1 Community Facilities District & Redevelopment Overview January 19, 2008

2 Overview  What is a Community Facilities District  What can CFDs pay for  Advantages and disadvantages of CFDs  Redevelopment

3 Community Facilities Districts Legal entity formed by School District Finances public facilities or fees Finances services Boundaries may be non-contiguous

4 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

5 CFD Services Services –Can fund School Maintenance with a registered voter vote. –Limited to new maintenance and services

6 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)

7 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

8 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

9 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

10 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

11 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)

12 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)

13 Redevelopment  Tax Increment  ERAF

14 Questions