Fees & public finance
Community facilities district (CFD)
The Mello-Roos financing vehicle: a district formed by election that levies special taxes per its recorded RMA, usually securing bonded debt.
Definition
A community facilities district is the entity the Mello-Roos Act creates: an agency adopts resolutions of intention and formation, then holds an election — two-thirds of registered voters, or, where fewer than 12 registered voters live in the district, a landowner vote weighted by acreage. That landowner-vote path is how developer-initiated CFDs form over raw land before residents exist. The Rate and Method of Apportionment fixes the maximum special tax by land-use class, its escalator, and its term; the district can fund both capital facilities (streets, utilities, parks) and ongoing services, and can issue bonds secured by the tax.
Why it matters in an underwrite
For a developer, a new CFD converts equity-funded backbone infrastructure into tax-exempt, parcel-secured financing that transfers with the land — common on larger sites, occasionally viable for mid-size infill where a city runs a program. Two cautions: formation runs months and must comply with the agency's adopted goals and policies, so start alongside entitlement; and the market prices total housing cost, so a capitalized special tax reduces supportable rents or prices — a CFD is not free money.
Sources & related guides
See also
See the term in the law itself
Read the controlling text in the Code Library, or ask the AI how it applies to your project.
Last reviewed 2026-07-29. General information, not legal advice.