Report to City Council
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TO: Mayor and City Council Acting in its Capacity as
President and Members of the Board of Directors of
the Moreno Valley Community Services District (CSD)
FROM: Dena Heald, Chief Financial Officer/City Treasurer
AGENDA DATE: May 20, 2025
TITLE: APPROVAL OF THE MAXIMUM AND APPLIED
SPECIAL TAXES FOR CERTAIN COMMUNITY
FACILITIES DISTRICTS FOR FISCAL YEAR 2025/26
(RESO. NOS. CSD 2025 -__ AND CSD 2025 -__)
(REPORT OF: FINANCIAL AND MANAGEMENT
SERVICES) (ALL DISTRICTS)
TITLE SUMMARY: Approval of FY 2025/26 Special Taxes for Certain Community Facilities Districts
DISTRICT: All Districts
Recommendation(s)
That the CSD:
1. Acting in its capacity as the Board of Directors for the CSD and as the legislative body of Community Facilities District No. 1, Adopt Resolution No. CSD 2025 -__, a Resolution of the Board for the Moreno Valley Community Services District of the City of Moreno Valley, California, Approving the Continuation of the Community Facilities District No. 1 Maximum and Applied Special Tax Rates for Fiscal Year 2025/26, and Calculation Thereof.
2. Acting in its capacity as the Board of Directors for the CSD and as the legislative body of Community Facilities District No. 2021 -01, Ad opt Resolution No. CSD 2025 -__, a Resolution of the Board for the Moreno Valley Community Services District of the City of Moreno Valley, California, Approving the Continuation of the Community Facilities District
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No. 2021 -01 Maximum and Applied Special Ta x Rates for Fiscal Year 2025/26, and Calculation Thereof.
3. Authorize the Chief Financial Officer to adjust the proposed special tax rates in the event there are any parcel changes, clerical errors, or other adjustments as may be necessary between the da te the special taxes were calculated and the date the fixed charges are submitted to the County of Riverside, provided the applied special tax does not exceed the maximum special tax and is in compliance with the Rate and Method of Apportionment of Special Tax for each district.
SUMMARY
This report recommends adoption of the resolutions (Attachments 1 and 2), which approve the calculation and set the maximum and applied special tax rates against real property included within certain Community Facilities Districts (CFD) administered by the CSD and authorizes the levy of the applied special tax on the fiscal year (FY) 2025/26 property tax roll. Adoption of the resolutions also acknowledges the filing of an annual report for each CFD. This is a routine process that occurs each year.
The proposed special tax is a continuation of the special tax currently, or authorized to be, levied on the property tax roll. There is no increase proposed to the maximum rate other than an annual adjustment, as previously approved by the qualified electors (i.e., landowners or registered voters, depending upon the number of registered voters).
Revenue received from the special tax funds the maintenance and operation expenses for the CFD facilities.
The Finance Subcommittee reviewed the annual inflationary adjustments proposed to be applied to the maximum rates at its April 22, 2025 meeting.
DISCUSSION
The Mello-Roos Community Facilities Act of 1982 (the “Act”) allows the formation of CFDs to fund the operation and mainte nance of public improvements. The qualified electors within the boundaries of the CFDs approved the Rate and Method of Apportionment (RMA) and authorized the levy of a special tax on their properties to fund the services of the district or as security for repayment of bonds. The RMA establishes the special tax formula (e.g. rate of annual adjustment, if any, etc.) and how the special tax is apportioned to properties included in each CFD.
The special tax cannot be levied on the property tax roll nor can adjustments be made to the maximum and applied rates, as authorized by the qualified electors, unless the CSD Board authorizes such actions. Adoption of the resolutions sets the maximum and applied special tax rates, approves the calculation of the rates, and approves an Annual Special Tax Report (“Report”) for each CFD. The resolutions also authorize the County to levy the special tax on the FY 2025/26 property tax roll.
The Report for each CFD includes a description of the formation proceedings, a
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description of the park facilities, boundary maps and list of parcels in the CFD, estimated operational and administrative costs to provide the services, and the proposed maximum and applied special taxes per parcel to be levied on the property tax roll for FY 2025 /26.
Boundary maps for each CFD are included as Attachment 3. The Reports are on file with the Chief Financial Officer/City Treasurer and accessible from the City’s website (www.moval.org/sd).
The maximum special tax rate is the maximum amount that can be used to calculate the special tax levied on the property tax roll. The qualified electors have previously authorized an annual inflationary adjustment to the maximum rate. Therefore, the Reports recommend adjusting the maximum rate by the adjustment.
