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1 City of Modesto Interoffice Memorandum Date: March 4, 2022 To: Joseph P. Lopez, City Manager DeAnna Christensen, Director of Finance Jose M. Sanchez, City Attorney Nathan Bray, Interim City Engineer Stephan Christensen, Budget Manager From: Jaylen French, Director of Community and Economic Development Jessica Hill, Community Development Manager Re: Fiscal Year 2022-2023 Escalators for Special Taxes Levied Within City of Modesto Community Facilities Districts Each year an escalator is applied to the Special Taxes levied within each of the City of Modesto's Community Facilities Districts (“CFDs”) in accordance with the Rate and Method of Apportionment (“RMA”) adopted for each CFD. Following is the San Francisco Bay Area Construction Cost Index (“CCI”) calculation and an analysis of each CFD, setting forth the process by which the escalators for Fiscal Year 2022-2023 were determined. CCI Calculation While the RMAs require that an escalator be calculated and applied each Fiscal Year, they do not require that the maximum annual facilities or maximum maintenance tax be levied and collected each fiscal year. The amount actually levied will be based upon the budget needs of each CFD. Such factors include the amount needed for facilities, debt service (if bonds have been issued), maintenance, utilities and administration. CCI Year Amount CCI for January 2021 $13097.91 CCI for January 2022 $14301.24 CCI Increase 9.19% ---PAGE BREAK--- Fiscal Year 2022-2023 Escalators for Special Taxes Levied Within City of Modesto CFDs Page 2 of 8 CFD No. 1996-1 (Village One) RMA: Maximum Facilities Special Tax. “Beginning in January 1997, the Facilities Special Tax shall be adjusted annually by applying the greater of: the construction cost index for the San Francisco region for the prior twelve (12) month period as published in the Engineering News Record or other comparable source if the Engineering News Record is discontinued or otherwise not available; or (ii) four percent Each annual adjustment of the Facilities Special Tax shall become effective on the subsequent July 1, and shall apply to all Parcels which have not paid the Facilities Special Tax prior to July Maximum Annual Maintenance Special Tax. “Beginning in January 1997, the Annual Maintenance Special Tax shall be adjusted annually by applying the greater of: the construction cost index for the San Francisco region for the prior twelve (12) month period as published in the Engineering News Record or other comparable source if the Engineering News Record is discontinued or otherwise not available; or (ii) four percent Each annual adjustment of the Annual Maximum Special Tax shall become effective on the subsequent July Analysis: Comparing the CCI for the time period January 2021 through January 2022, the Maximum Facilities Special Tax and Maximum Annual Maintenance Special Tax rates should be increased by 9.19% effective July 1, 2022. CFD No. 1997-1 (North Beyer Park) RMA: Maximum Facilities Special Tax. “Beginning in January 1998, the Facilities Special Tax shall be adjusted annually by applying the increase, if any, in the construction cost index for the San Francisco region for the prior twelve (12) month period as published in the Engineering News Record or other comparable source if the Engineering News Record is discontinued or otherwise not available. Each annual adjustment of the Facilities Special Tax shall become effective on the subsequent July 1, and shall apply to all Parcels which have not paid the Facilities Special Tax prior to July Maximum Annual Maintenance Special Tax. “Beginning in January 1998, the Annual Maintenance Special Tax shall be adjusted annually by applying the increase, if any, in the construction cost index for the San Francisco region for the prior twelve (12) month period as published in the Engineering News Record or other comparable source if the Engineering News Record is discontinued or otherwise not available. Each annual adjustment of the Annual Maintenance Special Tax shall become effective on the subsequent July ---PAGE BREAK--- Fiscal Year 2022-2023 Escalators for Special Taxes Levied Within City of Modesto CFDs Page 3 of 8 Analysis: Comparing the CCI for the time period January 2021 through January 2022, the Maximum Facilities Special Tax and Maximum Annual Maintenance Special Tax rates should be increased by 9.19% effective July 1, 2022. CFD No. 1998-1 (Enterprise Business Park) RMA: Maximum Quarterly Maintenance Special Tax. “Beginning in January 1999, and every January 1 thereafter, the Maximum Quarterly Maintenance Special Tax shall be adjusted annually by applying the increase, if any, in the construction cost index for the San Francisco region for the prior twelve (12) month period as published in the Engineering News Record