29 minute read
Legal Brief
THE NEW WORLD OF REMOTE WORK: COMPLIANCE ISSUES AND EMPLOYEE MANAGEMENT
By Ryan A. Quadrel, Esq., Slovak Baron Empey Murphy & Pinkney LLP
Remote work was relatively uncommon before COVID-19, with fewer than one-third of employees performing at least some remote work. Now, nearly half of the American workforce continues to work remotely. It has been more than a year since stay-at-home orders were lifted and it looks like remote work is here to stay.
Employers had to react quickly to the challenges of the pandemic and may not have had the luxury of time to properly implement a remote work policy under those circumstances. From a legal compliance standpoint, a good remote work policy should address the following, at a minimum:
Timekeeping
The Department of Labor explains that employers must use “reasonable diligence” to determine the hours worked. The relevant inquiry is what the employer “should” know, not what the employer “could” know.
The following are some best practices for keeping time for non-exempt employees who are working remotely: • Have a set schedule. If flexible schedules are needed, require employees to communicate when they will be working and set reasonable limits on this. • Train managers and employees that they are not expected to perform any work (e.g., responding to emails) outside of scheduled work time. • Implement and communicate reasonable procedures for reporting ALL hours worked. • Do not discourage accurate and complete reporting.
Meal and Rest Breaks
Employers run the risk of noncompliance when an employee working remotely decides to take a meal break and is interrupted by a manager or supervisor who might not have been aware of this when they called or texted the employee to discuss work.
The best practice is to have a set time for meal and rest breaks and train management not to contact employees during scheduled breaks. Employees must accurately document the time that they started and ended their meal break. Rest breaks do not need to tracked, but employees should be reminded that they need to take them even when they are working remotely.
Reimbursement of Business Expenses
The California Labor Code requires that an employer reimburse an employee for all “necessary” business expenses incurred by the employee as a direct consequence of performing the job. (Lab.C. §2802).
Common expenses for remote employees include cell phones, home internet plans, computers, office supplies, postage, printing costs and computer software licenses. Whether or not the expense was “necessary” for the employee to incur should be evaluated on a case-by-case basis, but employers should consider what is reasonable under the circumstances of an employee who is working remotely.
A written remote work policy should address the employer’s process for reimbursing these expenses. For expenses that are difficult to calculate, such as the employer’s use of a cell phone for both personal and business-related purposes, employers may consider a monthly stipend. An employee’s agreement to this stipend is good evidence that this stipend was reasonable.
Security and Confidential Information
Employees with access to sensitive information should work on IT-approved hardware and internet connections to servers must be secure. Employees with access to trade secret and confidential information should renew their commitment, in writing, to protect this information and should be required to conduct work on work devices only, not on personal hardware or personal email accounts.
If employees provide sensitive health information while working remotely (e.g., COVID-19 test results), employers should ensure that it is properly stored and that other employees do not have access to it.
Employee Management Considerations
For many employers, productivity is a major concern for remote work. Keystroke tracking and other technologies have been implemented by employers who want to monitor employee activity more closely. Employers considering this should be aware of the privacy, security and employee trust issues that may arise from the use of this technology.
The California Constitution affords all persons a reasonable expectation of privacy and that privacy is heightened in the home and on personal devices. Employers should obtain written consent from employees and develop a written privacy policy before implementing these measures.
The Fourth Amendment of the U.S. Constitution prohibits unreasonable searches and seizures by government actors, including public agency employees. The U.S. Supreme Court recently addressed the issue of privacy expectation in public workplace electronic communications. Based on their decisions, public agency employers considering the use of computer monitoring should: 1. Establish privacy expectations with a coherent policy that covers all technologies used in the workplace; 2.Require affirmative consent by employees; 3.Clearly articulate a work-related purpose; and 4.Reasonably limit any search to the employer’s legitimate, work-related objectives.
