Westminster City Council
SUBJECT
Title
Goals and Policies Concerning the Use of the Mello-Roos Community Facilities Act of 1982.
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From: Richard Rojas Jr., Community Development Director
Requested by: Administration
Prepared by: Ryan Salz, Senior Management Analyst
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RECOMMENDED ACTION
Recommendation
Staff recommends that the Mayor and City Council adopt a Resolution entitled, “A RESOLUTION OF THE MAYOR AND CITY COUNCIL OF THE CITY OF WESTMINSTER, CALIFORNIA, ADOPTING GOALS AND POLICIES CONCERNING THE USE OF THE MELLO-ROOS COMMUNITY FACILITIES ACT OF 1982.”
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BACKGROUND
The Mello-Roos Community Facilities Act of 1982 (“the Act”) authorizes local governments to establish Community Facilities Districts (CFDs) for the purpose of financing public infrastructure and services. Pursuant to Section 53312.7 of the California Government Code, any local agency intending to initiate proceedings to establish a CFD must first consider and adopt specific goals and policies concerning the use of the Act. These goals and policies are intended to ensure transparency, equity, and financial accountability in the formation and administration of CFDs.
In line with best practices and legal requirements, the proposed document, "Goals and Policies Concerning the Use of the Mello-Roos Community Facilities Act of 1982," (Attachment 1) sets forth a framework for the City’s consideration of CFDs.
The policy includes the following key elements:
• A statement of the City’s intent to use CFDs in a manner consistent with sound fiscal management and public benefit.
• Guidelines for determining when it is appropriate to form a CFD.
• Standards for the types of facilities and services eligible for CFD financing.
• Requirements for equity and fairness among property owners subject to the special tax.
• Evaluation criteria related to land-secured financing, including value-to-lien ratios and tax burden thresholds.
• Requirements for disclosure, public transparency, and administrative oversight.
Establishing a CFD would enable the City to finance critical infrastructure and services including, but not limited to, streets, drainage, water, utilities, parks, and public safety. The construction of public facilities could then be funded through tax-exempt bond issuance, supported exclusively by special taxes on benefited properties. Expanded service requirements, as a result of development, could also be funded by special taxes. This approach supports the delivery of public improvements and enhanced services and ensures that the cost burden falls on those who benefit directly, rather than on the General Fund or existing taxpayers. A CFD also offers the City substantial flexibility in structuring financing. The special tax assessment can be based on logical characteristics (e.g., lot size or square footage) rather than assessed value of the property. The City would bear no liability for CFD bonds and its general fiscal position is protected, while the community enjoys timely and well-maintained infrastructure.
From the perspective of developers and property owners, use of a CFD provides some key advantages. Public capital improvements within a CFD can be financed via tax-exempt bonds, reducing a developer’s capital costs and potentially lowering the sale price of new homes or properties. Property owners gain access to high-quality amenities and services, which may also enhance long-term property values. CFD special taxes are transparent and are required to be clearly disclosed to prospective purchasers.
Adopting this policy will allow the City to responsibly utilize CFDs as a tool to support infrastructure development, economic growth, and community enhancements, especially in areas of the City where new development or redevelopment is expected. For example, the Westminster Mall Specific Plan Area, as well as other zones where Specific Plans may be implemented, will be able to utilize the benefits derived from the formation of CFDs.
FISCAL IMPACT
There is no immediate fiscal impact associated with the adoption of the Resolution. Any future use of CFDs will undergo individual financial analyses to ensure consistency with the adopted goals and policies.
LEGAL REVIEW
The City Attorney’s Office has reviewed as to form.
CONCLUSION
Adoption of the proposed Resolution would ensure that the City complies with State law and positions itself to make prudent, equitable, and transparent decisions regarding the use of CFD financing in the future.
ATTACHMENTS
1. Mello-Roos Goals and Policies
2. Resolution
REVIEWED BY
Erin Backs, Finance Director
City Attorney’s Office
Christine Cordon, City Manager