Community Facilities Districts

About Community Facilities Districts:

In 1982, the Mello-Roos Community Facilities Act of 1982 (Government Code Section 53311 et seq.) (“CFD”) was created to provide an alternate method of financing needed for public improvements and services. Taxes are secured by a lien on CFD properties, and are collected on an annual basis.

The 1982 Act provides counties, cities, school districts, joint powers authority and other special districts authority to establish a CFD which can finance certain public improvements and services. Authorized improvements and services include but are not limited to:

Services
  • Fire protection
  • Ambulance services
  • Police protection
  • Parks and recreation programs
  • Streets, roads, and open space maintenance
  • Flood and storm protection services
Facilities
  • Streets and sewer systems
  • Fire structures
  • Schools
  • Parks
  • Libraries
  • Museums and other cultural facilities
  • Any facilities with an estimated useful life of five years or longer; under certain circumstances, improvements to private property

CFDs can be attractive financing alternatives for public agencies and developers in rapidly growing communities with large, undeveloped areas for the following reasons:

  • If less than 12 registered voters live within a proposed CFD boundary, the formation is determined by a supermajority landowner vote (one vote per acre or portion of an acre), rather than by registered voter vote
  • The Mello-Roos Community Facilities Act of 1982 requires a standard of “reasonableness” (excepting ad valorem) in the determination of which properties can be included within a CFD, instead of the more stringent requirement of direct and special benefit.
  • CFD boundaries can be expanded for phased developments through future annexations.
  • CFD tax rates and methodologies put forward in the Rate and Method of Apportionment, may include the option to allow for prepayments and exemptions, as well as the option to place differential tax rates on properties the based on square footage and land use.
  • Public agencies have the discretion to use Mello-Roos taxes to finance public improvements and services on a “pay-as-you-go” basis, or issue bonds and pledge tax proceeds towards servicing debt.

To review the Government Code Section 53311- et seq, the Mello-Roos Community Facilities Act of 1982, visit the Official California Legislative Information website and enter the Code Sections into the search box. Visit http://leginfo.legislature.ca.gov/.