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CFD taxes may help pay for police & fire
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Manteca plans on exploring use of a community facilities special tax levied on new development to help pay for police and fire services.

The City Council while discussing ways of generating new revenue to fund ongoing municipal services during a Tuesday meeting on the proposed budget for the fiscal year starting July 1, made it clear to staff they want to explore the possibility of implementing a CFD tax.

Cities that have done so have either applied it to specific new developments,imposing a blanket tax on all new development citywide,  or — if it goes to an election and is approved by two thirds of the voters — it can be a tax on existing and new development. Typically California cities that seek CFD taxes impose them only on new development.

Manteca has a number of landscape maintenance districts that focus on caring for common landscaping as well as sound walls and accompanying landscaping that are assessed as new developments move forward.

About six years ago the city — faced with a stressed general fund — started requiring new developments to include maintenance and other upkeep costs of neighborhood parks as part of CFD taxes. Some recent ones even have street light maintenance, energy use, as well as replacement of lights and — if needed — poles.

A staff suggestion at the time about including a charge for police services and possibly storm drainage system costs was quickly batted down by a previous council.

On Tuesday it was a different story. The suggestion to explore more muscular CFDs came from the council. Initially they will likely have the firm that helps form the city’s current CFDs that deal primarily with landscaping provide an overview at no charge. After that the council could decide to study the feasibility of such districts. That would require obtaining the services of experts to proceed.

Mayor Ben Cantu along with several council members acknowledged the only way that the city can provide the level of services many residents want as well as provide desired amenities is to secure an additional reliable and robust source of new municipal revenue.

Under state law a CFD special tax can fund police and fire services, recreation programs, libraries, street maintenance, parks and open space maintenance, as well as flood and storm maintenance.

Local agencies under the Mello-Roos Community Facilities Act of 1982 can form a CFD to fund construction of street improvements; water, sewer and storm drain improvements; parks; as well as libraries, schools, and public buildings.

Manteca Unified has CFDs that help pay for school facilities. The City of Lathrop has put in place CFDs in the Mossdale Landing section of the city that allowed developers to finance infrastructure such as water and sewer lines as well as streets.

River Islands at Lathrop has an all in compassing CFD that covers construction of streets, sidewalks, schools, parks, public safety facilities and even more as well as staff to oversee community recreation and social activities. The River Island CFD is capped at a set percentage pf the assessed value of property. And like in all CFDs that involve new development the developer goes from paying 100 percent of the assessment over time to a smaller portion as homes are built and sold. Then, after the last home or property has been sold, the developer no longer has an obligation.

In some of the Mossdale Landing CFDs the taxes were not capped. As a result when the values of homes plummeted during the Great Recession the CFD tax skyrocketed on each home in order to cover debt payment.  That pushed some homeowners into defaulting on home loans.

Manteca Unified CFDs — since they involve construction of specific facilities — are not only capped but they only encumber property once it is developed for 30 years.

CFDs set a maximum annual tax rate, may fund 100 percent of costs with the exception of landowner approved CFDs, and tax rates may run in perpetuity.

The Mello-Roos Act creating the ability of local governments to form CFDs was in response to the impact of Proposition 13 passed in 1978 that limited property tax hikes on property that doesn’t exchange hands to 2 percent a year.

Prior to passage of Proposition 13 cities, schools, and counties would set up a planned spending program, tally money they have coming in from various sources and whatever shortfall they had would jack up property taxes to cover it.

To contact Dennis Wyatt, email