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Officials mull fix in Indio's Terra Lago taxfight I The Desert Sun I nrydesert.com
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Officials mull fix in Indio's Terra Lago tax fight

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

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INDIO Those who stop by Gracie and Greg Nilson's mochacolored home on Sentiero Drive are greeted by a neatly manicured lawn, impeccable desert landscaping and a sky-blue sign protesting a "Mello Roos" tax.

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Sometimes the couple sticks magnetized signs on their cars. The Nilsons have paid the special tax since buying their home in the Terra Lago community in 2006. Tax receipts show they paid $3,550 for the special tax on Jan. 28, and they estimate theyve paid $33,000 since moving in. "That's a heavy burden for us," Gracie Nilson said. The Nilsons are among nearly 300 registered voters living in Terra Lago who filed a petition with the city in September, asking staff to revise the tax.
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Officials mull fix in Indio's Terra Lag a tax fig ht I The Desert Sun I mydesert.com Residents have long contended that the tax is unfair because homeowners on one side of the community known as Area 1 are fronting the cost for infrastructure
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improvements in another part of the community, known as Area 2, where no one lives. Area 2 hasn't been developed in nine
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years. "ht's a sham, the fact that Area 2 got all these benefits," said Brian Davies, who said he pays $4,000 in Mello Roos taxes a year. "Anybody can see it's not fair." On Wednesday, the Indio City Council is expected to approve a resolution to discuss changing the tax on Area 1. The resolution is required under the Mello Roos Act because a valid petition was filed with the city. Once the resolution is approved, a public hearing would follow on March 19.
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The Indio City Council is poised to approve on Wednesdays Resolution of Consideration' to discuss modification of a special tax levied on a development area known as Area 1within the Terra Lago community. Approval of the resolution would be followed bya public hearing on March 19. The discussions come after nearly 300 Terra Lago residents of Area 1 filed a petition with the city in September, asking staff to revise a special taxthat theyve paid annually since 2006. Residents have long contended that the taxis unfair because homeowners on one side of the communityknown as Area 1 are fronting the cost for infrastructural improvements in another part of the community, known as Area 2. The improvements include construction of a bridge and water, landscaping, sewer and road upgrades. In this photo construction is seen in Area 2. / Omar Ornelas, The Desert Sun

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Named after two California legislators Henry Mello and Mike Roos a Mello Roos tax is an additional tax placed on certain properties to create revenue for infrastucture improvements in new projects or neighborhoods. The improvements at Terra Lago include a bridge plus water, landscaping, sewer and road upgrades. Area 1 residents also say that more 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 owe Area 1 residents about $9 million. But Indio City Attorney Roxanne Diaz said residents in Area 1 agreed to 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 Desert Sun. ''The homeowners are receiving the benefits of the infrastructure that makes their piece of property a home."

What is sought
On Terra Lago Parkway north of I-10, Terra Lago is a picturesque gated community made up of about 520 villa-style homes that surround a 20-acre lake. The golf club at Terra Lago features two 18hole courses surrounded by timeshare homes. A small bridge cuts through the serene lake, offering an impressive view of the homes in Area 1, though many undeveloped plots of land remain. In 2005, according to a staff report, the city created the Terra Lago Community Facilities District at the request of its former master developer, Indio Land Ventures LLC. When the district was formed, two improvement areas were created http://www.mydeser t.cornlar ticle,/20140204/N EWS01/302040035/0fficials-mull-fi x-in- Indi a-s-Ter r a-Lag o-tax-fight 2/5

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Officials mull fix in Indio's Terra Lago taxfight I The Desert Sun I mIdesert.com within it to match two different development phases planned by the former developer. In that same year, $26.3 million in bonds were issued to finance facilities within Terra Lago, the staff report stated. However, the special tax was only issued to residents within Area 1. There is no tax for Area 2. In the petition, residents have three demands: First, Area 2 either "directly or indirectly" pay an amount to compensate Area l's special tax burden going forward. Second, that the city modify tax rates to incorporate the 113 undeveloped plots of land within Area 1. 'We're saying that the people with the undeveloped lots that haven't paid a tax should pay a tax," Davies said. "Otherwise if they don't pay a tax, (the developers) are going to sit on the property." "They should compensate us for the time that they didn't pay ... that's on our backs," he said. Diaz said that undeveloped land in Area 1 also paid the tax until about 5 years ago, when $3 million in escrow was used to pay off some of the bond debt. "That changed the way the formula worked," Diaz said. "The undeveloped properties were no longer required to be levied upon." Third, that the recalculation of the tax rate take into account this $3 million payment. The proposed tax rate amendment would reduce taxes on developed lots of land in Area 1 by 17.64 percent for the next fiscal year. For example, a 2,400- square-foot home on a 0.12 acre parcel in Area 1 that paid $3,003.92 in Mello Roos taxes last year would pay $2,474.12 in Mello Roos taxes for the 2014-2015 fiscal year, according to calculations made in a staff report. Diaz acknowledges that some residents "may not be satisfied with the change and believe that there should be some more relief provided to the Area 1 homeowners. I think that this amendment to the (tax rate) is fair in terms of how it looks at the developed property and the undeveloped property." Cost for the city to hire financial consultants to crunch numbers and analyze the tax modification process was set at a maximum of $77,500 in October. Hiring a financial consultant cost the city $18,000, but that amount excludes any legal costs, Diaz said. The city agreed to pay the fee using surplus amounts in the city's Acquisition and Construction fund, which was originally funded by Terra Lago's bond proceeds. Residents, however, said the city has denied their request for a forensic audit and hasn't taken sufficient steps to determine how much money is owed to Area 1 residents. "The main issue is the forensic accounting," said Gracie Nilson. "That needs to be done so that we know how much the people of Area 1

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Officials mull fix in Indio's Terra Lago taxfight I The Desert Sun I mydesert.com paid unknowingly." "Obviously, there are millions of dollars at stake here," she said. But the city attorney said it's not necessary. "The city has already diligently reviewed the disbursements of the bond proceeds and based on our review we do not believe that an outside audit is warranted," Diaz wrote in an email. In November, the City Council approved a settlement agreement with the development's new owner, Terra Lago Indio LLC. The new owner will pay the city $1.1 million by August 2015 to reduce the debt of the $26 million in bonds issued to Area 1 in 2006. The new owner also agreed to provide the city with a per-unit payment for each home developed in Area 2 to be used by the city to further reduce the debt by up to a maximum of $856, 811. In December, Terra Lago Indio LLC filed a request with the city that the district's authority to levy special taxes on Area 2 be waived in order for the agreement to be valid. A public hearing is required before the city could waive the tax. No hearing date has been set.

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Officials mull fix in Indio's Terra Lag o taxfight I The Desert Sun I nrydesert.com
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