Mello-Roos: Perpetual Debt Accumulation and Tax Assessment Obligation ("Report")*

Published: September 23, 2015 2 pages

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⚠️ Translation Notice: This content has been automatically translated. The original English text is the official version. Translation may contain errors.

⚠️ Este contenido ha sido traducido automáticamente. El texto original en inglés es la versión oficial. La traducción puede contener errores.

Findings and Recommendations 3 findings

There is a lack of transparency to homeowners relative to how CFD funds are being used. Response: The District disagrees wholly with this finding as it relates to the District. The District CFD was formed in 1990 and all improvement funds have been expended and authorized facilities have been constructed. The special tax is being levied annually to repay existing debt until the bonds mature in 2021. The actions of the District occur at open, publicly noticed Board meetings, which all community members are welcome to attend.

Related Recommendations (1)

Each local agency that established the CFD should create an oversight committee and an audit committee to provide for an independent, transparent view of the manner in which CFD funds are being expended. (F.1, F.2) The recommendation will not be implemented because it is not warranted or Response: The District CFD was formed in 1990 and all improvement funds have been reasonable. expended and authorized facilities have been constructed. The annual special tax is being levied to repay existing debt until the bonds mature in 2021, so the annual expenditures are limited to debt payments. Expenditures of CFD funds are audited annually and the Audit is reviewed at an open, publicly noticed Board meeting each year. There is already ample opportunity for the public to review any and all CFD fund expenditures to the same extent any committee could review such expenditures.

There does not seem to be appropriate oversight and auditing of CFDs and special tax expenditures within the County of Orange. Response: The District disagrees wholly with this finding as it relates to the District. As previously stated, the actions of the District occur at open, publicly noticed Board meetings which all community members are welcome to attend. Expenditures of the CFD funds are audited and the Audit is available for public review. Additionally, the District retains consultants, a Trustee Bank and designates school district employees to maintain strong internal audit controls over the CFD and special tax expenditures. Such oversight and auditing is in compliance with the law and appropriate.

Related Recommendations (1)

Audit report information, as delineated in California Government Code, 1982 § 53343.1, should be made available to the CFD taxpayers on a website after each fiscal year for each CFD number. (F.1, F.2) The recommendation will not be implemented because it is not warranted or Response: The requirement to provide an Annual Report under Section 53343.1 of the reasonable. California Government Code only pertains to CFDs formed after January 1, 1992. The District CFD was formed in 1990 and all improvement funds have been expended and authorized facilities have been constructed. The annual special tax is being levied to repay existing debt until the bonds mature in 2021. Any information that would be included in an Annual Report under Section 53343.1 is already included on specific disclosures provided when buyers purchased their homes and in reports filed annually on the State Treasurer's (CDIAC) website, and in the Audit available on Newport-Mesa Unified School District website. Please contact the undersigned at (714) 424-5002 with any questions. Respectfully submitted, Paul H. Reed Deputy Superintendent

While the assumption is that the CFD debt would be repaid in a finite period of time, there is a mechanism available to controlling entities to extend debt obligations and thereby extend the CFD special tax in perpetuity. Response: The District disagrees wholly with this finding as it relates to the District. The CFD special tax has a termination date that cannot be extended without a vote of the special tax payers. Issuing or refunding bonds does not extend the termination date.

No recommendations for this finding

* This report's PDF did not contain easily extractable text and required Optical Character Recognition (OCR) for analysis. There may be minor errors in the extracted findings and recommendations due to OCR limitations with scanned documents.