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June 10, 2009 > Community Facilities District for Cannery Place

Community Facilities District for Cannery Place

By Simon Wong

The City of Hayward has created a community facilities district (CFD) to provide police protection services for the Cannery Place Area and Downtown Corridor in perpetuity.

The Cannery Place project includes 575 residential units, a retail property, the new Burbank Elementary School (opened in Aug 2008), Cannery Park (opened in Summer 2008) and open space. Developers Citation Homes and Weyerhauser Realty Investors and the City of Hayward anticipate completion by 2015.

The Mello-Roos Community Facilities Act 1982 permits any county, city, special district, school district or joint powers authority to establish a CFD to fund specific public improvements and services. A CFD is created when no other funding source is available, viz. the limited ability for a public agency to raise property taxes, as per Proposition 13 (1978). The City of Hayward will consider future CFDs for other projects.

The new development is expected to increase demand for police services. In accordance with the Mello-Roos Act, these are additional services that will not replace existing services. The associated increase in costs will be covered by the special tax revenue raised by the CFD which the City has designated as CFD No.2. located south of Burbank Elementary bounded by the Southern Pacific Railroad tracks, Filbert, Meek, Myrtle and Winton Avenue.

How the former Burbank school parcel and a large parcel west of Filbert St, owned respectively by Hayward Redevelopment Agency and by Libitzky Holdings LP et al, will be developed is unknown at this time. These undeveloped sites constitute the "Future Annexation Area." The City will determine the tax rate for what is ultimately built there once the properties are developed and if the owners agree unanimously these parcels will be annexed to CFD No. 2.

Occupied, market-rate residential units will be subject to a maximum annual levy of $484. The tax will rise annually on July 1 by 4 percent or the Bay Area CPI, whichever is greater. The first increase will take effect on July 1, 2010. Government-owned properties and vacant land are exempt from the levy.

The special tax will be collected in the same way as regular ad valorem taxes. As per the Mello-Roos Act, CFDs have the right to foreclose on a property when payment of the special tax is in arrears by more than 90 days. The delinquent property owner must pay any penalties and collection costs. This accelerated foreclosure contrasts with the standard 5-year delinquency period for county ad valorem taxes. Property owners are legally bound to disclose the existence of the CFD and provide interested buyers with a Notice of Special Tax from the agency that levies the tax when they sell.

The City anticipates $7,744 of special tax revenue in FY 2009-10 from 16 completed units for which Certificates of Occupancy have been issued. Once all 575 market-rate units are occupied, CFD tax revenue should amount to $278,300 annually.

After a public hearing and a successful special landowner election on May 26, the Council voted 6-0 on June 2, to levy special taxes within CFD No.2. Councilman Henson was absent. The CFD will have the authority to levy special taxes with effect from early July. The levy will be included with FY 2009-10 special taxes on the County property tax bill.

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