The “Great Resignation”
If the current labor market is any indication, this pandemic has shifted perceptions of what it means to “work.” Employees and job candidates are now seeking more flexible work arrangements and the option to work from home when practicable. Many workers are still anxious about returning to their place of work and are seeking more physical privacy in their work environment to feel safe.
Employers seeking to remain competitive in this labor market ought to consider these factors, especially if they are struggling with employee retention. Many employers have embraced employee preference for the hybrid model, which allows employees to balance the convenience and safety of working from home with working in the office for in-person collaboration and productivity.
Litigation Concerns
Labor laws in California are notoriously employee oriented. Indeed, more employment lawsuits related to COVID-19 have been filed in California than in any other state. Wage and hour violations, wrongful termination, retaliation and disability discrimination are among the most commonly asserted claims. The majority of these lawsuits have contained at least some factual allegations related to remote work arrangements.
Crucial to the defense of any employment lawsuit is evidence of employer policies and practices that comply with California law. Employers permitting employees to work remotely should work with experienced and knowledgeable employment counsel to implement such policies and mitigate the risks of liability inherent with remote work.
• DISTRICT GENERAL COUNSEL • LABOR AND EMPLOYMENT • HUMAN RESOURCES • COLLECTIVE BARGAINING • UTILITY RATE SETTING • PROPOSITIONS 218 AND 26 • PUBLIC CONTRACTING • TORT LIABILITY DEFENSE • PREMISES LIABILITY • LITIGATION 760.322.2275 | sbemp.com
SAN DIEGO COSTA MESA PALM SPRINGS INDIAN WELLS NEW JERSEY NEW YORK
CSDA Focused on Special Districts’ Priorities in the Legislature
Special districts provide essential services to millions of Californians every day. It’s time for you to tell your story. The Capitol, the media, and, most importantly, the community you serve should understand the difference your special district makes.
Throughout the month we’ll be touching on topics such as meeting with elected officials, taking positions on legislation, writing a letter to the editor, and grassroots mobilization. Check your inbox every Tuesday in February!
To get started visit our Take Action Toolkit at csda.net/take-action where you’ll find resources and a preview of what’s to come.
Week One: Requesting Meeting with Elected Officials
• How to ask for a meeting with your legislator • Tips and tricks to get the most out of your meeting
Week Two: Taking Positions on Legislation
• Submit position letters in a timely manner by adopting an official district policy • Submit your official position on legislative measures • How to write a successful letter to the
Legislature
Week Three: Writing a Letter to the Editor
• Let your local paper know what you think
Week Four: Grassroots Mobilization
• How to contact your elected officials • Already have a relationship with your legislator? Let us know by taking a quick survey.
Join us next month as we take action together!
TAKE ACTION
SEASONS OF ADVOCACY: WINTER
• Request a “meet and greet” with newly elected legislators from recent special elections and legislators redistricted into your service territory for the upcoming election. • Sign up for your local legislators’ eNewsletters and social media— and add them and their staff to yours. • Update your CSDA Grassroots
Mobilization Survey at csda.net/ take-action with any new legislative relationships you have developed. • Set up a meeting or tour for your local news reporter or editor.
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DISASTER STRIKES:
The Importance of Incident Command
Co-authored by Chelsey Perkins, Planning Specialist, Connect Consulting Services; and Erik Angle RN, MICN, MEP, NHDP, Emergency Preparedness Coordinator, Sutter Roseville Medical Center
It could be a day just like any other day. Then the world around you can change forever. From natural disasters (such as wildfires, earthquakes, tornadoes, and hurricanes) to human- caused disasters (such as terrorism, active shooters, hazardous materials spills) disasters will happen. Knowing the risks, planning for the risks, and understanding actions to perform when they do happen can be critical for your safety and safety of your personnel, your business, and your customers.
The use of the Incident Command System (ICS) is one of the key actions that can be used for successful response to all-hazard disaster incidents. Below you will find a howto-guide to operationalize ICS within your organization.
