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.
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.