Utility district approves Mello Roos: Planned community landowners will help fund PUD improvements
August 14, 2003
The Truckee Donner Public Utility District board has agreed to enter into community facility district agreements with East West Partners.
The facility districts, which will not be official until October, will charge the future residents of Old Greenwood and Gray’s Crossing for the water infrastructure in the planned communities and other improvements in the utility district boundaries.
“The bottom line is with all the projected and anticipated growth in Truckee, we’re going to have a cash-flow problem building the water infrastructure to support that,” said board President Ron Hemig. “The [community facilities districts] provide that money up front for us.”
The agreement includes improvements on East West’s current infrastructure obligations, like increasing the diameter of the water lines from 12 inches to 24 inches in Gray’s Crossing and 12 inches to 20 inches in Old Greenwood. The improvements, utility district officials say, will move more water from the wells in the eastern quadrant of the district to the houses and businesses located in the western quadrant.
Consultants Fieldman, Rolapp and Associates, hired by the utility district and paid for by East West Partners to look into the formation of the community facilities districts, estimated the improvements could mean a net benefit of $1,377,000 in cash and improvements for the PUD.
“The main point is the CFD benefits the community as a whole by funding infrastructure improvements,” said director Nelson Van Gundy. “We’ve expanded rapidly by taking on two water companies. These are improvements we sadly need.”
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The board voted three to one to approve the agreements, with director Jim Maass sitting out on the vote on the advice of utility district counsel due to a possible conflict of interest because his residence borders the new development.
In keeping with her stance with the Mello Roos issue, director Pat Sutton voted no.
“It doesn’t seem to be the appropriate use of this law to finance the infrastructure of an exclusive community – a community where lots and condominiums will be aimed at the high-income home buyer,” she said.
Utility district officials estimate the Old Greenwood final agreement resolution would be adopted in early October, and the resolution for Gray’s Crossing will be adopted pending the town’s approval of the development.
The Community Facilities District Act authorizes local governments and developers to create CFDs, also called Mello Roos districts, for the purpose of selling lower-interest tax-exempt bonds to pay for public improvements.
In effect, property owners in Old Greenwood and the proposed Gray’s Crossing pay a separate tax – estimated at $3,000 per year – to repay the bonds.
Ordinarily, the CFD must be passed by two-thirds of registered voters, who are landowners in the proposed district. However, in this case, East West Partners owns the land. So if the board of directors accepts the proposal, the developer would cast the solitary vote, likely in favor of the Mello Roos.
Discussions about the CFDs began in January, when East West Partners representatives asked the PUD board to help finance the project.
“There was some hesitation on the part of the board and staff (to form a CFD), and we decided to take a good long look at it,” said utility district General Manager Peter Holzmeister.
Now that the utility district has agreed to form a CFD, it might lead to formation of similar agreements in future developments.
“I think we’ll evaluate how this goes, and then we can decide if it’s a vehicle we can use with other upstream projects,” Hemig said.