Score: -22
(0/10/22)
Orange County Grand Jury
• 2014-2015
Mello-Roos: Perpetual Debt Accumulation and Tax Assessment Obligation*
Published: June 19, 2015
26 pages
⚠️ 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 3 findings
F1
There is a lack of transparency to homeowners relative to how CFD funds are being used.
F2
There does not seem to be appropriate oversight and auditing of CFDs and special tax expenditures within the County of Orange.
F3
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. RECOMMENDATIONS In accordance with California Penal Code sections 933 and 933.05, the 2014- 2015 Grand Jury requires (or, as noted, requests) responses from each agency affected by the recommendations presented in this section. The responses are to be submitted to the Presiding Judge of the Superior Court. Based on its investigation titled "Community Facilities Districts (Mello-Roos): Perpetual Debt Accumulation and Tax Assessment Obligation", the 2014-2015 Orange County Grand Jury makes the following two recommendations: Each local agency that established the CFD should create an oversight
Recommendations 2
-
R1committee 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)
-
R2Audit 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)
Agency Responses 18
Government agencies' official responses to this report's findings and recommendations. Click on a response to see the structured breakdown.
▶
Capistrano Unified School District – Follow-up Response 06/24/16
June 24, 2016
•
2 pages
View Details ▾
No structured response data extracted yet.
View the PDF for full details.
▶
City of Brea
November 18, 2015
•
4 pages
View Details ▾
No structured response data extracted yet.
View the PDF for full details.
▶
City of Buena Park
September 22, 2015
•
2 pages
View Details ▾
No structured response data extracted yet.
View the PDF for full details.
▶
City of Fullerton 9/17/15
September 17, 2015
•
2 pages
• 5 responses
•
Score: -2
(+0, 0, -2)
View Details ▾
5 responses to findings and recommendations
F1
There is a lack of transparency to homeowners relative to how CFD funds are being used.
Response: Disagree
Score: -1
The City of Fullerton disagrees with the finding and recommendation with respect to the City of Fullerton Community Facilities District (Amerige Heights). Since this CFD was created for the purpose of constructing the infrastructure of a new development prior to the construction of the homes, the property owners are fully aware of what the funds were used for.
R1
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)
Response: Unknown
Score: 0
The City of Fullerton disagrees with this recommendation. The CFD has expended all bond proceeds and exists only to administer the retirement of the debt. A report is issued annually that provides the amount of assessments levied and collected as well as the amount of debt paid.
F2
There does not seem to be appropriate oversight and auditing of CFDs and special tax expenditures within the County of Orange.
Response: Disagree
Score: -1
The City of Fullerton disagrees with this finding. All expenses were incurred in accordance with the stipulations of the bond documents, and were reviewed and approved by the Bond Trustee prior to the City or Developer receiving reimbursements from proceeds. The CFD was also audited annually as part of the City's independent audit. Finally, the City contracts with a firm that specializes in administering special tax districts, which added yet another layer to the oversight.
R2
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)
Response: Unknown
Score: 0
The City agrees with this finding and will provide a copy of the annual report to the Homeowners Association of the District to post on its website. Gregory C. Sebourn, Mayor City of Fullerton cc: Paul S. Borzcik, Foreman
F3
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. RECOMMENDATIONS In accordance with California Penal Code sections 933 and 933.05, the 2014- 2015 Grand Jury requires (or, as noted, requests) responses from each agency affected by the recommendations presented in this section. The responses are to be submitted to the Presiding...
Response: Unknown
Score: 0
The City of Fullerton refunded the CFD 2002 bonds in 2012 for the sole purpose of reducing the debt payments. No additional bonds were issued and the property owners were the only beneficiaries of this refunding.
▶
City of Huntington Beach
September 28, 2015
•
3 pages
• 1 response
•
Score: 0
(+0, 1, 0)
View Details ▾
1 response to findings and recommendations
F2
There does not seem to be appropriate oversight and auditing of CFDs and special tax expenditures within the County of Orange.