ICS is a vetted concept and has been around more than 30 years. Through two separate incidents, wildfires in 1970 and the 9/11/2001 terrorist attacks, the system evolved and has been adopted by a wide variety of local, state, and national emergency management and law enforcement organizations due to its many documented successes. Today, it serves as a model all-risk, all-agency emergency management system.
ICS is a system, not a policy, used to direct, control, and coordinate the efforts of individual agencies as they work towards the common goal of stabilizing an all-hazard incident to protect life, property, and the environment. The “all-hazard” concept means that aspects of ICS can be used for any type for disaster, from natural (Wildfire or Severe Weather Responses) to human-caused (such as 9/11 or the Las Vegas Harvest Festival Active Shooter Incident) ICS uses principles and best practices that have been proven repeatedly to improve safety, efficiency, and effectiveness and applies these principles to emergency response. During all-hazard emergencies, problems and challenges often occur because leadership and management systems that work well on a day-to-day basis
cannot effectively meet the additional needs during a disaster. Key benefits for using ICS include: • Establishes a predictable Chain of
Command, no confusion on who would be in charge (i.e., Incident
Commander) • Provides a manageable span of control, limiting the number of personnel being managed under a leader and providing ability to add other leadership roles to supervise (i.e., Section Chiefs, Branch
Directors) • Clearly delineates roles and responsibilities with titles and Job
Action Sheets • Uses standard or common terminology to ensure clear communication (i.e., no codes, no jargon) through a common communication plan
ICS divides an emergency response into five manageable functions essential for safe emergency response operations. These Include: • Command Section sets the priorities and objectives for overall command and response to the incident. This section includes the key roles: o The Incident Commander is responsible for the overall management of the incident and is always activated in response o The Public Information Officer reports to the Incident Commander and is responsible for the development and release of information about the incident. o The Safety Officer is responsible for monitoring and assessing hazardous and unsafe situations as well as developing measures for assuring personnel and responder safety. o The Liaison Officer serves as the point of contact for assisting and coordinating activities between the facility and other responders and agencies. • Operations Section has responsibility for tactical “boots on the ground” operations to carry out objectives for incident response • Planning Section is responsible for collection, evaluation, and dissemination of information and intelligence related to the incident and provide documentation of incident response • Logistics Section is responsible for providing the necessary resources and support to meet incident response needs • Finance and Administration
Section is responsible for monitoring and documenting all costs, including additional staffing costs and workers compensation if injuries occur during the response as well as provides the necessary financial support related to the incident
The basic structure of ICS is the same regardless of the type of emergency, is scalable for response, and will reflect the magnitude of the incident. Not all positions and roles need to be filled but only activated as needed.
To create a culture of preparedness for your agency, it can be done by a process: • Establish a Team or key individual at your agency to be a designated Subject
Matter Expert and oversee developing an emergency preparedness/response plan. This would include development of an ICS structure and training. • Know your capabilities and risks.
Conduct a risk assessment regarding hazards your agency and region may face and your current ability to address those. This will help develop mitigation steps needed for response, including training, role designation of personnel in ICS and response. • Use the risk assessment to help develop your emergency plan(s) and program.
This may include response to specific hazards, communication, command
and control structure in ICS, leadership orders of succession and even identified training needed. This should be done annually as a best practice. • Approve and implement the plan(s).
Make it a “living document” and useful, not something that just gathers dust and is outdated the minute it gets approved. Update the plan on a as needed basis and routinely review for accuracy and applicability. Practice the plan, use lessons learned in drills/ exercises and actual incidents to streamline your plan, and train your
ICS staff for their roles (as a common issue identified in poor incident response is lack of trained personnel holding key ICS positions).
