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New plan for Chula Vista's west side

New home buyers won't have to groan for ten years

If the proposal is taken up, a sizable portion of western Chula Vista will be subject to deferment of developer impact fees for ten years (excluding the shaded area).
If the proposal is taken up, a sizable portion of western Chula Vista will be subject to deferment of developer impact fees for ten years (excluding the shaded area).

On February 9 the Chula Vista City Council declared their intent to form the first Community Facility District on the western side of the city. The city proposes to use this district and the deferment of developer impact fees to revitalize western Chula Vista.

Community Facility Districts were ushered in after Proposition 13, which limited local agencies’ ability to impose property taxes. The Facility Districts enable developers to raise money for developments; the debt is then passed on to home buyers through the Mello-Roos tax.

Most residents on the east side of Chula Vista bought into a Community Facility District when they purchased their homes, and many have groaned under the additional burden of the Mello-Roos tax.

In addition to creating a Community Facilities District 17-1, the city is proposing that developers receive a ten-year deferral of development impact fees. The proposed deferments include public facilities fees, park acquisition fees, and transportation development impact fees. These fees are normally used to offset the impact of new development by acquiring park land and upgrading roads.

Economic development director Eric Crockett offered this rationale for fee deferral:

“We’ve seen a lot of activity in western Chula Vista…but we’re not seeing a lot going vertical. There are really no comparables to satisfy the lenders, so the lenders are requiring additional equity from developers, which is lowering the return, which is making it less attractive to developers to get vertical.”

Gary Halbert

City manager Gary Halbert further clarified the proposal on February 22:

“This was geared toward a more holistic approach to create opportunities in western Chula Vista. The essence is to put a blank canvas of a [Community Facility District] over the commercial, industrial, and high-density residential districts in western Chula Vista. It doesn’t put anybody into that district; rather, it allows for future annexations on a parcel-by-parcel basis. So, if a developer comes forward and wants the fee deferral, then puts the fee onto the tax rolls through a Mello-Roos district, they’re doing it completely voluntarily.

“Ten years seems to be the sweet spot for refinancing projects, so it gives [developers] the ability to go ahead, at the ten-year mark, to pay off these fees as part of the refinancing of the project, or roll it over onto the tax roll. In no case would anybody [owner/developer of a parcel] be in a situation where they were forced into a Mello-Roos district.”

Patricia Aguilar

Councilmember Patricia Aguilar provided additional clarification:

“The [Community Facility District] lasts 30 years because that is the typical amount of time used to finance property purchases through a mortgage. For those developers who want to take advantage of the program, the special Mello- Roos tax shifts the burden of paying developer impact fees from the developer to the future property owner. But the future property owner [and their lender] would by law be informed, and would take that into consideration when deciding whether to purchase the property. If the buyer decides to purchase, they would not have to pay any of the ‘tax’ for 10 years. But they would have to start paying in year 11, and would have to be finished paying it by year 30.”

Regarding the fee deferral, Aguilar said:

“What is being proposed is a program that would, with city council approval, postpone the city’s collection of developer impact fees in parts of the west side for 10 years. The program would last at least 5 years. So, that means that for at least 15 years the city would not collect sufficient funds to pay for new public improvements, such as a new library or fire-station space, new roads, or new parks, necessary to service whatever development occurs. Given the slow rate of development on the west side, you could argue that there probably won't be enough new development to generate a need for new library space or fire station space, or new roads.

“But parks are at the heart of my concern. Given that the west side is already behind where it should be in park space, deferment of the park acquisition and development fee worries me. That is why I need to see a fiscal analysis for this proposal. I need to understand how this might affect what the public service needs are on the West side.”

Staff will provide a fiscal analysis by March 15. There will be a public hearing on the proposal at 5:00 p.m. Interested persons may appear before the council; written protests should be filed on or before that time.

The Southwest Civic Association will hold a forum on the proposed west side Community Facility District February 29 @ 6:00 in the South Chula Vista library. City Manager Gary Halbert will speak and District 4 candidates will be introduced.

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If the proposal is taken up, a sizable portion of western Chula Vista will be subject to deferment of developer impact fees for ten years (excluding the shaded area).
If the proposal is taken up, a sizable portion of western Chula Vista will be subject to deferment of developer impact fees for ten years (excluding the shaded area).

On February 9 the Chula Vista City Council declared their intent to form the first Community Facility District on the western side of the city. The city proposes to use this district and the deferment of developer impact fees to revitalize western Chula Vista.

