I’ve heard it a lot lately…the current state of the real estate market being described as the perfect storm. A once-in-a-century event where everything looks simply perfect to wreck the simply perfect real estate markets we were experiencing a couple of years ago.
As if things could not get any worse, a new home community here in the bay area was recently hit with extremely high tax bills because the developer that had once planned on building more housing in the area has since placed those plans on hold to ride out the current real estate market.
The area, known as
Unfortunately, as an underdeveloped area,
For those not familiar with CFD’s, in 1978, the state of California enacted Proposition 13, which limited the ability of local agencies to increase the taxes based on a property’s assessed value. In 1982, however, the government created the Mello-Roos Community Facility Act to provide an alternate method of financing improvements or services, and is normally formed in underdeveloped areas. Once approved, a Special Tax Lien is placed against each property in the CFD, whereby, each property owner then must pay the Special Tax to support the infrastructure created to support the newly developing area.
In most cases, the Special Tax Lien will be discontinued once the area is fully developed and able to support the infrastructure in place. In the case of
Though the developer continues to sell homes and business space in the area, there is still no proposed timetable in which residents can rely on when the Special Tax Liens will cease. Once thought by the residents that the end of 2007 was the last of these taxes, now has the residents wondering if the taxes will end at all.
According to the developer, the solution is to attract more businesses into the area, which, in turn, will attract more home buyers, thus lowering the CFD tax or eliminating it altogether. However, due to the area’s previous use as a ship yard, there is a bit of environmental clean up that needs to occur before many businesses will consider a move to