Loading...
Item 18 - Request to Loan Community Facilities Dist. #88-1 the Debt Service Payment Due AGENDA REPORT SUMMARY _ CJ~~-- '/,tt'7 ( J' ~ . Honorable Mayor and Members of the City Council . Honorable Chairman and Members of the Redevelopment Agency FROM: James L. Bowersox, City Man~ INITIATED BY: John _D. Fitch, Assistant City Manager Peggy A. Stewart, Director of Administrative Services DATE: January 25, 1994 SUBJECT: Request to Loan Community Facilities District No. 88-1 the Debt Service Payment Due February 8, 1994 ABSTRACT The City has been not Hi ed by the County Co 11 ector's Offi ce that certa i nproperty owners in Community Facilities District No. 88-1 (Parkway Business Center) are 1 delinquent on their first installment of special taxes for fiscal year 1993-94. A debt I 1 service payment in the amount of $1,383,654 is due on February 8, 1994. This report authorizes a loan from the City of Poway to Community Facilities District No. 88-1 in the amount of $1,267,398 to cover the debt service payment. ~NVIRONMENTAL REVIEW Environmental review is not required for this agenda item according to CEQA guidelines, ' FISCAL IMPACT The sewer fund has adequate funds in its reserve funds to loan the Community Facilities District 88-1 $1,267,398 to cover the February 8, 1994 debt service payment. ADDITIONAL PUBLIC NOTIFICATION AND CORRESPONDENCE Abigayle Industrial Investors, Inc.; Poway Venture Limited; South Poway Associates; and Security First National Corporation RECOMMENDATION It is recommended that the City Council authorize the loan of $1,267,398 from the Sewer Fund balance (61-8950) to the Community Facilities District No. 88-1 for payment of debt service due on February 8, 1994,. and charge the District the City's rate of return on its investment as interest charges until the debt is repaid. fACTION L 1 of 3 JAN 2 5 1994 ITEM 13 . ------ AGENDA REPORT CITY OF POW A Y This report is induded on the C"""""" CaIendao', There wiD be no __ ~........ of the report prior to approvoI by the City Council unless members of the Counc:i~ _ or public request k to be ~ from the Consent Colendor and discussed separat<Iy. ')'XI wish to have this report puUed for ~K,""" pIeose fill out. slip indicaIing the report number and g;.e it to the City Clerk prior to the beginning of the Cd)' ComciI ..-mg. TO: Honorable Mayor and Members of the City Council Honorable Chairman and Members of the Redevelopment Agency FROM: James L. Bowersox, City Man~ INITIATED BY: John D. Fitch, Assistant City Manager Peggy A. Stewart, Director of Administrative Services DATE: January 25, 1994 SUBJECT: Request to Loan Community Facilities District No. 88-1 the Debt Service Payment Due February 8, 1994 BACKGROUND In October 1988, the City Council approved the formation of the Community Facilities District No. 88-1 (Parkway Business Center) to provide for the issuance of special tax bonds to finance the construction and acquisition of certain public improvements within the District. In November 1988, the qualified electors of the District authorized the District to incur bond indebtedness not to exceed $45,000,000. These bonds were issued in the total principal amount of $30,000,000 in early 1989 to finance certain public improvements. In January 1991, an additional $8,000,000 of Special Tax Bonds, Series 1990, were issued to finance part of the costs of the acquisition and construction of public improvements. The special taxes secure the debt service payment on those bonds. Furthermore, there is a covenant that in the event of a delinquency on the tax payment, the City would institute judicial foreclosure proceedings within 120 days of the delinquency. On February 26, 1993, Parkway Business Centre Partners, Ltd., a California limited partnership, the majority property owner of land located within the boundaries of Community Facilities District No. 88-1 (Parkway Business Center) of the City of Poway, filed a Chapter 11 bankruptcy action in United States Bankruptcy Court, Southern District of California, Case No. 93-02076-H-ll. At that time, Parkway was delinquent in the payment of its first installment of fiscal year 1992-93 special taxes of the District. Commencement of judicial foreclosure proceedin9s with respect to Parkway's property in the District was halted by automatic stay pending the resolution of the bankruptcy. Parkway has since defaulted in the payment of the remaining fiscal year 1992-93 special tax payments due and owing with respect to ACTION: 2 of 3 J JAN 2 5 1994 ITEM 18.~ - - Agenda Report - January 25, 1994 Page 2 Parkway's property in the District, bringing Parkway's total delinquency to $2,782,871.55 out of a total District-wide tax levy for fiscal year 1992-93 of $3,248,478.88. On June 30, 1993, the City of Poway and the District filed a motion for relief from the automatic stay in order to proceed with judicial foreclosure proceedings against Parkway. The bankruptcy court continued the hearing on such motion to September 22, 1993 and, after a further continuance, on October 5, 1993 granted relief from stay in Case No. 93-01076-H-ll, effective immediately. The City has now resumed judicial foreclosure proceedings in this matter. FINDINGS According to the Mello-Roos Bond Act of 1982, special taxes are levied to cover the debt service need within the District. The City Council established the FY 1993-94 special tax charges for Community Facilities District No. 88-1 on August 8, 1993. In order to avoid drawing on the reserve funds or to avoid a default on the bonds, the City loaned $2,892,261 to the District for the February 8 and August 8, 1993 debt service payments. A debt service payment for $1,383,654 is due to the Fiscal Agent on the outstanding bonds by February 8, 1994. Since the City is in a secured position because of the nature of the special tax, and the special taxes will not be - paid by the property owners in time to make the debt service payment, it will be necessary for the City to loan $1,267,398 in funds to the Community Facilities District No. 88-1 through the sewer fund. ENVIRONMENTAL REVIEW Environmental review is not required for this agenda item according to CEQA guidelines. FISCAL IMPACT The sewer fund has adequate funds in its reserve funds to loan the Community Facilities District 88-1 $1,267,398 to cover the February 8, 1994 debt service payment. ADDITIONAL PUBLIC NOTIFICATION AND CORRESPONDENCE Abigay,e Industrial Investors, Inc.; Poway Venture Limited; South Poway Associates; and Security First National Corporation. RECOMMENDATION It is recommended that the City Council authorize the loan of $1,267,398 from the Sewer Fund (61-8950) to the Community Facilities District No. 88-1 for payment of debt service due on February 8, 1994 and charge the District the City's rate of - return on its investment as interest charges until the debt is repaid. c:\wpfiles\foreclse.agn 3 of 3 "IAN 2 5 1994 ITEM 18,.