Response: Disagree Partially
Score: 0
Disagree with Finding. There is no State requirement to establish an oversight committee for CFD's as advised in the Grand Jury's first recommendation. However, the City has recently re-instated its Finance Commission in May 2015, which acts in an advisory capacity to the City Council in matters pertaining to financial management. Moreover, CFD financial information is included in the City's CAFR which is audited on an annual basis. F.3_ 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 ob...
▶
City of Huntington Beach – Follow-up Response 06/28/16
June 28, 2016
•
1 pages
View Details ▾
No structured response data extracted yet.
View the PDF for full details.
▶
City of Irvine 9/14/15
September 14, 2015
•
3 pages
View Details ▾
No structured response data extracted yet.
View the PDF for full details.
▶
City of Irvine – Follow-up Response 07/12/16
July 12, 2016
•
3 pages
View Details ▾
No structured response data extracted yet.
View the PDF for full details.
▶
City of Mission Viejo 8/31/15
August 31, 2015
•
2 pages
View Details ▾
No structured response data extracted yet.
View the PDF for full details.
▶
City of Orange 9/24/15
September 24, 2015
•
3 pages
View Details ▾
No structured response data extracted yet.
View the PDF for full details.
▶
City of Placentia
September 02, 2015
•
2 pages
• 4 responses
•
Score: -1
(+0, 2, -1)
View Details ▾
4 responses to findings and recommendations
F1
There is a lack of transparency to homeowners relative to how CFD funds are being used.
Response: Disagree Partially
Score: 0
Partially disagree - The law provides "that the CFD prepare, if requested by a person who resides in or owns property in the district, within 120 days after the last day of each fiscal year, a separate document titled "Annual Report."" This option has existed and there have been very few times if any when this report has been requested.
R1
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)
Response: Unknown
Scheduled: within 120 days
Score: 0
Partially disagree - The law provides "that the CFD prepare, if requested by a person who resides in or owns property in the district, within 120 days after the last day of each fiscal year, a separate document titled "Annual Report."" This option has existed and there have been very few times if any when this report has been requested.
F2
There does not seem to be appropriate oversight and auditing of CFDs and special tax expenditures within the County of Orange.
Response: Disagree
Score: -1
Disagree - The City's CFDs are a part of the City's financial system, as such, they are audited by the City's independent outside auditing firm on an annual basis. The City's annual audit is already overseen by the City's Financial Audit Oversight Committee.
F3
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. RECOMMENDATIONS In accordance with California Penal Code sections 933 and 933.05, the 2014- 2015 Grand Jury requires (or, as noted, requests) responses from each agency affected by the recommendations presented in this section. The responses are to be submitted to the Presiding...
Response: Disagree Partially
Score: 0
Partially disagree - The law provides "that the CFD prepare, if requested by a person who resides in or owns property in the district, within 120 days after the last day of each fiscal year, a separate document titled "Annual Report."" This option has existed and there have been very few times if any when this report has been requested.
▶
City of San Clemente 9/4/15
September 04, 2015
•
5 pages
View Details ▾
No structured response data extracted yet.
View the PDF for full details.
▶
City of Seal Beach
September 28, 2015
•
4 pages
• 5 responses
•
Score: -5
(+0, 0, -5)
View Details ▾
5 responses to findings and recommendations
F1
There is a lack of transparency to homeowners relative to how CFD funds are being used.
Response: Disagree
Score: -1
The City wholly disagrees with this finding. In connection with the formation of each CFD, a Notice of Special Tax Lien has been filed with the County's Clerk-Recorder in the County Official Records, as required by the Mello- Roos Act.
R1
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)
Response: Will Not Implement
Score: -1
The City believes that the implementation of this recommendation is unnecessary. Creation of additional oversight and audit committees will result in additional administrative expenses. Expenses incurred for the administration of a CFD are included in the calculation of the amount of special tax levy each year.
F2
There does not seem to be appropriate oversight and auditing of CFDs and special tax expenditures within the County of Orange.
Response: Disagree
Score: -1
The City wholly disagrees with this finding, as applied to the City and its CFDs. As discussed above, the revenues and expenditures of each CFD are shown and readily identifiable in each adopted annual budget and the CAFR of the City.