In conclusion, ICS is a tried and true is the system used to command, control, and coordinate the response efforts of individual agencies as they work towards the common goal of stabilizing an emergency to protect life, and property. It is tried and true system based on best-practices and lessons learned from disaster incident response. When disaster strikes, from natural or humancaused, knowledge and use of ICS can be a crucial tool to have for safe all-hazard response.
Watch the CSDA On-Demand Webinar:
Tools for Managing Disaster Response and Recovery
Visit csda.net under the Learn tab.
OSHA
Reporting with Updated COVID-19 Guidance
By Debbie Yokota, ARM, Chief Risk Officer, Special District Risk Management Authority
Employers have had to adjust to a lot in 2020 in response to the COVID-19 pandemic. One item that may have slipped under the radar is Cal-OSHA’s recording and reporting requirements for employees who contract COVID-19 on the job.
As described below, work-related COVID-19 infections are recordable for those employers who are required to maintain Cal-OSHA 300 logs. Certain work-related COVID-19 infections that result in death or hospitalization must also be reported to Cal-OSHA.
CAL/OSHA’s 300 LOG REPORTING REQUIREMENTS
First it is important to remember what must be reported on a California employer’s 300 log. To be recordable, an illness must be work-related and result in one of the following: • Death (Reportable within 8 hours of employer’s knowledge) • Days away from work • Restricted work or transfer to another job • Medical treatment beyond first aid* • Loss of consciousness • A significant injury or illness diagnosed by a physician or other licensed health care professional. (Reportable within 8 hours of an employer’s knowledge)
Employers with ten or fewer employees are exempt from the recordkeeping requirements and are only required to report illnesses that result in a fatality or an employee’s inpatient hospitalization.
Employers in California that have establishments meeting one of the requirements below are required
annually to electronically submit Form 300A injury and illness data: • All establishments with 250 or more employees, unless specifically exempted by section 14300.2 of title 8 of the California Code of
Regulations. • Establishments with 20 to 249 employees in the specific industries listed in Appendix H of Cal/OSHA’s regulations regarding occupational injury and illness records.
The deadline for submission each year is March 2nd, and employers covered by the electronic submission requirements must submit their Form 300A data for the previous calendar year. For example, employers must submit their Form 300A data for the 2021 calendar year by March 2, 2022.
CAL/OSHA’S COVID-19 RECORDKEEPING REQUIREMENTS
Cal-OSHA maintains that workrelated exposure to COVID-19 is a recordable incident and must be recorded in an OSHA 300 log if the following three requirements are met:
1. The case is a confirmed diagnosis of
COVID-19 as defined by the CDC; 2. The case is “work-related,” which is defined by OSHA as an “event or exposure in the work environment [that] either caused or contributed to the resulting condition or significantly aggravated a pre-existing injury or illness”; and 3. The case involves one or more of the general recording criteria specified by
OSHA regulations, which are injuries and illnesses that result in one of the following: death; days away from work; restricted work or transfer to another job; medical treatment beyond first aid; loss of consciousness; and/or a significant injury or illness diagnosed by a physician or other licensed health care professional.
Given the manner in which a virus like COVID-19 is contracted, it can be difficult for employers to determine whether a COVID-19 illness is workrelated, especially when an employee had possible exposure both in and out of the workplace. If an employee becomes sick at work, it does not matter if the illness is work-related. Employers must report all serious injuries, illnesses or deaths occurring at work without making a determination about work-relatedness. An employer should also report a serious illness if there is cause to believe the illness may be work-related, regardless of whether the onset of symptoms occurred at work.