or other comparable source if the Engineering News Record is discontinued or otherwise not available. Each annual adjustment of the Maximum Quarterly Maintenance Special Tax shall become effective immediately after the adjustment is made.” Analysis: Comparing the CCI for the time period January 2021 through January 2022, the Maximum Facilities Special Tax and Maximum Annual Maintenance Special Tax rates should be increased by 9.19% effective July 1, 2022. CFD No. 1998-2 (Carver-Bangs/Pelandale-Snyder) RMA: Maximum Facilities Special Tax. “Beginning in January 2002 and each January thereafter, the maximum Facilities Special Tax assigned to each Parcel shall be increased by four percent of the amount in effect in the prior year.” Maximum Annual Maintenance Special Tax. “Beginning in January 1999 and each January thereafter, the maximum Annual Maintenance Special Tax shall be increased by four percent of the amount in effect in the prior year. Each annual adjustment of the maximum Annual Maintenance Special Tax shall become effective on the subsequent July Analysis: The Maximum Facilities Special Tax rates should be increased by 4.0% effective January 1, 2022, and the Maximum Annual Maintenance Special Tax rates should be increased by 4.0% effective July 1, 2022. CFD No. 2000-2 (Coffee-Claratina) RMA: Annexation One-Time Special Tax. shall increase on January 1, 2001, and on each January 1 thereafter by applying the greater of: the percentage increase, if any, in the construction cost index for the San Francisco region for the prior twelve (12) month period as published in the Engineering News Record or other comparable source if the Engineering News Record is discontinued or otherwise not available… or (ii) four percent ---PAGE BREAK--- Fiscal Year 2022-2023 Escalators for Special Taxes Levied Within City of Modesto CFDs Page 4 of 8 Maximum Annual Special Tax. “Beginning in January 2002, the Maximum Annual Special Tax shall be adjusted annually by applying the greater of: the percentage increase, if any, in the construction cost index for the San Francisco region for the prior twelve (12) month period as published in the Engineering News Record or other comparable source if the Engineering News Record is discontinued or otherwise not available; or (ii) four percent Each annual adjustment of the Maximum Annual Special Tax shall become effective on the subsequent July Analysis: The Maximum Annual Special Tax rates shall be increased by 9.19% and are effective July 1, 2022. CFD No. 2002-1 (NorthPointe) RMA: Maximum Annual Special Tax. “Beginning in January 2002, the maintenance portion of the maximum Annual Special Tax shall be adjusted annually by applying the greater of: the percentage increase, if any, in the construction cost index for the San Francisco region for the prior twelve (12) month period as published in the Engineering News Record or other comparable source if the Engineering News Record is discontinued or otherwise not available; or (ii) four percent Each annual adjustment of the maintenance portion of the maximum Annual Special Tax shall become effective on the subsequent July 1. The sinking fund portion of the maximum Annual Special Tax shall not escalate.” Analysis: The percentage increase to be applied to the maintenance portion of the Maximum Annual Special Tax is 9.19%, effective July 1, 2022. CFD No. 2003-1 (Fairview Village) RMA: Maximum Annual Facilities Special Tax. “Beginning with Fiscal Year 2005-06, and each Fiscal Year thereafter, the Maximum Annual Facilities Special Tax assigned to each Parcel shall be increased by two percent of the amount in effect in the prior Fiscal Year.” Maximum Annual Maintenance Special Tax. “Beginning in January 2005 and each January thereafter, the Maximum Annual Maintenance Special Tax shall be adjusted annually by the greater of: the percentage increase, if any, in the construction cost index for the San Francisco region for the prior twelve (12) month period as published in the Engineering News Record or other comparable source if the Engineering News Record is discontinued or otherwise not available; or (ii) four percent Each annual adjustment of the Maximum Annual Maintenance Special Tax shall become effective on the subsequent July ---PAGE BREAK--- Fiscal Year 2022-2023 Escalators for Special Taxes Levied Within City of Modesto CFDs Page 5 of 8 Analysis: The percentage increase to be applied to the Maximum Annual Facilities Special Tax is 2.0% while the increase to the Maximum Annual Maintenance Special Tax is 9.19% effective July 1, 2022. CFD No. 2004-1 (Village One RMA: Maximum One-Time Facilities Special Tax. “Beginning in January 2005 and each January thereafter, the Maximum One-Time Facilities Special Tax assigned to each Parcel and the Per-Acre Special Tax shown in Table 1 above shall be adjusted