Title
Calling a Special Election to Make Certain Changes to Improvement Area No. 3, Deeming it Necessary to Incur Debt for Improvement Area No. 4, and Calling a Special Election to Levy a Special Tax in and Incur Debt for Improvement Area No. 4 of the Delta Shores Community Facilities District No. 2019-01 (Improvements) [Noticed 03/25/2026; Published 04/03/2026]
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FileID
File ID: 2026-00620
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Location
Location: District 8
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Recommendation
Recommendation: Conduct a public hearing and upon conclusion: adopt 1) a Resolution calling for a special election on proposals to change the boundaries of Improvement Area No. 3 (IA-3) of the Delta Shores Community Facilities District No. 2019-01 (Improvements) (CFD) and to the Rate and Method of Apportionment (RMA) of Special Tax, the appropriations limit, the authorized amount of bonded indebtedness and the public facilities authorized to be financed in and for IA-3 of the CFD; 2) a Resolution deeming it necessary to incur bonded indebtedness to finance the acquisition and construction of certain public facilities in and for Improvement Area No. 4 (“IA-4”) of the CFD; and 3) a Resolution calling for a special election on the proposals to levy a new special tax in IA-4 and incur debt for IA-4 to finance the acquisition and construction of certain public facilities.
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Contact
Contact: Jessica Steinhauer, Senior Development Project Manager, (916) 808-8243, jsteinhauer@cityofsacramento.org; Eric Frederick, Special Districts Manager, (916) 808-5129, efrederick@cityofsacramento.org; Department of Finance
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Presenter
Presenter: Eric Frederick, Special Districts Manager, (916) 808-5129, efrederick@cityofsacramento.org, Department of Finance
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Attachments
Attachments:
1-Description/Analysis
2-Background
3-Schedule of Proceedings
4-Amended Boundary Map
5-Second Amended and Restated RMA for IA-3
6-RMA for IA-4
7-Resolution Calling Special Election for IA-3
8-Resolution Deeming it Necessary to Incur Bonded Indebtedness for IA-4
9-Resolution Calling Special Election for IA-4
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Description/Analysis
IssueDetail
Issue Detail: On September 24, 2019, City Council adopted Resolution No. 2019-0371 establishing the CFD, designating three separate improvement areas therein, Improvement Area No. 1 (IA-1), Improvement Area No. 2 (IA-2) and IA-3, and providing for the levy of a special tax within each of the three improvement areas to finance the acquisition and construction of certain public facilities. The CFD currently encompasses approximately 535 acres of the Delta Shores development project within the Delta Shores Planned Unit Development area. As part of establishing the CFD, separate RMAs were approved by Council for each of the three improvement areas that established the maximum special tax rates for each land use classification in the improvement areas.
On February 1, 2022, after receiving a petition from the owner of all of the taxable land in the CFD at that time, M & H Realty Partners VI, LP (M&H), Council adopted Resolution No. 2022-0036 to, among other things, modify the special tax rates, modify the structure of the backup special tax, and make certain other related changes to each RMA and to modify certain of the other authorizations for each of the three improvement areas.
In 2024, M&H sold most of the land that constitutes what is currently IA-3 of the CFD to JEN California 27, LLC (JEN) and, with respect to the land in IA-3 that it sold, M&H partially assigned, transferred, and conveyed its right, title and interest in, to and under the Acquisition-and-Shortfall Agreement to JEN (City Agreement #2024-0879).
In 2025, JEN sold ----three parcels to DR Horton CA2, Inc. (DR Horton) comprising approximately 55.6 acres of land. JEN plans to sell an additional 25.7 acres to DR Horton in the near future. It is anticipated that DR Horton will construct 397 single family homes of varying density on the land acquired, and to be acquired, from JEN.
JEN and DR Horton previously petitioned the City Council to commence change proceedings to create a new IA-4 of the CFD comprised of the area where the 397 homes are planned to be constructed by DR Horton. In addition, the creation of this new IA-4 will necessitate changes to the existing IA-3, as the land that will make up IA-4 will no longer be a part of IA-3. To that end, JEN and DR Horton also petitioned the City Council to consider 1) changes to the boundaries of IA-3 of the CFD to exclude the area to be designated as IA-4 and related modifications to the RMA for IA-3, as well as the appropriations limit, the authorized amount of bonded indebtedness and the public facilities authorized to be financed in and for IA-3, 2) designating a new IA-4 of the CFD with a new special tax in IA-4 to finance the acquisition and construction of certain public facilities, and 3) declaring the necessity to incur bonded indebtedness in and for IA-4.
