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WHWD Mello-Roos Bonds

WHWD Board of Directors�April 14, 2021

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What is a Mello-Roos bond?

  • A Community Facilities District is a special taxing district formed to fund public infrastructure. The Mello Roos bonds are essentially issued (basically a loan to the district that is secured by certain real property within the district) to raise funds that will be paid back by property owners who benefit from the infrastructure, ie the Western Hills Water District.

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  • The funds to build the infrastructure and facilities of the Western Hills Water District were paid from these bonds and a portion from the original developer. Generally, a developer may fund the infrastructure up front and might be reimbursed by the district for authorized use of the funds through the sale of the bonds

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Original Use of Mello-Roos Bond Funds

  • Original amount: $57,000,000
  • Used for WHWD facilities including but not limited to:
    • Water treatment and transportation line facilities
    • Pump station engineering and construction
    • Aqueduct turnout construction
    • On-site engineering and construction for sewer
    • City of Patterson engineering, collection system expansion and connection
    • Roadway Facilities, utilities and emergency communications
    • Section 404 Permit Mitigation
    • Streets and utilities for 313 lots

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How are owners in DG impacted by this bond?

  • Incorporated into yearly property tax payments to the county�
  • Individual owner responsibility ($/year) is based on lot size�
  • Owners within the district pay this additional yearly amount to repay the bond money loaned�

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How does the bond money flow?

  • Owners pay Stanislaus county via your property taxes twice a year�
  • That money is sent to the WHWD twice a year from the county�
  • WHWD forwards that money (as the designated pass-through entity) to the Bank of New York�
  • Bank of New York handles these funds and disperses them to the bond holders

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What is meant by “Mello-Roos bond refinance”?

  • The district refinanced the Mello Roos in 2014 and 2015. This reduced interest payments but did not extend the term or increase principal or interest to taxpayers in the district.

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  • The interest savings was deposited into a reserve fund for the district.

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How much is currently owed in Mello-Roos taxes for the district?

  • The largest landowners in the Western Hills Water District account for the largest delinquencies of Mello Roos in the district and they are over 3 years delinquent in payments.
  • The largest landowner stopped paying property taxes and Mello Roos on the majority of finished lots and parcels within the district as of December 2017, according to public records.
  • According to public records, currently, the largest holder of title in the district has not paid property taxes or Mello-Roos payments on any of the parcels or finished lots they own.
  • The significant delinquencies have resulted in a depletion of reserve funds for the Mello-Roos bond holders’ repayment, which affects the interest and principal paid to bondholders. (see slides 9 & 10)

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What happens when the dev-owner doesn’t pay their Mello-Roos tax?

  • The district is required to pursue foreclosure on the delinquent lots
    • The water district has covenanted in the Fiscal Agreement: “...if the Water District determines on the basis of such review that the amount so collected is deficient by more than 5% of the total amount of the Special Tax levied in the District in such fiscal year, it will within 30 days thereafter institute foreclosure proceedings…”
  • The district has a duty to the bond holders to attempt to collect on these delinquencies
    • These costs are authorized under the act to be paid from the Mello Roos funds. However, these costs can typically be sought and recouped through collection and foreclosure process.�

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2018 Parcel

Mello-Roos

Payoff Example

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2021 Parcel

Mello-Roos

Payoff Example

(same parcel)

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Contact & References

Julie Davis, Director of Real Estate and Bonds, WHWD Board of Directors

Chris Blessing, Director of Communications, WHWD Board of Directors

Email: chrisblessingwhwd@gmail.com

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Reference documents and websites:

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