FROM:
Finance
SUBJECT:
Title
Levy of a Special Tax in Community Facilities District No. 7 (Country Club Estates) for Fiscal Year 2025-2026.
End
RECOMMENDATION:
Recommendation
Adopt Resolution No. 2025-052, of the City Council of the City of Fontana, California, authorizing the Levy of a Special Tax in Community Facilities District No. 7 (Country Club Estates) 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. 7 (Country Club Estates) was established by Resolution No. 98-08 on January 20, 1998, to finance public facilities and to pay annual landscape and lighting maintenance costs within the District. On February 25, 1998, the District issued $4 million in Special Tax Bonds 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 Ordinance No. 1235 approved and adopted by the City Council on February 3, 1998.
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 administrative expenses (Special Tax A); and the annual landscape and lighting maintenance costs of the District (Special Tax B).
The portion of the special tax rate 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). Special tax rate A (bond) is the same as prior year and special tax rate B (maintenance) will increase by 10% ($31.52) per 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 special tax A rates are the same as the prior year while special tax B rates will increase by 10%. This will generate approximately $395,051; $268,159 for debt service expenses and $126,892 for landscape and lighting maintenance costs. Fully funding expenses without the use of fund balance would require an 125% increase to the maintenance assessment. The 10% increase will require the utilization of $111,220 or 54% of current estimated fund balance.
MOTION:
Approve staff recommendation.