While Cal-OSHA considers a positive test for COVID-19 determinative of recordability, a positive test result
continued on page 40
SDRMA Board and Staff
Officers
MIKE SCHEAFER, PRESIDENT Costa Mesa Sanitary District SANDY SEIFERT-RAFFELSON, VICE PRESIDENT, Herlong Public Utility District ROBERT SWAN, SECRETARY, Groveland Community Services District
Members of the Board
DAVID ARANDA, CSDM, Stallion Springs Community Services District TIM UNRUH, CSDM, Kern County Mosquito & Vector Control District JESSE CLAYPOOL, Honey Lake Valley Resource Conservation District THOMAS WRIGHT, Clovis Veterans Memorial District
Consultants
JAMES MARTA, CPA, James Marta & Company, LLP LAUREN BRANT, Public Financial Management DEREK BURKHALTER, Bickmore Actuarial CHARICE HUNTLEY, River City Bank FRANK ONO, ifish Group, Inc. ANN SIPRELLE, Best Best & Krieger, LLP KARL SNEARER, Apex Insurance Agency DOUG WOZNIAK, Alliant Insurance Services, Inc.
Staff
LAURA S. GILL, ICMA-CM, ARM, ARM-P, CSDM, Chief Executive Officer C. PAUL FRYDENDAL, CPA, Chief Operating Officer ELLEN DOUGHTY, ARM, Chief Member Services Officer DEBBIE YOKOTA, AIC, ARM, Chief Risk Officer WENDY TUCKER, AU, Member Services Manager ALANA LITTLE, Health Benefits Manager JENNIFER CHILTON, CPA, ARM, Finance Manager HENRI CASTRO, CSP, Safety/Loss Prevention Manager DANNY PENA, Senior Claims Examiner HEIDI SINGER, Claims Examiner II ASHLEY FLORES, Management Analyst/Board Clerk MICHELLE LAVELLE-BROWN, Health Benefits Specialist II TERESA GUILLEN, Member Services Specialist II MARGARITO CRUZ, Accountant CANDICE RICHARDSON, Member Services Specialist I RYAN CORP, Accounting Technician
Special District Risk Management Authority 1112 I Street, Suite 300, Sacramento, CA 95814 tel: 800.537.7790 • www.sdrma.org
is not necessary to trigger recording requirements. There may be other situations in which an employer must make a recordability determination even though testing did not occur or the results are not available to the employer. In these instances, the case would be still be recordable if it meets any one of the other general recording criteria described above, such as resulting in days away from work. Cal-OSHA recommends erring on the side of recordability.
For COVID-19 cases, evidence suggesting transmission at or during work would make a serious illness reportable. An employer should consider these factors: • Multiple cases in the workplace. • The type, extent, and duration of contact the employee had at the work environment with other people, particularly the general public. • Physical distancing and other controls that impact the likelihood of work-related exposure. • Whether the employee had workrelated contact with anyone who exhibited signs and symptoms of
COVID-19.
For recordkeeping purposes, an injury or illness is considered workrelated if an event or exposure in the work environment either caused or contributed to the resulting condition, or significantly aggravated a pre-existing injury or illness. An injury or illness is presumed to be work-related if it results from events or exposures occurring in the work environment unless an exception in section 14300.5(b)(2) specifically applies.
A work-related exposure in the work environment would include interaction with people known to be infected with SARS-CoV-2 (the virus that causes COVID-19); working in the same area where people known to have been carrying SARS-CoV-2 had been; or sharing tools, materials or vehicles with persons known to have been carrying SARS-CoV-2. Given the disease’s incubation period of 3 to 14 days, exposures will usually be determined after the fact.
If there is not a known exposure that would trigger the presumption of work-relatedness, the employer must evaluate the employee’s work duties and environment to determine the likelihood that the employee was exposed during the course of their employment. Employers should consider factors such as: • The type, extent, and duration of contact the employee had at the work environment with other people, particularly the general public. • Physical distancing and other controls that impact the likelihood of work-related exposure. • Whether the employee had workrelated contact with anyone who exhibited signs and symptoms of
COVID-19.
If after conducting the above goodfaith inquiry the employer cannot determine whether it is more likely than not that the employee’s exposure in the workplace caused the COVID-19 illness, the employer does not need to record the COVID-19 illness on their OSHA 300 log.
