Agenda Item   

AGENDA STAFF REPORT

 

                                                                                                                        ASR Control  21-000484

 

MEETING DATE:

07/27/21

legal entity taking action:

Board of Supervisors, Community Facilities Districts and Assessment Districts

board of supervisors district(s):

2, 5

SUBMITTING Agency/Department:

County Executive Office   (Approved)

Department contact person(s):

Suzanne Luster (714) 834-3362 

 

 

Christine Gardea (714) 834-3014

 

 

Subject:  Community Facilities Districts and Assessment Districts Property Tax Credit

 

      ceo CONCUR

County Counsel Review

Clerk of the Board

Concur

Approved Resolution to Form

Discussion

 

 

3 Votes Board Majority

 

 

 

    Budgeted: Yes

Current Year Cost: See Financial Impact Section

Annual Cost: N/A

 

 

 

    Staffing Impact:

No

# of Positions:

Sole Source: N/A

    Current Fiscal Year Revenue: N/A

  Funding Source: Other (CFD and AD Funds): 100%

County Audit in last 3 years: No

 

 

    Prior Board Action: 08/09/2016 #30, 07/26/2016 #41

 

RECOMMENDED ACTION(S):

 

 

1.

Adopt resolution titled “A Resolution of The Board of Supervisors of The County of Orange Declaring Certain Funds of Community Facilities District Numbers 86-1 (Rancho Santa Margarita), 87-4 (Foothill Ranch), 87-5A (Rancho Santa Margarita), 87-5B (Rancho Santa Margarita), 87-5C (Rancho Santa Margarita), 87-5D (Rancho Santa Margarita), 87-5E (Rancho Santa Margarita), and 87-8 (Coto de Caza) as Surplus and Ordering the Disposition of Said Surplus Amounts in the Form of a  One-Time Property Tax Credit to Property Owners Within The Respective Community Facilities District”.

 

2.

Adopt resolution titled “A Resolution of The Board of Supervisors of the County of Orange Ordering the Recordation of Notices of Discharge of Assessment and Reassessment Liens and Addendum to Notices of Assessment and Reassessment relating to County of Orange Irvine Coast Assessment District No. 88-1, County of Orange Newport Coast Reassessment District No. 99-1R and County of Orange Newport Coast Reassessment District No. 01-1R Declaring Certain Funds of Such Assessment District and Reassessment Districts as Surplus and Ordering the Disposition of Said Surplus Amounts in the Form of a One-Time Property Tax Credit to Property Owners Within the Assessment District and Reassessment Districts”.

 

3.

Read the title of each ordinance.

 

4.

Waive further reading of each ordinance.

 

5.

Consider the matter.

 

6.

Direct that each ordinance be placed on the agenda of the next regularly scheduled Board of Supervisors meeting for adoption.

 

7.

At the next regularly scheduled meeting, consider the matter and adopt the ordinances.

 

 

 

 

SUMMARY:

 

Adoption of the attached resolutions and ordinances will allow: (1) a one-time tax credit of surplus funds to property owners in certain Community Facilities Districts, Assessment Districts and Reassessment Districts; (2) the dissolution of certain Community Facilities Districts, Assessment Districts and Reassessment Districts; (3) the cessation of special taxes within certain Community Facilities Districts; and (4) the discharge of assessment and reassessment liens within certain Assessment Districts and Reassessment Districts.

 

 

BACKGROUND INFORMATION:

 

Community Facilities Districts

 

Since 1986, the County of Orange Board of Supervisors (Board) established Community Facilities Districts (CFD) located in the southern portion of the County.  Special tax revenue bonds were issued for all of the respective CFDs to finance, in whole or in part, the development of fire stations, sheriff substations, street and roadway improvements, bridges, transportation corridors, libraries, parks, storm drains, utilities and other public facilities. 

 

In order to pay the debt service on the bonds, special taxes were levied annually according to the Rate and Method of Apportionment of Special Tax (Rate and Method), which the Board approved for each of the CFDs at the time of bond issuance.  The special tax amounts calculated for individual properties are impacted by land use (e.g., residential, non-residential/commercial and undeveloped land) and the type and square footage of any improvements on the property.  The special tax bonds related to certain CFDs are retired and there are no remaining obligations of the CFDs.  The levy of the annual special taxes in the CFDs is no longer necessary and funds remaining in the various CFD accounts may be considered a surplus.  The attached resolution allows for the disposition of any surplus amounts in the form of a one-time property tax credit to the property owners based on the Rate and Method within each respective CFD. 

