Newport Beach Municipal Code Art. II General Provisions

This chapter shall be known and may be cited as the “City of Newport Beach Special Improvement District Financing Code,” and shall be referred to herein as the “Code.”

(Ord. 94-40 § 2 (part), 1994)

This Code is adopted pursuant to City Charter Section 200. In proceedings had pursuant to this Code which are a municipal affair, any general laws referred to in this Code are deemed a part of this Code.

In the event that any proceeding had pursuant to this Code shall be adjudged a matter of statewide concern, it is declared to be the intention that the proceedings were had pursuant to any applicable general law or laws.

This Code provides an alternative method of financing certain public capital facilities and services. The provisions of this Code shall not affect or limit any other provisions of law authorizing or providing for the furnishing of governmental facilities or services or the raising of revenue for these purposes. The City may use the provisions of this Code instead of any other method of financing part or all of the cost of providing the authorized kinds of capital facilities and services.

(Ord. 94-40 § 2 (part), 1994; Ord. 2023-22 § 133, 2023)

The City Council may take any actions or make any determinations which it determines are necessary or convenient to carry out the purposes of this Code and which are not otherwise prohibited by law.

(Ord. 94-40 § 2 (part), 1994)

A special improvement district may be established under this Code to finance any one or more of the following types of services within an area:

A. Police protection services, including, but not limited to, criminal justice services. However, criminal justice services shall be limited to providing services for jails, detention facilities, and juvenile halls.

B. Fire protection and suppression services, and ambulance and paramedic services.

C. Recreation program services, library services and the operation and maintenance of museums and cultural facilities.

D. Maintenance of parks, parkways, and open space.

E. Flood and storm protection services, including, but not limited to, the operation and maintenance of storm drainage systems, and sandstorm protection systems.

F. Services with respect to removal or remedial action for the cleanup of any hazardous substance released or threatened to be released into the environment. As used in this subsection, the terms “remedial action” and “removal” shall have the meanings set forth in California Health and Safety Code Sections 25322 and 25323, respectively, and the term “hazardous substance” shall have the meaning set forth in California Health and Safety Code Section 25281. Special improvement districts shall provide the State Department of Health Services and local health and building departments with notification of any cleanup activity pursuant to this subsection at least thirty (30) days prior to commencement of the activity.

G. Any other municipal service which the City is authorized by law to provide.

(Ord. 94-40 § 2 (part), 1994; Ord. 2023-22 § 135, 2023)

A special improvement district may also finance the purchase, construction, expansion, improvement, or rehabilitation of any real or other tangible property with an estimated useful life of three years or longer or may finance planning and design work that is directly related to the purchase, construction, expansion, or rehabilitation of any real or tangible property. The facilities need not be physically located within the district. A district may finance the purchase of facilities whose construction has been completed before or after the adoption of the resolution of formation to establish the district is adopted if the facility is or was constructed pursuant to plans approved by the City, and the facility is inspected by the City and found to be in compliance with applicable City building codes and standards. For example, a special improvement district may finance facilities, including, but not limited to, the following:

A. Local park, recreation, parkway, and open-space facilities.

B. Libraries.

C. Child care facilities, including costs of insuring the facilities against loss, liability insurance in connection with the operation of the facility and other insurance costs relating to the operation of the facilities, but excluding all other operational costs. However, the proceeds of bonds issued pursuant to this Code shall not be used to pay these insurance costs.

D. The district may also finance the construction or undergrounding of water transmission and distribution facilities, natural gas pipeline facilities, telephone lines, facilities for the transmission or distribution of electrical energy, and cable television lines. The district may enter into an agreement with a public utility to utilize those facilities to provide a particular service and for the conveyance of those facilities to the public utility. “Public utility” shall include all utilities, whether public and regulated by the Public Utilities Commission, or municipal. If the facilities are conveyed to the public utility, the agreement shall provide that the cost or a portion of the cost of the facilities that are the responsibility of the utility shall be refunded by the public utility to the district or improvement area thereof, to the extent that refunds are applicable pursuant to: (1) the California Public Utilities Code or rules of the Public Utilities Commission, as to utilities regulated by the commission; or (2) other laws regulating public utilities. Any reimbursement made to the district shall be utilized to reduce or minimize the special tax levied within the district or improvement area, or to construct or acquire additional facilities within the district or improvement area, as specified in the resolution of formation.

