Community Facilities District (CFD) special taxes remain a vital tool in most public agency’s toolbox. CFD’s are known for having financed hundreds of millions of dollars of California infrastructure over the past two decades, and for funding essential public services. Consider the following uses of CFD’s for both annual funding and longer-term financing:

  • Localized water or sewer infrastructure replacement
  • 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)

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 CFD’s 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 CFD’s, or alternatively sometimes Assessment Districts, to finance the replacement of aging infrastructure or to connect areas served by wells to existing water systems.

CFD’s 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 available for use by Cities, Counties, and most Special Districts. 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.

A number of NBS staff have been providing CFD formation and ongoing administration services for two decades. If you would like further information, please contact Tim Seufert, Danielle Wood, or Greg Davidson at NBS.

Example of CFD’s used by agencies in California:

Nevada Irrigation District, 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, it comprised 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, contact:

Tim Seufert at tseufert@nbsgov.com