A new housing community on the city’s southwest side will soon be underway, utilizing a financing tool that shifts the cost of development to future homeowners.
Known as Wildflower Community Facilities District, the one-square-mile development will be along Valencia Road, near Ajo Way with more than 2,600 residential units for sale and rent.
It is the second Community Facilities District, or CFD, approved by Pima County since the program came into existence in the early 2000s.
Rocking K Ranch, in Vail near the Rincon Mountains, was the first approved CFD by the county in 2017.
A CFD requires developers pay for public infrastructure, such as roads, utilities and sewer lines, then request reimbursement from Pima County once the work is done.
If the work quality is approved by the county, bonds are issued to reimburse developers and the bonds are repaid by an increased tax rate to homeowners within the CFD.
“It’s a low-risk proposition for the county because we’re not up-fronting funds,” said Carla Blackwell, director of development services for Pima County. “The bond proceeds reimburse costs after the improvements have been made.”
Future homeowners would voluntarily pay the additional tax.
The owner of a $400,000 home, for example, would have a limited assessed value of $320,000 (80% of value). The tax assessment ratio by state law for residential is 10% or $32,000 to get to net assessed value.
That means the additional tax would be $2.50 per $100 of net assessed value so the owner will pay an additional $800 a year.
“There’s definitely a higher tax on the people who live in the CFD but the developer will be required to provide public disclosure,” Blackwell said. “Market demand is driving up housing costs and one way to alleviate that is to provide more housing opportunities.
“The benefit to the community is that by allowing the formation of the CFD, the county is helping to bring more housing online with no risk to Pima County taxpayers outside of the CFD.”
Upon completion and approval of the infrastructure, the county assumes responsibility for the maintenance of the public portion of the infrastructure which is paid for by the increased tax rate.
The Board of Supervisors, which recently approved the Wildflower CFD, cannot put any restrictions on the type of housing within the community.
Developers expect to spend $32.3 million on public infrastructure for Wildflower.
Located west of Casino del Sol, on Valencia Road, the Wildflower CFD property was bought by developers Crown West Land Group in 2015.
Dean Wingert, vice president of Crown West, said the improvements made to both Valencia Road and Ajo Highway made the site appealing.
Plans for Wildflower include about 2,600 homes, parks, open spaces, some retail and a school site.
Arizona law used to require CFD projects be within towns or cities and Crown West first developed a community using that tool with Gladden Farms in Marana.
“We have a lot of experience,” Wingert said. “The developer has all the financial exposure, if there is any.”
He said all homeowners take on the added tax willingly.
“Gladden Farms has been a good story for us,” Wingert said. “Homeowners take on the extra tax but only after extensive disclosure.”
Work on sewer lines has already begun for the Wildflower CFD and Crown West hopes to have the first 680 home sites ready for homebuilders in 2022.
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