Community Facilities District
Presentation
Presented by
Ivan Holler, Assistant City Manager
Javier Carcamo, Director of Finance
December 5, 2023, Workshop
Agenda
Agenda
Agenda
- Background
- Land Secured Districts Overview
- Community Facility District for Public Safety Services - Fiscal Impact Analyses
- Community Facilities District Goals and Policies
Background
Council Actions
- Community Facilities District (CFD) Goals and Policies Murrieta Future Growth
- Single and multi-family housing development
- Built-out projections
- Population ≈ 150,000
- Units ≈ 13,000 – 14,000 units
- Need to ensure adequate infrastructure and public services are available to support the growth while maintaining the quality of life for the current residents and business owners.
Background
Recent updates have been made to several Land Use and Infrastructure policies in the adopted General Plan:
• LU-1.7 Ensure necessary capital improvements are in place prior to new development or completed concurrently.
• LU-1.8 Ensure fiscal impacts associated with growth and change are evaluated to ensure the City’s ability to provide vital services is not compromised.
• LU-4.1 Provide for housing opportunities that address the needs of those who currently live or desire to live in Murrieta.
• INF-1.20 When considering development and City annexations, include assessment of all impacts to public facilities, services, and infrastructure, and identify any necessary mitigation.
Background
Review of the City’s plan and approach to allow financing of infrastructure and public services:
- Metrics and City’s policies (General Plan, professional organization staffing model)
- Impact on Public Safety level of services
- Identifying the needs of the development community to ensure quality housing projects and service deliverability
Community Facilities District for
Public Safety Services
Why a Community Facilities District for Public Safety Services? Murrieta Public Safety
- Safest Cities
- Population ≈ 115,000
Personnel
- Police 106 sworn officers
- Fire 62 sworn Suppression Personnel
Community Facilities District for
Public Safety Services
Public Safety Projected Staffing Needs
Police
• 44 sworn officers
• 20 support staff (Dispatchers, Professional)
Fire
• 20 sworn Suppression Personnel
• Financial Resources
General Fund Impact
What is a “Land-
Secured” District?
Generally, refers to either an Assessment Districts (“ADs”) or Community Facilities Districts (“CFDs”). Predominantly used to finance new development. • Due to flexibility, CFDs are the norm for new development • ADs are often used with existing homeowners or policy preferences E.g., undergrounding of utility lines
• ADs levy “assessments”, CFDs levy “special taxes”
• AD levies are based on special benefits to each individual property owner (consultant’s report showing benefit proportional to levy is required) and requires only a majority vote
• CFD levies are based on general benefits and requires a 2/3rds vote What is a CFD?
A method of financing public improvements and certain services by imposing a “special tax” on real property in a limited geographic area to:
Pay debt service on bonds issued to finance capital improvements Finance authorized capital improvements on a pay-as-you-go basis Finance certain public services (i.e., landscape maintenance, police and fire) • CFD Bonds are limited obligations, payable SOLELY from annual special taxes – an annual lien on property for the CFD’s life – paid for by property owners (homeowners) • CFDs are separate legal entities. The City has no financial liability for bonds. The CFD will have no staff, so City staff will work with the County to levy, collect, apply and enforce the special taxes • CFDs can be formed by a City, County, School District, and Special District What can a CFD
Fund/Finance?
CFDs can fund backbone infrastructure, including:
Street improvements (including gutters, streetlights and more) Water, sewer, storm drain improvements
Parks, libraries, schools, childcare facilities, community centers, animal shelters, performing arts centers, sports complexes and museums
Development impact fees and planning and design costs for any of the above CFD Levy Mechanism
Rate and Method of Apportionment (RMA) sets a Maximum Annual Special Tax Rate approved by CFD voters
Maximum tax rate may escalate (i.e., 2% per annum)
Term of tax may outlive term of bonds
Cannot be directly based on property value (a.k.a. an ad valorem charge) Collected by the County on the property tax bill
Special tax is not a special assessment
May be based on any “reasonable” basis (except ad valorem), as determined by the City Council
13 1. Property owner petitions to form CFD;
City Council has 45 days to estimate
costs needed to form CFD and demand
deposit of funds from petitioner
