2006 ANNUAL CONFERENCE CALIFORNIA SOCIETY OF MUNICIPAL FINANCE OFFICERS COMMUNITY FACILITIES...
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Transcript of 2006 ANNUAL CONFERENCE CALIFORNIA SOCIETY OF MUNICIPAL FINANCE OFFICERS COMMUNITY FACILITIES...
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2006 ANNUAL CONFERENCE2006 ANNUAL CONFERENCECALIFORNIA SOCIETY OF CALIFORNIA SOCIETY OF
MUNICIPAL FINANCE OFFICERSMUNICIPAL FINANCE OFFICERS
COMMUNITY FACILITIES DISTRICT FINANCING FOR SERVICES
AND INFRASTRUCTURE
Sam Sperry, AttorneySam Sperry, AttorneyOrrick, Herrington & Sutcliffe LLPOrrick, Herrington & Sutcliffe LLP
San Francisco, CA San Francisco, CA
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Quick Intro to Community Facilities Districts (“CFDs”)
the Mello-Roos Community Facilities Act of 1982 (Sections 53311 and following, Government Code) (the “Mello-Roos Act”)
adopted in 1982 in the wake of Prop. 13 (June, 1978) to provide for property tax-supported financing of "community facilities" and some public services
requires 2/3 voter approval
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CFD procedure entails 5 fairly distinct phases:
settling the preliminaries district formation (concluding with the protest
hearing) the election bond issuance/project implementation on-going special tax and bond administration
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The "Qualified Electors" for CFD Election
2/3 voter approval is required, with either landowners or registered voters as the “qualified electors”
two VERY different categories of CFD’s, depending on which category of voters
12 or more registered voters within the proposed CFD for the prescribed 90 day period - registered voters
11 or fewer registered voters – landowners, with one vote per acre or portion of an acre
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The CFD Special Tax
CFD’s involve the calculation of an annual special tax for each taxable parcel based upon the special tax formula
the Special Tax Formula is the most important legal document of the CFD formation process!!
the Mello-Roos Act anticipates tax roll collection of the special tax, although it also permits direct billing as an alternative
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Adoption of Local Goals and Policies
local agency must “consider and adopt” "local goals and policies" PRIOR TO start of CFD formation proceedings
Section 53312.7 of Mello-Roos Act prescribes minimum contents, and they have little to do with services
clear focus on bond financing
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Basic List of Eligible Services police protection fire protection and suppression, including ambulance and
paramedic services maintenance of parks, parkways, and open space flood, storm protection, drainage and sandstorm protection
systems cleanup of hazardous substances recreation, library, maintenance of elementary and secondary
schools, and O/M for museums and cultural facilities
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Two Categories of Restrictions on Eligible Services for Landowner CFDs
first, special tax proceeds may NOT be used for recreation, library, or maintenance of schools, museums or cultural facilities IF any residential property will be taxed
second, use of special tax proceeds must be restricted to services that are in addition to the services being provided within the CFD prior to formation, and the additional services may not supplant services already available within the CFD when it was formed.
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Charter City Ordinance Provisions to Authorize Additional Services
or Remove Restrictions
focus on making up negative fiscal impact of new residential development
some, particularly in the development community, question legality, arguing that this is NOT a legitimate use of the charter city powers over "municipal affairs"
road repair and maintenance - the most common
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Exactions to Fund Services
"exaction" – meaning a forced payment imposed by government action (as opposed to a voluntary payment)
examples for this discussion:– CFD special taxes
– parcel taxes
– special assessments
– fees and charges (edging toward voluntary)
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Special Tax Formula Ingredients
determining the revenue needs – estimated cost of services being financed
– estimated administrative expense
gauging the taxable property base limitations on the maximum special tax
– if a developer-oriented CFD, determining the competitive tax level
– if a registered-voter CFD, determining the tolerance of the registered voters for differing levels of taxation
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Basic Formula Structuring Concepts
special taxes NOT required to be allocated based on benefit special tax categories may be based on lot size, home size,
density, land use type, development status or other criteria usually, there are categories of “developed property” and
“undeveloped property,” with various trigger events for moving a parcel from undeveloped to developed
developed property special tax limited by marketing and public policy
special tax on developed property should be stable and unaffected by rate of development
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Other Structuring Considerations
special tax escalator – Mello-Roos Act does NOT limit escalator for special taxes funding only services
sunset NOT required when funding only services in multi-landowner, developer-oriented CFD’s,
must decide whether to allow cross-collateralization among landowners
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Formation and Election
formation milestones:– local goals and policies
– boundary map
– resolution of intention
– conduct hearing
– resolution of formation
call and conduct election– same day as hearing if 100% consent
authorize levy of special tax
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Special Tax Administration
who's responsible – staff or consultant annual tax levy procedure:
– determine budget– update taxable parcel base– calculate special tax for each taxable parcel
coordination with County Auditor for posting disclosure to prospective purchasers various annual report requirements