Hemet City Council considers owner land lien process to speed up subdivision plans for builders

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Following a lengthy work session, the Hemet City Council approved on first reading an ordinance that would allow lien agreements as securities for subdivision improvements to speed up the development process for land developers.

The council and staff sought to encourage developers and landowners to subdivide their land for housing tracts that would help the economic growth of the city.

According to staff, the amendment proposed would add another method, outside of cash deposits, surety bonds and letters of credit by the landowner or developer to assure the construction and installation of needed streets, sewers, water infrastructure, storm drains, etc. by the builder of the subdivision before it can be approved. Staff said in their report that often a land owner or developer may not have enough cash or other monetary means required to forward the sale of their land for a planned subdivision, causing the plans abandonment or long delay.

The proposed amendment would allow the developer or land owner seeking to subdivide their land for sale to allow the city to lien the property as security until the purchasing builder takes over the requirement to build the infrastructure.

Further ensuring the proposed new development does not stall for inordinate amounts of time, the initial length of lien agreements will be three years, with one additional three-year extension available if certain requirements are met. The lien agreements make it necessary that the construction of public improvements commence no less than three years or within a three-year extension following the date the subdivision map is approved. More importantly, in order to receive permits and commence construction, the land owners seeking to subdivide their land must first post surety bonds, letters of credit or cash deposits with the city in place of the landowner or developers’ lien agreement.

Staff will need to set the ordinance for its second reading March 10.

Earlier in the work session the council discussed a financial model to analyze the five-year projections of the General Fund and Measure U. The presentation forwarded a proposed guide to follow in the upcoming fiscal year as well as capital purchases.

The model discussed was the result of the state auditor reporting Hemet was an “at risk” city financially in 2015. In August 2016, the state auditor outlined the areas of concern for the city. One of those was the ongoing budget deficit, although the city still had enough reserves to cover the shortfall but it had exceeded revenues in eight of the nine fiscal years.

The city prepared a five-year revenue expenditure model after that in May 2017, but the auditor considered the projections were inaccurate and overly optimistic.

The city in the next two-year budget cycles, 2018-2019 and the current 2019-2020, the staff presented balanced budgets to the city council to move the city forward. While the budgets were balanced use of many one-time sources of revenue were used to bridge the gap between expenditures and revenues.

The staff provided their model that would keep the city moving forward in keeping the General Fund and Measure U funds balanced.

The projections were taken under advisement by the council. The projections are available for public viewing on the city webpages under the Jan. 28 council meeting agenda minutes.

In another workshop discussion the council heard financial options with financial institutions for the purchase of a new first line fire engine to replace an aging engine.

The council took the request under consideration seeking the costs from different financial institutions.

Tony Ault can be reached by email at tault@reedermedia.com.