Since 1986, the district has formed 18 Community Facilities Districts (“CFDs”). Annually, the board is presented with a resolution which has two purposes.
The first is to establish the maximum special tax rates applicable to properties for which the first or initial year of taxation is fiscal year 2015-2016, and to existing developed properties which were taxed in previous years.
Pursuant to the provisions of the various Rate and Methods of Apportionments (“RMAs”), the Maximum Initial Year Special Tax Rates (“MIYSTR”) are subject to an increase over the previous MIYSTR that is generally 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 annual percentage increase in the BCI for the previous year was 0.48% so, for the properties in the various CFDs for which fiscal year 2015-2016 represents the initial year of taxation, the MIYSTR will increase by two percent over the previous year. These maximum tax rates are reflected in Exhibit “A” of the Resolution Establishing the Annual Special Tax Levy.
After the initial year of taxation, each taxable property within the CFDs is subject to an annual increase of two percent as set forth in each RMA. As the MIYSTR is established each year in accordance with changes in the BCI, there are many applicable tax rates for each CFD which are determined by the size, type and year of development of each taxable property. As a result, only the tax rates applicable to properties for which fiscal year 2015-2016 represents the initial year of taxation, are included in the Exhibit to the Resolution.
The second purpose of the resolution is to establish the actual tax rates to be levied in fiscal year 2015-2016 for each CFD. Since 1987, the board has levied the actual tax rates at the maximum authorized rate as described above except, commencing in fiscal year 2013-2014, the actual special tax rate was reduced to approximately two percent less than the maximum special tax rate. The levy of the special taxes provides for payment of (i) principal and interest due on all outstanding debt of the CFDs, (ii) direct funding of additional authorized CFD facilities, and (iii) CFD administrative expenses.
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 actual special tax rate to be applied to each taxable parcel within the majority of the CFDs is reduced by a credit derived from the preliminary or actual tax applicable for these outstanding general obligation bonds. The district estimates that such credit will not exceed $0.032 per $100 of assessed value. This estimate is a maximum and such credit may be lower. In fiscal year 2014-2015 this credit was equal to $0.026 per $100 of assessed value.
After review of the current outstanding debt service requirements, Capital Facilities Funding Plan, and the projected need for new schools based on projected development, staff recommends that the actual Special Taxes to be levied for fiscal year 2015-2016 be set at 98.04% of the maximum rate to allow for the two percent increase from fiscal year 2014-2015.