The Use of M ello-Roos Financing in the City of Davis: 1990 to the Present A presentation to the Davis City Council November 5, 2014
Table of Contents } Community Facilities Districts Formed by the City Since 1990 } Policy Goals Behind Historical CFD Formations } Debt Issued by Davis CFDs } Changes M ade to CFDs Since Formation and Original Issuance of Bonds } Current Tax Levies for CFDs in Davis 2
N HA | A D V ISO RS Strategy. Innovation. Solutions. Community Facilities Districts Formed by the City Since 1990
CFDs Formed Since 1990 } CFDs Formed to Implement the M ajor Projects Financing Plan (M PFP) } CFD No. 1990-1 (East Davis) } CFD No. 1990-2 (East Davis/ M ace Ranch) } CFD No. 1990-3 (North Central Davis) } CFD No. 1990-4 (South Davis) } CFD No. 1990-5 (West Davis) 4
CFDs Formed Since 1990 } CFDs Formed to Accommodate Developers } CFD No. 1991-2 (East Davis – M ace Ranch Area) } CFD No. 2007-2 (East Davis M ace Ranch Area II) } Non-Residential 5
N HA | A D V ISO RS Strategy. Innovation. Solutions. Policy Goals Behind Historical CFD Formations
The M ajor Projects Financing Plan (M PFP) } M PFP intended to fund long-term capital needs for the City } M PFP did not fund specific improvements required for new development } M PFP allocated long-term capital costs between development impact fees and CFD bond financing } 5 different CFDs were formed because the M PFP allocated capital costs differently among different parts of the City 7
The M ace Ranch Developer’s CFD } CFD 1991-2 was formed to fund backbone infrastructure needs for the development of M ace Ranch } CFD 2007-2 was formed to restructure the 1991-2 special tax structure for undeveloped non-residential parcels in M ace Ranch } No other developer CFDs have been formed by the City 8
N HA | A D V ISO RS Strategy. Innovation. Solutions. Debt Issued by Davis CFDs
M PFP CFD Bond Issues Y ear Par Value Final M aturity Purpose 1990 7,070,000 9/ 1/ 15 Fund infrastructure 1995 7,195,000 9/ 1/ 15 Refund 1990 Bonds 1999 9,785,000 9/ 1/ 29 Fund infrastructure 2003 5,355,000 9/ 1/ 15 Refund 1995 Bonds 2009 9,750,000 9/ 1/ 29 Refund 1999 Bonds All M PFP CFD Bond Issues comprise all M PFP CFD’s on a pooled basis 10
M ace Ranch Developer Bond Issues ear Par Value Final M aturity Purpose Y 1992 20,000,000 9/ 1/ 25 Fund infrastructure 1992 9,500,000 9/ 1/ 25 Fund infrastructure 1997 31,220,000 9/ 1/ 25 Refund both 1992 bond issues 2007 14,115,000 9/ 1/ 25 Refund developed portion of 1997 bonds 2007 5,510,000 9/ 1/ 37 Refund undeveloped portion of 1997 bonds 11
N HA | A D V ISO RS Strategy. Innovation. Solutions. Changes M ade to CFDs Since Formation and Original Issuance of Bonds
Changes to the M PFP CFD Program } Reduction in Authorized Bonding } $44 million in bonds originally authorized } $16.855 actually issued (refundings do not count towards authorization limit) } Council terminated remaining authorized bonds with 1999 bond issue infrastructure funding } Elimination of 2% Inflator } Council terminated 2% inflator with 1999 bond issue for infrastructure funding 13
Changes to the M ace Ranch CFD Program } 10% Reduction in M aximum Tax for Residential Parcels Negotiated with developer and authorized by Council as part of the } 1997 refunding bond issue } Elimination of 2% Inflator Negotiated with developer and authorized by Council as part of the } 1997 refunding bond issue } Simplification of Tax Structure for Non-Residential Parcels Requested by developer and authorized by Council as part of the } 1997 refunding bond issue } Conversion of Remaining Undeveloped Property Debt to Variable Rate Requested by developer and authorized by Council as part of the } 2007 refunding bond issues 14
N HA | A D V ISO RS Strategy. Innovation. Solutions. Current Tax Levies for CFDs in Davis
Overlapping CFD Tax Rates For Single Family Homes in the City of Davis CFD 1990-1 (East Davis Area) 80% CFD 1990-2 (East Davis - M ace Ranch Area) 20% CFD 1990-3 (North Central Davis Area) 80% CFD 1990-4 (South Davis Area) 40% CFD 1990-5 (West Davis Area) 40% CFD 1991-2 (M ace Ranch Developer CFD) 65% Percentage of max tax being levied varies for the M PFP CFDs because of the need to balance } the actual amount paid by each CFD with the original allocation of M PFP costs by CFD. Consequently, areas that developed earlier pay less now than areas that developed later. 16
Overlapping CFD Tax Rates For Single Family Homes in the City of Davis Area of City North Central West CFD East Davis M ace Ranch Davis South Davis Davis M PFP CFDs 461.56 122.10 268.70 236.74 43.62 M ace Ranch Developer CFD - 556.83 - - - DJUSD M easure C 327.04 327.04 327.04 327.04 327.04 DJUSD M easure E 204.00 204.00 204.00 204.00 204.00 DJUSD CFD #1 189.74 189.74 189.74 189.74 189.74 DJUSD CFD #2 667.47 667.47 667.47 667.47 667.47 County Library CFD 99.10 99.10 99.10 99.10 99.10 Total annual special taxes levied 1,948.91 2,166.28 1,756.05 1,724.09 1,530.97 City CFDs as a % of total 23.7% 31.3% 15.3% 13.7% 2.8% Tax rates for M ace Ranch Developer CFD and DJUSD #2 are averages } 17
Policy Questions to Consider for the Cannery CFD Should the Council Want to Proceed } Should the taxes in the Cannery be at the same level as other CFD taxes in Davis? } Should there be a 2% inflator for taxes at the Cannery? 18
Next Steps Should the Council Want To Proceed } Address policy questions } Verify that proposed home prices are in the “ ballpark” } Develop estimated costs for proposed improvements to be funded by the CFD } Determine whether any credits for impact fees apply to CFD funded improvements } Develop financing plan for CFD } Finalize rate and method of apportionment (special tax formula) 19
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