E. The district may also finance the acquisition, improvement, rehabilitation, or maintenance of any real or other tangible property, whether privately or publicly owned, for the purposes described in subsection (E) of Section 3.32.060.

F. The district may also pay in full all amounts necessary to eliminate any fixed special assessment liens or to pay, repay, or defease any obligation to pay or any indebtedness secured by any tax, fee, charge, or assessment levied within the area of a special improvement district or may pay debt service on that indebtedness. In addition, tax revenues of a district may be used to make lease or debt service payments on any lease, lease-purchase contract, or certificate of participation used to finance authorized district facilities.

G. Any other governmental facilities which the City is authorized by law to contribute revenue to, or construct, own, or operate.

H.

1. A district may also pay for the following:

a. Work deemed necessary to bring buildings or real property, including privately owned buildings or real property, into compliance with seismic safety standards or regulations. No project involving the dismantling of an existing building and its replacement by a new building, nor the construction of a new or substantially new building may be financed pursuant to this subsection (H)(1)(a). Work on qualified historical buildings or structures shall be done in accordance with the State Historical Building Code (California Health and Safety Code Division 13, Part 2.7, Section 18950 et seq.)

b. In addition, within any county or area designated by the President of the United States or by the Governor as a disaster area or for which the Governor has proclaimed the existence of a state of emergency because of earthquake damage, a district may also pay for any work deemed necessary to repair any damage to real property directly or indirectly caused by the occurrence of an earthquake cited in the President’s or the Governor’s designation or proclamation, or by aftershocks associated with that earthquake, including work to reconstruct, repair, shore up, or replace any building damaged or destroyed by the earthquake. Work may be financed pursuant to this subsection (H)(1)(b) only on property or buildings identified in a resolution of intention to establish a special improvement district adopted within seven years of the date on which the county or area is designated as a disaster area by the President or by the Governor or on which the Governor proclaims for the area the existence of a state of emergency.

2. Work on privately owned property, including reconstruction or replacement of privately owned buildings pursuant to subsection (H)(1)(b) of this section, may be financed by a tax levy only if all of the votes cast on the question of levying the tax favor levying the tax, or with the prior written consent to the tax of the owners of all property which may be subject to the tax, in which case the prior written consent shall be deemed to constitute a vote in favor of the tax and any associated bond issue. Any district created to finance seismic safety work on privately owned buildings, including repair, reconstruction or replacement of privately owned buildings pursuant to this subsection (H) shall consist only of lots or parcels that the City Council finds were the sites of buildings damaged or destroyed by an earthquake cited in the President’s or the Governor’s designation or proclamation.

a. A district may also pay for the following:

i. Work deemed necessary to repair and abate damage caused to privately owned buildings and structures by soil deterioration. “Soil deterioration” means a chemical reaction by soils that causes structural damage or defects in construction materials including concrete, steel, and ductile or cast iron. No project involving the dismantling of an existing building or structure and its replacement by a new building or structure, nor the construction of a new or substantially new building or structure, may be financed pursuant to this subsection (H)(2)(a)(i).

ii. Work on privately owned buildings and structures pursuant to this subsection (H)(2)(a), including reconstruction, repair, and abatement of damage caused by soil deterioration, may only be financed by a tax levy if all of the votes cast on the question of levying the tax favor levying the tax. Any district created to finance the work on privately owned buildings or structures, including reconstruction, repair, and abatement of damage caused by soil deterioration, shall consist only of lots or parcels that the City Council finds suffer from soil deterioration.

(Ord. 94-40 § 2 (part), 1994; Ord. 2023-22 § 136, 2023)

Pursuant to Section 3.32.070, a special improvement district may also finance the acquisition, improvement, rehabilitation, or maintenance of any real or other tangible property, whether privately or publicly owned, for the purposes described in Section 3.32.060(F).

