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2/5/2014 f fic ia ls m ul l f ix in Ind io 's Ter ra Lago taxf ight I The Des er t Sun I n rydeser t .comCLASSIFIEDS: JOBS CARS HOMES APARTMENTS CLASSIFIEDS SHOPPING OG IN SUBSCRIBE ACTIVATE E.NEWSPAPER HELP

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Officials mu ll fix in Indio s Terra L ag o tax fightIndio set to discuss cut but Terra Lago owners say deal still unfairFeb. 4, 2014 I Comments ec omm end Be the f ir s t o f you r fr iends to r ec ommend th is .

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The Indio City Council is poised to approve on Wednesday a 'Resolution of Consideration' to discuss modification ofa special tax levied on a development area known as Area 1 within the Terra Lago community. Approval of theresolution would be followed by a public hearing on March 19. The discussions come after nearly 300 Terra Lagoresidents of Area 1 filed a petition with the city in September, asking staff to revise a special taxthat theyve paidannually s ince 2006. Residents have long contended that the taxis unfair because homeowners on one side of thecommunity known as Area 1are fronting the cost for infrastructural improvements in another part of thecommunity, known as Area 2. The improvements include construction of a bridge and water, landscaping, sewer androad upgrades. In this photo construction is seen in rea 2./ Omar Ornelas, The Desert Sun

Written byT a t ia na Sa nchezThe Desert Sun

FILED UNDERLocalLocal NewsIndio City Council

INDIO Those who stop by Gracie and Greg Nilson's mocha-colored home on Sentiero Drive are greeted by a neatly manicuredlawn, impeccable desert landscaping and a sky-blue sign protesting a"Mello Roos" tax.Sometimes the couple sticks magnetized signs on their cars.The Nilsons have paid the special tax since buying their home in theTerra Lago community in 2006. Tax receipts show they paid $3,550for the special tax on Jan. 28, and they estimate theyve paid $33,000since moving in.

"That's a heavy burden for us," Gracie Nilson said.The Nilsons are among nearly 300 registeredvoters living in Terra Lago who filed a petitionwith the city in September, asking staff torevise the tax.

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Purchase Irn gThe Indio City Council is poised to approve onWednesd ays Resolution of Consideration' to discussmodification of a special tax levied on a developmentarea known as rea 1within the Terra Lagocommunity. Approval of the resolution would befollowed bya public hearing on March 19. Thediscussions come after nearly 300 Terra Lagoresidents of Area 1 filed a petition with the city inSeptember, asking staff to revise a spe cial taxthattheyve paid annually since 2006. Residents have longcontended that the taxis unfair because hom eownerson one side of the commun ityknown as Area 1are fronting the cost for infrastructural improvements inanother part of the community, known as Area 2. Theimprovements include construction of a bridge andwater, landscaping, sewer and road upgrades. In thisphoto construction is seen in Area 2. / O mar Ornelas,The Desert Sun

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Residents have long contended that the tax isunfair because homeowners on one side ofthe community known as Area 1 arefronting the cost for infrastructureimprovements in another part of thecommunity, known as Area 2, where no onelives. Area 2 hasn't been developed in nineyears.

ht's a sham, the fact that Area 2 got all thesebenefits, said Brian Davies, who said he pays$4,000 in Mello Roos taxes a year. Anybodycan see it's not fair.On Wednesday, the Indio City Council isexpected to approve a resolution to discusschanging the tax on Area 1.The resolution is required under the MelloRoos Act because a valid petition was filedwith the city. Once the resolution is approved,a public hearing would follow on March 19.Named after two California legislators Henry Mello and Mike Roos a Mello Roostax is an additional tax placed on certainproperties to create revenue for infrastuctureimprovements in new projects orneighborhoods.The improvements at Terra Lago include abridge plus water, landscaping, sewer androad upgrades. Area 1 residents also say thatmore than Si million of their taxes went to a

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fire station that serves both areas.Davies, who wrote the petition to the city, estimates developers oweArea 1 residents about $9 million.But Indio City Attorney Roxanne Diaz said residents in Area 1 agreedto pay when they first bought their homes.A Mello Roos district is not required, nor is the city required, to

