Will the City Council Address Voter Concerns on Overtaxing and Transparency?

October 6, 2025

Katherine Turner

City Attorney

City of Imperial

420 S. Imperial Avenue

Imperial, CA  92251

Email: kturner@cityofimperial.org

RE:      PETITION FOR REPEAL OF ASSESSMENTS IN CFD 2004-2 (Mayfield)

Novalk, LLC v. City of Imperial, et al.

            (Southern District of California case number 25-cv-2307 BAS LR)

Imperial County Superior Court case #ECU000568

Imperial County Superior Court case #ECU000569

Dear Katie:

This letter serves to “meet and confer” regarding potential motion practice in the above litigation and is being copied to your outside counsel, Allison Burns. This also follows my letter to you of September 17, 2025. In that earlier correspondence, I reminded you that I appeared before the legislative body of the City of Imperial Community Facilities District 2004-2 (CFD 2004-2) and presented a petition for repeal of excessive and/or illegal assessments in that District.

Importantly, the petition called for a public hearing for the City Council to explain in a public hearing if they intend to continue with illegal and excessive taxation of the homeowners in the Mayfield neighborhood. Recent communications from your specially hired attorney makes it appear that the City Council is afraid to explain itself to the voters.

I reminded you of applicable provisions of the Government Code. Specifically, under the Mello-Roos Community Facilities Act (the “Act”), Section 53330.5 provides:  

“…the special tax may be levied only so long as it is needed to pay the principal and interest on debt incurred in order to construct facilities under authority of this chapter, or so long as it is needed to pay the costs and incidental expenses of services or of the construction of facilities authorized by this chapter….”

According to the City’s official Annual Continuing Disclosure Report for CFD 2004-2 dated February 25, 2025 (page 2) “… the funds designated for public improvements to be financed with the Net Bond proceeds have been fully spent has completed the construction of all facilities….” Accordingly, the CFD 2004-2 cannot levy more than what is required to pay off the bonds, which according to the City’s Special Tax Administrator as of September 1, 2025, is now $1,520,000.

Therefore, it is illegal for the CFD to attempt to collect more than the bond indebtedness.

Government Code Section 53332 states:

(a) If a petition signed by 25 percent or more of the registered voters residing in the district, or by the owners of 25 percent or more of the land within the district not exempt from the special tax, is filed with the legislative body requesting that proceedings be commenced to change the types of public facilities or services financed by the district or that the rate or method of apportionment of an existing special tax be changed, or that territory to be removed from the district, or that a new special tax be levied, the legislative body shall within 40 days of the payment of the fee determined under subdivision (b) adopt a resolution of consideration in the form specified in Section 53334 to make those changes within the community facilities district except that an existing special tax being used to pay off any debt incurred under this chapter shall not be reduced or terminated if doing so would interfere with the timely retirement of that debt.

(b) Upon receipt of any petition filed by landowners under this section, the legislative body shall, within 45 days, determine the amount of a fee sufficient to compensate the local agency for all costs incurred in conducting proceedings to change the district pursuant to this article. Upon receipt of any petition filed by registered voters under this section, the legislative body may determine the amount of a fee, within 45 days, sufficient to compensate the local agency for all costs incurred in conducting proceedings to change the district pursuant to this article.

You know that 53% of the property owners in Improvement Area No. 1 of CFD 2004-2 have signed the petition for the public hearing. Yet, the City Council appears to resist public accountability and transparency.

This resistance appears to come from your outside counsel who has provided two incorrect opinions about this valid petition. First, she incorrectly claimed that the petition was addressed to the wrong entity. Nevertheless, she admitted in her recent 12(B)(6) motion dated September 26, 2025, that “Government Code section 53332 allows for a petition of the Legislative Body of a CFD.…” (See, Motion, page 18, lines 20-21.) The official operating agreement of CFD on page 2 unambiguously states: “…the five members of the City Council now act as the legislative body for the District by virtue of their election to the City Council.” Thus, the petition was properly addressed to the proper legislative body.

Second, she also claimed the petition was ineffective as it did not seek to “…to change the rate or method of apportionment of an existing special tax….” (See, Motion, page 18, lines 24-25.) Again, that opinion is incorrect.

The phrase "rate or method of apportionment of an existing special tax" within the Mello-Roos Community Facilities Act of 1982 (California Government Code sections 53311 - 53368.3) refers to the manner in which a special tax is calculated and distributed among properties within a Community Facilities District (CFD). The Act allows local agencies to establish CFDs to finance public facilities and services through the levy of special taxes, which are subject to voter approval. The "rate" pertains to the amount of the tax, while the "method of apportionment" involves the formula or criteria used to allocate the tax burden among the properties within the CFD, often based on factors such as property size, use, or benefit received. (Building Industry Assn. of Bay Area v. City of San Ramon, 4 Cal. App. 5th 62; Azusa Land Partners v. Department of Industrial Relations, 191 Cal. App. 4th 1; Riverside County Cmty. Facilities Dist. v. Bainbridge 17, 77 Cal. App. 4th 644.)The Mello-Roos Act specifies that the imposition of a special tax must be approved by a two-thirds vote of the qualified electors in the CFD. The Act also requires that the resolution forming the CFD include details about the facilities or services to be funded and the rate or method of apportionment of the special tax. This ensures transparency and fairness in how the tax is applied to properties within the district. (Azusa Land Partners v. Department of Industrial Relations, 191 Cal. App. 4th 1; Riverside County Cmty. Facilities Dist. v. Bainbridge 17, 77 Cal. App. 4th 644; Cmty. Facilities Dist. v. Harvill, 74 Cal. App. 4th 876.)

The petition submitted clearly indicated that it sought to change the rate or manner of apportionment so that all principal and interest (without penalties) be assessed against all owners to fully extinguish the outstanding indebtedness of CFD 2004-2. Note that the change sought was explicitly aimed at eliminating penalties and interest in its rate or manner of apportionment. The payment of these revised assessments of principal only by Novalk, LLC and the others in the District up to and including this 2025-2026 fiscal year would fully satisfy the outstanding bonds. This change in the existing rate and manner of apportionment is clearly contemplated in the statute.

Today is the last day for your client, the legislative body of CFD 2004-2 (Mayfield), to determine the amount of a fee sufficient to compensate the local agency for all costs incurred in conducting the required proceedings and communicate the same to those who signed the petition. By law, this is the last day for the City Council to indicate whether it is willing to hold an open public hearing and answer the questions of the citizens and taxpayers of the City of Imperial.

The homeowners in the Mayfield neighborhood want to know why they should be taxed for improvements which were promised and never built. Our neighbors want to know why there is a daily traffic jam on Second Street and no plan to fix it. We want to know why the City wants to continue to tax the owners in this neighborhood for the next 12 years when the amount demanded is excessive.

As you were previously advised, if you fail to provide the required information to allow a public hearing to proceed, we will be compelled to seek immediate relief from the Court.

Sincerely,                                 

Andrew K. Rauch

cc:      Outside Counsel: Allison Burns Email: aburns@stradlinglaw.com

City Manager: Dennis Morita Email: dmorita@imperial.ca.gov

Mayor, City of Imperial: James Tucker Email: jtucker@imperial.ca.gov