R2
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)
Response: Will Not Implement
Score: -1
The City believes that the implementation of R-2 is unnecessary. Government Code Section 53343.1 describes an audit report which the City must prepare only if requested by a person who resides or owns property in a CFD.
F3
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. RECOMMENDATIONS In accordance with California Penal Code sections 933 and 933.05, the 2014- 2015 Grand Jury requires (or, as noted, requests) responses from each agency affected by the recommendations presented in this section. The responses are to be submitted to the Presiding...
Response: Disagree
Score: -1
: The Grand Jury found: "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 City wholly disagrees with this finding, as applied to the City's CFD bonds. Pursuant to the Mello-Roos Act, CFD bonds can only be issued if qualified electors of the CED had authorized the issuance of bonds in an election held within the CFD. The maximum principal amount of bonds that can be issued pursuant to such bond authorization m...
▶
City of Tustin 9/17/15
September 17, 2015
•
2 pages
• 4 responses
•
Score: -3
(+0, 1, -3)
View Details ▾
4 responses to findings and recommendations
F1
There is a lack of transparency to homeowners relative to how CFD funds are being used.
Response: Disagree
Score: -1
disagrees" with findings F1, F2, and F3, and reports that recommendation RI has not yet been implemented, but will be, in part, and that recommendation R2 has been implemented.
F2
There does not seem to be appropriate oversight and auditing of CFDs and special tax expenditures within the County of Orange.
Response: Disagree
Score: -1
disagrees" with findings F1, F2, and F3, and reports that recommendation RI has not yet been implemented, but will be, in part, and that recommendation R2 has been implemented.
R2
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)
Response: Implemented
Score: 0
R2 has been implemented.
F3
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. RECOMMENDATIONS In accordance with California Penal Code sections 933 and 933.05, the 2014- 2015 Grand Jury requires (or, as noted, requests) responses from each agency affected by the recommendations presented in this section. The responses are to be submitted to the Presiding...
Response: Disagree
Score: -1
disagrees" with findings F1, F2, and F3, and reports that recommendation RI has not yet been implemented, but will be, in part, and that recommendation R2 has been implemented.
▶
Bonita Canyon Public Facilties Financing Authority of Orange County 9/22/15
September 22, 2015
•
2 pages
• 5 responses
•
Score: -5
(+0, 0, -5)
View Details ▾
5 responses to findings and recommendations
F1
There is a lack of transparency to homeowners relative to how CFD funds are being used.
Response: Disagree
Score: -1
The Authority disagrees wholly with this finding as it relates to the Authority. The actions of the Authority occur at open, publicly noticed Board meetings, which all community members are welcome to attend. Specifically, the annual budget, fund expenditures and special tax rates are reviewed at an open, publicly noticed Authority Board meeting each year. F.2. There does not seem to be appropriate oversight and auditing of CFDs and special tax expenditures within the County of Orange. Response: The Authority disagrees wholly with this finding as it relates to the Authority. As previously stat...
R1
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)
Response: Will Not Implement
Score: -1
The Authority disagrees wholly with this finding as it relates to the Authority. The actions of the Authority occur at open, publicly noticed Board meetings, which all community members are welcome to attend. Specifically, the annual budget, fund expenditures and special tax rates are reviewed at an open, publicly noticed Authority Board meeting each year. F.2. There does not seem to be appropriate oversight and auditing of CFDs and special tax expenditures within the County of Orange. Response: The Authority disagrees wholly with this finding as it relates to the Authority. As previously stat...
F2
There does not seem to be appropriate oversight and auditing of CFDs and special tax expenditures within the County of Orange.
Response: Disagree
Score: -1
The Authority disagrees wholly with this finding as it relates to the Authority. The actions of the Authority occur at open, publicly noticed Board meetings, which all community members are welcome to attend. Specifically, the annual budget, fund expenditures and special tax rates are reviewed at an open, publicly noticed Authority Board meeting each year. F.2. There does not seem to be appropriate oversight and auditing of CFDs and special tax expenditures within the County of Orange. Response: The Authority disagrees wholly with this finding as it relates to the Authority. As previously stat...