Thus, employers need to conduct an investigation into whether an employee’s COVID-19 infection was work-related, even if that investigation is relatively straightforward. Employers should keep documentation of its work-relatedness investigation in the event OSHA questions the sufficiency of its decision not to record a COVID-19 illness.
OSHA’S COVID-19 REPORTING REQUIREMENTS
The same difficult work-relatedness assessment discussed above also comes into play when considering whether to report (by telephone or online) a confirmed COVID-19 case to OSHA. The reporting obligation applies to 1) in-patient hospitalizations, or 2) fatalities resulting from a work-related exposure to the virus. A hospitalization for COVID-19 only becomes reportable when the employee receives a formal admission to the in-patient service of a hospital or clinic for care or treatment (not merely observation or diagnostic testing) within 24 hours of exposure to COVID-19 in the workplace. Employers must report such a hospitalization to OSHA within 24 hours of knowing both that the employee became hospitalized and that the hospitalization resulted from a work-related case of COVID-19. This scenario has a lower probability given COVID-19’s epidemiology, where individuals typically remain asymptomatic for the first 24 hours after exposure and hospitalizations (if they occur) happen later in time.
A fatality due to a work-related case of COVID-19, on the other hand, is reportable if it occurs within 30 days of the exposure to the virus in the workplace. Employers must report such a fatality within eight hours of learning that the employee died as a result of a work-related case of COVID-19. Obtaining reliable information on whether the employee’s death resulted from COVID-19 may likely pose a practical challenge. The cause of death is protected health information and thus not simply a matter of contacting the treating health care institution for details. Sometimes family members of the employee will report this information to the employer. OSHA has not provided solutions for how employers are to acquire COVID-19-related health information from employees.
IS TIME AN EMPLOYEE SPENDS IN QUARANTINE CONSIDERED “DAYS AWAY FROM WORK” FOR RECORDING PURPOSES?
No. Unless the employee also has a work-related illness that would otherwise require days away from work, time spent in quarantine is not “days away from work” for recording purposes.
DISTRICTS MAKE THE DIFFERENCE: A Look Back On
Districts Make the Difference (DMTD) is a public outreach campaign to spread the word about the many special districts that enhance communities across the U.S. During its early years, DMTD successfully promoted the important work of individual districts throughout California. In 2021, the outreach campaign expanded nationwide through a partnership with the National Special Districts Coalition (NSDC) to promote special districts across the country.
DMTD saw astronomical growth last year. The audience for our Twitter, Facebook, and YouTube profiles grew by nearly 200% and our posts were viewed over nine million times across all platforms. We look forward to continuing to promote the excellent work of special districts in 2022.
TOP FIVE CALIFORNIA SOCIAL MEDIA POSTS OF 2021
FIRE DISTRICTS FIGHT BLAZE
Our top post of 2021 exemplifies how grateful communities are for the brave men and women in their local fire districts. This post about how the Carpinteria-Summerland Fire Protection District and others worked to quickly extinguish a wildfire in Ventura County reached over 600,000 individuals and was shared nearly 3,000 times.
EAST BAY MUNICIPAL UTILITY DISTRICT DISCOVERS FOSSILS
Ten million-year-old fossils discovered by a special district in a local watershed? We thought this story featuring the East Bay Municipal Utility District was cool, and apparently, our followers did, too! This DMTD post was shared more than 100 times.
BELOVED FIRE CHIEF RETIRES
Chief Schapelhouman of the Menlo Park Fire Protection District retired in July 2021 after 40 years with the department. DMTD congratulated him in a post that garnered nearly 1,500 messages of gratitude and support.
A public outreach campaign supported by the California Special Districts Association to provide information about special districts, descriptions on how they serve communities, and compelling content. Visit us at districtsmakethedifference.org.