(governed by Deposit and
Reimbursement Agreement)
2. City Council commences CFD
proceedings by adopting Resolution of
Intention (ROI) to form CFD (consultant
needed to develop Rate and Method of
Apportionment; bond counsel needed
to draft formation documents)
3. Public Hearing (at least 30 days after ROI
approved)
4. Adoption of Resolutions forming CFD
and determining necessity to incur
bonded indebtedness
5. Election to authorize special tax levy
and authorize bond issuances
6. Introduce Ordinance Authorizing the
levy of the Special Tax
7. Record Notice of Special Tax Lien
with County Recorder
8. Enact Ordinance Authorizing the
levy of the Special Tax
9. Proceedings to issue bonds (bond
and disclosure counsel needed to
prepare bond documents, Appraisal
of properties in CFD)
10. Special Taxes levied to pay debt
service on the bonds, pay-go, and
services, if applicable
11. Project costs funded or reimbursed
12. City administers CFD until bonds
mature
Usual Sequence of Events
Landowner Deposit to Pay
Formation and Issuance Costs
Separates real developers and projects from “speculators” Deposit used to cover City’s costs and consultant fees
• Bond Counsel
• Financial Advisor
• Special Tax Consultant
Landowner reimbursed from bond proceeds
Refund any unexpended amount if CFD formation ceases
• Appraiser
• Absorption Consultant
• Other Expenses
Agencies Using CFDs
Riverside County – FY 2023-24
• Cities – 42% of all CFDs, and
72% of Services Districts
• School Districts – 30% of all
CFDs, and 42% of Facilities
• Water Districts – 22% of all
CFDs, and 23% of Facilities
Agency Type
Facilities
Maintenance
Services
Public
Safety
Total
Cities 239 196 17 452
School Districts 324 - - 324
Water Districts 179 53 - 232
Special Districts 16 16 - 32
County of Riverside 16 12 - 28
Total 774 277 17 1,068
CFDs within the City
CFD 2000-1 GREER RANCH
CFD 2001-1 MURRIETA HIGHLAND
CFD 2003-2 BLACKMORE
CFD 2003-4 BLUESTONE
CFD 2000-2 THE OAKS
CFD 2003-1 MURRIETA SPRINGS
CFD 2003-3 CREEKSIDE
CFD 2004-1 BREMERTON
CFD 2004-2 MURRIETA FIELDS
CFD 2005-1 SPRINGBROOK
CFD 2001-1 IA B HIGHLANDS
CFD 2000-2 IA B THE OAKS
CFD 2004-3 MEADOWLANE
CFD 2005-5 GOLDEN CITY IA A
CFD 2005-5 GOLDEN CITY IA B
Agency Name Total
City of Murrieta 15
Murrieta Valley USD 25
Eastern Municipal WD 3
Rancho California WD 3
Elsinore Valley WD 2
County of Riverside 1
Total 49
Previously formed City CFDs
General Fund Analysis
Analyzed the City’s General Fund for future development impacts Planning Department:
• Current General Plan
• Any revised Specific Plan Amendments
• Current population per household by residential type (SFR, MFR) • Remaining development list (total units planned)
• Projected Population Growth
Finance Department:
• Line Item by Department budget detail in electronic format • Public Safety Staffing needs
• Average Police personnel cost
• Average Fire personnel cost
Residential Development
Residential Development New Units Population
Single Family Residential 3,379 11,151
Multi-Family Residential 9,600 24,000
Affordable Housing Units 1,000 1,790
Total Residential Units 13,979 36,941
Population Growth
• Population as of 2022 was
114,541
• New Residential brings 36,941
additional population
• Total FY 2039 Population of
150,806 growth of 24%
Increased Public Safety
Personnel
The increase in population
will require additional
police and fire personnel.
• 64 total positions for
the Police Department
• 20 positions for the Fire
Department
Police Department No. Fire Department No.
Captain 1 Firefighters (truck) 3
Lieutenants 2 Medic Patrol 6
Sergeants 8 Division Chief 1
Officers/Corporals/Detectives 33 Fire Station 6 9
Dispatchers 10 Fire Inspector 1
Professional Staff 10
Total Positions 64 20
General Fund Expenditures
We identified the total Direct Expenditures of $77,497,830 for FY 2022-23. • These expenditures represent the true costs realized in the daily operations (basic level of services approved by the City Council) and excludes any one-time costs and capital projects.
• Public Safety Services makes up 72% of the total expenditures consisting of:
• Police Services - $34.5M and Fire Services - $21.4M
General Fund Expenditures
Total Projected Direct Expenditures for FY 2038-39 is $145,079,341 - Based on City’s Long-Term Financing Plan
- Anticipated increase in service costs is 3% except Public Safety which also includes new personnel costs
- New personnel anticipated cost increases are:
Police - $27.6M
Fire - $13M
Includes Salaries and Benefits, Ancillary, and Indirect Costs General Fund Revenues
For FY 2022-23 the two largest revenues are Property Tax and Sales and Use Tax
• Property Tax consists of $9.1M of base property tax and $12.8M of fire protection property tax for a total of $21.9M
• Sales Tax consists of 1% of all taxable sales and an additional 1% for Measure T totaling $20.6M
