COTO DE CAZA : Election Is Today on Property Taxes

Residents of this planned community go to the polls today to vote whether to change the property tax structure that pays for building roads and other facilities in their area.

Proponents say the measure would lower homeowners’ property taxes while critics claim it would benefit the community’s developer more than residents.

The ballot issue, Measure A, asks for a yes or no vote on lowering the maximum property tax rates established under a Mello-Roos district formed in 1988.

The measure would reduce the maximum allowable property tax rate by 38% and reduce the annual escalation rate from the current 3.5% to 2%.

Measure A results from a request from the community’s developer, Coto de Caza Ltd., to change the rate and method of collecting Mello-Roos taxes in the district. The request is tied to an attempt by the developer to structure a new way of financing bonds for capital improvements.

But such a change requires approval by two-thirds of the community’s registered voters. At Coto de Caza Ltd.’s request, the County Board of Supervisors earlier this year agreed to put the measure on the ballot.

When Coto de Caza was formed, the developer and the county created the Mello-Roos district to pay for roads and other facilities. The agreement allowed for issuing up to $46.3 million worth of bonds, with the interest to be paid from special property taxes.

To date, bonds worth $11.3 million have been issued.

Now the county seeks to issue more bonds to pay for roads and other improvements in the area, and the developer plans to begin another phase of the project called South Ranch.

But Coto de Caza Ltd. officials say that paying off municipal bonds became prohibitive recently, with bond underwriters requiring high interest rates because of increases in property tax delinquencies in the community.

To avoid charging residents substantially higher Mello-Roos taxes, Coto de Caza Ltd. and county officials agreed on a proposed revision of the taxing structure.

Under Measure A, current property owners would continue to pay a property tax that would pay off only the $11.3 million debt. They would not be taxed to finance bonds issued for future improvements.

The county would then establish an improvement area funded by taxes attached to builders’ fees, which in turn would be passed on to home buyers.

The developer’s parent company, Chevron, would use its credit to guarantee the bonds.

Laer Pearce, a Coto de Caza resident and public relations specialist hired by the developer, said most property owners are eager for Measure A’s passage.

“Most people I talk to say this is great, it lowers our taxes,” Pearce said.

But resident David Kirkey said many residents are upset that only 671 homes of the project’s proposed 5,000 residences will be left with Mello-Roos taxes. That will make those homes harder to sell, Kirkey said.

“If you’re looking for a house today and there are Mello-Roos and non-Mello-Roos properties available, which are you going to choose?” Kirkey said.

In addition, Kirkey said, some residents are upset and believe the developer did not consult with them sufficiently before taking its petition to the county.

“It feels like it is being jammed down our throat,” he said.