Counsel: Secondary property taxes repaying facilities district bonds in Apache Junction
Nick M Do, Metro Creative
The Superstition Vistas Community Facilities District No. 1 and No. 2 boards voted unanimously Nov. 19 to approve feasibility reports and authorize issuing bonds related to the acquisition and financing of improvements benefiting the district and levying property taxes to repay the bonds.
City of Apache Junction
A map of Superstition Vistas Community Facilities District No. 1.
City of Apache Junction
A map of Superstition Vistas Community Facilities District No. 2.
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The property taxes are fully disclosed to all of the homeowners when they are purchasing their homes. Whether you read the whole stack of documents that come with your mortgage, we can’t control that. But it’s in there multiple times that they’re choosing to live within a special taxing district and there is an additional property tax related to owning a home within the district.”
Zach Sakas of Greenberg Traurig, special counsel to SVCFD No. 1 and No. 2 districts
What are community facilities districts?
Community facilities districts are special purpose, tax-levying public improvement districts separate and apart from a municipality.
A debt of a community facilities district is not a debt or obligation of the city.
Community facilities districts are typically formed at a developer’s request to provide and finance public infrastructure and improvements for benefited landowners. These projects may include water and wastewater facilities, flood control and drainage improvements, design and construction of roads, traffic signals, emergency facilities, parks and park improvements, school sites and facilities, and landscaping improvements.
For information, e email AJCFD@apachejunctionaz.gov or call 480-474-5066.
The first issuance of general obligation bonds to be repaid with secondary property taxes was recently approved for Superstition Vistas Community Facilities District No. 1 and No. 2 in south Apache Junction.
The SVCFD No. 1 board, comprised of members of the Apache Junction City Council, voted unanimously Nov. 19 to approve a feasibility report and authorize issuing bonds related to the acquisition and financing of improvements benefiting the district and levying property taxes to repay the bonds.
Homeowners will pay $3.30 per $100 in net assessed limited property value, with an additional $0.30 per $100 of net assessed limited property valuation for an operations and maintenance tax, the feasibility report states. Assuming the approximate average parcel full cash valuation of $336,000 and net assessed limited property valuation of $15,000, the district portion of a tax bill for a homeowner will be approximately $45 per month or $540 annually.
In a separate meeting, the SVCFD No. 2 board, with the same members, voted unanimously Nov. 19 to also approve a feasibility report and issue bonds to be repaid with property taxes. Homeowners will pay $3.85 per $100 in net assessed limited property value, with an additional $0.30 per $100 of net assessed limited property valuation for an operations and maintenance tax, the feasibility report states. Assuming the approximate average parcel full cash valuation of $340,000 and an approximate net assessed limited property valuation of $15,000, the district portion of a tax bill for a homeowner will be approximately $50 per month or $600 annually.
As of Nov. 1, the developer in SVCFD No. 1 has sold approximately 740 single family residential units within the district. By the same date, approximately 132 single family residential units have been sold within SVCFD No. 2, according to both feasibility reports.
An HOA is responsible for the operation and maintenance costs of landscaping for the roadways, trails and open space within the districts. Monthly fees for the HOA are currently approximately $90 in SVCFD No. 1 and $125 in SVCFD No. 2 per single family residence, it states in the feasibility reports.
SVCFD No. 1
A total of $120,000 in bonds for work on Radiance Avenue are to be issued for SVCFD No. 1 for the D.R. Horton development east of Meridian Road, west of Ironwood Drive, south of Radiance Avenue and north of Ray Avenue. On Feb. 2, 2022, D.R. Horton authorized at an election general obligation bonded indebtedness of SVCFD No. 1 in an amount not to exceed $400 million.
“(W)ithin Superstition Vistas CFD No. 1, we’re looking at Radiance Avenue. This board has previously approved segments of Radiance Avenue in connection with an assessment bond financing. Tonight, depending on how the public hearing goes... we will possibly consider general obligation bonds related to the same project,” said Zach Sakas of Greenberg Traurig, special counsel to the district, during a Nov. 19 discussion of the feasibility report.