R2
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)
Response: Will Not Implement
Score: -1
The Authority disagrees wholly with this finding as it relates to the Authority. The actions of the Authority occur at open, publicly noticed Board meetings, which all community members are welcome to attend. Specifically, the annual budget, fund expenditures and special tax rates are reviewed at an open, publicly noticed Authority Board meeting each year. F.2. There does not seem to be appropriate oversight and auditing of CFDs and special tax expenditures within the County of Orange. Response: The Authority disagrees wholly with this finding as it relates to the Authority. As previously stat...
F3
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. RECOMMENDATIONS In accordance with California Penal Code sections 933 and 933.05, the 2014- 2015 Grand Jury requires (or, as noted, requests) responses from each agency affected by the recommendations presented in this section. The responses are to be submitted to the Presiding...
Response: Disagree
Score: -1
The Authority disagrees wholly with this finding as it relates to the Authority. The actions of the Authority occur at open, publicly noticed Board meetings, which all community members are welcome to attend. Specifically, the annual budget, fund expenditures and special tax rates are reviewed at an open, publicly noticed Authority Board meeting each year. F.2. There does not seem to be appropriate oversight and auditing of CFDs and special tax expenditures within the County of Orange. Response: The Authority disagrees wholly with this finding as it relates to the Authority. As previously stat...
▶
City of La Habra 9/21/15
September 21, 2015
•
2 pages
• 5 responses
•
Score: -3
(+0, 2, -3)
View Details ▾
5 responses to findings and recommendations
F1
There is a lack of transparency to homeowners relative to how CFD funds are being used.
Response: Disagree Partially
Score: 0
Based on the information and documentation provided in the study, the City of La Habra partially disagrees with the finding of the Grand Jury. The City's CFD is in a small commercial area that comprises of two business corporations and does not include any homeowners.
R1
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)
Response: Will Not Implement
Score: -1
The recommendation will not be implemented. The CFD fund has been audited annually along with other funds of the City by an independent external auditor. Additionally, the CFD funds are used mainly to pay for debt service and debt management related costs.
F2
There does not seem to be appropriate oversight and auditing of CFDs and special tax expenditures within the County of Orange.
Response: Disagree
Score: -1
(F2): There does not seem to be appropriate oversight and auditing of CFDs and special tax expenditures within the County of Orange. Based on the data and analysis provided by the Grand Jury, the City of La Habra disagrees with the finding in regards to the City. The CFD fund has been audited annually along with other funds of the City by an independent external auditor. We do not have information regarding the level of oversight or auditing conducted by the County of Orange.
R2
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)
Response: Will Not Implement
Score: -1
The recommendation will not be implemented. In accordance with California Government Code 1982 Section 53343.1, the requirement is only applicable to a CFD formed after January 1, 1992. The City's CFD was formed in December 1989; therefore, this recommendation is not applicable to the City of La Habra.
F3
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. RECOMMENDATIONS In accordance with California Penal Code sections 933 and 933.05, the 2014- 2015 Grand Jury requires (or, as noted, requests) responses from each agency affected by the recommendations presented in this section. The responses are to be submitted to the Presiding...
Response: Disagree Partially
Score: 0
Based on the data and analysis presented by the Grand Jury, the City of La Habra partially disagrees with the finding of the Grand Jury Although the City has an option to refinance the CFD debt to extend the debt obligation and special tax, the City has expressed no intention to do so.
▶
County Executive Officer 8/25/15
August 25, 2015
•
3 pages
• 2 responses
•
Score: -1
(+0, 1, -1)
View Details ▾
2 responses to findings and recommendations
F1
There is a lack of transparency to homeowners relative to how CFD funds are being used.
Response: Disagree Partially
Score: 0
Disagrees partially with the finding. The prospective purchaser of a new home, in which a County of Orange, Community Facilities District (CFD) has been formed, is provided a Notice of Special Tax. The Notice of Special Tax provides information specific to each Assessor Parcel Number, Tract, Lot, and Unit. The amount of the tax, for the most recent tax year, the maximum annual increase of the tax, maximum term of the tax, and a list of the authorized facilities and capital improvements (i.e. transportation improvements, sewer and water improvements, fire station, sports park, bridge, etc.) is ...