'compensate' the homeowners, Diaz wrote in an email to The DesertSun. ''The homeowners are receiving the benefits of the infrastructurethat makes their piece of property a home.What is soughtOn Terra Lago Parkway north of I-10, Terra Lago is a picturesquegated community made up of about 520 villa-style homes thatsurround a 20-acre lake. The golf club at Terra Lago features two 18-hole courses surrounded by timeshare homes.A small bridge cuts through the serene lake, offering an impressiveview of the homes in Area 1, though many undeveloped plots of landremain.In 2005, according to a staff report, the city created the Terra LagoCommunity Facilities District at the request of its former masterdeveloper, Indio Land Ventures LLC.When the district was formed, two improvement areas were created

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2/5/2014 f f icials mull f ix in Indio's Terra Lago taxf ight I The Desert Sun I mIdesert.comwith in i t to match two d if ferent development phase s planned by theformer developer.In that same year, $26.3 mil l ion in bonds were issued to f inancefaci l i ties with in Terra La go, the staff report s tated. However, thespec ia l tax was on ly issued to res iden ts wi th in Area 1 . There is no taxfor Area 2.In the peti t ion, residents have three demands:

First, Area 2 e ither d irect ly or indirect ly pay an am ount tocompensate Area l's special tax burden going forward.

Second, that the c ity modify tax rates to incorporate the 113undeve loped p lo ts o f land wi th in Area 1 .'We're saying that the people with the undeveloped lots that haven' tpaid a tax should pay a tax, Davies said. Othe rwise i f they don' t paya tax, ( the developers) are going to s it on the property.They sho uld com pensate us for the t im e that they d idn ' t pay . . . that 's

on our backs , he sa id .Diaz sa id tha t undeve loped land in Area 1 a lso pa id the tax un t i l abou t5 years ago , when $3 mi l l ion in escrow was used to pay o f f some o fthe bond debt.That changed the way the formu la worked, Diaz said. The

undeve loped proper t ies were no longer requ i red to be lev ied upon .Third, that the recalculat ion of the tax rate take into accoun t th is $3

mil l ion payment.The proposed tax ra te amendm ent wou ld reduce taxes on deve lopedlots of land in Area 1 by 17.64 perce nt for the next f iscal year.For example , a 2 ,400- square- foo t home on a 0 .12 ac re parce l inArea 1 tha t pa id $3,00 3.92 in Me l lo Roos taxes las t year wou ld pay$2,474.12 in Me l lo Roos taxes fo r the 20 14 -2015 f isca l year ,accord ing to ca lcu la t ions ma de in a s ta f f report .D iaz acknowledges tha t some res iden ts may no t be sa t is f ied wi th thechange and be l ieve tha t the re shou ld be som e m ore re l ie f prov ided tothe Area 1 ho meo wners. I th ink that th is amend me nt to the ( tax rate) isfa ir in terms of how it looks at the developed property and theundeveloped property.Cost for the c ity to h ire f inancia l consultants to crunch numbers a ndana lyze the tax m od i f ica t ion process was se t a t a max imum o f

77,500 in October.Hiring a f inancia l consultant cost the c ity $18,00 0, but that amoun texc ludes any lega l cos ts , D iaz sa id .The c ity agreed to pay the fee us ing surplus amo unts in the c ity 'sAcquis it ion and Construct ion fund, which was or ig inal ly funded byTerra Lago's bond proceeds.

Residents, however, sa id the c ity has denied their request for afo rens ic aud i t and ha sn ' t taken su f f ic ien t s teps to de te rmine howmuch mon ey is owed to Area 1 res iden ts .The main issue is the forensic accounting, said Gracie Nilson. Tha t

needs to be done so tha t we know how m uch the people o f Area 1http://vmw.ndesert.com/art icle/20140204/NEWS01/302040035/0ff icials-mull-f ix-in-Indio-s-Terra-Lago-tax-f ight /5

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