Overcharged CFD Taxes Used to Pay Developer Mitigation Fees

Words have Meanings.

What is PAYGO?

From the Tax Policy Center:

“A budget rule requiring that new legislation that affects revenues and spending on entitlement programs, taken as a whole, does not increase projected budget deficits.” https://www.taxpolicycenter.org/briefing-book/what-paygo

‘Paygo’ is a Federal policy, but in the City of Beaumont ‘Paygo’ is being used to mean ‘Mello Roos CFD Taxes Charged in Excess of Amount Needed to Pay the Bond Debt’, which is illegal.

California Government Code 53340(d) states: “(d) The proceeds of any special tax may only be used to pay, in whole or part, the cost of providing public facilities, services, and incidental expenses pursuant to this chapter.”

It is illegal for the City of Beaumont to acquire Mello Roos Bonds without Property Owner’s Approval. It’s illegal for the City to charge and collect Millions more CFD Taxes than needed to pay the Bonds. It is also illegal for Beaumont to use the overcharged CFD Taxes to reimburse Developer Mitigation Fees.

Below is a paragraph from the City of Beaumont/Pardee Homes Agreement, Page 7, Item 6. titled: “No Distribution of Current Balance in Unspent Tax Revenues (“Paygo”) to Pardee.”

“Pursuant to the CFD Agreement, the City deferred Pardee’s payment of fees for 435 dwelling units in an amount totaling $6,017,745.”

Beaumont Agreed to allow Pardee Homes to build 435 Houses without paying any Mitigation Fees. $6 Million/435 Houses equals $13,833.90 per House.

“The CFD Agreement provides for reimbursement of the deferred fees to the City from 20% of the proceeds of bonds issued by the City for Improvement Areas within Sundance and Tournament Hills.”

20% of all Bond Debt the City can acquire on Sundance & Tournament Hills will go to pay Pardee Homes’ Mitigation Fees that were deferred. Developers actually received 100% of the $50 Million in CFD Bond Debt Beaumont acquired in 2018.

“To date, the City has received $654,433 in reimbursement from the proceeds of bonds issued for Improvement Area No. 17B.”

Beaumont has already paid Pardee Homes’ Mitigation Fees with Bond Money.

“Despite the City’s delay in the issuance of bonds for Improvement Area Nos. 8C, 8D, and 17C, Pardee agrees that the City may retain “Paygo” special taxes collected in those Improvement Areas and Improvement Area 8E through fiscal year 2025-2016 in the amount of $3,208,512 as reimbursement of an equal amount of fees deferred pursuant to the CFD Agreement.”

Pardee was promised that Overcharged CFD Taxes would be used to Reimburse Developer Mitigation Fees, but allowed Beaumont to keep the Mitigation Fee Reimbursements in the City’s Bank Account in order to make the City appear more financially stable, which is Fraud, an intentional lie.

“The City shall also be entitled to retain all Paygo taxes levied and collected in Improvement Areas Not. 8C, 8D, 8E, AND 17C in fiscal year 2016-2017 and thereafter to a portion of the deferred fees until such time as it has collected an additional $2,154,800, which together with Paygo special taxes previously collected and kept by the City shall be deemed to equal the total amount of deferred fees owed to the City.”

Overcharged CFD Property Taxes collected in 20126-2017 were also held by the City to defraud Banking Institutions, but then used to Reimburse Mitigation Fees.

“If, however, the CFD no. 93-1 is unable to issue bonds prior to September 1, 2017 as described in Section 2 of this Agreement, Pardee is entitled to receive 100% of Paygo special taxes, collected in an after fiscal year 2017/2018, to fund Project Costs until CFD no. 93-1 issues bonds as described in Section 2 of this Agreement.”

If Beaumont can not get Mello Roos Bonds on Pardee Homes’ Development Areas by September 2017, then Pardee receives all of the illegally overcharged CFD Property Taxes. NOTE: The City was not able to acquire any bonds until June, 2018. Every penny of the $50 Million in Bonds acquired in 2018 was either paid to Lawyers & Consultants or transferred to Developers.

“The bonds to be issued for Improvement Area Nos. 8C, 8D, 8E, AND 17C shall be sized so that, assuming no delinquencies in the payment of special taxes, the City will be fully reimbursed for the remaining deferred fees in not more than three (3) years.”

The remaining Fees owed to the City will be paid with Mello Roos CFD Bond Debt large enough to cover the Developers’ Mitigation Fees.

It’s important to note that we’re talking about two different revenue sources; the Bonds and the overcharged Property Taxes. Beaumont agreed to Reimburse Pardee Homes’ Mitigation Fees with both Bond Money and excess CFD Property Taxes.

Mitigation Fees are paid by the Developer to ‘mitigate’ the impact of additional houses. Government Agencies are supposed to fairly assess and collect Developer Mitigation Fees to pay for the roads, schools, sewer, libraries, and parks that will be needed to maintain a ‘quality of life’.

Beaumont’s corrupt Staff and City Council charge Developers far less than needed to build Facilities like Fire Stations, then deposits the Developer Mitigation Fees into the General Fund instead of establishing separate Interest-Bearing Accounts for each Mitigation Fees and Special Tax collected.

Beaumont’s Staff and Council spends a fraction of the Mitigation Fees on the City Councilmen’s bribes and parties like the Cherry Festival while the bulk of the money is pillaged by the Staff, which is hand picked by the City Council.

To this day not one honest and/or qualified person has been hired by the Beaumont City Council.