Community Facility Districts were ushered in after Proposition 13, which limited local agencies’ ability to impose property taxes. The Facility Districts enable developers to raise money for developments; the debt is then passed on to home buyers through the Mello-Roos tax.

Most residents on the east side of Chula Vista bought into a Community Facility District when they purchased their homes, and many have groaned under the additional burden of the Mello-Roos tax.

In addition to creating a Community Facilities District 17-1, the city is proposing that developers receive a ten-year deferral of development impact fees. The proposed deferments include public facilities fees, park acquisition fees, and transportation development impact fees. These fees are normally used to offset the impact of new development by acquiring park land and upgrading roads.

Economic development director Eric Crockett offered this rationale for fee deferral:

“We’ve seen a lot of activity in western Chula Vista…but we’re not seeing a lot going vertical. There are really no comparables to satisfy the lenders, so the lenders are requiring additional equity from developers, which is lowering the return, which is making it less attractive to developers to get vertical.”

Gary Halbert

City manager Gary Halbert further clarified the proposal on February 22:

“This was geared toward a more holistic approach to create opportunities in western Chula Vista. The essence is to put a blank canvas of a [Community Facility District] over the commercial, industrial, and high-density residential districts in western Chula Vista. It doesn’t put anybody into that district; rather, it allows for future annexations on a parcel-by-parcel basis. So, if a developer comes forward and wants the fee deferral, then puts the fee onto the tax rolls through a Mello-Roos district, they’re doing it completely voluntarily.

“Ten years seems to be the sweet spot for refinancing projects, so it gives [developers] the ability to go ahead, at the ten-year mark, to pay off these fees as part of the refinancing of the project, or roll it over onto the tax roll. In no case would anybody [owner/developer of a parcel] be in a situation where they were forced into a Mello-Roos district.”

Patricia Aguilar

Councilmember Patricia Aguilar provided additional clarification:

“The [Community Facility District] lasts 30 years because that is the typical amount of time used to finance property purchases through a mortgage. For those developers who want to take advantage of the program, the special Mello- Roos tax shifts the burden of paying developer impact fees from the developer to the future property owner. But the future property owner [and their lender] would by law be informed, and would take that into consideration when deciding whether to purchase the property. If the buyer decides to purchase, they would not have to pay any of the ‘tax’ for 10 years. But they would have to start paying in year 11, and would have to be finished paying it by year 30.”

Regarding the fee deferral, Aguilar said:

“What is being proposed is a program that would, with city council approval, postpone the city’s collection of developer impact fees in parts of the west side for 10 years. The program would last at least 5 years. So, that means that for at least 15 years the city would not collect sufficient funds to pay for new public improvements, such as a new library or fire-station space, new roads, or new parks, necessary to service whatever development occurs. Given the slow rate of development on the west side, you could argue that there probably won't be enough new development to generate a need for new library space or fire station space, or new roads.

“But parks are at the heart of my concern. Given that the west side is already behind where it should be in park space, deferment of the park acquisition and development fee worries me. That is why I need to see a fiscal analysis for this proposal. I need to understand how this might affect what the public service needs are on the West side.”

Staff will provide a fiscal analysis by March 15. There will be a public hearing on the proposal at 5:00 p.m. Interested persons may appear before the council; written protests should be filed on or before that time.

The Southwest Civic Association will hold a forum on the proposed west side Community Facility District February 29 @ 6:00 in the South Chula Vista library. City Manager Gary Halbert will speak and District 4 candidates will be introduced.

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Comments
14

Seems like a very hairbrained scheme, akin to purchasing a ticking timebomb.

Is this really the best our civic leaders can come up with?

Is no one in Chula Vista's planning department capable of rational thought?

Feb. 23, 2016

The solution to the west (ghetto) CV is first and foremost eliminate the gangs then go after slum lords and then invest in a line of bulldozers and . . . .

Feb. 24, 2016

Crocket and Aguilar both gush a lot of jargon-laced words. "Get vertical?" Whazzat mean, Crocket? "No comparables to satisfy lenders?" Maybe that sort of lingo means something in governmental or real estate circles, but just what he's trying to say is impossible to decipher.

With all the Mello-Roos misery and controversy generated in East CV, why would the city government want to double down on more of the same, with a delayed start to the payments, on the west side? Is this corruption or just simple desperation at city hall?

