Council notes CFD 1 annual report after debate over $200,000 San Jose payment

Council considered item 7.7, the annual bond accountability report for Community Facilities District (CFD) No. 1 for fiscal year 2024—25. One council member said CFD 1, created after the 2023 annexation of Campbell Village, appears on residents' tax bills but "does not provide any additional services to Campbell above anything else in Campbell," and that roughly $200,000 of the fund is used to pay San Jose for services the speaker said San Jose does not provide to the district. The council member proposed that the city should challenge San Jose's charge so CFD 1 could be retired.

Other council members explained the payment's origin: when the commercial area moved from San Jose to Campbell as part of the annexation, San Jose lost sales tax and the annexation negotiation included compensation to San Jose for that lost tax base. One vice mayor said that explanation matched the speaker's understanding and described the payment as part of the original agreement.

After public and staff discussion, the council moved to note and file the annual bond accountability report as required by state law (the staff report cited California Government Code sections cited in the packet). The motion passed; roll call recorded at least one dissenting vote (Council member Hines) and the remainder voting to note and file.

The discussion centered on financial accounting transparency for special-district levies tied to annexation agreements; the council did not direct immediate remedial action beyond noting the report.