Community Facilities District
Scottsdale: Do you know what a
Community Facilities District IS?
Many people are not aware that Community Facilities Districts exist. Scottsdale, Arizona has five of them. Do you live in one of them? Are you considering buying a home in one of them?
Here is the list of Scottsdale, Arizona
Community Facilities Districts:
1) DC Ranch
2) Scottsdale Mountain
3) Via Linda Road
4) Waterfront Commercial
5) McDowell Mountain Ranch
Ok, so what is a Community Facilities District and why should you care about them?
In plain language, a Community Facilities District is an area that a home developer made arrangements with the city to develop the infrastructure of a community in advance of a city bond. Typically a 20 year bond. The developer is paid back over the term. There is no prepayment available without a penalty.
Homeowners care because they are paying for the improvements and infrastructure of the community. The homeowner may never know they are paying this additional money, because it is accounted for on the taxes. If the homeowner has a loan on the property the tax bill goes to the lender to pay along with the assessed tax bill. The additional money is collected through the homeowners monthly loan payment. The loan statement may or may not show this amount separately.
A homeowner can always request a copy of the tax bill at any time from the county assessors office.
The amount of the additional payment depends upon the particular situation or community and what improvements were made.
The issue here is that the amount payed for the Community Facilities District is not considered an assessment. Therefore, when purchasing the property if the check box is selected that the seller pays “all assessments”… this would not be one of them. Again, it is not considered an assessment. When a buyer looks as the tax amount for the property the Community Facilities District amount IS in the number.
Presumably, once the[pl_tooltip tip=”See Download Below” position=”right”]bond is retired, [/pl_tooltip] the amount is removed and taxes would appear to be lower by that amount. The specific timeframe would depend upon the community.
Here is the official description of a Community Facility District:
- A political subdivision of the State
- Within the corporate limits of a city
- Formed by the City Council
- On petition of property owners
- Following a hearing
- If approved at an election of – Property owners, and qualified electors (if any)
- With authority to construct, acquire, operate and maintain public infrastructure (broadly defined) that will result in a beneficial use principally to the land within the District.
- Finance construction and acquisition of public infrastructure with – General obligation bonds, revenue bonds, or special assessment bonds
- Finance operation and maintenance of public infrastructure with – general obligation tax levy, special assessments, or operating revenue.
- Governed by: the City Council or an appointed board (if over 600 acres)
Don’t make the assumption that all master planned communities are Community Facilities Districts. Grayhawk, for example, is not one even though it was purchased from the Resolution Trust Corporation (RTC) roughly at the same time DC Ranch was purchased. The two were developed differently and one is and one is not a Community Facilities District.
Download this brief history of the (5) Community Facility Districts in Scottsdale.
Keep in mind that just because a community is gated it does not necessarily make it a Community Facilites District. If a community is gated it stands that the roads belong to the Homeowners Association along with the responsibility to maintain them.
So, as you can see there are many different types of community, but the difference between them and a Community Facilities District is the deal the developer made with the city to construct the infrastructure of the community in advance of the bond to pay for them. Essentially the developer footed the bill and is payed back through a bond carried by the city for this specific purpose.