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City staff brief council on Community Facilities District process; formal CFD items expected June 23
Summary
Finance director introduced municipal advisor and bond counsel to explain CFDs: special taxes on property secure bonds for infrastructure (not city liability), formation steps, consultants, a 4:1 proposed value-to-lien policy, and an expected action item for council on June 23 to adopt goals and resolutions of intent.
On June 9 the City of Commerce heard an extended informational presentation on Community Facilities Districts (CFDs), a financing tool city staff may use to fund backbone infrastructure for new development.
Finance Director Cassian introduced municipal advisor Dan Masiello and bond counsel Brian Forbath, who explained that a CFD is a land-secured district that can levy a special tax on property within its boundaries to repay bonds. Forbath said CFDs are commonly used to finance streets, sewer, water and other infrastructure and emphasized that bond debt is a limited obligation payable from special taxes on the properties in the CFD — "it's not a liability of the city," he said.
The presenters described typical formation steps: adoption of local goals and policies, a resolution of intention and a public hearing, followed by an election (landowner or registered voter depending on resident count). Forbath said the city is likely to propose a 4-to-1 value-to-lien policy (above the state minimum 3-to-1) and that formation usually takes about three to six months. He added CFDs can also finance services and, in some cases, remediation of hazardous substances — a point raised as relevant to certain projects under consideration.
Councilmembers said the material was detailed and requested follow-up briefings with the city manager and finance director; the staff said a set of action items (local goals and policies and resolutions of intent) will be brought back on June 23 for formal consideration. No formation action occurred on June 9; the presentation was informational and the council received and filed the report.