• Total Direct Revenues are $69,730,885
Findings
New Residential Development
responsible for 24% of total
population at build-out expenditures
- $34.9M
New Development GF revenues able
to be generated - $28M
Amount to mitigated to safety
services by new development -
$6.8M
CFD Tax Rates
• $580 per SFR
• $468 per MFR
• $250 per AHR
Description Total
General Fund Expenditures New Development
Total General Fund Expenditures $145,079,341
Percent of Residents Served 24%
Allocable Share for new development $34,887,811
General Fund Revenues New Development
Property Tax & Transfer Tax $8,919,165
Sales and Use Tax $15,414,576
Franchise Fees $1,466,038
Fire Special Assessment $570,902
Fines, Forfeiture, Misc. Revenues $1,725,847
Total General Fund Revenues $28,096,529
Mitigation Amount $6,791,282
Fiscal
Impact
Sample
Property
Tax Bill
Comparison
Home Value $550,000
Ad Valorem Property Taxes: Net Rate Net Tax
01-0000-GP GENERAL PURPOSE 1.000% $5,500
03-8601-D PERRIS UNION HS 0.089% $487
03-9201-D MT SAN JACINTO JR COLLEGE 0.014% $73
04-5301-D MWD EAST 1301999 0.004% $19
04-5954-D EMWD IMP U-35 0.009% $47
04-5955-D EMWD IMP U-36 0.009% $47
03-3901-D MENIFEE SCHOOL 0.063% $341
Total General Property Taxes 1.185% $6,515
Assessment, Special Taxes & Parcel Charges:
68-4341-FC MURRIETA FIRE PROTECTION NA $40
68-4266-FC MURRIETA PARKS & REC NA $45
68-4265-FC MURRIETA CSD NA $45
68-1861-FC CSA 152-MURRIETA STORMWATER NA $10
68-1379-FC FLD CNTL STORMWATER NA $4
68-3282-FC CFD 92-1 PERRIS UNION HS NA $323
68-5305-FC MWD STANDBY EAST NA $7
68-5402-FC EMWD INFRASTRUCTURE CHARGE NA $15
PROPOSED CFD NA $4,000
Total Assessments & Special Taxes $4,489
Projected Total Property Tax $11,004
Projected Effective Tax Rate 2.00%
Home Value $550,000
Ad Valorem Property Taxes: Net Rate Net Tax
01-0000-GP GENERAL PURPOSE 1.000% $5,500
03-8601-D PERRIS UNION HS 0.089% $487
03-9201-D MT SAN JACINTO JR COLLEGE 0.014% $73
04-5301-D MWD EAST 1301999 0.004% $19
04-5954-D EMWD IMP U-35 0.009% $47
04-5955-D EMWD IMP U-36 0.009% $47
03-3901-D MENIFEE SCHOOL 0.063% $341
Total General Property Taxes 1.185% $6,515
Assessment, Special Taxes & Parcel Charges:
68-4341-FC MURRIETA FIRE PROTECTION NA $40
68-4266-FC MURRIETA PARKS & REC NA $45
68-4265-FC MURRIETA CSD NA $45
68-1861-FC CSA 152-MURRIETA STORMWATER NA $10
68-1379-FC FLD CNTL STORMWATER NA $4
68-3282-FC CFD 92-1 PERRIS UNION HS NA $323
68-5305-FC MWD STANDBY EAST NA $7
68-5402-FC EMWD INFRASTRUCTURE CHARGE NA $15
PUBLIC SAFETY CFD NA $580
PROPOSED CFD NA $3,420
Total Assessments & Special Taxes $4,489
Projected Total Property Tax $11,004
Projected Effective Tax Rate 2.00%
Agency District SFR MFR
Desert Hot Springs PTAX 2(1) $341.12 $190.68
Palm Springs CFD 2005-1(2) $494.02 $416.39
Perris CFD 2001-3(3) $378.92 $75.78
Hemet CFD 2005-1(3) $247.07
San Jacinto CFD 2003-1(4) $654.61 $490.96
Lake Elsinore
CFD 2003-1(3) $445.78 $222.89
CFD 2007-1(3) $571.08 $285.54
CFD 2015-1(5) $958.90 $586.54
Wildomar CFD 2013-1(7) $396.69 $281.26
CFD 2022-1(8) $451.50 $320.25
Corona CFD 2016-3(7) $722.32 $501.15
San Bernardino CFD 2018-1(10) $385.00 $358.00
Murrieta CFD 2024-X(11) $580.00 $468.00
Note:
(1) Escalates at lesser of CPI or 3% per year.
(2) Escalates at CPI annually.
(3) Escalates at 2% per year.
(4) Escalates at CPI with Min. 2% - Max. 6% per year.
(5) Escalates at greater of CPI or 4% per year.
(7) Escalates at greater of CPI or 5% per year.
(8) Escalates at greater of CPI or 5% per year, not to exceed 6%. (9) Escalates at greater of CPI or 3.5% per year.
(10) Escalates at 2% per year, beginning FY 24-25.
(11) Escalates TBD.
Fiscal Impact
Public Safety CFD Tax
Rate Comparison
Community Facilities District
Goals and Policies
Current Policy
Total tax burden for property owners within the CFD is not to exceed 1.8% at the time of project completion, including all ad valorem, special taxes, and assessments. Maximum special taxes will not escalate.
Bond proceeds will not be used to finance City Impact fees. CFD bonds will not be issued until at least 50% of parcels are considered developed (Certificate of Occupancy required) or the City will require a bank letter of credit to secure payment of taxes on undeveloped parcels.
Community Facilities District
Goals and Policies
Proposed Updates
Current Policy
Total tax burden for property owners within the CFD is not to exceed 2.0% at the time of project completion, including all ad valorem, special taxes, and assessments. Maximum special taxes may escalate.
Bond proceeds may be used to finance City Impact fees. Remove the requirement of 50% of development to be required at the issuance of the bonds; however, the city still has the discretion to issue at any time.
Recommended Actions
None. This is a receive-and-file Report.
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