A tentative agreement between East West Partners and the Truckee Donner Public Utility District may lead to the formation of a Mello Roos District in the Grays Crossing and Old Greenwood developments.

The agreement, conditioned on PUD board approval, includes improvements on East West’s current infrastructure obligations, like increasing the diameter of the water lines from 12 inches to 24 inches in Grays Crossing and 12 inches to 20 inches in Old Greenwood.

“We, as a community, have grown to the point where we are truly beginning to tax our pipeline system,” said district General Manager Peter Holzmeister at a past meeting. “[East West Partners] needs a [12-inch] pipeline through their land. If they would upsize that pipeline, it would benefit the district.”

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Utility district staff and consultants Fieldman, Rolapp and Associates presented the board with the proposed community facility district agreement at the June 18 district board meeting.

The board directed staff, on a four-to-one vote, to begin the formation of the community facility districts. Director Pat Sutton voted no.

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“I do not believe there’s any advantage to the district [in forming a Mello Roos,” Sutton said. “I can’t agree that a public agency should provide the vehicle for the financing for an exclusive community.”

According to the report, the formation of the facility district could mean a net benefit – including cash and improvements – of $1,377,000 to the PUD. The report also suggests the formation of separate community facility districts – one for each development.

“[The public utility district] is in a cash-flow crisis. It seems to me that this addresses that,” said Director Nelson Van Gundy of the district’s multi-million-dollar debt.

The Community Facilities District Act authorized local governments and developers to create CFDs for the purpose of selling tax-exempt bonds to pay for public improvements.

“With the CFD, the PUD can get a lower interest rate than [East West Partners] can to put in the utility infrastructure,” said Rick McConn, the project manager for East West Partners’ Gray’s Crossing, at an earlier meeting.

In effect, property owners in the special district pay a separate tax – estimated at $3,000 per year – to repay the bonds.

“Is this fair?” said Director Jim Mass, about the Old Greenwood and Grays Crossing residents who will be paying not only for their own infrastructure, but also improvements for the rest of the district. “These people buying these homes can well afford to pay for [the improvements]. They’re going to come up here into this play land, and they’re going to support an infrastructure that doesn’t affect them. Is that a moralistic question?”

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 – in favor of the Mello Roos.

The concern still remains, however, that it will be the district’s name on the bill.

“The Truckee Donner Public Utility District will show up on the tax bill – not East West Partners. That is the negative as I see it,” Maass said. “It’s a public image issue, not a legality issue.”

The public utility district board will see the issue of the community facilities districts again on Aug. 6, when the board will consider adopting local goals and policies and a resolution of intention for the assessment districts.