MAKE THE
2021
RESOURCE CONSERVATION DISTRICT OF THE SANTA MONICA MOUNTAINS MAKES HISTORY
The Resource Conservation District of the Santa Monica Mountains (RCDSMM) is prioritizing the safety of motorists and wildlife by building the world’s largest wildlife crossing across a portion of the 101 Freeway. This DMTD post highlighted the record-breaking $25 million conservation challenge grant awarded to RCDSMM by the Annenberg Foundation, which got them one step closer to breaking ground on this project.
CONSERVATION DISTRICT HOSTS SUCCESSFUL COASTAL CLEANUP DAY
The Solano Resource Conservation District collected more than 21,000 pounds of trash debris and 500 pounds of recyclables at its annual Coastal Cleanup Day. Thanks to DMTD, news of this event’s success reached over 70,000 people on social media.
Co-authored by Sara Mares, Director, NBS; and Rick Brandis, Managing Director, Oppenheimer & Co. Inc.
The Community Facilities District (“CFD”) may be the most flexible funding and financing tool available to California’s local governmental agencies. This flexibility is demonstrated by the following attributes: • A wide variety of facilities and services can be funded • The special taxes can be apportioned simply on a reasonable basis, as opposed to the stringent benefit requirements of special assessments • Flexibility is strengthened by utilizing zones, annexation areas, and improvement areas
These attributes can suit almost any situation, which makes the CFD an excellent choice for many municipalities seeking funding or financing.
A CFD can fund or finance a broad array of services over time and can be used by most types of special districts. The services that can be FUNDED include the following: • Police protection • Fire protection and suppression • Ambulance/paramedic services • Recreation programs • Library services • School maintenance • Operation and maintenance of museums and cultural facilities • Maintenance of lighting of parks/parkways/streets/roads/ open space • Flood and storm protection services • Hazardous substance remediation/removal • Maintenance and operation of any real property with an estimated useful life of five years or more owned by the local agency (or another local agency with a joint community facilities agreement)
Virtually any improvement or infrastructure can be FINANCED with a CFD. In addition to financing typical construction of parks, schools, and subdivision backbone infrastructure, CFDs can be used to: • Repay existing indebtedness secured by a tax, assessment or fee, including that of another public agency • Finance seismic safety and earthquake damage • Pay for remediation of hazardous substances and soil deterioration
What Type of Debt can be Utilized With a CFD?
A CFD can leverage debt for capital facilities financing. The special tax levy, secured by the property within the CFD, is the security for any debt issued. Debt financing options include land-secured municipal bonds (Mello Roos Special Tax Bonds), bank loans, and State Revolving Fund loans. The debt is typically tax exempt and a limited obligation (i.e., not a general obligation) of the issuing agency. As tax exempt debt, public agencies and taxpayers get the advantage of lower interest rates.
When issuing debt to finance capital facilities, the issuer must consider the costs of issuance, the value of the underlying property (an appraisal may be required if the property is in a developing condition), the overall tax burden on the property including ad valorem taxes, and other overlapping debt.
In some cases, facilities may be financed with pay-asyou-go funding in addition to or instead of issuing debt.
How is a CFD Formed?
A CFD can be initiated by registered voters, landowners, or members of a legislative body. The formation process begins with the one-time adoption of local goals and policies outlining the criteria under which CFDs may be used for facilities, services or both, credit requirements related to bonds issued and appraisal standards. Through a series of resolutions, the Rate and Method of Apportionment and Boundary Map are subsequently approved, the CFD is formed, and the election is called. With 2/3 approval of voters (if 12 or more registered voters reside within the boundaries of the proposed CFD) or landowners by acreage (if fewer than 12), the CFD is confirmed, and the special tax levy is ordered.
If there are 12 or more registered voters within the boundary of a CFD, an election must be held. Some agencies choose to consolidate with another election, while some may hold a mailed ballot or special election. Polling consultants may be used before the CFD formation process officially begins to determine whether there is sufficient voter support to win election approval. Outreach or strategy consultants may assist with developing informational messaging, preparing presentations for community meetings, writing informational mailings, and developing
strategies early on for engaging key stakeholders. An advocacy campaign may be mounted: This cannot be funded by public dollars but rather it needs to be privately funded.
