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2020-04-15 City Council Item No. 12.2 Community Facilitieis District Goals & Policies (Amended Policy FN-09) Presentation Regular MEETING - Additional Meeting MaterialsCity of Menifee Community Facilities District Goals & Policies (Amended Policy FN-09) Rochelle Clayton, Deputy City Manager City Council Meeting April 15, 2020 PURPOSE OF THE COMMUNITY FACILITIES DISTRICT (“CFD”) FORMATION PROCESS A CFD is created to finance public improvements and services when no other source of money is available. CFDs are normally formed in undeveloped areas and are used to build roads and install water and sewer systems so that new homes can be built. -1- A CFD is a Special Tax District provided in State Law that funds the installation of public improvements or ongoing services within an identified area.A special tax is levied on taxable property within the district boundaries.Revenue received from the special tax is used to fund the CFD’s authorized public facilities and/or services." -2- WHAT IS A COMMUNITY FACILITIES DISTRICT or CFD? No.A Mello-Roos District and a Community Facilities District are one in the same.The Community Facilities Act of 1982 was written by Senator Henry J.Mello (D- Watsonville)and Assemblyman Mike Roos (D-Los Angeles).~Mello-Roos Is there a difference between a Mello-Roos District and a CFD? -3- Maintenance CFDs provide funding for maintenance services related to public landscaping or improvements and street lighting,and a services CFD may include public safety services.Funds collected on behalf of the district are restricted for the maintenance and operation services outlined in the CFD’s formation documents. What is a maintenance or services CFD? -4- Bonded CFDs are funded through the sale of land secured municipal bonds to pay for the costs of planning,acquisition,and installation of public improvements that are a requirement of a new development project.The property owners within the district boundaries pay the annual special tax until the debt service (principal and interest)on the bonds are paid in full. What is a bonded CFD? -5- No.Revenue received from special taxes for a CFD are restricted and can only be used for the purposes for which the qualified electors approved at the time of CFD formation or approval. Can revenue from a CFD be used for other purposes? -6- Eastern Municipal Water District or a local school district could be the administrator of a CFD recorded against the property.The administrator of a CFD has oversight of the formation process. A phone number of the appropriate contact for each CFD can be found on the property tax bill. If the City of Menifee doesn’t administer my CFD,who does? -7- -8- Why must the City adopt a policy on Community Facilities District Goals and Policies? 1.)The priority to be given to the various types of public improvements,including facilities or fees of other public agencies. Before a local agency may undertake any CFD proceeding, it is required to adopt its own “Local Goals &Policies” which must include statements of: -5- 2.)The credit quality to be required of any bonds issued,and the means of measuring that quality – usually the ratio between the value of the property that is the security for the tax,and the amount of bonds permitted to be sold.-9- 3.)The steps to be taken to ensure that purchasers of property will be informed of the special tax before they enter into a contract to purchase. “Local Goals &Policies” must include statements of (continued): 4.)Criteria for evaluating the equity of proposed special tax formulas,and desirable and maximum limits on the special tax. 5.)Definitions,standards and assumptions to be used for appraisals of the taxable property that will be the security for the bonds.-10- On September 6,2011,Council approved Policy FN-09,Special Assessment and Community Facilities District Debt Financing Programs, which was later modified on August 6,2014. The common title used by agencies is “Community Facilities District Goals and Policies” so to be consistent and transparent,staff has recommended that the policy title be updated accordingly. City of Menifee Goals &Policies -11- The Finance Committee reviewed the policy during meetings held on September 10,2019,March 26, 2020 and April 7,2020,and provided input leading to the proposed updates. FISCAL IMPACT There is no fiscal impact associated with the Policy. Additionally,the cost of CFD formation associated with the Policy are funded by the developer initiating the process. City of Menifee Goals &Policies -12- Questions?Thank You.