Community Facilities District - McDowell Mountain Ranch Area information by Helene Cass and Team
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Community Facilities District

The following information was originally prepared by McDowell Mountain Ranch limited Partnership in conjunction with the City of Scottsdale for the purpose of explaining the concept of Community Facilities District financing and the basis for establishing such a district at McDowell Mountain Ranch. It also described the approximate property tax liability for each McDowell Mountain Ranch resident resulting from inclusion within the district along with the benefits that each resident will derive because of the district.

Background

On September 30, 1988, the Arizona Community Facilities District Act became effective. The act, which was passed by the state legislature, was created to allow Arizona municipalities to form special districts for the purpose of financing the installation, operation and/or maintenance of public infrastructure.

How The Cfd Works

On January 31, 1994, the Scottsdale City Council adopted Resolution 3972 forming a CFD including all of the area in the McDowell Mountain Ranch project. An election was held on March 29, 1994, at which the owners of the property within the district voted to authorize $20 million of general obligation bonds to be issued over time by the district. The proceeds from the bonds were to be utilized by the district to finance the acquisition and/or construction of public Infrastructure including but not limited to, roadway improvements, drainage, water and sewer improvements. The public infrastructure will then be dedicated to the City of Scottsdale for perpetual operation and maintenance.

What Was Financed?

In 1994 The McDowell Mountain Ranch CFD issued $11.95 million in bonds with a payoff period of 25 years. The proceeds from this initial bond issuance were utilized to finance the engineering design and construction of roadway improvements, drainage, water and sewer facilities.

Benefit To Residents

Because each resident is participating in the repayment of the bonds in the form of an addition to their annual property tax bill, this added tax, similar to the balance of each resident's property tax liability, is currently deductible from federal and state taxes.

Property Owner's Tax Liability

The obligation to retire all bonds issued by the McDowell Mountain Ranch CFD is the responsibility of any landowner or resident in McDowell Mountain Ranch. Beginning in fiscal year 1994-95, the district levied a $3.00 per $ 100.00 secondary assessed valuation tax rate to provide for repayment of the bonds. The bonds have been structured with the expectation that a tax rate of $3.00 per $100 of secondary assessed valuation will be maintained. However, under the law, there is no limit as to what this rate might be. To the extent monies from the $3.00 tax levy are insufficient to provide for the debt services of the existing and future bonds, the existing and past owners of McDowell Mountain Ranch Limited Partnership have agreed by contractual obligation to provide additional monies to maintain the $3.00 tax rate.

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