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HomeMy WebLinkAbout12-City Administrator -- - - - . CITY OF SAN BERNAeDINO - REQUEST F. COUNCIL ACTION .From: FRED WILSON, ACTING DIRECTOR OF FINANCE Subject: ASSESSMENT OF SPECIAL TAX LEVY FOR CFD #995 Dept: FINANCE Date: JULY 8, 1993 Synopsis of Previous Council ection: Resolution # 92-351 adopted on August 17, 1992 Resolution # 91-353 adopted on August 5, 1991 Recommended motion: Adopt Resolution Contact person: FRED WILSON. ACTING DIRECTOR OF FINANCE Phone: x - 5242 Supporting data attached: Ward: FUNDING REQUIREMENTS: Amount: N/A Source: 225-673-53925 Finance: Council Notes: 75-0262 Agenda Item NO.--1 ~ - ,CITY OF SAN BERNA.,NO - REQUEST F~ COUNCIL ACTION STAFF REPORT A requirement of the Community Facilities District #995 bond issue is that the Council authorize the determination and levy of the Special Tax Assessment each year. The City has contracted with Muni Financial Services, Inc. (MFS) to prepare the Special Tax Levy report for CFD #995. The Special Tax Levy report for 1993/94 has been prepared and is on file in the City Clerk's Office. The executive summary has been provided as an attachment to this report. Attached also is the resolution required authorizing the levy of the CFD #995 Special Tax on the tax rolls. It should be noted that this district has experienced a delinquency rate of 80.3% as of the April 10, 1993 Special Tax installment date and 75.6% as of the December 10, 1992 installment date. This delinquency can be primarily attributed to non payment of the Special Tax by one developer - Brimar Industries. Due to this heavy delinquency, the Bond Reserve Fund was used to make a portion of the March 1, 1993 debt service payment and will be needed to make the payment due on September 1, 1993. It is necessary to add to the Fiscal Year 93/94 Special Tax levy an amount that will replenish the Bond Reserve Fund so that the balance equals the reserve requirement. The need to replenish this fund is important as the Bond Reserve Fund may be needed to continue making debt service payments if the delinquency issue is not mitigated. This year's Special Tax levy is $1,095,882.67 which is composed of Calendar Year 1994 Debt Service payments, Administrative Expenses for cost recovery, and replenish the Bond Reserve Fund. The additional requirement is to replenish the Bond Reserve Fund as noted above in the amount of $373,775.02. REQUIREMENTS DOLLARS PERCENT Principal Due $ 70,000.00 9.7% Interest Due 616,777.50 85.4% Administrative 35,330.15 4.9% Expense Subtotal 722,107.65 100.0% Additional 373,775.02 NA Requirement TOTAL SPECIAL TAX $1,095,882.67 NA 75-0264 . . In response to the high delinquencies, the City has authorized MFS to send letters to the delinquent property owners. A resolution to proceed with judicial foreclosure has previously been adopted which permits MFS to proceed with all the necessary actions to initiate foreclosure in the event they are unsuccessful in obtaining payment for the delinquencies. We will keep the Mayor and Common Council apprised of the delinquency issue and the need to initiate judicial foreclosure. . . 1 RESOLUTION NO. 2 A RESOLUTION OF THE CITY OF SAN BERNARDINO COMMUNITY FACILITIES DISTRICT NO. 1 ESTABLISHING ANNUAL SPECIAL TAX FOR 3 FISCAL YEAR 1993/94. 4 WHEREAS, the Mayor and Common Council of the City of San 5 Bernardino (hereinafter referred to as the "legislative body"), 6 has initiated proceedings, held a public hearing, conducted an 7 election and received a favorable vote from the qualified electors 8 relating to the levy of a special tax in a community facilities 9 district, all as authorized pursuant to the terms and provisions 10 of the "Mello-Roos Community Facilities Act of 1982", being 11 Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of 12 the State of California, 13 WHEREAS, said election authorized the Special Tax by two- 14 thirds vote, as required by Government Code Section 53328 and 15 California Constitution Article 13A Section 4; This Community 16 Facilities District shall hereinafter be referred to as "District" 17 and, 18 WHEREAS, this legislative body, by Ordinance as authorized by 19 Section 53340 of the Government Code of the State of California, 20 has authorized a levy of a special tax to pay for costs and 21 expenses related to said Community Facilities Districts, and this 22 legislative body is desirous to establish the specific rate of the 23 special tax to be collected for the next fiscal year. 24 NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND COMMON 25 COUNCIL OF THE CITY OF SAN BERNARDINO, AS FOLLOWS: 26 Section 1. That the above recitals are all true and correct. 