How MADs are Formed
A MAD may be formed at the time a new subdivision is built. The developer is usually the only property owner, so the developer determines the scope of services to be provided. Sometimes, the developer is required to install certain assets as part of the Development Permit. Other times, the developer wants to install certain assets in order to make the development more marketable. Either way, the City requires the developer to sign a Landscape Maintenance Agreement guaranteeing to maintain the assets until maintenance responsibility can be turned over to a Homeowners' Association, MAD, or other entity. The developer pays the required District Formation costs (independent Assessment Engineer's Report and balloting) and constructs all of the assets. The scope of services of the MAD is limited to maintaining the assets. An Assessment Engineer determines which properties benefit from maintenance of the assets, and apportions a share of the cost of maintenance to each parcel based on the benefit it receives. Prospective buyers of the property are informed of the existence of the MAD as a line-item on their property tax bill.
If the community is already developed when the MAD is proposed to be formed, District Formation costs are either funded by CDBG or by some of the benefitting property owners, usually with the provision that if the ballot passes, the front-money is returned to the originator from the first year's assessments. Community members advocating the MAD usually meet frequently with the Park and Recreation Dept. and the Assessment Engineer to identify a scope of services and resulting assessment amount, which the community members believe will get a favorable result in a ballot of all assessable property owners.