FROM:
Finance
SUBJECT:
Title
Levy of a Special Tax in Community Facilities District No. 87 (El Paseo) for Fiscal Year 2025-2026.
End
RECOMMENDATION:
Recommendation
Adopt Resolution No. 2025-066, Authorizing the Levy of Special Tax in Community Facilities District No. 87 (El Paseo) 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 87 (El Paseo) was established by Resolution No. 2019-011 on January 22, 2019, to finance public facilities and to pay annual landscape and lighting costs for the district. The District will issue a maximum (not to exceed) of $6,200,000 in Special Tax Bonds to finance the acquisition of certain major capital facilities (infrastructure) to serve properties within the District.
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 cost of providing public facilities, services, and incidental expenses. The rate and method of apportionment of the special tax was originally set forth in Ordinance No. 1790 approved and adopted by the City Council on February 12, 2019.
The special tax levied on each assessable parcel within the District is necessary to pay for the cost of providing public facilities and authorized administrative expenses (Facilities Special Tax A); and the annual landscape and lighting maintenance costs of the District (Services Special Tax B). The proposed Fiscal Year 2025-2026 special tax rates (Special Tax A and Special Tax B) are shown in Exhibit A.
The proposed special tax rates for Fiscal Year 2025-2026 were developed according to the Rate and Method of Apportionment (Exhibit B). The rates for special tax A (bond) are the same as the prior year while the rates for special tax B have increased 2% ($6.28) per parcel.
As recommended, the 2% 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 special tax rate A is the same as the prior year while special tax rate B will increase 2%. This will generate approximately $599,185; $521,961 for public facility expenses and $77,224 for landscape and lighting maintenance costs. Fully funding expenses without the use of fund balance would require a 21% increase to the maintenance assessment. The 2% increase will require the utilization of $14,680 or 7% of current estimated fund balance.
MOTION:
Approve staff recommendation.