Community Facilities District (CFDs) are permissible pursuant to the Mello-Roos Community Facilities Act of 1982 which was enacted to assist public agencies in financing certain public improvements by either issuing tax-exempt securities that are repaid by an annual levy of special taxes or to provide for the financing of ongoing public services.
Tonight's presentation will provide an overview of the City's four public service CFDs as were established to fund eligible ongoing public services including, but not limited to, law enforcement, fire protection, paramedic services, and the operation and maintenance of storm drains, parks, trails and open space. For reference the below table summarizes the City's four public service CFDs:
| CFD District |
CFD Type |
Expiration |
| CFD 2008-1 (Blackstone/Peppertree Hills) |
Residential |
Perpetuity |
| CFD 2011-1 (La Floresta) |
Residential/Non-Residential |
Perpetuity |
| CFD 2013-1 (Taylor Morrison/Summerwind) |
Residential |
Perpetuity |
| CFD 2013-2 (Central Park Village) |
Residential |
Perpetuity |
CFDs that are established to fund ongoing public services have been, and continue, to be used throughout the State to provide bridge financing to collect revenue to support the service level impacts associated to a growing community. Traditional funding sources including property taxes are not sufficient to cover the costs of providing general public services.
In Brea, only 12.9% of the 1% of direct base property tax rate comes back to the City to support the delivery of general services. As an example, the 2021 average tax valuation of a single family dwelling unit in the Blackstone Community (CFD 2008-01) is approximately $1.2 million. Of this $1.2 million tax valuation, the property tax revenue received would be $1,548 annually for the City, however, the costs to support a typical single family detached dwelling unit is approximately $4,461 (3.2 persons x $1,394 expenses per capita). The 3.2 persons per single family detached dwelling unit is an approximate average based upon the most recent CFD rate and method feasibility study completed in 2013.
As a result, public service CFDs have become a necessary consideration to fund ongoing public services for agencies. For Brea, during the onset of the Great Recession in 2007, the City Council approved a series of Budget Strategic Planning (BSP) assumptions, one of which included an assured mechanism for new development to pay for the costs of services necessary to maintain their projects (so existing residents would not have to subsidize the cost of new development). These assumptions can be referenced in the attached Exhibit A.
To date, staff have worked cooperatively with developers to come to a mutual agreement on cost recovery for ongoing City services. This can come in the form of a public service CFD or as an upfront contribution amount or a combination of the two. The developer agreement process helps guide those conversations and because the financial impacts are different for each development, the developer agreements may also vary.
The Blackstone/Peppertree Hills and La Floresta developers negotiated with the City a significant housing benefit of a 94 and 115 unit affordable housing complex, an 18 hole golf course, Cal-Domestic Water Company Shares, monetary contribution toward construction of the City's War Memorial, 16 acre park (Wildcatters Park) with lighted ball fields and play areas, and two dog parks. In comparison to the Taylor Morrison/Summerwind and Central Park Village development where approximately a one-acre park with splash pad was added as a community benefit.
As part of the developer agreement for each of the public CFDs, a feasibility study was conducted and was the initial starting point in identifying a levy methodology and a maximum CFD special tax assessment rate. Once a mutual agreement is made between the City and developer, the CFD proceedings process starts and ends in an adopted Rate and Method of Apportionment (RMA) to assess a special tax levy within the CFD. Exhibit B summarizes the FY 2022-23 Estimated CFD rate and levy information for each public service CFD including levy information for affordable housing units (AHU). |
For FY 2022-23, the City's public services CFDs fund approximately $1.67 million in eligible public service costs. Costs include, but not limited to, salary and benefits for one police officer position, three fire positions, 50% of a fire administration support position, Public Works maintenance related positions as well as operating related costs to maintain Wildcatter's Park, Wildcatter's Dog Park, trails and landscape. Without these public service CFDs, $1.67 million would need to be funded from other sources or a reduction in service level would need to be identified for City Council consideration.
It is also important to note that any change or amendment to the special tax assessment levy will require an amendment to the Rate and Method of Apportionment (RMA) and the attached CFD proceedings would need to be followed (Exhibit C).
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