[quote=SK in CV] . . . I guess where we really differ is how much the CFD’s contributed to the problems. Surely if the homes hadn’t been built, it would have been a non-issue. But it was the lenders making all those loans. And the builders facilitating. Should the cities and municipalities that approved the CFD’s known what was going to happen? In hindsight it looks pretty obvious. But in 2000-2004 when many of them were approved? I don’t know the answer to that. By the end of 2004 I was pretty sure that absorption levels were going to be an issue by 2007, and the state would be overbuilt. But I had over 3,000 hours in my project studying it, and it was done for builders, not cities. I’m not sure they should have known just because I did.
That doesn’t mean I don’t think there weren’t foolish mistakes made.[/quote]
Yes, SK, the city/county leaders should have known that their own future finances were at stake in consummating these deals they made with developers. They knew the bonds issued by CFDs were ONLY used for infrastructure. They knew their own employees would have to service the subdivisions within these CFDs. When ChulaV had to start hiring employees (around 2003) they felt “rich” due to all the new property taxes coming in, from which they got a cut. Instead of having someone pay attention as to how these unsustainable bubble prices were being financed within their CFDs, they kept hiring until AFTER their property tax receipts had been severely reduced, due to practically the entire city of market-rate taxpayers qualifying for a reassessment under Prop 8 and a subsequent reduction in their property taxes!
Some of these new employees they ended up having to lay off no doubt stayed the required five years to be “vested.” So now they’ve earned a “pension,” however small.
By F/Y ’09/10, the county assessor had adjusted EVERY county homeowner’s taxes (who had purchased up to about ten years prior, in most areas) in order to prevent them from filing assessment appeals because they didn’t have the staff to handle them.
By this time, it was too late for ChulaV. They conducted massive layoffs after a couple of years of receiving a shorted share of their property tax proceeds and shuttered many of their public counters for one day per week and lunch hour.
In short, Chula V’s leaders were positively giddy over the initial property tax proceeds (for ~2003-2005) emanating from the CFD’s. From there on out, they were asleep at the switch and not nimble enough to realize that that party was dwindling down and soon to be over … with a bang … until of course, after the fact.
We now have more than double the population in ChulaV without the city and county personnel to properly support it.
I believe the last CFD in ChulaV was approved by the City in around 2000. There is a bit of a a time lag between the formation of a CFD and a developer being able have the first phase of a subdivision within it ready for market (2+ yrs?). This is due to the developer having to build a certain amount of infrastructure (shaving hilltops off, bringing in utilities and grading and forming streets, curbs and storm drains, etc) before pouring any pads for homes.
This same sad story could be told all over the state. The saving grace of ChulaV is that it was “coastal” and already had established upscale areas, a longtime established population and was wedged between SD (multiple job centers) and the int’l border, and thus its RE values didn’t suffer as much as they did in other, less well-located cities who approved multiple CFD’s during the same time frame (such as San Bernardino).
I’m curious, SK. What did builders want to know from the results of your project? And, if any of them learned that SD (or CA) was “overbuilt,” did they then leave the state in search of buildable land as a result of your report?