annually by the greater of: the percentage increase, if any, in the construction cost index for the San Francisco region for the prior twelve (12) month period as published in the Engineering News Record or other comparable source if the Engineering News Record is discontinued or otherwise not available; or (ii) four percent Each annual adjustment of the One-Time Facilities Special Tax shall become effective on the subsequent July Maximum Annual Maintenance Special Tax. “Beginning in January 2005 and each January thereafter, the Maximum Annual Maintenance Special Tax assigned to each Parcel and the Per-Acre Special Tax shown in Table 1 above shall be adjusted annually by the greater of: the percentage increase, if any, in the construction cost index for the San Francisco region for the prior twelve (12) month period as published in the Engineering News Record or other comparable source if the Engineering News Record is discontinued or otherwise not available; or (ii) four percent Each annual adjustment of the Maximum Annual Maintenance Special Tax shall become effective on the subsequent July Maximum Annual Facilities Special Tax. “Beginning in Fiscal Year 2005-06, and each Fiscal Year thereafter, the Maximum Annual Facilities Special Tax assigned to each parcel and the Per-Acre Special Tax shown in Table 1 above shall be increased by two percent of the amount in effect in the prior Fiscal Year.” Analysis: The percentage increase to be applied to the Maximum One-Time Facilities Special Tax and the Maximum Annual Maintenance Special Tax is 9.19% while the increase to be applied to the Maximum Annual Facilities Special Tax is 2.0%. All increases are effective July 1, 2022. CFD No. 2007-1 (North Beyer Park RMA: Maximum One-Time Facilities Special Tax. “Beginning in January 2008 and each January thereafter, the Maximum One-Time Facilities Special Tax assigned to each Parcel shall be adjusted by the greater of: the percentage increase, if any, in the construction cost index for the San Francisco region for the prior twelve (12) month period as published in the Engineering News Record or other comparable source if the Engineering News ---PAGE BREAK--- Fiscal Year 2022-2023 Escalators for Special Taxes Levied Within City of Modesto CFDs Page 6 of 8 Record is discontinued or otherwise not available; or (ii) four percent Each annual adjustment of the One-Time Facilities Special Tax shall become effective on the subsequent July Maximum Annual Maintenance Special Tax. “Beginning in January 2008 and each January thereafter the Maximum Annual Maintenance Special Tax assigned to each Parcel shall be adjusted by applying the greater of: the percentage increase, if any, in the construction cost index for the San Francisco region for the prior twelve (12) month period as published in the Engineering News Record or other comparable source if the Engineering News Record is discontinued or otherwise not available; or (ii) four percent Each annual adjustment of the Maximum Annual Maintenance Special Tax shall become effective on the subsequent July Analysis: The Maximum Facilities Special Tax and Maximum Annual Maintenance Special Tax rates should be increased by 9.19%, effective July 1, 2022. CFD No. 2007-2 (Kiernan Business Park West) RMA: Maximum One-Time Facilities Special Tax. “Beginning in January 2008 and each January thereafter, the Maximum One-Time Facilities Special Tax assigned to each Parcel shall be increased by an amount equal to four percent of the amount in effect for the prior Fiscal Year. Each annual adjustment of the One-Time Facilities Special Tax shall become effective on the subsequent July Maximum Annual Maintenance Special Tax. “Beginning in January 2008 and each January thereafter, the Maximum Annual Maintenance Special Tax assigned to each Parcel shall be adjusted by the greater of: the percentage increase, if any, in the construction cost index for the San Francisco region for the prior twelve (12) month period as published in the Engineering News Record or other comparable source if the Engineering News Record is discontinued or otherwise not available; or (ii) four percent Each annual adjustment of the Maximum Annual Maintenance Special Tax shall become effective on the subsequent July Analysis: The percentage increase to be applied to the Maximum One-Time Facilities Special Tax is 4.0% and the Maximum Annual Maintenance Special Tax rate should be increased by 9.19%, effective July 1, 2022. CFD No. 2012-1 (Kiernan Business Park South) RMA: Maximum One-Time Facilities Special Tax. “Beginning in January 2013 and each January thereafter, the Maximum One-Time Facilities Special Taxes shall be adjusted annually by the greater of: the percentage increase, if any, in the construction cost index for the San Francisco region for the prior twelve (12) month period as