Financial Planning
Community Facilities Districts (CFDs)
Mello-Roos Community Facilities Districts (CFDs) are formed to finance the construction, reconstruction or acquisition of certain designated capital facilities (infrastructure) and/or to finance public services by levying special taxes which appear on the property tax bill of the parcels included in the CFD. There are several Mello Roos Community Facilities Districts (CFDs) in the City of Elk Grove. Some finance the construction of infrastructure and others finance police and maintenance services as outlined below.
INFRASTRUCTURE CFDs
There are eight infrastructure CFDs located in the City of Elk Grove, four of which are administered by the County, one which is administered by the Elk Grove Unified School District, and three which are administered by the City of Elk Grove as outlined below and on the Infrastructure CFD Map.*
County Administered Infrastructure CFDs
- Park Meadows CFD
- Laguna West Improvement Area #1 CFD (also known as Laguna Creek Ranch)
- Lakeside Improvement Area #2 CFD (also known as Elliott Ranch)
- Stonelake CFD
Note: The Laguna West Improvement Area #1 and Lakeside Improvement Area #2 CFDs are technically one CFD, but for purposes of this discussion, are shown as two CFDs.
Contact the County Infrastructure Finance Section at (916) 874-6525 for further information.
Elk Grove Unified School District Administered Infrastructure CFD
- CFD No. 1 (includes all areas located in the City of Elk Grove)
Contact the school district at (916) 686-7562 for further information.
City of Elk Grove Administered Infrastructure CFDs
- East Franklin CFD 2002-1 (see detail below)
- Poppy Ridge CFD 2003-1 (see detail below)
- Laguna Ridge CFD 2005-1 (see detail below)
East Franklin Infrastructure CFD 2002-1
Location: See the Infrastructure CFD Map.*
What it Funds: Construction, reconstruction, or reconfiguration of the following public facilities: street improvements, wastewater system improvements, potable and non-potable water system improvements, drainage system improvements, and other public facility improvements.
Maximum Special Tax: The maximum annual facilities special tax for developed property is $840 per single family residential unit and $4,200 per net acre for multi-family property and non-residential property. This maximum special tax may not be increased for inflation. This special tax levy appears on the property tax bill.
Other Information: This special tax will not be levied later than the 2037-2038 fiscal year. For information regarding special tax rates on mapped property and undeveloped property, or other related questions, contact the City Finance Department at (916) 627-3423 or email to rcraig@elkgrovecity.org.
Poppy Ridge CFD 2003-1-Infrastructure Component
(note this CFD also has a police services component-see next section for details)
Location: See the Infrastructure CFD Map.*
What it Funds: The infrastructure component of this CFD funds construction, reconstruction, or reconfiguration of the following public facilities: street improvements, wastewater system improvements, potable and non-potable water system improvements, drainage system improvements, and other public facility improvements.
Maximum Special Tax: The infrastructure related maximum annual facilities special tax for developed property is $965 per single family residential unit and $4,825 per net acre for multi-family property and non-residential property. This maximum special tax for the infrastructure component of this CFD may not be increased for inflation. This special tax levy appears on the property tax bill. See fiscal year 2007/08 Disclosure Statement.
Other Information: The infrastructure portion of this special tax will not be levied later than the 2045-2046 fiscal year. For information regarding special tax rates on mapped property and undeveloped property, or other related questions, contact the City Finance Department at (916) 627-3423 or email to rcraig@elkgrovecity.org. Also see the next section on Police Services CFDS.
Laguna Ridge CFD 2005-1-Infrastructure Component
(note this CFD also has a landscaping maintenance services component-see next section for details)
Location: See the Laguna Ridge Infrastructure CFD Map.*
What it Funds: The infrastructure component of this CFD funds construction, reconstruction, or reconfiguration of the following public facilities: street improvements, wastewater system improvements, potable and non-potable water system improvements, drainage system improvements, landscaping improvements, parks and parkway facilities, and other public facility improvements.
