A group of new home buyers in the JKB Homes Belmont division of Bridle Ridge are perplexed and in the dark when it comes to tax assessment fees for homes they’ve put down payments on, but have yet to close costs with the builder.

With finger pointing of JKB saying the city is in error, and continuing to make errors, and the city saying JKB should know all new lots in town have the assessments, the buyers are left wondering if they should pull out and find affordable homes elsewhere – a tough task as the housing market rebounds as once low prices rise.

Buyers Make Council Aware

A group of potential buyers, led by former city council member Bob McKlinsky, addressed the Oakdale City Council on Aug. 3 with complaints about JKB Homes stating they were not furnished information regarding Mello-Roos/CFD assessments at the time of placing a down payment.

The buyers all stated they asked about the tax and were told there was none by JKB salespeople.

CFDs or “Community Facilities Districts” also known as Mello-Roos taxes, were established so local government agencies could obtain community funding to pay for public works and other public services such as police and fire personnel for new home developments.

California law states that a property owner, or in this case, builder, must disclose to a buyer those assessments, or they can be sued to pay the entire Mello-Roos assessment. Agents also must run a title check on a property to find out all the taxes on it, so it can be taken into account so the person purchasing the property can be aware of all costs.

McKlinsky and three other couples said they were initially told there was no CFD assessments with lots they purchased earlier this year and now they are hearing that the CFD taxes do apply, making the budgeting they first thought affordable for house payments questionable.

“The way they’re taking care of business to resolve this isn’t taking care of us,” said one speaker, adding that he has already sold his family home and is living with his wife’s parents while they await the construction of their home.

All the buyers said that JKB representatives have told them they can back out of the deals and receive full refunds, but the buyers feel that backing out puts them in a bind for finding like-priced homes since the housing market has picked up.

“They tell us the city is at fault,” said McKlinsky, “but it does show that JKB was advised in April of 2015.”

City Manager Bryan Whitemyer told the group that he has reminded and continues to remind JKB Homes that the development is subject to CFD assessments.

Councilman Rich Murdoch suggested the group take their plight up with the Real Estate Board since their complaints weren’t about the city’s actions.

“We just want you to be aware of their actions,” McKlinsky said.

City Filing, Parcel Recording Flawed

When contacted, JKB representative Adrienne Farinha said she understands the buyers’ confusion.

“It’s so unfortunate,” Farinha said. “The City of Oakdale incorrectly assessed out here.”

Farinha provided a city Community Facilities District 2005-1 map showing the new Belmont Division outside the district boundaries.

She also showed an email from Oakdale Finance Director Albert Avila dated July 29 which stated, “The property in question is not in CFD 2005-1. These properties were incorrectly assessed in 2014-15. I am in the process of refunding the incorrect assessments. There will be no assessment for CFD 2005-1 for 2015-16 and going forward.”

Farinha added that when the parcel numbers were filed by the city under CFD 2007-1 with the county, the parcels referred to in the April 2015 Oakdale action, they were recorded with the wrong numbers and thus title companies aren’t finding CFD assessments with the parcel sales and CFD obligations aren’t coming up on disclosure reports.

“If it’s not coming up (as a CFD), we cannot disclose it as a Realtor,” Farinha said. “I can’t make a good faith effort to disclose something if I look and it’s not there.”

Farinha showed documents associated with McKlinsky’s lot where its identification came back in a Mello-Roos district, but lot documentation on each side of him came back clear of any assessments.

“I can see why he’s coming back upset,” Farinha said. “This is tough to untangle and we’re not getting clear answers for the CFD.”

City Says Builder Should Have Known

When contacted at city hall, Whitemyer provided a JKB application to participate in CFD 2007-1 dated Dec. 19, 2013, signed by JKB land owners showing their awareness of the development inside the CFD. He also provided a letter sent to JKB by City Attorney Thomas Hallinan about representatives possibly not disclosing Mello-Roos fees and advising them of the prior paperwork they had completed with the CFD information.

“It’s really simple,” Whitemyer said. “There’s an assessment and they (JKB) know there’s an assessment.”

Whitemyer explained that there were two different assessments for the Bridle Ridge Development. The 2005-1 CFD was a bond assessment that paid for the infrastructure of the area such as streets and sewers and the 2007 CFD was an assessment for city services like police and fire.

“They were erroneously assessed as (CFD) 2005 but were still part of the (CFD) 2007-01 Public Safety Services CFD,” Whitemyer said.

He also said the JKB subdivision of Bridle Ridge is two different phases and in one of the phases the streets were changed which affected the assessor when it came to recording parcel numbers.

“It may take the fiscal year for addendums and revisions to catch up with the county,” Whitemyer said.

Situation Finally Rectified?

Attorney Michael Warda, representing JKB, said the confusion in the whole matter started with the city inadvertently filing the properties in the wrong CFD.

“All the title reports were showing it was in,” Warda said, “but then we got notice that it was not.”

Warda said that all the lots in question were in CFD 2007-1.

“Those fees are considerably less,” Warda said. “However, some properties where the city did not record properly, those properties escaped CFD assessments on title searches.”

Warda said when the matter was finally clarified and rectified; everyone who intended to purchase was disclosed that there was a CFD defined by the Mello-Roos Act. Prior to closing escrow the buyers can always withdraw.

“From my perspective, JKB didn’t make the error,” Warda said. “The intent here is to get the right information prior to disclosure. The title reports came back with misinformation due to the city’s error on misfiling.”

Buyers Asking For Credits

McKlinsky said he and the other buyers are currently in separate negotiations with JKB to receive some sort of credits after their purchase.

“It was disclosed to us at the time of sale that we were not in Mello-Roos and that affected our decision to purchase,” McKlinsky said. “JKB knew as of April we were in the assessment area.”

McKlinsky added that he still wants to move into the home which is expected to be completed and ready for move-in on Sept. 29.

“There still may be room to make everybody happy,” McKlinsky said.