“(W)e’re repaying this potential bond issuance with secondary property taxes,” he said. “So usually we see an assessment per individual residential lot and as you all reviewed in the feasibility report for the information for the public and the board, this potential bond issuance will be repaid with the levy of property taxes in the amount of $3.30 on all taxable property per $100 in net assessed limited property value within the district.”
General obligation bonds — repaid over time with tax collections on all taxable property within the district — have not been used previously by SVCFD No. 1, he said.
“What we’re looking at tonight is the first issuance of general obligation bonds of District No. 1,” Sakas said.
“The property taxes are fully disclosed to all of the homeowners when they are purchasing their homes. Whether you read the whole stack of documents that come with your mortgage, we can’t control that. But it’s in there multiple times that they’re choosing to live within a special taxing district and there is an additional property tax related to owning a home within the district,” he said.
It often takes 18 to 24 months for a finished home to show up on the tax rolls, Sakas said.
Board member Darryl Cross asked what a typical tax bill would be.
“The estimated amount per month is about $45 per month for a homeowner. That uses an average full cash valuation of $336,000 for the house. So your limited property valuation is much lower than that. And so about $540 annually,” Sakas said.
SVCFD No. 2
A total of $35,000 in bonds for work on Blossom Rock Trail are to be issued for SVCFD No. 2 for the Brookfield Homes development east of Ironwood Drive, west of South Dutchman Drive, south of Radiance Avenue and north of Ray Road. On Feb. 2, 2022, D.R. Horton authorized at an election general obligation bonded indebtedness of SVCFD No. 2 in an amount not to exceed $400 million. Brookfield Homes Holdings LLC purchased the property from D.R. Horton March 14, 2022, it states in the feasibility document.
The bonds for work on Blossom Rock Trail will be repaid with property taxes, Sakas said to the SVCFD No. 2 board.
“In this case, the target tax rate is $3.85. Brookfield requested a slightly higher general obligation debt service target tax rate,” he said. “And so the estimated average monthly property tax bill to future residents within CFD No. 2 ... is estimated to be about $50 per month for homes in there with a slightly higher full cash valuation estimate of $340,000.”
Board member Peter Heck asked if Brookfield needs to get approval from its homebuilders or does it represent them all.
“They represent them all,” Sakas said. “In their purchase and sales agreements with their home builders, they’ll have a provision in there that says the CFD exists, right? Similar to a homeowner moving in to purchase an individual residential home where they receive all sorts of disclosures that they are in a special taxing district, the homebuilders likewise receive all sorts of disclosure and due diligence from Brookfield because those home builders have to price accordingly and factor in the assessments and additional property taxes.”
Richard H. Dyer can be reached at rdyer@iniusa.org, or on X @rhdyer. To voice your opinion on this story, connect with us at AzOpinions@iniusa.org.
Meet Richard Richard Dyer has worked at Independent Newsmedia Inc. USA since 1987, starting his career in Apache Junction as a copy editor and being promoted over the years to work as the editor of the Mesa Independent, news services editor for the East Valley office in Apache Junction, managing editor for the East Valley office, news services editor for the East Valley office and eventually also for the newspapers at INI’s then-Chandler office, managing editor again and as a news editor covering Apache Junction/Gold Canyon and Queen Creek. He helped start the Florence Independent while the news editor covering Apache Junction and Mesa news. In January 2023, he became associate managing editor for the East Valley newspapers and in August 2023 became managing editor for the East Valley newspapers of Chandler/Tempe, Gilbert, Queen Creek, Florence, Mesa and Apache Junction/Gold Canyon, while also reporting on Mesa and Apache Junction/Gold Canyon.
Community: Since 2009, he has worked as a volunteer to design The Blue Guitar Magazine, Blue Guitar Jr. magazine and Unstrung magazine, which are projects of The Arizona Consortium for the Arts; and since 2014, has been overseeing the art submissions.
Education: University of Arizona with a master of arts in journalism and a bachelor of science in agricultural communication. Also continuing education at Mesa Community College in welding in a metal art sculpture class.
Random fact: Saw his first tornado on May 31, 2010, which was classified as an EF-2, as part of a stormchasing tour group.
Hobbies: He is an artist of welded-steel sculptures, selling his artwork at juried and non-juried art shows.
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