F2
There does not seem to be appropriate oversight and auditing of CFDs and special tax expenditures within the County of Orange.
Response: Disagree
Score: -1
Disagrees wholly with the finding. There are multiple mechanisms of oversight and auditing of CFDs and special tax expenditures of County of Orange CFDs. The Orange County Board of Supervisors approves each CFD formation. CFD bond issuance and eligible facilities to be financed is reviewed and recommended by the Public Finance Advisory Committee (PFAC) prior to deliberation by the Board of Supervisors. PFAC is an advisory committee made up of five public members appointed by each Board of Supervisor member, the Auditor-Controller, Treasurer-Tax Collector, and County Executive Officer. All Coun...
▶
City of Cypress 8/12/15
August 12, 2015
•
3 pages
• 5 responses
•
Score: -2
(+0, 3, -2)
View Details ▾
5 responses to findings and recommendations
F1
There is a lack of transparency to homeowners relative to how CFD funds are being used.
Response: Disagree Partially
Score: 0
The City of Cypress agrees partially with this finding. We are not familiar what information other agencies provide homeowners, however the City of Cypress required the developer to provide information on the CFD to the original buyers. The required information included the disclosure of the time duration of the CFD, improvement costs associated with the assessment and the projected debt payments (including a maximum annual assessment amount). The homeowner and realtor were responsible for providing this information to future home buyers. Rob Johnson, Mayor Mariellen Yarc, Mayor Pro Tem Stacy ...
R1
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)
Response: Will Not Implement
Score: -1
The City of Cypress agrees partially with this finding. We are not familiar what information other agencies provide homeowners, however the City of Cypress required the developer to provide information on the CFD to the original buyers. The required information included the disclosure of the time duration of the CFD, improvement costs associated with the assessment and the projected debt payments (including a maximum annual assessment amount). The homeowner and realtor were responsible for providing this information to future home buyers. Rob Johnson, Mayor Mariellen Yarc, Mayor Pro Tem Stacy ...
F2
There does not seem to be appropriate oversight and auditing of CFDs and special tax expenditures within the County of Orange.
Response: Disagree Partially
Score: 0
The City of Cypress agrees partially with this finding. We are not familiar with the oversight and auditing of other CFDs within the County of Orange. While there is no oversight committee or separate audit completed for the CFD in Cypress, the District is responsible for providing an Annual Continuing Disclosure Information Statement. Since the CFD assessments are for debt payments on previously approved bonds used to construct improvements within the District, an oversight committee and annual audit would likely represent unnecessary costs to the homeowners. F.3. While the assumption is that...
R2
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)
Response: Will Not Implement
Score: -1
The City of Cypress agrees partially with this finding. We are not familiar what information other agencies provide homeowners, however the City of Cypress required the developer to provide information on the CFD to the original buyers. The required information included the disclosure of the time duration of the CFD, improvement costs associated with the assessment and the projected debt payments (including a maximum annual assessment amount). The homeowner and realtor were responsible for providing this information to future home buyers. Rob Johnson, Mayor Mariellen Yarc, Mayor Pro Tem Stacy ...
F3
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. RECOMMENDATIONS In accordance with California Penal Code sections 933 and 933.05, the 2014- 2015 Grand Jury requires (or, as noted, requests) responses from each agency affected by the recommendations presented in this section. The responses are to be submitted to the Presiding...
Response: Disagree Partially
Score: 0
The City of Cypress agrees partially with this finding. We are not familiar what information other agencies provide homeowners, however the City of Cypress required the developer to provide information on the CFD to the original buyers. The required information included the disclosure of the time duration of the CFD, improvement costs associated with the assessment and the projected debt payments (including a maximum annual assessment amount). The homeowner and realtor were responsible for providing this information to future home buyers. Rob Johnson, Mayor Mariellen Yarc, Mayor Pro Tem Stacy ...
* 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.