 

Because the CFDs have no facilities remaining to be built, are not obligated to pay any outstanding debt and are no longer authorized to levy a special tax, the CFDs may be dissolved by ordinance, pursuant to Government Code section 53338.5.  Moreover, pursuant to Government Code section 53330.5, a Notice of Cessation of Special Tax must be recorded upon the Board’s determination that special taxes shall cease to be levied.  The attached ordinances and resolution declare that the obligation of the parcels in the CFDs to pay the special tax shall cease and that the lien imposed by the Notice of Special Tax Lien in the records of the County Recorder’s office is extinguished.

 

Assessment Districts and Reassessment Districts

 

Since 1988, the Board established Assessment Districts (AD) located on the coastal portion of the County.  In the past, bond issuances for certain ADs have been pooled together to form Reassessment Districts (RAD) to refund bonds for savings. Limited obligation improvement bonds were issued to finance the construction and acquisition of public improvements related to development within and around the AD and RAD and consist of public facilities, such as backbone facilities that provide traffic access and control, drainage, fire protection and utility services and other public facilities for properties within the ADs and RADs.

 

The limited obligation improvement bonds were paid by assessment and reassessment liens on parcels within the ADs and RADs.  Assessments were based on the benefit that the properties receive from the works of the improvement and the formula used to apportion the assessments was determined by the Assessment Engineer in the Engineer’s Report at the time of bond issuance. The limited obligation improvement bonds related to certain ADs and RADs are retired and there are no remaining obligations of the ADs and RADs.  The levy of the annual assessment in the ADs and RADs are no longer necessary and funds remaining in the various ADs and RADs accounts may be considered a surplus.  The attached resolution allows for the disposition of any surplus amounts in the form of a one-time property tax credit to the property owners based on the assessment method within each respective AD and RAD. 

 

Since the ADs and RADs have no facilities to be built, are not obligated to pay any outstanding debt and are no longer authorized to levy an assessment, they may be dissolved by resolution.  Limited obligation improvement bonds were issued pursuant to provisions of the Improvement Bond Act of 1915 (Division 10 of the California Streets and Highways Code), which recorded a Notice of Assessment Lien on property’s within the AD.  For RADs, limited obligation bonds were issued pursuant to provisions of the Refunding Act of 1984 for 1915 Improvement Act Bonds, which recorded a Notice of Reassessment Lien on properties within the RAD.  A Notice of Discharge of Assessment/Reassessment Lien and Addendum to Notice of Assessment/Reassessment must be recorded upon the Board’s determination that assessment/reassessment liens shall cease to be levied.  The attached resolution also declare that the lien imposed by the Notice of Assessment/Assessment is discharged and released in the records of the County Recorder’s office.

 

Prior Audit

 

All County CFDs were audited by Internal Audit for FY 2012-13 to evaluate whether internal controls were in place to ensure special tax rates were calculated in accordance with pertinent governing documentation, bond proceeds were used for projects in compliance with pertinent governing documentation and the process was efficient and effective.  The audit found controls and processes in place to ensure special tax rates and bond proceeds were calculated and utilized in accordance with pertinent governing documentation.

 

Prior Board Actions

 

The formation of each CFD, AD, and RAD (collectively as Districts) includes multiple Board actions, a special election and the recording of documents with the County Recorder’s office. The attached resolutions and ordinances provide information relating to the formation and approval process of each individual District. Similar to this Agenda Staff Report, on July 26, 2016, and August 9, 2016, the Board approved resolutions and ordinances that dissolved certain CFDs and declaring one-time property tax credits for surplus funds.

 

 

 

FINANCIAL IMPACT:

 

 

Adoption of the attached resolutions will allow disposition of surplus funds related to their respective Districts to property owners.  There is no cost to the County.

 

 

STAFFING IMPACT:

 

N/A

 

 

ATTACHMENT(S):

 

Attachment A - Resolution Declaring Surplus for CFDs
Attachment B - Resolution Ordering Notice of Discharge and Declaring Surplus for ADs and RADs
Attachment C - Ordinance for District 86-1 (Rancho Santa Margarita)
Attachment D - Ordinance for District 87-4 (Foothill Ranch)
Attachment E - Ordinance for District 87-5A (Rancho Santa Margarita)
Attachment F - Ordinance for District 87-5B (Rancho Santa Margarita)
Attachment G - Ordinance for District 87-5C (Rancho Santa Margarita)
Attachment H - Ordinance for District 87-5D (Rancho Santa Margarita)
Attachment I - Ordinance for District 87-5E (Rancho Santa Margarita)
Attachment J - Ordinance for District 87-8 (Coto de Caza)