FROM:
Finance
SUBJECT:
Title
Levy of a Special Tax in Community Facilities District No. 12 (Sierra Lakes) for Fiscal Year 2025-2026.
End
RECOMMENDATION:
Recommendation
Adopt Resolution No. 2025-054, of the City Council of the City of Fontana, California, authorizing the Levy of a Special Tax in Community Facilities District No. 12 (Sierra Lakes) for Fiscal Year 2025-2026.
End
COUNCIL GOALS:
• Practice sound fiscal management by fully funding liabilities and reserves.
• Practice sound fiscal management by developing long-term funding and debt management plans.
DISCUSSION:
Community Facilities District No. 12 was established by Resolution No. 99-09 on January 19, 1999, to finance public facilities and to pay annual landscape and lighting maintenance costs for the district. On November 24, 1999, the District issued $25.4 million in Special Tax Bonds, Series 1999, to finance certain public improvements within the District. The bonds were refunded in 2005 and again in 2021 to take advantage of interest rate savings.
Pursuant to Government Code Section 53340, a resolution must be adopted by the City Council annually to levy a special tax to pay for the maturing principal and interest on the bonds. The rate and method of apportionment of the special tax was originally set forth in Resolution No. 99-09 approved and adopted by the City Council on January 19, 1999, and later amended by Resolution No. 99-99 on October 5, 1999.
The special tax levied on each assessable parcel within the District is necessary to pay principal and interest on the outstanding bonded indebtedness and authorized administration expenses (Special Tax A); and the annual park, parkways, and open space maintenance costs of the District (Special Tax B).
The portion of the special tax rate above necessary to pay the principal and interest on the outstanding bonded indebtedness and authorized incidental expenses is comprised of available cash balance, debt service payments, and administration costs (Exhibit A, Schedule 1).
The proposed Fiscal Year 2025-2026 special tax rates (Special Tax A and Special Tax B) are outlined in Exhibit A, Schedule 2.
A comparison of the total special tax levy and rates (A and B) for Fiscal Year 2024-2025 and Fiscal Year 2025-2026 is outlined in Exhibit A, Schedule 3.
The proposed special tax rates for Fiscal Year 2025-2026 were developed according to the Rate and Method of Apportionment (Exhibit B). The rate for the special tax A (bond) and will remain the same as prior year while special tax rate B (maintenance) will increase by 10% ($46.35) per residential parcel.
As recommended, the 10% increase for Special Tax B doesn’t fully fund the maintenance expenses for the District and use of fund balance is required. The City is conducting a citywide comprehensive analysis and review of its community facility districts. Following this, the City will present recommendations to the Council for a long-term funding plan to ensure that services are fully funded, and districts remain sustainable.
The District was established after the adoption of Proposition 218 and complies with its requirements because the District and the special taxes were approved by the consent of the property owner at the time the District was formed.
FISCAL IMPACT:
The proposed Fiscal Year 2025-2026 bond special tax rates and the maintenance special tax rate will increase 10%. The levy will generate approximately $2.5 million; $1.47 million for debt service expenses and $1.03 million for park, parkways and open space maintenance costs. Fully funding expenses without the use of fund balance would require a 83% increase to the maintenance assessment. The 10% increase will require the utilization of $186,390 or 22% of current estimated fund balance.
MOTION:
Approve staff recommendation.