The applied special tax rate is the amount that is used to calculate the special tax actually levied on the property tax roll. The applied special tax is the amount necessary to fund the services of each CFD, including administration and rese rves for the upcoming fiscal year. The special tax is calculated as described in the RMA for each CFD. The applied special tax rate cannot exceed the maximum special tax rate.
Conflict of Interest Analysis
Section 18702.2 of the Fair Political Practices Commission (FPPC) Regulations provides that if a Council Member has a financial interest in a parcel of land (other than a leasehold interest), the Council Member must recuse him or herself from voting on any proposal that would impose, repeal, or modify any taxes, fees, or assessments that apply to the parcel owned by the Council Member. However, there is an exception under Section 18703 of the FPPC Regulations, which provides that if a governmental decision's financial effect on a Council Member’s financial interest is indistinguishable from its effect on the public generally, then the Council Member is not disqualif ied from participating in the subject decision. In other words, if the Council Member can esta blish that a significant segment of the public is affected by the decision, and the effect on the Council Member’s financial interest is not unique compared to the effect on the public generally, then the subject Council Member may participate in the subject decision.
Section 18703 also includes a provision titled “Specific Rules for Special Circumstances,” which provides in part that there is no potential conflict of interest if the decision involves a proposal to set or adjust the amount of an assessment or tax for broadly provided public services that is applied equally, proportionally, or by the same percentage to the official's interest and all businesses, properties, or individuals subject to the assessment or tax.
This exception, however, does not a pply if the decision would initially impose the assessment or tax, or determine the boundaries of a property or who is subject to the assessment or tax. Under this exception, a Council Member is only permitted to take part in setting or adjusting the amoun t of the assessment or tax, once the decisions to implement the assessment or tax, or determine which property or persons that will be subject to the assessment or tax have already been made.
Since the instant situation pertains to recommendations regard ing whether to adjust the amounts of various assessments and taxes in a manner that will be the same across the
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board, which are associated with assessment and special tax districts that have already been established, any Council Member who owns property w ithin any of the subject districts who are subject to payment of the assessments and/or special taxes may vote on the assessments and/or special taxes, whether it is recommended that the amounts remain the same or be increased.
With respect to those Council Members who rent or lease real property within any of the subject districts, there is a different rule which applies that suggests that there may be a potential conflict of interest that requires such Council Members to recuse themselves from voting on the proposed assessments and/or special taxes, whether it is recommended that the amounts remain the same or be increased.
Section 18702.2 of the FPPC Regulations, titled “Materiality Standard: Financial Interest in Real Property” provides that it is reasonably foreseeable that a governmental decision on any real property in which a Council Member has a leasehold interest is material if the governmental decision will increase or decrease the potential rental value of the property.
In cases involving any proposed increase in an assessment or special tax that must be paid by the landlord as the property owner, it is foreseeable that the landlord may pass - through any such increase to anyone leasing the property that is subject to the assessment or special tax.
In light of the foregoing, it is recommended that each Council Member who rents property within a particular district that is subject to the taxes and assessments listed in this staff report should recuse themselves from participating in any decision to increase any tax or assessment that may be passed through by the landlord and consequently affect the potential rental value of the property rented by the Council Member. On the other hand, those who own property within the subj ect districts may vote on the proposed taxes and assessments since they will be applied equally across the board that presumably will not create a unique effect on the Council Member’s interest.
This action meets the Strategic Plan Priorities by providin g the financial resources to manage and maximize Moreno Valley’s public infrastructure to ensure an excellent quality of life.
ALTERNATIVES
1. Adopt the resolutions and recommended actions as presented. Staff recommends this alternative as it will allow fo r the collection of revenue necessary to fund the services of each CFD. It is also consistent with the Act.
2. Do not approve the recommended actions. Staff does not recommend this alternative as it may prevent the City from levying the special tax on the FY 2025/26 property tax roll and leave the CFDs without sufficient revenue to fund services each CFD was created to provide. Selection of this alternative may require a contribution from the General Fund. Furthermore, failure to file the Report is a violation of the Act.
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3. Continue the item to a future regular CSD Board meeting. Staff does not recommend this alternative as it may prevent the City from meeting the County of Riverside’s deadline to include the special taxes on the FY 2025/26 property tax roll.