Maximum Special Tax: The fiscal year 2007/08 infrastructure related maximum annual facilities special tax rates are outlined on the Laguna Ridge Infrastructure CFD Map. The maximum special tax rates for the infrastructure component of this CFD shall be increased by 2% each July 1st. This special tax levy appears on the property tax bill. See fiscal year 2007/08 Disclosure Statement.Other Information: The infrastructure portion of this special tax will not be levied later than the 2050-2051 fiscal year. For related questions, contact the City Finance Department at (916) 627-3423 or email to rcraig@elkgrovecity.org.
Delinquency Information: Many areas of California and the country, including the City and the Community Facilities District No. 2005-1 (the “CFD”) within the City, have experienced significant increases the number of homes in foreclosure as interest rates on adjustable rate loans are reset at higher rates and monthly payments are increased. Demand for houses has decreased significantly and in turn home prices have decreased. This has slowed the rate of new home development and sales in many parts of the country, including the Sacramento area.
As of February 1, 2008, the delinquency rate in the CFD was reported to be 44.63% as to the installment payable by December 10,, with a substantial portion of this delinquency being attributable to non-payment of the Special Tax by the developer Reynen & Bardis Communities, Inc., and, to a lesser extent, to Corinthian Homes and Cambridge Homes.
The Special Taxes of the CFD is the source of payment for the City’s Community Facilities District No. 2005-1 (Laguna Ridge) Special Tax Bonds, Series 2007. For the semi-annual bond payment which became due on March 1, 2008, the delinquencies were at a level which caused the amount collected to be less than the amount of the payment due on the bonds on that date. In order to fully pay the March 1, 2008 payment on the bonds, the City used a portion of the bond proceeds which had been earmarked for public improvements to cover the deficient amount needed to pay the bond payments, which amount would otherwise had been a draw on the reserve fund established for the bonds.
The City has calculated that for the bond payment which will become due on March 1, 2009, the City has the ability to increase the levy of the Special Taxes on property in the CFD, however if the present delinquencies continue, the permitted increase will not be to a level that will be sufficient to generate enough money to pay such payment. To estimate the shortfall, the City calculates that, assuming it levies the maximum Special Tax on all properties in the CFD for the 2008/09 levy, and assuming 2007/08 development status is unchanged in 2008/09, and further assuming that all of the Reynen & Bardis Communities, Inc., Corinthian Homes and Cambridge Homes properties remain delinquent but all other properties pay their tax in full, the projected special tax collected would provide approximately 91% bond debt service coverage.
The City is monitoring the delinquency rate in the CFD, particularly as it relates to the City’s covenant to foreclose in the event the delinquency rate reaches levels prescribed in the bond documentation. The City has been in contact with Reynen & Bardis Communities, Inc. asking for payment but has not yet received payment or assurance of payment.
The bonds are also secured by a Bond Reserve Fund established at the time the bonds were issued and the City may need to utilize reserve fund moneys to meet the payment due on the bonds on September 1, 2008. In the event the reserve fund is depleted, there could be a default in the payment of principal of and interest on the bonds, as the bonds are payable only from the CFD special taxes and the reserve fund; the City has no obligation to supplement any shortfalls.
The lien of the special taxes against property in the CFD has priority over the lien created by bank loans, so in the event a property is foreclosed, the successful foreclosure bidder becomes the owner of the property and must assume the special tax obligation, including any delinquencies.
The City will continue to monitor and follow its bond covenants, particularly as to its agreement to foreclose properties which have delinquent special taxes in certain circumstances, and consult with its financial advisors and attorneys as appropriate to follow the best course of action to protect the bondholders during this period of uncertainty in the real estate market.
SERVICES CFDs
There are two police services CFDs and two maintenance services CFD located in the City of Elk Grove and all four services CFDs are administered by the City as outlined below.
Poppy Ridge CFD 2003-1-Police Services Component
(note this CFD also has an infrastructure component-see previous section for details)
Location: See the Police Services CFD Map.*
What it Funds: The police services component of this CFD funds public safety services, and specifically police protection operation services.
Maximum Special Tax: The fiscal year 2007/08 police services maximum annual special tax for developed property is $164.08 per single family residential unit, $125.80 per multi-family residential unit, and $273.49 per net acre for non-residential property. This maximum will be adjusted for inflation each year on July 1st. This special tax levy appears on the property tax bill. See fiscal year 2007/08 Disclosure Statement.