27 28 1 . . 1 Section 2. That the specific rate and amount of the special 2 tax to be collected to pay for the costs and expenses for the next 3 fiscal year (1993-1994) for the referenced District is hereby 4 determined and established to set forth in the attached, 5 referenced and incorporated Exhibit "A". 6 Section 3. That the rate as set forth above does not exceed 7 the amount as previously authorized by Ordinance of this 8 legislative body, and is not in excess of that as previously 9 approved by the qualified electors of the District. 10 Section 4. That the proceeds of the special tax shall be 11 used to pay, in whole or in part, the costs of the following, in 12 the following order of priority: 13 A. Payment of principal of and interest on any outstanding 14 authorized bonded indebtedness; 15 B. Necessary replenishment of bond reserve funds or other 16 reserve funds; 17 C. Payment of costs and expenses of authorized public 18 facilities; 19 D. Repayment of advances and loans, if appropriate. 20 E. Payment of District administrative costs. 21 The proceeds of the special taxes shall be used as set forth and shall not be used for any other purpose. 22 above, 23 / / / 24 / / / 25 / / / 26 27 28 2 . . 1 Section 5. The special tax shall be collected in the same 2 manner as ordinary ad valorem property taxes are collected, and 3 shall be subject to the same penalties and same procedure and sale 4 in cases of any delinquency for ad valorem taxes, and the Tax 5 Collector is hereby authorized to deduct reasonable administrative 6 costs incurred in collecting any said special tax. 7 Section 6. All monies above collected shall be paid into 8 Community Facilities District funds, including any bond fund and 9 reserve fund. 10 section 7. The Auditor of the County is hereby directed to 11 enter in the next County assessment roll on which taxes will 12 become due, opposite each lot or parcel of land affected in a 13 space marked "public improvements, special tax," or by any other 14 suitable designation, the installment of the special tax, and for 15 the exact rate and amount of the said tax, reference is made to 16 the attached Exhibit "A". 17 Section 8. The County Auditor shall then, at the close of 18 the tax collection period, promptly render to this Agency a 19 detailed report showing the amount and/or amounts of such special 20 tax installments, penalties, interest and percentages so collected 21 and from what property collected, and also provide a statement of retained for the expense of making any such 22 any percentages 23 collection. 24 / / / 25 / / / 26 / / / 27 28 3 . . 1 A RESOLUTION OF THE CITY OF SAN BERNARDINO COMMUNITY FACILITIES DISTRICT NO. 1 ESTABLISHING ANNUAL SPECIAL TAX FOR 2 FISCAL YEAR 1993/94. 3 4 I HEREBY CERTIFY that the foregoing resolution was duly adopted by 5 the Mayor and Common Council of the City of San Bernardino at a 6 meeting thereof, held on the , day of 7 1993, by the following vote, to wit: 8 COUNCIL MEMBERS Aue 9 NEGRETE 10 CURLIN 11 HERNANDEZ 12 OBERHELMAN 13 OFFICE VACANT 14 POPE-LUDLAM 15 MILLER 16 17 18 ~ ABSENT ABSTAIN CITY CLERK 19 20 21 22 The foregoing resolution is hereby approved this , 1993. day of Tom Minor, Mayor City of San Bernardino Approved as to form 23 and legal content: 24 JAMES F. PENMAN City Attorney 25 26 By: ~~. ,.. (l~ rJ 27 4 28 . . 1 STATE OF CALIFORNIA ) 2 COUNTY OF SAN BERNARDINO ) SS CITY OF SAN BERNARDINO ) 3 4 I, RACHEL KRASNEY, city Clerk in and for the City of San Bernardino, DO HEREBY CERTIFY that the foregoing and attached copy 5 of Resolution No. , is a full, true and correct copy of that now on file in this office. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Bernardino this day of , 1993. City Clerk BY Deputy 25 26 27 28 5 - ~ I MFS . . . . EXECUTIVE SUMMARY . Summarized below are the Fiscal Year 1993/94 Special Tax Requirement, the tax spread, delinquency levels, fund balances, and other issues for the Community Facilities - District (CFD). For further detail, please reference the relevant Section of this Special Tax Report. . I. SPECIAL TAX INFORMATION . A. Special Tax Requirements . This year's Special Tax Requirement is $1,095,882.67 which is composed of Calendar Year 1994 Debt Service payments, Administrative Expenses for cost recovery, and replenish the Bond Reserve Fund. I I I REQUIREMENTS DOLLARS PERCENT I Principal Due $70,000.00 9.7% Interest Due 616,m.50 85.4% I Administrative Expenses 35,330.15 4.9% Subtotal 722,107.65 100.00,1 . Additional Requirement . 