Community Facilities Districts CFDs

In 1989, CFD’s did not have maturity end dates. That was resolved in 2016 by the Board of Trustees. CFD No. 1 is not subject to any restriction on the termination date. However, since all the facilities have been built, the tax will terminate once all the debt to build those facilities is repaid, which is 2033.

The tax collection is to pay off the debt which will be paid effective September 2033. CFD No. 1 does not any longer generate dollars for the purpose of new projects. The tax will be utilized to pay off the debt issued by the CFD until 2033.

No.

No.

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CFD Bonds are secured by the revenues of the CFD. Borrowing additional new money bonds does not impact the School District’s operating finances because the Community Facility District generates its own revenue through special taxes to pay its debt service. Borrowing new money bonds generates funds for school projects that might otherwise need to be paid from developer fees, RDA funds or the general fund. Additionally, no building projects can impact the general fund by increasing the cost of transportation or by adding operating costs for implementing multi-track year-round education on one or more campuses. Not issuing CFD bonds can place pressure on revenues controlled by the District as part of its operating budget when capital projects are needed.

CFD refinancing bonds are also secured by the revenues of each CFD. When refinancing, annual debt service and total debt service is reduced. The principal amount of bonds rises to cover issuance costs and escrow inefficiency, but interest payments fall to an even greater degree -- producing lower overall payments. Escrow inefficiency is caused by federal tax laws and market conditions. The IRS restricts the District’s ability to invest funds at the newer low borrowing rate even though the escrow funds continue to pay for bonds at the old, higher rate until the bonds can be redeemed. Additionally, market conditions (such as those that exist today) may prevent the District from investing even at the new lower rate. All these transaction costs are included in calculating savings. Savings can be used to borrow additional funds for necessary remaining CFD projects or applied to reducing taxes once the CFD projects are declared complete. CFD refunding bonds have no greater impact on District finances than new money bonds.

The tax is levied on the property regardless of the home owner. The previous owner paid their special taxes assessment as well.

Whether a property is annexed into the CFD or is included in the original formation their special tax obligation is outlined in the Rate and Method of Apportionment that is approved when the CFD is formed. In each case the special tax is not assessed on a property until a building permit is pulled for the construction of a residential unit. The special tax is assessed on each property for a term based on the CFD. If additional properties are annexed, it does not affect the properties that are already within the CFD. All properties continue to pay the special tax in the amount and for the duration they would have if an annexation had not taken place.

Right to Vote on Taxes Act.

Where new developers can annex. Constantly changing boundaries.

A report that shows the amount of money saved.

In the past, the City of Manteca, City of Lathrop, and developers have understood the critical role public schools play in building and maintaining a safe and successful community. To date, MUSD’s CFD program has been a successful tool, providing the funding needed to build quality schools to meet the needs of our growing community.

Developers enter into a mitigated agreement with the district to provide school facility funding for interim housing and school facility funding.

MUSD staff is engaged in an active dialog with all parties regarding the need for the continuation of their support.

COPs have been issued by other school districts and cities as part of their CFD-related debt programs. The District has not needed or used COPs for its other CFD areas.

No. CFDs completed after CFD 1989-1 had larger bond authorizations so that sufficient funds could be generated for the project list items required to house students from their developments through the sale of bonds

The City and School District can partner up on a CFD. There are two (2) ways to structure this.

Option 1: Joint Powers Authority

The City and School District can form a Joint Powers Authority (JPA). The JPA would be governed by a Board made up of staff and/or Board members from the City and School District. The JPA would be the lead agency on one or more CFDs that would benefit the members (City and School District). This structure has been used when working with Elementary and High School Districts. The benefit is that the member agencies maintain equal power and administrative burden. If structured correctly this could provide additional efficiency to the developers because the City services component could be used as Debt Service Coverage.

Option 2: Joint Community Facilities Agreement

The School District could enter into a Joint Community Facilities Agreement with the City. In this structure the City would form and administer the CFD. The School District would receive funding when bonds are issued. Council does not believe the School District could be the lead agency on a CFD that funds City services. If the School District is not the lead agency, they would lose much of the control over the funding mechanism.