Resolution No. 4853.

Mello-Roos

Acting as the legislative body for Community Facilities District Nos. 1, 3, 4, 5, 6, 8, 9A, 9B, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19 IA-1, 19 IA-2, and 20.

* Adopt Resolution No. 4853, Establishing the Special Tax Levy for Fiscal Year 2023-2024 for Community Facilities District Nos. 1, 3-6, 8, 9A, 9B, 10-18, 19 IA-1, 19 IA-2, and 20 (collectively, “CFDs” and “Resolution”).

Since 1986, the Sweetwater Union High School District (“SUHSD”) has formed twenty-one (21) CFDs.  Annually, the Board is presented with a Resolution which has several purposes.  

The purposes of the Resolution are to (i) establish the Maximum Initial Year Special Tax Rates (“MIYSTR”) applicable to properties for which the first or initial year of taxation as developed property is fiscal year 2023-2024, (ii) establish the maximum Special Tax rates for existing developed properties which were taxed in previous years (together with MIYSTR, the Maximum Special Tax Rate (“MSTR”)), and (iii) direct the levy of such Special Taxes as applicable to the CFDs.

Pursuant to the provisions of the majority of the various Rate and Methods of Apportionments (“RMAs”), the applicable MIYSTR are subject to an increase over the previous MIYSTR that is equal to the greater of (i) the annual change in the Building Cost Index as published in the Engineering News Record (“BCI”) or (ii) two percent (2%). The RMAs for CFD No. 17 and CFD No. 19 Improvement Area 2 established two components of the special tax.  The land component is subject to an increase based on the greater of the annual change in the BCI or four percent (4%).  The other component of the special tax is subject to annual change as previously described for the other CFDs.  The annual percentage increase in the BCI for 2022-2023 was 7.8 percent. Hence, for the properties in the various CFDs for which fiscal year 2023-2024 is the initial year of taxation, the MIYSTR will increase by 7.8 percent over the previous year. The MIYSTR for the applicable CFDs are reflected in Exhibit “A” of the Resolution. 

After the initial year of taxation, the maximum Special Tax applicable to each “Taxable Property” within the CFDs is subject to an annual increase of two percent (2%) as set forth in each RMA.  As the MIYSTR is established each year in accordance with changes in the BCI, there are many applicable Special Tax rates for each CFD which may be determined by the size, type and year of development of each Taxable Property.  As a result, only the MIYSTRs applicable to properties for which fiscal year 2023-2024 represents the initial year of taxation, are included in Exhibit A to the Resolution. 

The Resolution also establishes the Special Tax rates to be levied for fiscal year 2023-2024 for Taxable Property in each CFD and directs the levies of such Special Taxes for fiscal year 2023-2024 as to the applicable CFDs.  Since 1987, the board has levied the Special Tax rates at the MSTR as described above except, commencing in fiscal year 2013-2014, the Special Taxes levied within certain CFDs were not adjusted by two percent (2%).  This action resulted in the levy of Special Taxes less than the applicable MSTR in certain CFDs.  The table below (Exhibit A) summarizes the historical Special Tax rates and Special Taxes adopted by the board as the Legislative Body of the CFDs.

(1)   Percent increase from prior year reflects the increase on property levied as Developed Property in the prior year only.

(2)   The levy of Special Tax for CFD No. 2 ended in Fiscal Year 2017-18

The levy of the Special Taxes by the Resolution provides for payment of (i) principal and interest due on all outstanding debt of the CFDs, (ii) CFDs administrative expenses, and (iii) funding of additional authorized CFD facilities including those described in the “Funding of and Obligation for Facilities” report referred to in Section 4D of the Resolution.

Because certain school facilities eligible to be constructed or acquired with Special Taxes levied within the CFDs were also authorized and funded from proceeds of general obligation bonds pursuant to the 2000 General Obligation Bond Election, the Special Tax rate to be applied to each taxable parcel within the majority of the CFDs is reduced by a credit derived from the ad valorem taxes levied pursuant to the 2000 General Obligation Bond Election applicable to such outstanding general obligation bonds (“GO Credit”). The CFD estimates that such GO Credit will not exceed $0.032 per $100 of assessed value. This estimate is a maximum and such GO Credit may be lower.  In fiscal year 2022-2023 this GO Credit was equal to $0.02212 per $100 of assessed value.  

Recommendation and Rationale:

Staff recommends that the Special Tax rates be approved and levied for fiscal year 2023-2024 as set forth in the table below (Exhibit B). The rationale for staff’s recommendations includes the need for new or expanded schools based on current and projected development, current outstanding debt service principal and interest requirements of the CFDs, ongoing CFD administrative and bond-related administrative expenses, and costs and expenses of additional authorized facilities.

(1)   The levy of Special Tax for CFD No. 2 ended in Fiscal Year 2017-18.

(2)   The percentage increase from the prior year reflects the increase on property levied as developed property in the prior year only.

For questions regarding this board item, please contact Jenny Salkeld at (619) 691-5550 or jenny.salkeld@sweetwaterschools.org.