(Ord. 94-40 § 2 (part), 1994; Ord. 2023-22 § 139, 2023)

The City Council may from time to time transfer moneys to a special improvement district or to an improvement area within a special improvement district, for the benefit of the district or improvement area, from any funds available to the City. The City Council may also appropriate any of its available moneys to a revolving fund to be used for the acquisition of real or personal property, engineering services, or the construction of structures or improvements needed in whole or in part to provide one or more of the facilities of a special improvement district.

The district may reimburse the City for any amount transferred or appropriated pursuant to this section, together with interest at the rate per annum determined by the City Council.

(Ord. 94-40 § 2 (part), 1994)

A. At any time either before or after the formation of the district, the City Council may accept advances of funds or work in kind from any source, including, but not limited to, private persons or private entities and may provide by resolution for the use of those funds or that work in kind for any authorized purpose, including, but not limited to, paying any cost incurred by the City in creating the special improvement district. The City Council may enter into an agreement, by resolution, with the person or entity advancing the funds or work in kind, to repay all or a portion of the funds advanced, or to reimburse the person or entity for the value, or cost, whichever is less, of the work in kind, as determined by the City Council, with or without interest, under all of the following conditions:

1. The proposal to repay the funds or the value or cost of the work in kind, whichever is less, is included in the resolution of intention to establish the district or in the resolution of formation to establish the district, or in the resolution of consideration to alter the types of public facilities and services provided within an established district.

2. Any proposed special tax or change in a special tax is approved by the qualified electors of the district. Any agreement shall specify that if the qualified electors of the district do not approve the proposed special tax or change in a special tax, the local agency shall return any funds which have not been committed for any authorized purpose by the time of the election to the person or entity advancing the funds.

3. Any work in kind accepted pursuant to this section shall have been performed or constructed as if the work had been performed or constructed under the direction and supervision of, or under the authority of, the local agency.

B. The agreement shall not constitute a debt or liability of the City.

(Ord. 94-40 § 2 (part), 1994; Ord. 2023-22 § 140, 2023)

This Code shall be liberally construed in order to effectuate its purposes. No error, irregularity, informality, and no neglect or omission of any officer, in any procedure taken under this Code, which does not directly affect the jurisdiction of the City Council to order the installation of the facility or the provision of service, shall void or invalidate such proceeding or any levy for the costs of such facility or service.

(Ord. 94-40 § 2 (part), 1994)

The failure of any person to receive a notice, resolution, order, or other matter shall not affect in any way whatsoever the validity of any proceedings taken under this Code, or prevent the City Council from proceeding with any hearing so noticed.

(Ord. 94-40 § 2 (part), 1994)

This Code authorizes the City to create special improvement districts pursuant to this Code within its territorial limits. The City may initiate proceedings pursuant to Section 3.32.180 to include territory proposed for annexation to the City within a special improvement district if a petition or resolution of application for the annexation of the territory to the City has been accepted for filing and a certificate of filing has been issued by the executive officer of the local agency formation commission at the time the proceedings to create the district are initiated. Those proceedings may be completed only if the annexation of the territory to the City is completed.

(Ord. 94-40 § 2 (part), 1994)

If property not otherwise exempt from a special tax levied pursuant to this Code is acquired by a public entity through a negotiated transaction, or by gift or device, the special tax shall, notwithstanding Section 3.32.630, continue to be levied on the property acquired and shall be enforceable against the public entity that acquired the property. However, even if the resolution of formation that authorized creation of the district did not specify conditions under which the obligation to pay a special tax may be prepaid and permanently satisfied, the City Council may specify conditions under which the public agency that acquires the property may prepay and satisfy the obligation to pay the tax. The conditions may be specified only if the City Council finds and determines that the prepayment arrangement will fully protect the interests of the owners of the special improvement district’s bonds.

(Ord. 94-40 § 2 (part), 1994)

If property subject to a special tax levied pursuant to this Code is acquired by a public entity through eminent domain proceedings, the obligation to pay the special tax shall be treated, pursuant to California Code of Civil Procedure Section 1265.250, as if it were a special annual assessment. For this purpose, the present value of the obligation to pay a special tax to pay the principal and interest on any indebtedness incurred by the district prior to the date of apportionment determined pursuant to California Code of Civil Procedure Section 5082 shall be treated the same as a fixed lien special assessment.

(Ord. 94-40 § 2 (part), 1994; Ord. 2023-22 § 141, 2023)