Bonds Secured by Residential or Commercial Real Estate
At Weist Law, we handle all types of land-secured bonds, particularly those involving Mello-Roos districts, also known as community facilities districts (CFDs), and assessment district bonds. Mello-Roos CFD bonds and assessment district bonds are secured by liens on real estate and are used to finance public infrastructure improvement projects.
How Do Mello-Roos and Assessment Bonds Work?
Mello-Roos CFDs and Assessment Districts are often used to finance the public infrastructure components of new residential subdivision development. Typically, a real estate developer seeks financing of public infrastructure such as curbs and gutters, streets, sewer, water and public safety. If a CFD or Assessment District is created, ultimately each property owner in the subdivision will pay a tax/assessment which, collectively, are then collected and pledged to make payments on the bonds issued to pay for the corresponding public infrastructure improvements.
Although most CFDs and Assessment Districts involve residential real estate, our firm has also been involved in the creation of CFDs and Assessment Districts supporting public infrastructure for commercial and industrial developers involved in projects such as big box stores, malls, car dealerships and manufacturing and distribution centers. These CFDs and Assessment Districts are often used to jumpstart industrial parks and other commercial entities that have the potential to bring tax revenue to the larger community.
Both Assessment Districts and Mello-Roos districts issue municipal bonds to pay for needed public infrastructure improvements and services. Although the developer or investor can pay for improvements out of pocket, the cost of construction loans is usually greater than the interest rate on municipal bonds. This typically reduces the cost of property in a subdivision or leases in a commercial development.
How We Help
We become involved in the creation of land secured bonds early on in the process, advising each municipal client about potential benefits and drawbacks of creating a Mello-Roos district or an assessment district. We offer counsel on ways of obtaining voter approval for the creation of a district, as well as the procedures for elections and public hearings. We lawyer the structure and economics of each transaction.
Our firm handles all aspects of Mello-Roos bonds and Assessment District financings, from making an initial definition of the district to organizing approval campaigns to taking the bonds to the marketplace. For knowledgeable counsel and advocacy during any land-secured bond transaction, call the Weist Law Firm. Contact us online or call us at 831-438-7900 to learn more about our services.
Weist Law - serving California and the Greater San Francisco Bay area.