In response to the petition, Council adopted Resolution No. 2026-0059 (Resolution of Consideration) on March 10, 2026, thereby initiating proceedings to make the requested modifications to IA-3 and to designate the new IA-4. The Resolution of Consideration also fixed April 14, 2026, as the date for a public hearing on the questions of the proposed modifications to IA-3 of the CFD and the levy of a new special tax in IA-4, and the incurrence of debt for IA-4.
To address the request to change the boundaries the CFD and designate the new IA-4, an amended CFD boundary map was included as Exhibit A to the Resolution of Consideration. This map was also recorded with the Sacramento County Clerk/Recorder’s Office on March 19, 2026, as required by the Mello-Roos Community Facilities Act of 1982 (California Government Code sections 53331 to 53339) (Act) and is included as Attachment 4 to this report for reference.
In regards to IA-3, JEN and DR Horton requested the City Council change the authorized amount of bonded indebtedness and appropriations limit from $63 million to $43.4 million. This lower amount of bonded indebtedness and appropriations limit is due solely to 60.5 acres of taxable land in IA-3 proposed to now be in IA-4, resulting in less special tax revenues being available in IA-3 under this proposal. The RMA for IA-3 was modified to reflect this change as well. Other minor and clarifying changes were made to the IA-3 RMA, but the maximum special tax rates for developed properties remain unchanged. The Second Amended RMA for IA-3 that includes these modifications was included as Exhibit B to the Resolution of Consideration and is included as Attachment 5 to this report for reference.
For IA-4, JEN and DR Horton requested the City Council set the authorized amount of bonded indebtedness and appropriations limit at $23.0 million. This amount is set based on the new RMA for IA-4 and the projected special tax revenues expected to be collected in IA-4. The RMA for IA-4 divides taxable property in IA-4 into three separate Tax Zones, with the proposed FY2025/26 maximum special tax rates ranging from $3,010 per unit to $3,417 per unit for properties in Tax Zone 1, from $2,391 per unit to $2,849 per unit for properties in Tax Zone 2, and from $3,424 per unit to $3,555 per unit for properties in Tax Zone 3. A map showing the location of each Tax Zone is provided in the RMA for IA-4, and this RMA was included as Exhibit D to the Resolution of Consideration and is included as Attachment 6 to this report for reference. The FY2025/26 expected special tax revenue for IA-4 is projected to be $1,151,882 based on 397 expected taxable units at full buildout. Every July 1, the maximum special tax rates and expected revenue in IA-4 shall be increased by an amount equal to two percent (2%) of the amount in effect for the previous fiscal year. This annual escalation is the same for all improvement areas of the CFD.
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PolicyConsiderations
Policy Considerations: Modifying the boundaries and RMA for IA-3 and creating the new IA-4 will allow special tax bonds to be issued in IA-4 earlier in the development process and will increase the amount of special tax proceeds available for eligible facilities. Modifying the appropriations limit, the authorized amount of bonded indebtedness and the public facilities authorized to be financed is necessary as a result of these proposed changes. In addition, based on projected future home prices, the overall tax burden for future homeowners in the proposed IA-4 is estimated to be at or below the threshold outlined in the City’s adopted Policies and Procedures for Use of Special Assessment and Mello-Roos Community Facilities District Financing for Infrastructure and Public Facilities.
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EconomicImpacts
Economic Impacts: Not applicable.
EnvironmentalConsiderations
Environmental Considerations: Under California Environmental Quality Act (CEQA) Guidelines, modifying the RMA of a CFD (a CFD being a financing mechanism) or of a designated improvement area therein without commitment to any specific projects which could result in significant impact to the environment does not constitute a project for purposes of CEQA and is therefore exempt from review (14 Cal. Code Regs. §15378(b)(4)).
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Sustainability
Sustainability: Not applicable.
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Commission/Committee Action
Commission/Committee Action: Not applicable.
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RationaleforRecommendation
Rationale for Recommendation: Conducting a public hearing on the proposals mentioned above and included as part of the Resolution of Consideration is required under the Act. These actions have been requested by JEN and DR Horton as owners of land in the CFD and are permitted under the Act.
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FinancialConsiderations
Financial Considerations: There will be no impact to the City’s General Fund as a result of this action. It is anticipated that special tax bonds will be issued in the future to finance the acquisition and construction of certain public improvements, and those bonds will be secured solely by the levy of special taxes within each improvement area pursuant to each improvement area’s specific RMA. Bond sales for IA-1 and IA-2 of the CFD have already occurred, and one or more bond sales will occur in IA-3 and IA-4 at some point in the future.
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LocalBusinessEnterprise
Local Business Enterprise (LBE): Not applicable.
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