Community Facilities Districts (CFDs) represent a tremendous opportunity, as the so-called “Designer Tax,” for financing facilities and funding ongoing services. CFDs are known for having financed billions of dollars of California infrastructure over the past few decades, and for funding many essential public services. Cities, counties, schools, and many special districts have the authority to use this tool.

A community can consider the following uses of CFDs for both annual funding and longer-term financing:

  • Provision of public safety services, including police and fire
  • Improved library, recreation and school services
  • Park maintenance and services
  • Street maintenance and flood protection services (these abilities added in 2007)
  • Most any infrastructure and facilities including water or sewer infrastructure replacement

Many cities are using or considering the use of CFD Future Annexation Areas to basically blanket a city with the ability to set up areas as they develop for CFDs that fund ongoing public safety, park, and other vital services. Procedurally, a Map of the Future Annexation Area is filed as part of the initial set up which allows annexations to occur smoothly.

Water districts are using CFDs, or alternatively sometimes Assessment Districts, to finance the replacement of aging infrastructure or to connect areas served by wells to existing water systems.

CFDs can also effectively serve as a legal “back-up tax” for areas served by homeowner associations (HOA), in the event that the HOA becomes insolvent.

The Mello-Roos Community Facilities Act of 1982 is the statute. Charter Cities have the ability to adjust the general CFD law to tailor to certain needs. For example, the Cities of Berkeley and San Francisco crafted a CFD to finance energy efficiency and alternative energy (solar, wind, etc.) improvements.

Our team of expert consultants at NBS have been providing CFD formation and ongoing administration services for decades.

Example of CFDs used by agencies in California:

City of Manteca, Villa Ticino community, San Joaquin County

CFD Purpose: To provide $24MM in capital to finance parks and local infrastructure for this desirable community while an overlapping CFD provides funding for ongoing maintenance and services needed.

NBS Role: Advisor, Special Tax Consultant to form the CFD. Administration services ongoing.

Project Highlights: The Villa Ticino area is known as an exceptional community in the City of Manteca, located near the I-5 Freeway, Highway 99 and State Route 120. It benefits from the new neighborhood parks, playgrounds, and many other amenities along with ongoing services and maintenance.

Nevada Irrigation District (NID), Cement Hill, Nevada County

CFD Purpose: To provide $5MM in capital as part of the financing for desperately needed water system infrastructure in an area known as Cement Hill. This infrastructure was needed to hook up the residents to the existing NID treated water system as the local wells were becoming inadequate, both in terms of water quality and quantity.

NBS Role: Advisor and Special Tax Consultant to form the CFD.

Project Highlights: The CFD solved a long-standing water well problem, and it combined a registered voter constituency in a capital-financing CFD. The registered voter vote was conducted by NBS and NID, not the County registrar’s office, via a mailed ballot.

City of Vacaville, Solano County

CFD Purpose: To provide pay as you go funding for police and fire services.

NBS Role: Advisor and Special Tax Consultant to form several CFDs.

Project Highlights: NBS analyzed the various factors and development plans to formulate each Rate and Method of Apportionment of Special Tax to be congruent with the needs of the City. The various districts formed by NBS represent several for new subdivision development and another geared toward infill development, which was designed to handle future annexations.

For more information, visit https://www.nbsgov.com/insights/ to view our CFD video and download our CFD publication, and/or contact Tim Seufert at NBS at tseufert@nbsgov.com.

Article updated March 2025