Land sale could ease special tax on some Atwater residents

mnorth@mercedsunstar.comApril 10, 2013 

ATWATER -- City officials are coming close to selling two pieces of land -- a move that could ease the tax burden to some residents.

Staff is moving forward with the sale of a 9-acre lot and a 20-acre lot near the intersection of North Buhach Road and East Juniper Avenue.

The area is part of a special-taxing district in Atwater known as Mello-Roos, and some city officials are hoping the sales of the properties will help alleviate those extra taxes.

The Mello-Roos district in Atwater, which is bound by East Bellevue Road, North Buhach Road, Shaffer Road and East Broadway Avenue, has left many residents paying an extra $2,000 a year or more in special property tax.

Mello-Roos districts -- named for the former legislators who sponsored the law creating them -- issue bonds to pay for infrastructure, then homeowners within the district are taxed to pay off the bonds.

During a report out of a closed-session meeting earlier this week, Atwater City Attorney Tom Terpstra said staff was given direction to complete the negotiations of an agreement and the mayor was given authorization to execute the agreement for the sales of those pieces of land.

Though the city has gotten offers on the properties, nothing's been finalized, said Frank Pietro, police chief and interim city manager.

There are taxes owed on the properties, but they do present an opportunity for development, Pietro said.

"It's vacant property that could easily be built up," he said.

Scott McBride, acting community development director, said the properties are zoned as planned development and could accommodate several potential uses, such as commercial.

He said the city's been working on selling the land for nearly 2 years.

"This has been a really hard market to sell commercial land, especially so much commercial land," McBride said.

Once the land is sold, McBride said it could bring some relief to those paying the Mello-Roos tax.

The special tax is set to end in August 2015, but if the two properties are sold, more than $430,000 of unpaid Mello-Roos tax would be paid into the remaining bond amount, McBride said. That money could potentially ease the tax burden on home owners in the Mello-Roos area.

Since the city is selling the land, it would be paying the back taxes. The revenue from the sale of the land would be used to cover those taxes. Any money that's left over will go toward reducing the Mello-Roos balance.

Councilman Jeff Rivero, who's fought to reduce the Mello-Roos taxes, said he's been told that the sale of the two parcels of land could reduce Mello-Roos payments by close to half for one payment year.

He described the Mello-Roos district as a "horrible mistake" and an "atrocity," adding that many homeowners either didn't know what they were getting into when they moved into the area or were give misinformation about the tax.

However, once the Mello-Roos bonds are paid off, they can't come back.

"It's like a vampire," he said. "Once you drive a stake through it, it can never come back."

Reporter Mike North can be reached at (209) 385-2453 or mnorth@mercedsunstar.com.

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