How is a CFD Managed Once it is Formed?
After formation, the CFD needs to be managed. On an annual basis, the special tax levy is calculated according to the RMA (the special tax “formula”) and typically billed via the county tax property billing process, though direct billing is allowed. The active parcels must be determined, and the special taxes allocated to any new parcels. Development status and land use may require review for each parcel. Any annexations must be accounted for. Once the parcel and property data has been determined, rates may require updating based on a cost-ofliving inflator before being applied to each parcel. Mandatory reporting is needed, managing payment delinquencies is often required, and continuing bond disclosure may be necessary as part of the overall administration process. The annual administration is typically done by the same consultant that provided the formation services.
Special districts, cities, counties, and school districts have used the CFD since 1982 when the Mello Roos Community Facilities Act became law. Watch the CSDA Webinar:
Date: July 26, 2022 Register at csda.net under the Learn tab.
CSDAFC Board and Staff
Officers
JO MACKENZIE, PRESIDENT, Vista Irrigation District VINCE FERRANTE, VICE PRESIDENT, Moss Landing Harbor District ARLENE SCHAFER, SECRETARY, Costa Mesa Sanitary District GLENN LAZOF, TREASURER, Regional Government Services Authority
Members of the Board
GEORGE EMERSON, Goleta Sanitary District PAUL HUGHES, CSDM, South Tahoe Public Utilities District MATTHEW MCCUE, Coachella Valley Cemetery District
Consultants
RICK BRANDIS, Brandis Tallman, a Division of Oppenheimer & Co. Inc. WILLIAM MORTON, Municipal Finance Corporation ALBERT REYES, Kutak Rock LLP NICOLE TALLMAN, Brandis Tallman, a Division of Oppenheimer & Co. Inc.
Staff
NEIL MCCORMICK, Chief Executive Officer CATHRINE LEMAIRE, Coordinator AMBER PHELEN, Executive Assistant RICK WOOD, Finance & Administrative Director
CSDA Finance Corporation 1112 I Street, Suite 200, Sacramento, CA 95814 tel: 877.924.2732 • www.csdafinance.net
Recent Financings
Last year, CSDA Finance Corporation facilitated more than $77 million in financings both large and small for special districts throughout the state. From a $20 million bond offering for an electrical substation project to a $300,000 lease financing for a snowplow purchase, we provided solutions for a wide range of financing needs. Here are a few examples of financings closed in 2021:
Lassen Municipal Utility District
Electrical Substation - $20,000,000
McKinleyville Community Services District
Water/Wastewater System Improvements - $7,895,000
Pixley Irrigation District
Canal Restoration Project - $5,000,000
Groveland Community Services District
Refinancing Water Bonds - $3,000,000
Auburn Area Recreation and Park District
Energy Efficiency Projects - $2,190,000
Capistrano Bay Community Services District
Property Purchase - $1,020,000
Ebbetts Pass Fire Protection District
Fire Engine - $800,000 We have solutions for your financing needs, large and small. Contact CSDA Finance Corporation at 877.924.2732 or visit csdafinance.net.
Your Community. Your Services. Your District!
This campaign is centered on the concept that special districts go beyond providing important services to their communities. They make a difference in the lives of their residents and help our state thrive. The goal is to bridge the gap between special districts and the essential services that millions of people value.
The first step is to visit DistrictsMaketheDifference.org. The website features a simple-to-use toolkit filled with public awareness videos, web banners, posters, fact sheets, and other materials that can be easily downloaded.
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MAKE THE
California Special Districts Association 1112 I Street, Suite 200 Sacramento, CA 95814
PRSRT STD U.S. Postage PAID Permit No. 316 Sacramento, CA