Feb. 24, 2016

The west side of Chula Vista has many problems with roads and drainage just to name a couple. Deferring developers' impact fees can only aggravate the problem. Ironically, it's been reported that the city is considering asking voters to approve a bond measure to finance infrastructure projects. Deferring Developer Impact Fees for ten years(!) might look good to a developer's bottom line, but it's doubtful it will sit well with voters being asked, at the same time, to vote for more taxes. 

Feb. 24, 2016

Visduh, I believe what they mean by going "vertical" is to actually construct something on the property as opposed to just developing the land "flat," like into a dog park or some such. As to the "no comparables" from the banks, it's their way of saying "no one has built anything there lately so it makes it hard for us to figure out how badly we can screw you." You know they are experts at the old razzle-dazzle when it comes to justifying interest rates, fees, etc..

Feb. 24, 2016

AlexClarke, I'm going to have to disagree with you about some of the west side and definitely about the bulldozer. It is a vibrant, multi-ethnic community with people who are real neighbors. As the east side becomes increasingly congested, I know personally a number of young people who have moved or are looking to move to the west side. There are some nice homes, big lots, and no Mello-Roos. Mello-Roos often makes it harder for young people to qualify. Third Avenue has been getting a makeover...very slow...but it's happening. And there are some unique restaurants on Third Avenue that attract people from all over. Certainly if there were more jobs and better paying jobs that would give us a lift up. If we really do pull out of the great recession maybe there's hope for that. I think if the city hired more code enforcement some of the slum landlord problems could be addressed.

Feb. 24, 2016

City is looking for suckers to buy new condos and then have them pay for all the streets in West CV. Sad.

The property tax bond is a bad idea too. I propose Special Assessments.

And I have to disagree a little with you Susan. W CV is not really diverse any longer. It's about 90% Hispanic. East CV is much more diverse with large Asian American population as well as African Americans.

Feb. 24, 2016

The biggest problem with CF Districts is that there are no provisions for the overseeing and oversight of those funds. Portions go to school districts and portions go to the city in question, and those paying never get to see what those funds consist of.

IF (and that is a BIG IF) the public was made aware of the amounts garnered by district on a quarterly basis every year, I might be more in favor. As it stands, we have been paying for over 20 years now, as have many of our neighbors, and we really do not see where the money has gone. Yes, we have schools, roads, etc., but it is apparent that the money has been spent in ways that are, at the very least, inconsistent with the spirit and letter of the law.

It is madness to continue to do this without oversight being vastly improved.

Feb. 25, 2016

Eastlaker, your points are good. As with Sweetwater in the past, the public gets little accounting of the funds. I have several times, from several different agencies done a PRA for this information but the information is generic.

This next idea I'm posing as a question, a thought...all CFDs time out. Using Eastlake CFDs as an example, residents in each district will be done paying in a certain amount of time, 20 years for example. Those funds were originally to lay infrastructure and build schools for new developments. When the CFDs are paid off...when the money runs out then the schools or the city must assume that maintenance. If more and more CFDs get paid off, the city increasingly assumes the financial obligation. That's why I wonder if the city has to keep creating more CFDs, kind of like a Ponzi scheme.

Also, there are lots of areas in the state and country that don't rely on CFDs, but things still get built. How?

Feb. 25, 2016

The CFDs for the east side might be timing out after 25 years...because we are still paying! Or do we need to inform the city when they can no longer bill us, and only then will they stop?!

It has indeed become like a ponzi scheme.

Feb. 26, 2016

Perhaps CV leadership might take heed of what is happening at the National level - the populace is SICK AND TIRED OF THE POOR LEADERSHIP AND,,,,,,,,,,,

Sweetwater is looking to put a new tax on the ballot this November. On top of BB on top of O on top of CV Elementary and on top of Southwesterns - surely they are out of their freakin' minds!!!!!!!!!

Feb. 26, 2016

I really want to know what happened with all of our Mello-Roos money.

The city of Chula Vista is completely crackers if they think having a west side CFD...WITH A TEN YEAR DELAY is the answer. Do they pass around magic mushrooms in city hall?

Feb. 26, 2016

eastlaker - the proposal offered in this story is PRECISELY why City Hall needs new blood. It is hard to believe a City as great as CV has such POOR leadership.

Feb. 26, 2016

CV definitely going downhill with this crop of leadership. Salas uninspiring, has the wrong priorities

Feb. 28, 2016

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