Funding a PRD
If the PRD is already formed or you plan to form the PRD as set forth above at the same time, these are the steps for the Committee to also petition for the work to be performed and for a special tax to pay for the improvements. As stated above, if the PRD is not yet formed, the County requests that a petition to form and a petition for improvements and a special tax be combined to avoid multiple hearings.
Make sure that your PRD is still in existence; if not, follow the steps in Forming a PRD to draft a petition to form the PRD. If the PRD was formed for a specific project and the project has been repaid, it is possible that the PRD no longer exists pursuant to California Streets and Highway Code section 1194. If the Committee is unsure, please confirm with the Department of Public Works. If the PRD is determined to be in existence, then it may seek additional funding if all loan obligations have been repaid.
The PRD shall obtain an engineer’s report that sets forth proposed work and estimated costs. The cost of the engineer’s report can be paid from funds in the existing PRD account. If the PRD lacks funds, the property owners shall bear these costs. However, if the special tax passes, these costs can be refunded if codes and laws stipulating the expenditure of public monies have been followed. (The engineer that prepares the engineer’s report shall be a licensed civil engineer in California that does not live within the boundaries of the PRD.)
The Committee must prepare a petition as set forth in California Streets & Highway Code section 1170, which must include a description of the project and its probable costs as provided in the engineer’s report. In addition, the PRD shall request that a special tax be levied. If the PRD intends to obtain a loan from the Department of Finance for road improvements or to request that a special tax be levied, the petition must be signed by at least 70% of the landowners in the PRD.
The 70% requirement for signatures is a County Policy to assure a high likelihood of eventual ballot approval prior to spending additional County resources on the process. (Note: to create this special tax, the actual vote must pass by a 2/3 majority of all votes cast of registered voters that live in the PRD boundary area, not homeowners.)
The Committee should submit the draft petition and any other supporting documents to the Department of Public Works for review prior to obtaining signatures.
The Department of Public Works will schedule a notice of public hearing wherein it will request a formal hearing and publication and mailing of the notice as required by State law. If the Board of Supervisors approves the project, it will order an election. If such an election is ordered, the Committee will work with the County Elections Department to prepare the documents required for the election. The Committee may provide arguments in favor of the special tax measure to be included in the voter’s pamphlet. The Committee may contact Dan Miller at 415-473-6437 or by email. Again, those voting on the tax measure are registered voters within the PRD boundaries, not the landowners. In addition, there are only certain mail ballot election dates, so the PRD should coordinate with the County Elections Department to determine when the dates are.
If the tax measure passes by the required 2/3 votes cast of registered voters in the PRD, the Committee will work to complete the project in accordance with Streets & Highway Code sections 1171-1172. The Committee will need to coordinate the project with the Department of Public Works.
All costs, including the cost of an election, must be covered by the property owners within the PRD. These costs are typically paid for by the passage of a special tax that is reflected on the tax bills of all property owners in the defined district pursuant to California Streets and Highway Code section 1179.5. Once the PRD is formed, PRD funds are handled as public monies. This means that the PRD must follow purchasing and contracting requirements, including following the competitive bid process via the Public Contract Code and prevailing wage requirements.
An interest-bearing loan may be available to finance a portion of road work rather than waiting until the PRD has accumulated sufficient funds through the tax measure. The PRD may contact the Department of Finance for more information, including interest rate requirements associated with loan repayment.
The main disadvantage of utilizing a PRD is increased cost. A portion of any assessment or special tax must be used to pay County staff for administrative time related to the PRD. In addition, because the funds raised by a PRD are public monies, the PRD is required to pay prevailing wage and follow bid procedures as outlined in the Public Contract Code related to its project, which can increase costs and the timing of a project. Finally, the PRD can only finance capital improvements over a maximum of a ten (10) year period. This will often result in a higher annual tax assessment than would be expected under other funding means with a longer repayment period.