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Special Tax Designed For New Development
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Riverbank City Council members recently passed a motion 5 to 0 to adopt a City of Riverbank Community Facilities District (CFD) 2016-1 (Public Services) and to authorize the levy of a special tax therein to finance the maintenance of certain City services, including police, street maintenance, parks, storm drainage, and landscaping within the boundaries of the District.

The special tax will help the City of Riverbank to maintain the current level of municipal services, including police services, in areas of new development and prevent the deterioration of services throughout the currently developed areas of the city. Being considered is the creation of a Maintenance Community Facilities District consistent with the provisions of the Mello-Roos Community Facilities Act of 1982 (the “Act’) for new development in the City of Riverbank.

As stated in the agenda packet, in 1978 Californians enacted Proposition 13, which limited many local public agencies’ ability to finance new projects and maintain adequate levels of service. In 1982, the passage of the Mello-Roos Community Facilities District Act (CFD) authorized local governments to create CFDs for the purpose of collecting special-purpose taxes and selling tax-exempt bonds to fund public improvements. A CFD can be used as a mechanism to finance the cost of public improvements. Public improvements can consist of new infrastructure such as water and wastewater systems, roads, storm drainage facilities, parks and recreational facilities, and government facilities.

A CFD can also be used as a mechanism to finance ongoing maintenance obligations and public safety services, similar to a Landscape and Lighting Maintenance District (LLMD). In recent years, public agencies are increasingly opting to use CFDs to finance the maintenance of roads, storm drainage systems, street lights, parks, public landscape areas and to maintain service levels for police and fire services. CFDs used in this fashion are often referred to as a “Maintenance CFD” and they are more cost effective to administer than LLMDs. This is the type of CFD being proposed in Riverbank at this time.

The Rate and Method of Apportionment (RMA) is summarized with Land Use Class of 1 being detached residential with a maximum Special Tax of $580 per dwelling unit, 2 being attached residential with a maximum special tax of $348 per dwelling unit, class 3 as mixed-use property with a sum of maximum special tax for each applicable land use class, 4 as office with a maximum special tax of $0.369 per square foot of building floor area, class 5 as commercial with a maximum Special Tax of $0.211 per square foot of building floor area, and land use class 6 as industrial business park/agricultural processing with a max Special Tax of $0.148.

The proposed CFD as listed in the agenda – providing background information on the issue – is as follows: in 2006 the City Council adopted Resolution No. 2006-115, requiring the Bruinville Developments to annex to and participate in a Maintenance CFD for City services such as public safety, street, storm and park maintenance, landscaping and lighting. Once formed, the Maintenance CFD would create a dedicated revenue source to fund the anticipated taxing shortfalls necessary to maintain existing City service levels in the areas of new development and prevent the deterioration of services in the currently developed areas of the city.

The City was advised by its Special District Consultant, Willdan Financial Services, that rather than form individual Special Districts for Landscape and Lighting and/or Storm Drainage Maintenance, that the City of Riverbank should focus on forming a comprehensive CFD to handle all of the service requirements. The primary reason for this has to do with the “Special Benefit” and “General Benefit” provisions of assessment law that are not required under the Mello-Roos Law. A Maintenance CFD is less costly to administer and gives the city flexibility in collecting special taxes for needed services as determined by the City Council.

New development requires municipal services that would need to be funded by the general fund of the City of Riverbank, which is currently struggling to maintain adequate services, unless an alternative revenue source is established. Therefore, it is crucial for the financial stability of the City that a funding source be created to fully pay for the City services that new development will require and that a Maintenance CFD be formed with the expectation that new development could annex into it in the future.

The consideration and possible implementation of a Maintenance CFD was included as an objective during the City’s most recent Strategic Planning session earlier this month in support of the City’s goal to “Achieve and Maintain Financial Stability and Sustainability. It specifically mentions the creation of a Maintenance (CFD) for police, streets, storm, parks, landscaping and lighting for new development.

For more information on this item visit the City of Riverbank’s website and view the April 12 City Council agenda packet. There will also be a public hearing held on Tuesday, May 24 regarding the CFD.