Developer Impact Financing Fees (DIFF) and Land Secured Development Bonds (LSDBs)
Land Development Financing
The DIFF Program provides developers, municipalities, and schools the opportunity to construct, acquire, and provide additional community facilities to foster growth in their communities. DIFF is a pooled tax-exempt bond financing program that can finance developer impact fees and public improvements for private developments.
The DIFF Program provides non-recourse financing for either (a) eligible development impact fees payable to the local agency or (b) eligible public capital infrastructure improvements, or both if needed.
CalMuni PFA works closely with land owners and developers to issue all types of Land Secured Development Bonds (“LSDBs”), including Mello-Roos Community Facility District Bonds (“Mello-Roos Bonds”) and Assessment District Bonds (“Assessment Bonds”) to finance public infrastructure improvement projects secured by residential and commercial real estate.
LSDBs are often used to finance public infrastructure components of new residential and commercial projects. Typically, a real estate developer seeks financing for public improvements such as streets, curbs and gutters, parks, sewer, water, drainage, public safety, schools, and/or related impact fees. Such financing can be achieved by forming a community facilities district or an assessment district, levying taxes or assessments on individual land parcels, and issuing LSDBs, which are secured by the pledge of the taxes or assessments.
Bonds are issued by CalMuni PFA to provide financing for developer impact fees and eligible public capital infrastructure improvements. Revenues to pay debt service on the Bonds are derived in one of two ways – (1) through the levy of special assessments on the parcels which comprise the participating Projects by establishing one or more assessment districts (each, an “Assessment District”) under the Municipal Improvement Act of 1913 (the “Assessment Act”) or (2) through the levy of special taxes on the Project parcels by establishing a community facilities district (a “CFD”) under the Mello-Roos Community Facilities Act of 1982 (the “CFD Act”).
The advantages of the LSDBs include tax-exempt interest rates offered by the municipal bond market, long-term fixed-rate financing, and the non-recourse nature of the bonds, which are secured only by real property, with the lien and payment obligation automatically passing to new property owners with the change of title.
CalMuni PFA Advantage
Benefit from the availability of expert consultants at no extra cost to you. From the time of an inquiry, you will be paired with localized bond counsel and a municipal advisor for specialized consulting on financing your project needs.
Public Agencies Benefit
Local agencies benefit because the program encourages developers to pay fees sooner and in larger amounts than they otherwise would, all at no cost to the local agency.
Developers can benefit from the DIFF Program mainly by providing off-balance sheet, land secured non-recourse debt that automatically transfers to the homeowner upon purchase from the developer.
Finance 100% of project
The DIFF Program can finance a variety of public infrastructure projects with a range from $500,000 to $10,000,000 or higher depending on the project needs.
Low Cost of Borrowing
CalMuni PFA and the DIFF Program provide diversity to investors and economies of scale to its participants which will, in turn, translate into competitive interest rates and lower costs of borrowing.