published in the ---PAGE BREAK--- Fiscal Year 2022-2023 Escalators for Special Taxes Levied Within City of Modesto CFDs Page 7 of 8 Engineering News Record or other comparable source if the Engineering News Record is discontinued or otherwise not available; or (ii) four percent Each annual adjustment of the Maximum One-Time Facilities Special Tax shall become effective on January 1 of the calendar year for which the annual adjustment was made.” Maximum CFD Maintenance Cost Tax. “Beginning in January 2013 and each January thereafter, the Maximum CFD Maintenance Cost Tax shall be adjusted annually by the greater of: the percentage increase, if any, in the construction cost index for the San Francisco region for the prior twelve (12) month period as published in the Engineering News Record or other comparable source if the Engineering News Record is discontinued or otherwise not available; or (ii) four percent Each annual adjustment of the Maximum CFD Maintenance Cost shall become effective on July 1 of the calendar year for which the annual adjustment was made.” Analysis: The Maximum Facilities Special Tax rates should be increased by 9.19%, effective January 1, 2022. The Maximum CFD Maintenance Cost Tax rates should be increased by 9.19%, effective July 1, 2022. CFD No. 2016-1 (Kiernan Business Park East RMA: Maximum One-Time Facilities Special Tax. “On January 1, 2016 and each January thereafter, the Maximum One-Time Facilities Special Tax rates shall be adjusted by the Escalation Factor. Each annual adjustment of the Maximum One-Time Facilities Special Tax shall become effective on the subsequent July “Escalation Factor means, in any Fiscal Year, the greater of the percentage increase, if any, in the construction cost index for the San Francisco region for the prior twelve (12) month period as published in the Engineering News Record or other comparable source if the Engineering News Record is discontinued or otherwise not available, or (ii) four percent Maximum Annual Maintenance Special Tax “On January 1, 2016 and each January thereafter, the Maximum Annual Maintenance Special Tax rates shall be adjusted by the Escalation Factor. Each annual adjustment of the Maximum Annual Maintenance Special Tax shall become effective on the subsequent July “Escalation Factor means, in any Fiscal Year, the greater of the percentage increase, if any, in the construction cost index for the San Francisco region for the prior twelve (12) month period as published in the Engineering News Record or other comparable source if the Engineering News Record is discontinued or otherwise not available, or (ii) four percent Analysis: The percentage increase to be applied to the Maximum One-Time Facilities Special Tax and Maximum Annual Maintenance Special Tax is 9.19% effective July 1, 2022. ---PAGE BREAK--- Fiscal Year 2022-2023 Escalators for Special Taxes Levied Within City of Modesto CFDs Page 8 of 8 CFD No. 2016-2 (The Vintage) RMA: Maximum Special Tax. “On January 1, 2016 and each January thereafter, the Maximum Special Tax rates shall be adjusted by the Escalation Factor. Each annual adjustment of the Maximum Special Tax shall become effective on the subsequent July “Escalation Factor means, in any Fiscal Year, the greater of the percentage increase, if any, in the construction cost index for the San Francisco region for the prior twelve (12) month period as published in the Engineering News Record or other comparable source if the Engineering News Record is discontinued or otherwise not available, or (ii) four percent Analysis: The percentage increase to be applied to the Maximum Special Tax rates is 9.19%, effective July 1, 2022. CFD No. 2021-1 (Woodglen) RMA: Maximum One-Time Facilities Special Tax. “Beginning July 1, 2022 and each July 1 thereafter, the Maximum One-Time Facilities Special Taxes shall be adjusted by the greater of the percentage increase, if any, in the construction cost index for the San Francisco region for the prior twelve (12) month period as published in the Engineering News Record or other comparable source if the Engineering News Record is discontinued or otherwise not available, or (ii) four percent Annual Maintenance Special Tax. “Beginning in July 1, 2022 and each July thereafter, the Maximum Annual Maintenance Special Tax assigned to each Parcel in the CFD, shall be adjusted by the greater of the percentage increase, if any, in the construction cost index for the San Francisco region for the prior twelve (12) month period as published in the Engineering News Record or other comparable source if the Engineering News Record is discontinued or otherwise not available; or (ii) four percent Analysis: The percentage increase to be applied to the Maximum One-Time Facilities Special Tax and Maximum Annual Maintenance Special Tax is 9.19% effective July 1, 2022.