Other Information: The police services portion of this special tax will be levied in perpetuity (forever). The police services special tax is only levied on properties with a building permit. For related questions, contact the City Finance Department at (916) 627-3423 or email to rcraig@elkgrovecity.org. Also see the previous section on Infrastructure CFDs.
Police Services CFD 2003-2
Location: The boundaries of this CFD continually expand throughout the City. The boundary includes new residential projects (outside of projects located in the Poppy Ridge Police Services CFD 2003-1) that have requested entitlements from the City and were then annexed into this CFD. See the Police Services CFD Map.*
What it Funds: This CFD funds public safety services, and specifically police protection operation services.
Maximum Special Tax: The fiscal year 2007/08 police services maximum annual special tax for developed property is $355.54 per single family residential unit and $251.62 per multi-family residential unit. This maximum will be adjusted for inflation each year on July 1st. This special tax levy appears on the property tax bill. See fiscal year 2007/08 Disclosure Statement.
Other Information: The police services portion of this special tax will be levied in perpetuity (forever). The police services special tax is only levied on properties with a building permit. For questions relating to this CFD contact the City Finance Department at (916) 627-3423 or email to rcraig@elkgrovecity.org.
Laguna Ridge CFD 2005-1-Landscaping Maintenance Services Component
(note this CFD also has an infrastructure component-see previous section for details)
Location: See the Laguna Ridge Landscaping Maintenance CFD Map.*
What it Funds: Maintenance of public parkways, public parks, open space, landscape setbacks, bike and other paths, and landscaped medians in and adjacent to roadways within the CFD, maintenance and operation of a community center, recreation center, sports (including aquatic) facilities, cultural arts center, and water features, and maintenance of other related facilities.Maximum Special Tax: The fiscal year 2007/08 maximum special tax rates for landscaping maintenance services are outlined on the Laguna Ridge Landscaping Maintenance CFD Map. This maximum will be adjusted for inflation each year on July 1st. This special tax levy appears on the property tax bill. See fiscal year 2007/08 Disclosure Statement.
Other Information: The landscaping maintenance services portion of this special tax will be levied in perpetuity (forever). For related questions, contact the City Finance Department at (916) 627-3423 or email to rcraig@elkgrovecity.org. Also see the previous section on Infrastructure CFDs.
Maintenance Services CFD 2006-1
Location: The boundaries of this CFD continually expand throughout the City. The boundary includes new residential and non-residential projects (outside of projects located in the area bounded by Elk Grove Blvd. on the north, State Route 99 on the east, Bruceville Road on the west, and Kammerer Road on the south) that have requested entitlements from the City and were then annexed into this CFD. See the Maintenance Services CFD Map.*
What it Funds: A portion of the costs associated with maintenance of public parkways, public parks, open space, landscape setbacks, bike and other paths, landscaped medians in and adjacent to roadways, maintenance and operation of a community center, recreation center, sports (including aquatic) facilities, cultural arts center, and water features, and maintenance of other related facilities.
Maximum Special Tax: The fiscal year 2007/08 maintenance services maximum special tax rates are outlined on the Maintenance Services CFD Tax Rate Table. There are seventeen different possible tax rate zones. Each project will be individually evaluated based on detailed information about on-site maintenance requirements in order to establish the correct tax rate zone. The maximum special tax rates will be increased for inflation each year on July 1st but in no event shall they be increased by less than 2% of the amount in effect for the previous fiscal year. This special tax levy appears on the property tax bill. For a current Disclosure Statement contact the City Finance Department at (916) 627-3423 or email to rcraig@elkgrovecity.org.Other Information: The landscaping maintenance services portion of this special tax will be levied in perpetuity (forever). The special tax is levied on single family lots that have a final map, and on single family units that have a building permit. The special tax is levied on multi-family units with a building permit, and on non-residential acreage with a building permit. For related questions, contact the City Finance Department at (916) 627-3423 or email to rcraig@elkgrovecity.org.
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