What is a CFD?

A community facilities district, or CFD, is a special tax district in which property owners tax themselves to fund critical infrastructure improvements. This tax is not a property tax. It is in addition to the standard property tax. The rate that property owners pay, the conditions, the length of time are determined by the city or agency proposing the CFD. Explore the stages of initiating and implementing a CFD to the right.

  • The City begins the official process of establishing a CFD, often by undertaking a study.

  • Goals and policies — the rules of the CFD — are adopted by the City These govern the rate, eligible properties and other conditions, the timeline and other details about how the tax will be levied or charged.

  • If there is no opposition, the City formally proposes the CFD.

  • A public hearing is held, allowing stakeholders to weigh in.

  • If applicable, a resolution to incur debt is adopted.

  • An election is held amongst the property owners. A two-thirds vote in favor of the CFD is required for it to pass.

  • Any debt necessary for the CFD, such as municipal bonds or bank loans, is issued by the City.

Why a CFD?

Unlike other funding mechanisms such as Enhanced Infrastructure Districts and Special Assessment Districts, CFDs are highly flexible in what they can fund, their structure, and both how and what they can charge. These special tax districts can pay for all manner of public services and infrastructure improvements while offering transparency in revenue sources, the ability to develop a long term funding plan, and more targeted control over how the that funding is spent.