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Community Facilities District & Redevelopment Overview

January 19, 2008

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Overview

What is a Community Facilities District

What can CFDs pay for

Advantages and disadvantages of CFDs

Redevelopment

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Community Facilities Districts

• Legal entity formed by School District

• Finances public facilities or fees

• Finances services

• Boundaries may be non-contiguous

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Facilities

• Public capital improvements with a useful life of more than 5 years

• Infrastructure, school buildings and other facilities, equipment, etc.

• Level II fees or other• May fund facilities of other public

agencies (joint financing agreement)• Lead Agency must have greater share

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CFD Services

• Services– Can fund School Maintenance with a

registered voter vote.

– Limited to new maintenance and services

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Community Facilities Districts

• Maximum special tax set by election• If less than 12 registered voters within

proposed boundaries, then landowner vote • Mailed ballot• 2/3 vote required - one vote per acre • Annual special tax levy - collected on property

tax bill• Constitutes annual tax lien (fixed period for

facilities, sufficient to cover debt services and other costs)

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CFD Bonds

• Finance public capital facilities• Maximum bond authorization set by

election • Requires 3 to 1 value-to-lien ratio • Appraisal/absorption study• Requires option to tax on

undeveloped property

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CFD Bonds (Cont.)

• Reserve fund, capitalized interest• Issue one or more series (25 to 30 year

maturities)• Financial advisor, underwriter, fiscal

agent, bond counsel, disclosure counsel, special tax consultant

• Bonds may be sold competitively or on a negotiated basis

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Financing Policy

Agencies are required to adopt Financing Policy for land-securing financings

Guidelines minimum acceptable credit quality for bonds to be issued

Guidelines for establishing the special tax levy Should address types of facilities and services

to be funded

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Benefits

For the School District: Bond issue provides timely construction of

facilities compared to pay-as-you-go Provides opportunity to bring developer to the

table Usually provides higher than Level II funding Burdens the new development with the cost of

new schools, not the entire school district

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Benefits

For the Developer/Builder: Assists cash flow on project by passing cost onto

homeowner Provides off-book financing

For the Homeowner: Potential lowering of home purchase price since

fees paid are not added into developer’s cost to build (partially offset by higher property tax bill)

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Disadvantages

For the School District: Ongoing existence and administration of CFD Line item on tax bill – public perception

For the Homeowner: Higher overall property tax rate than those without CFD Additional tax lien creates foreclosure risk (bonded)

For the Builder: Pays for all costs associated with setting up CFD Upfront credit enhancement and pays vacant land tax

(bonded)

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Redevelopment

Tax Increment

ERAF

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Questions