What Are CFD’s Anyway?
I recently had a client ask me what a CFD (or Community Facility District) is and I got to thinking that there are probably other folks who would like to know more about these things. CFD’s are special districts, often called Improvement Districts, that are formed for the purpose of construction, operation/maintenance and finance acquisition of the common area (public infrastructure) benefiting planned communities. There are a few community facility districts in Scottsdale and many more throughout Maricopa County and Arizona.
In Scottsdale, there are four CFD’s that are listed on the Arizona Department of Revenue site:
- DC Ranch
- Eagle Mountain
- McDowell Mountain Ranch
- Scottsdale Waterfront
Here’s a link to all community facility districts (and other special tax districts) in Arizona:
http://www.azdor.gov/ReportsResearch/ReportofBondedIndebtedness/SearchSpecialDistrictBonds.aspx
So why is it important to know about these special districts?
The short answer is that as a tax payer living in one of these communities, you pay more property taxes. Developers create CFD’s to offset the cost of building public infrastructure within planned communities–so, rather than paying a larger upfront cost, the home buyer pays a smaller tax annually–the total cost of the infrastructure is then paid over a long period of time. Often times, general obligation bonds are issued when the CFD is created–the taxes paid by homeowners living in the CFD pay the bond obligation. For example, in DC Ranch the outstanding bonds were refinanced in September of 2012–this made the outstanding balance approximately $14,600,000 and as of 7/10/2014, the principal balance is now around $14,110,000.
To find out what you are being charged for living within a CFD, go to www.maricopa.gov — then click on “assessor/parcel information” on the left hand side — type your address into the search bar and click search –then click on the blue taxes link –click on the current year tax details and scroll to the section titled “special tax districts”–here is a screenshot for a DC Ranch address–note the tax listed next to DC RANCH CFD:
It can take a very long time to pay-off the bond obligation and even when the obligation is paid, there may still be a small tax levied to pay for maintenance of the public infrastructure. In the end though, the taxes paid are usually well worth the cost when you look at the public improvements that residents get to enjoy.