FISCAL IMPACT
Property owners pay the special tax as part of their annual property tax bill. The special tax, including annual adjustments, has been approved by the affected qualified electors through prior proceedings. Funds received for the benefit of each CFD are restricted and can only be used to fund the services of each district. The table below provides a summary of the proposed special tax rates for FY 2025/26.
NOTIFICATION
Posting of the agenda.
PREPARATION OF STAFF REPORT
Prepared By: Department Head Approval:
Felicia London Dena Heald
Deputy Finance Director Chief Financial Officer/City Treasurer
Concurred By: Concurred By:
Kimberly Ganimian Jeremy Bubnick
Special Districts Division Manager Parks and Community Services Director
CITY COUNCIL GOALS
Community Image, Neighborhood Pride and Cleanliness: Promote a sense of community pride and foster an excellent image about our City by developing and No. of Dwelling Units
Single Family 764 $ 351.98 $ 351.96 $ 369.57 $ 369.56 17.60$ $ 282,343.84 Multi-Family 716 $ 351.98 $ 351.96 $ 369.57 $ 369.56 17.60$ $ 264,604.96 Mobile Home 0 $ 351.98 $ 351.96 $ 369.57 $ 369.56 17.60$ $ - No. of Sq. Footage
Commercial 472.62 $ 22.56 $ 22.56 $ 23.69 $ 23.69 1.13$ $ 11,195.38 Office 0 $ 37.56 $ 37.56 $ 39.44 $ 39.44 1.88$ $ - Industrial 262.35 $ 10.95 $ 10.95 $ 11.50 $ 11.50 0.55$ $ 3,015.84 $ - -$ $ - -$ -$ $ - 221.64$ 217.96$
Per Dwelling Unit
1,000 Ft. of Building Sq. Footage
Parcel
1Maintenance services outlined in the Rate and Method of Apportionment for each CFD. 2Maximum rates are based on a predetermined formula as outlined in the Rate and Method of Apportionment for each CFD. 3Annual adjustment to maximum rate as approved by qualified electors (landowners or registered voters). Based on the greater of the percentage change calculated for the prior year in the Los Angeles-Long Beach-Anaheim Regional Consumer Price Index (CPI), as published by the Department of Labor’s Bureau of Labor Statistics (3.42%) or 2.0%. 4Annual adjustment to maximum rate as approved by qualified electors (landowners or registered voters). Based on the greater of the percentage change calculated for the prior year in the Riverside-San Bernardino-Ontario County Regional Consumer Price Index (CPI), as published by the Department of Labor’s Bureau of Labor Statistics (2.61%) or 5.0%.
3.42%3 19.82$ 2,283,488.38$ CFD No. 11 (Park Maintenance) 10,477
CFD No. 2021-011
(Parks Maintenance)
All
1,000 Ft. of Building Sq. Footage
Parcel
5.00%4
Residential Property
Non-Residential Property
Proposed Annual Special Tax Rates
FY 2025/26
Per Dwelling Unit
Maximum2 Applied
214.31$ 198.14$
Per Dwelling Unit
Per Dwelling Unit
Undeveloped Property
Special Tax
RevenueMaximum2 Applied District No. of
Dwelling Units
FY 2024/25 Adjustment to
Maximum
Change in
Applied
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executing programs which will result in quality development, enhanced neighborhood preservation efforts, including home rehabilitation and neighborhood restoration.
Revenue Diversification and Preservation: Develop a variety of City revenue sources and policies to create a stable revenue base and fiscal policies to support essential City services, regardless of economic climate.
CITY COUNCIL STRATEGIC PRIORITIES
1. Economic Development
2. Public Safety
3. Library
4. Infrastructure
5. Beautification, Community Engagement, and Quality of Life
6. Youth Programs
Objective 4.2: Develop and maintain a comprehensive Infrastructure Plan to invest in and deliver City infrastructure.
Objective 5.2: Promote the installation and maintenance of cost effective, low maintenance landscape, hardscape and other improvements which create a clean, inviting community.
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Report Approval Details
Document Title: STAFFREPORT_FMS_SD_FOR CSD CFDs _05.20.25.docx Attachments: - Resolution Approving Annual Levy for CFD 1.docx - Resolution Approving Annual Levy for CFD 2021-01.docx Final Approval Date: May 12, 2025
This report and all of its attachments were approved and signed as outlined below:
No Signature found
Felicia London, MPA
No Signature found
Jeremy Bubnick
Natalia Lopez
Dena Heald
Launa Jimenez
Brian Mohan
Patty Rodriguez