A Brief Explanation of the Rio Salado Community Facilities District

Who and Why?: The City of Tempe created the Rio Salado Community Facilities District (CFD) in 1998. The CFD was created in order to have property owners within a close proximity of Tempe Town Lake (and benefit from it) help pay for the cost of construction and the annual operations & maintenance of the lake.

How is the assessment calculated?: The linear lake frontage of each land parcel in the CFD was measured, along with distance from the lake itself. The City then broke down this figure by ownership into the developable square footage of the parcel. Each parcel’s developable area was then divided by the entire CFD’s developable area to determine the percentage of the whole on a parcel-by-parcel basis. This percentage is then applied to the CFD budget to determine the assessment.

What is the Interim Operations and Maintenance Assessment: Landowners within the district began paying an Interim Operations and Maintenance Assessment (IOMA) upon lake completion in 1999. This assessment is based on 20% of the Rio Salado Community Facilities District Annual Operations and Maintenance Budget.

What is the Operations and Maintenance Assessment: Once a parcel has been improved the City of Tempe issues the building owner a Certificate of Occupancy. Then that portion of the property developed shall begin to pay 100% of the Annual Operations and Maintenance Assessment, based on the parcel’s percentage share of the CFD Operations and Maintenance Budget. The remaining undeveloped property would continue to pay the IOMA.

What is the Lake Assessment (Capital Cost): Once the improvements on a parcel have been issued a Certificate of Occupancy, that portion of the property developed shall begin to pay the Lake Assessment. The Lake Assessment is based on the capital cost of Tempe Town Lake, or $44,849,700.12, to which the parcel’s percentage of the whole CFD is applied. The Lake Assessment is indexed by a 5% annual Cost Index Factor until a Certificate of Occupancy is obtained. At that time the developer/property owner has the option of paying the revised capital amount in one lump sum, or over a period of 25 years amortized at 5%. The Lake Assessment will be prorated in the first year and in the final year of assessment.

How long will the assessments last?: The Operations and Maintenance Assessment (or IOMA) is a 50 year agreement that started on June 19, 1998, with two automatic 20 year renewals subject to termination for material cause. The Lake Assessment will last no more than 25 years from the time that the Certificate of Occupancy is issued. See C98-121 (Tempe), or 98-0545160 (Maricopa County Records).

When are the assessment payments due?: The assessment is divided into payment periods. The first half of the assessments are due on October 1st of the current year and delinquent if not paid by 5 PM on December 1st. The second half of the assessments are due on April 1st of the subsequent year and delinquent if not paid by 5 PM on June 1st. Should the due date or delinquent date fall on a weekend or holiday, the following workday becomes the due date.

A detailed explanation of a community facilities district can be found in A.R.S. § 48-701 through 723. The intergovernmental agreement is recorded with Maricopa County, document number 19980545160.

Modified Finance Plan for Tempe Town Lake - June 15, 1997

I. Interim Operations and Maintenance Assessment (IOMA)

From lake completion, all parcels within the District with undeveloped land at the time of formation of the District, would begin to pay an Annual IOMA. The assessment would be based on 20% of the Rio Salado Community Facilities District Annual Operations and Maintenance Budget. The assessment would be based on a per linear lake frontage basis. The City will break down linear feet of lake frontage by ownership into square foot of property owned within the CFD…then allocate the cost over each property on a square foot basis. The 20% factor would remain constant until such time as the property is developed and a Certificate of Occupancy obtained.

II. Operations and Maintenance Assessment

From the date of issuance of a certificate of Occupancy, that portion of the property developed shall begin to pay 100% of the Annual Operations and Maintenance Assessment as determined by the Rio Salado Community Facilities District Budget. If for example, 5 acres of a 20-acre site is developed, the Operations and Maintenance Assessment would be assessed for only that part of the property developed. Calculation of the assessment would also be based on a linear lake frontage basis. Remaining undeveloped property would continue to pay the Interim Operations and Maintenance Assessment Only.

III. Lake Assessment (Capital Cost)

From the date of issuance of a Certificate of Occupancy, property owners would begin to pay an annual lake Assessment on that portion of the property developed, based on the actual cost of lake construction, as revised by a base index factor and assessed on a per linear foot calculation. The remaining undeveloped land would not be assessed until development occurs. The original lake capital cost for that portion of the property developed would be indexed by a 5% annual Cost Index Factor to the date of Certificate of Occupancy. This would generate a revised lake capital cost for that portion of property being developed. The developer would have the option of paying this revised capital amount off either in a lump sum or over a period of 25 years at the average interest rate on the bond the city issued for the Lake (approximately 5%).

Developed property at the time of the formation of the district would be exempt from Lake Assessment, Land Assessment and Operations and Maintenance Assessment until such time as their property is re-developed, intensified and/ or the land use changed. Assessments shall begin when any of the following occurs after the date of the formation of the Rio Salado Community Facilities District:

• Building Size is increased by more than 1,000 square feet cumulatively
• Any change in land use or zoning
• Any intensification of use requiring additional parking beyond that of the 1,000 square foot building expansion