Mission Viejo

Editor’s note: Listed below is the third in an on-going series about Mello-Roos taxation and its impacts to homeowners. 


Mello-Roos: Part III

On February 23, 1987 the Capistrano Unified School District (CUSD) and the Mission Viejo Company entered into an agreement to form Community Facilities District 87-1 (“87-1”). The agreement states in part that 87-1 bonds will be used to provide funds to construct 87-1 School Facilities in accordance with the Plan to the extent that funds for the School Facilities are neither timely nor adequately provided by the State
of California or from other sources. And, that the Special Tax shall be levied to pay off the bonds for providing the 87-1 School Facilities, furniture, equipment, and required sites therefore, in accordance with the Plan. The facilities discussed in the plan and financed under the Mello-Roos Program are specifically intended to meet the needs of the students generated by residential developments within 87-1.

Resolution 87-38 adopted on April 20, 1987 expands the use of the 87-1 taxes, without a vote of the taxpayers, to include construction, acquisition, modification or rehabilitation of certain real and other tangible property with an estimated useful life of five years or longer, including certain school and related facilities to serve the project area as fully described in Resolution 87-31 and the report.
Ordinance 87-1-1 enacted on November 6, 1987 Lists no end date for the 87-1 Special Tax collection. CUSD maintains the tax is in perpetuity.

One example from a 1999 Homeowner Disclosure states, “The special tax will be levied each year until all of the authorized facilities are built and all special tax bonds are repaid. The foregoing special tax may not be used to pay for ongoing services. The authorized facilities which are being paid for by the special taxes, and by the money received from the sale of bonds which are being repaid by the special taxes are: K-12 School Facilities. These facilities may not yet have all been constructed or acquired and it is possible that some my never be constructed or acquired. In addition, the special taxes may be used to pay for the costs or the following services: NONE”.

On March 5, 2006, the City of Mission Viejo (“MV”) conducted an audit of 87-1. The results revealed that MV property owners represented about 31% of the total 87-1 collection for 2002 through 2006, yet only 10% of the total 87-1 spending was on schools that serve MV students.

On September 9, 2010 CUSD obtained a legal opinion that concluded 87-1 may be used proportionally on the school facilities, including modernization and rehabilitation, that serve the project students. This legal opinion was reaffirmed on September 26, 2012. However, to date no basis for this opinion has been provided explaining how the uses of the taxes collected were expanded beyond the uses authorized in the original agreement.

On June 25, 2013 CUSD revealed it collected excess taxes above what is needed to service the bond debt. The excess collection was over $3.5 million in 2013 and increases 2% per year.

On February 27, 2013 CUSD disclosed that $14,463,000 or 72% of the administrative building was funded by 87-1. This in spite of the fact that on September 16, 2006 residents were told NO CFD 87-1 money was spent or will be spent on the new administration building CUSD was building.

Since 2006 residents have asked CUSD to provide an accounting of how much has been collected in 87-1 taxes and how those tax revenues have been spent. As of October 2013 CUSD still has not, cannot or will not answer these two simple questions. Nor has it answered most of the questions that have been asked about 87-1 taxation.

From the inception of 87-1 to the present CUSD has misspent or misused millions of dollars of 87-1 funds. If you would like to know more about Mello Roos, CFD 87-1 or would like to help end this tax, email us at: EndCFD87.1@gmail.com



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