373,775.02 NA. TOTAL SPECIAL TAX $1,095,882.67 NA. I * The additional requirement is to replenish the Bond Reserve Fund. The actual amount needed is $607,517.06, I however the Special Tax Formula limits the amount that can be collected to $373,775.02. For further discussion see Appendix B, Section H. I B. Special Tax Spread . SPECIAL TAX PERCENT OF TOTAL TOTAL PARCELS TOTAL DOLLARS AREA DOLLAR REQUIREMENT LEVIED LEVIED I A 11.76% 4 $128,875.80 B 19.16% 115 209,971.12 C 50.27% 129 550,900.22 I D 18.81% 50 206,135.53 TOTALS: 100.0% 298 $1.095,882.67 I i -- -. ... . I' I' I . - . . I . . . . I . I I I I 1\11 ~ l) . . II. FINANCIAL SYNOPSIS A. Delinquencies Current delinquency rates for Fiscal Year 1992/93 are as follows: SPECIAL TAX TOTAL TOTAL PERCENT OF TOTAL TOTAL PERCENT OF INSTALLMENT PARCELS PARCELS PARCELS DOLLARS DOLLARS DOLLARS DATE LEvIED DEUNQUENT DEUNQUENT LEVIED DEUNQUENT DEUNQUENT December 10, 1992 298 149 50.0% $388,294.66 $293,651.17 75.6% April 10, 1993 298 173 58.1% $388,294,66 $311,806.47 80.3% B. Fund Balances The balances for the CFD's Funds are shown in the following table: INITIAL BALANCE FUND/ACCOUNT PROCEEDS AS OF MAY 31,1993 Special Tax Fund $347,625.00 $575.64 Bond Fund: Principal Account 0.00 0.00 Interest Account 34,495.42 0.00 Acquisition and Construction Fund: Cost of Issuance Account 240,000.00 201,739.22 Capitalized Interest Account 775,529.15 29.67 Acquisition and Construction Account: CFD Subaccount 1,810,647.85 1,182,808.71 School District Subaccount 2.093,619.00 2,334,606.51 Administrative Expense Fund 0.00 0.00 Bond Reserve Fund 744,000.00 506.366.05 Redemption Fund 0.00 0.00 Rebate Fund 0.00 0.00 Escrow Fund 1,619,964.00 1,578,086.49 ii .' ----- --- MFS . . C. Bond Infonnation There have been no defaults on Bond payments. The outstanding bonded indebtedness of the CFD is $7,440,000.00 as of June 30, 1993. ill. ISSUES/RECOMMENDA TIONS 1) Due to heavy delinquencies, the Bond Reserve Fund was used to make a portion of the March 1, 1993, debt service payment and will be needed to make the payment due on September 1, 1993. It is necessary to add to the FY 1993/94 Special Tax Levy, an amount that will replenish the Bond Reserve Fund so that the balance equals the Reserve Requirement The amount neeeded is $607,517.06 (see Appendix B, Section H for the calculation). By taxing all taxable parcels at the Maximum Special Tax Rate, the Bond Reserve Fund cannot be replenished and additional $40,355.38 will be needed to make 1994 Debt Service payments even if all Special Tax revenues are collected for the 1993/94 levy. It is recommended that the Backup Special Tax be used for the FY 1993/94 Special Tax Levy. By doing so, $373,775.02 of the amount needed to replenish the Bond Reserve Fund can be recovered. 2) In response to the extremely high delinquencies, MFS sent letters to the delinquent property owners. The City has adopted a Resolution to proceed with judicial foreclosure, and is prepared to send demand letters and strip the Special Taxes from the County of San Bernardino tax rolls. This issue is of most importance as the Bond Reserve Fund has been used and will be needed to continue making debt service payments if delinquency is not mitigated. 3) The developer of the parcels in Special Tax Area C shall submit an appraisal on the parcels to the City by September 1, 1993. If the appraisal shows a value-te- lien ratio of 3:1 or greater, the funds in the Escrow Fund shall be transferred to the Acquisition and Construction Fund to be used to pay for the portion of the Project related to Special Tax Area C. If the value-to-Iien ratio is less than 3:1, the funds in the Escrow Fund shall be transferred to the Special Mandatory Redemption Account to redeem Bonds on November 1, 1993. MFS has sent a letter to inform the developer of the appraisal requirement. 4) Tax Area B is now fully developed with a house on each parcel. The Maximum Special Tax that can be collected in 1993/94 for Tax Area B without using the Backup Special Tax is $130,623.62. Since Tax Area B is responsible for 19.16% of the total Special Tax requirement, the Maximum Special Tax that can be collected in 1993/94 for the CFD without using the Backup Special Tax is $681,751.67. This does not even cover the Debt Service portion of the Special Tax requirement. Even without the high delinquency rates that have occurred, it is likely that the Backup Special Tax would be needed in order to meet the Special Tax requirement now that Tax Area B is fully developed. iii :MFS . . 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