In 1978, Proposition 13 was enacted by Californians, which limited the ability of many public agencies to finance new projects. In 1982, Senator Henry Mello and Assemblyman Mike Roos affected the passage of the Mello-Roos Community Facilities Act of 1982 (the Act) authorizing local governments and developers to create Community Facilities Districts (CFD’s) for the purpose of selling tax-exempt bonds to fund public improvements.
The Mello-Roos Act allows any county, city, special district, school district, or joint powers of authority to establish a CFD, which allows for the financing of public services and facilities. Basically, a CFD allows local governments to obtain the financial resources needed for improvements to infrastructure (streets, sewers, storm drains) in a specific area, even though Proposition 13 limits their ability to tax property.
Establishing a Community Facilities District
In order to establish a CFD, it must be approved by a two-thirds margin of qualified voters within the City or district. If there are fewer than 12 registered voters within the City or district, the vote may be passed by current landowners. At the close of the legal proceedings, an established CFD has all the legal privileges of a legally sanctioned governmental body.
In addition, State law requires that local governments who establish a CFD also establish local goals and policies concerning the use of the CFD, prior to initiating procedures to establish a new CFD.
For more information please contact (626) 812-5203.