WILL ROYAL GORGE LLC TRY TO PASS THE BUCK ON DONNER SUMMIT?

The Mello-Roos Community Facilities Act of 1982 was passed in response to Proposition 13, enacted in 1978.  Mello Roos allows any county, city, special district, school district, or joint powers authority to establish a Community Facilities District (CFD) to allow for financing of public improvements and services- things like streets, sewers, schools, parks.  The CFD is also allowed to recover expenses related to formation of the CFD, and is permitted to administer the annual special taxes and bonded debt. So far reading this is as exciting as watching paint dry, right? I'll try to cut to the chase.

Property owners in the CFD pay for the public improvements on their tax bill- but, with few exceptions, these payments are non deductible- contrasted with regular property tax. Plus, non payment of these special fees can result into a foreclosure sale of the property- in a very short time frame.  Many new developments in the state have Mello-Roos financing- which ultimately makes the new developments more expensive than comparable developments not burdened by Mello Roos. If a development doesn't sell well, early buyers are going to be carrying a huge burden- especially if the developer goes under financially.  There are lots of permutations on this, but for a lesson in how bad it can get, look at the Wildwood Estates (http://www.theunion.com/article/20071102/NEWS/111020149) fiasco in Nevada County, where it all fell into default. Nevada County wasn't responsible for picking up the tab, but the entire county paid nevertheless insofar as their bond rating plummeted- affecting ability to borrow and rates for borrowing money for other county endeavors. 

Here's the chase I promised to cut to, if you're still awake.  If Royal Gorge gets a CFD formed to cover their infrastructure of roads and storm drains at say, Lake Camp, and buyers end up paying for it, most people would say, "ok- buyer beware, but ok."

But Royal Gorge has much bigger plans for water, and sewer, and bridges, perhaps involving SLCWD, or DSPUD, or both, or maybe, in their dreams, a merged DSPUD/SLCWD. And here's where RG might start trying to pass the buck for things they want for their development to all the Summit residents, whether or not Summit residents think they should pay extra annual fees to support RG's development.

Case number 1:  Let's suppose RG makes the argument that water piped up from Rainbow Lodge (very,very pricey) benefits all of SLCWD- so the bond to pay back on this 1000 foot increase in elevation, nine mile long pipeline up Old 40's right-of-way should be assessed against all properties in SLCWD, not just RG development. Apply this same logic to a raised dam on Dulzura, a new dam a mile down Serena Creek, maybe even the two "impoundments" at Lake Camp, the ones they're not building until Phase 2. Water's pretty fungible- once it's all sluiced into the SLCWD pipes, you can't then say  "oh-that's old water, so it goes to Serene Lakes, and they don't have to pay for this bond, but new water, we'll make the RG part of the SLCWD district pay"  That's not going to work, so if there's a CFD formed that is contiguous with SLCWD, we're all going to be looking at Mello-Roos fees.  Bluntly, we'll all pay for the water RG needs to develop 1000 units we may not want- and we won't get to vote on whether we want this CFD unless we're full time residents, as the rules for who votes on CFD's are different than the rule of who may vote for SLCWD.

Case number 2:  You don't have to read between the lines real hard to get the distinct feeling that RG might like to see SLCWD fade away- especially when you're reading about all of the sewer negotiations.  So, let's say DSPUD and SLCWD get merged, something I'm sure neither district desires, nor do the voters in those districts, as by and large people are pretty happy with the status quo .

First off, anyone in SLCWD who isn't a full time resident will lose their ability to vote for a water board. (I'm not sure if DSPUD's voting is like ours or not, but the cross-county issues would really throw a monkey wrench into our special voting situation) Taxation without representation?  Second, say RG carries out all the water works alluded to above, and raises a dam again on Van Norden Meadow, and makes a huge new sewer treatment plant.  Water, and effluent- how will the burden of the bonds be spread so, as members of the CFD, we're not all stuck footing RG's bill?  CFD's are flexible, and maybe everything can be structured so that RG, or RG's buyers will carry their equitable burden- but at this stage of the game we need to watch them like hawks to make sure we're not suddenly subsidizing their plans for impoundments, dams and pipes, and new sewage treatment facilities. 

And bridges.  Whether one thinks a new bridge over the South Yuba, and/or a bridge over the train tracks is a "plus" in terms of safety- and opinion goes both ways- when you read RG's plans it looks like they're going to be footing the bill for the bridge(s).  Guess again.  A CFD will be used to pay, and that CFD will be deemed to confer a benefit to the public at large, so, again, we're all going to pay, and many of us won't get to vote on whether or not we want to pay for any bridge(s).

There's no such thing as a free lunch, but I think most of us would like to at least have the choice of whether to eat lunch, or skip it.  If RG's planned CFDs cover more than their development, and expand into SLCWD/DSPUD and our existing County roads, we may be looking at a very expensive, non-optional banquet. The intricacies of Mello-Roos financing are enough to make anyone's eyes glaze over, but if we don't pay very close attention to all of this, RG may well be able to pass the buck for much of their infrastructure needs to the entire Donner Summit Community. Thanks for nothing.