OCEANSIDE — The city will establish a special tax district for new residential development projects, starting with the largest multifamily project west of Interstate 5 in two decades, to provide funds for additional public safety services.
The Oceanside City Council recently adopted a resolution establishing a citywide Community Facilities District, a special tax district, also known as Mello-Roos, for the Alta Oceanside mixed-use project currently under construction on North Coast Highway 101.
The district will help fund additional public improvement projects and municipal services (i.e., police, fire, water, sewage and public works) that inevitably arise from the construction of new dwelling spaces.
In 2020, the City Council approved the 309-unit Alta Oceanside development contingent upon establishing a special tax district with two zones (Zone A, Zone B) to neutralize the project’s impact on public safety services. The Alta Oceanside project is currently the lone district tenant in Zone A.
“The rest of the city will be designated as a ‘Future Annexation Area’ and new development projects meeting certain design criteria will be required to annex to (Zone B) as a condition of approval,” according to the staff report.
As the number of new housing developments continues to grow in Oceanside, the district will help the city offset additional service costs by annexing all future projects into the district.
Under state law, Mello-Roos tax districts must be approved by at least two-thirds of eligible voters — property owners within a proposed district — via special election. According to the city, the county Registrar of Voters has determined no registered voters live within the boundaries of the special tax district.
“If there are not at least 12 persons registered to vote in the proposed district on each of the 90 days preceding the election, the vote is by the landowners of the real property,” or in this case, the developer, Wood Partners.
“This public safety services Community Facilities District is intended to help funding for vital public safety services and keep pace with the rising costs and impacts of new residential development,” said Assistant City Manager Michael Gossman.
According to Gossman, the city determined annual public safety costs for each new residential unit by examining police and fire incident data; calculating cost by land-use type per residential unit based on police and fire budgets; building in tax assumptions received per residential unit, and calculating the district’s special tax rates by land-use type.
The annual tax rate would be $376 for single-family or duplex residences, $350 for multi-family residences and $339 for assisted living units. The rates will increase each year in relation to the consumer price index for the San Diego region, with a maximum annual increase of 4% and a minimum 2% rise.
Future residential developments over 16 units in size will be annexed into the tax district if they meet the following criteria: mixed-use projects proposed on commercially zoned land including projects in the downtown zone, residential projects exceeding base density allowance and assisted living and skilled nursing facilities of any size.
The city expects to receive between $120,000 and $130,000 from the Alta Oceanside project each year starting in 2023.
Kelly Batten, a senior public policy advisor with the Building Industry Association of San Diego, provided the sole comment against the the special tax district at the Dec. 7 council meeting.
“Community Facilities Districts are an added tax on homes at a time when borrowing is getting more expensive due to drastic interest rate increases, lumber and building supply costs are high, and cost of labor is increasing,” Batten said. “We should not be adding additional tax and fees on homes. Doing so only makes housing more unattainable for families.”
City Council voted 4-1 to approve the Community Facilities District, with Councilmember Kori Jensen opposed.
