On Wednesday, Jan. 8, the East Valley Water District (EVWD) Board of Directors approved the goals and policies for and then authorized the creation of a community facilities district (CFD) to help finance water and sewer infrastructure for the Highland Hills development project in San Bernardino. The board also approved the acceptance of the developer’s petition for formation of the CFD.
The Mello-Roos Community Facilities Act of 1982 authorizes public agencies, through the creation of community facilities district, to levy special taxes and/or borrow money through the issuing of bonds to finance specified facilities and services.
The Highland Hills project proposes to build a maximum of 695 residential units on approximately 542 acres north of Highland Avenue east of City Creek Road, across from American Legion Post 421.
As owner of the property and petitioner for the CFD, First American Title Insurance Co. will pay a $75,000 deposit to EVWD for the costs associated with forming the CFD.
Prior to approving the CFD formation, the district was required to approve a statement of its goals and policies for the CFD. A presentation of the CFD goals and policies outlined for the board the policy’s criteria for establishing special taxes and appraisals as well as the requirements for builders, developers, resale of homes or lots, and credit quality for CFD bond issues. The policy also set formulas and maximums for the special taxes for the project properties.
According to EVWD’s policy, the total tax burden will not exceed 2 percent of projected initial sales price of developed parcel and the special tax shall not increase by more than 2 percent annually on developed property.
While the Community Facilities Act requires a minimum value of lien of 3-to-1 ⎯ meaning that the value of the property within the CFD must be three times the amount the bonds issued for it ⎯ the EVWD’s policy requires a more conservative 4-to-1 debt ratio. To add additional security to the bonds there will also be dedicated reserve bonds.
“I’m really happy to hear the guidelines as presented meet everything we need but also that they were more conservative than the state minimums. That’s important for us to make sure we’re well balanced and that we fall on the more conservative side,” said Director James Morales Jr. “I like the idea that this helps us prepare for future demand.”
EVWD Executive Director John Mura also pointed out that the district has worked to be the only CFD associated with the Highland Hills project in order to avoid legal entanglements in the future.
Mura also said the CFD was important to insuring the development is paying for itself and existing ratepayers are not subsidizing the development.
“This is a way for the water district to actively implement the strategic plan that calls for us to prepare for new development,” added Morales. “I think it is responsible.”