Stopping Corruption in the
Paseo del Sol Community Facilities District
Newly uncovered corruption in the Community Facilities District in the Paseo del Sol Neighborhood must be stopped! Officially the District is called Imperial CFD 2004-3 (Bratton). A single developer, with the help of corrupt government officials, set up a scheme to enrich himself with taxpayer money. Taxpayers now can stop this scheme by voting to eliminate excessive property taxes!
Background (How everything got started in 1978)
In 1978, property taxes were tied to property values without restrictions. In high inflation times, property taxes could rise rapidly for homeowners, even those on fixed incomes. These taxes were causing people to lose their homes which they bought decades before. Citizens Howard Jarvis and Paul Gann put Proposition 13 on the ballot to cap runaway property taxes which gained overwhelming support at the ballot box.
So, this was good for the taxpayers. So far, so good.
Howard Jarvis and Paul Gann
Sponsor Proposition 13
Mello-Roos CFD Act
(next step in 1982)
In response to voter approval of Proposition 13, and to partially restore reduced property tax revenue, California politicians, Senator Henry Mello and Assemblyman Mike Roos developed legislation in 1982 to allow local governments to set up special districts ("CFDs"). These districts could only be created with the approval of a majority of the property owners to fund public works and some public services.
Again, the idea as proposed sounded good.
Senator Henry Mello, co-author of bill to create CFD taxes
Next, the Loophole
In 2004, a developer and corrupt officials helped set up a special (CFD) district in Imperial. This district was named Imperial Community Facilities District 2004-3 (Bratton). The map of the district is shown to the left. But the trick was this: the vote to create the District was not held when all the homes were built there. The vote was held when only one person owned all of the property when the land was vacant. An election of only one developer was held to tax everyone else.
CFD Taxes hurt the Homeowners
So, instead of the developer paying for roads, sewers, and other public infrastructure, those costs were all passed on to the people who bought homes in the neighborhood as part of new CFD assessments.
But, the corruption did not stop there!
The developer who voted for the taxes didn't pay any taxes himself!
What follows is the big theft....the 2005 Acquisition Agreement
On April 18, 2005, the City of Imperial (“CITY”), acting on behalf of the Imperial Community Facilities District 2004-3 (Bratton) (“CFD 2004-3”) entered into an agreement with the new developers, Rilington Imperial, LLC (“RILINGTON”) and Paseo Del Sol Dos, LLC (“PASEO”).
As part of this April 18, 2005 agreement, in Section 2.04, the CITY indicated that it desired to finance certain public improvements. As part of the April 18, 2005 agreement, the CITY and/or CFD 2004-3 agreed to pay RILINGTON and PASEO, or their successors-in-interest, more than $3.6 million for public infrastructure they would build.
In other words, the original developers would build certain facilities and the taxpayers in the District would pay them back.
THE ORIGINAL DEVELOPERS WOULD SPEND MONEY AND PASS THE EXPENSE ONTO THE TAXPAYERS WHO WOULD BUY HOMES IN THE DISTRICT. THE CITY COLLECTED THE TAX AND AGREED TO GIVE THE DEVELOPERS THE MONEY.
The 2018 Robbery
By 2018, the City had collected about $2,000,000 from the taxpayers (homeowners) in the District and had distributed that money to the original developers (or their successors) as "reimbursements" under the April 2005 Agreement.
Yet, the 2005 Agreement provided that the original developers (or their successors) also had to pay CFD assessments that they owed for property they retained. As mentioned above, the developers refused to pay the tax they owed and agreed to pay!! By 2018, they were delinquent by more than $396,320.50 in CFD assessments, plus almost a million dollars more in penalties and interest.
In spite of that, in 2018, the City Council agreed that they would continue to pay out $1,652,338.69 to the affiliates of the original developers who paid no tax.
The Corruption Continues
Though the original developers owe now nearly $1,500,000 in unpaid CFD liability, the City is still making payments to them.
Where is the City getting the money to pay these developers (or their affiliates)?
If you live and own a house in the Paseo Del Sol neighborhood (CFD 2004-3) the City is taking the money from you!
YOU READ THAT CORRECTLY:
THE CITY IS TAXING YOU TO PAY THE ORIGINAL DEVELOPERS WHO HAVEN'T PAID THE TAXES THEY OWE!
What follows below is an official City document showing the payouts since 2018.
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