Item 6.2 - Community Facilites Dist. 1 Debt Service Payment _AGENDA REPORT SUMMARY
TO: Honorable Mayor and Members of the City Council
Honorable Chairman and Members of the Redevelopment Agency
FROM: James L. Bowersox, City Mana~
A
INIIIATEDBY: John D. Fitch, Assistant City Manage~'
Peggy A. Stewart, Director of Administrative Service~
DATE: ~ January 17, 1995
SUBJECT: Community Facilities District No. 1 Debt Service Payment
Due January 25, 1995; and Community Facilities District
No. 88-1 Debt Service Payment Due February 8, 1995
ABSTRACT
The City has been notified by the County Tax Collector's Office that certain property
owners in Community Facilities District No. 1 (C.F. Poway Ltd.) and Community
Facilities District No. B8-1 (Parkway Business Center) are delinquent on their first
installment of special taxes for fiscal year 1994-95. This report authorizes a draw on
the reserves from Community Facilities Districts No. 1 and No. 88-1 in the amounts of
$726,379.40 and $631,845.31 to cover the debt service payments of $1,329,167.61 and
$1,470,020.00, respectively.
ENVIRONMENTAL REVIEW
Environmental review is not required for this agenda item according to CEQA guidelines.
FISCAL IMPACT
The bond reserves for Community Facilities Districts No. 1 and No. 88-1 have adequate
funds to cover a draw of $726,379.40 and $631,845.31, respectively, for the January 25
and February 8, 1995 debt service payments.
ADDITIONAL PUBLIC NOTIFICATION AND CORRESPONDENCE
None
RECOMMENDATION
It is recommended that the City Council authorize a draw of $726,379.40 and $631,845.31
from the bond reserve fund balances of Community Facilities Districts No. 1 and
No. 88-1 for payment of debt service due on January 25 and February 8, lggs.
ACTION
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JAN 1 ? 1995 rrl=M 6.2
AGENDA REPORT
CITY OF POWAY
TO: Honorable Mayor and Members of the City Council
Honorable Chairman and Members of the Redevelopment Agency
FROM: James L. Bowersox, City Manager
INITIATED BY: John D. Fitch, Assistant City Manager
Peggy A. Stewart, Director of Administrative Services
DATE:
January 17, 1995
SUBJECT: Community Facilities District No. 1 Debt Service Payment Due
January 25, 1995; and Community Facilities District No. 88-1
Debt Service Payment Due February 8, 1995
BACKGROUND
Community Facilities pistrict No. 1
In December 1985, the City Council approved the formationof the South Poway
Community Facilities District No. 1 to provide for the issuance of special tax bonds
to finance the construction and acquisition of public improvements within the South
Poway Planned Community Area.
Initially, $30,000,000 in bonds were issued under the provisions of the Mello-Roos
Community Facilities Act of 1982 which authorized the levy of a special tax on the
property within the district boundary to service the debt on the bonds. Due to a
downturn in interest rates, it was determined that the developers of the Pomerado
Business Park (South Poway Community Facilities District No. 1) could realize a
substantial savings if refunding bonds were issued to defease the original issue.
Therefore on March 3, 1987, the City Council approved the issuance of $32,800,000 in
special tax refunding bonds.
On December 27, 1994, Cadillac-Fairview, parent company of C.F. Poway, Ltd., major
developer for Community Facilities District #1, filed for Canadian bankruptcy court
protection to reorganize its outstanding debts. C.F. Poway failed to pay its first
installment of special taxes for fiscal year ]994-95. We do not anticipate that the
taxes will be collected prior to the debt service payment due date of January 25,
1995.
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.
ACTION:
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JAN 1 7 1995 ~'ri~M 6,2
Agenda Report
January 17, 1995
Page 2
Community Facilities District No. 88-1
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 lg91, 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.
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-11. Since that time, the City
Attorney's office has initiated and continued with the process of the judicial
foreclosure against the property.
A new group, JMP Advisors, Inc., received clear title to the Parkway Business Centre
Property; however, the taxes have not been brought current. If full collection does
not occur prior to foreclosure sale, which may happen very soon, the District does
not anticipate sufficient payment of any of the delinquent special taxes prior to
the debt services payment due date. JMP Advisors, Inc. has changed its name to
Burlich Corporation and some of the properties have changed owners and delinquent
taxes have been paid. The total payoff from delinquent parcels in 1994 was
$601,664.19.
FINDINGS
According to the Hello-RODs Bond Act of 1982, special taxes are levied to cover the
debt service need within the District. The City Council established the FY 1994-95
special tax charges for Community Facilities Districts No. ] and No. 88-1 on
August g, 1994.
Community Faci)ities Pistrict No. 1
A debt service payment of $1,329,167.61 is due to the Fiscal Agent on the
outstanding bonds by January 25, 1995. Community Facilities District No. 1 has bond
reserve funds of $3,000,000. These reserve funds were established at the time bonds
were sold to cover up to one year's debt service payment in the event of
delinquencies in the special tax payment. It is recommended that the Council
authorize a draw on these funds in the amount of $726,379.40 to cover the shortfall
for the January 25, 1995 debt service payment.
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JAN 1 ? 1995
Agenda Report
January 17, 1995
Page 3
Community Facili%ies pistrict No. 88-1
In order to avoid drawing on the reserve funds or to avoid a default on the bonds,
the City loaned $4,159,659.09 to the District for the February 8, 1993, August 8,
1993, and February 8, 1994 debt service payments and drew down $1,393,354.77 from
the reserve fund to pay for the August 8, 1994 debt service payment.
A debt s~ice payment of $1,470,020.00 is due to the Fiscal Agent on the
outstanding bonds by February 8, 1995. Community Facilities District No. 88-1 has
remaining bond reserve funds of $2,423,603.87. These reserve funds were established
at the time bonds were sold to cover up to one year's debt service payment in the
event of delinquencies in the special tax payments. It is recommended that the
Council authorize a draw on these funds in the amount of $631,845.31 to cover the
February 8, 1995 debt service payment.
ENVIRONHENTAL REVIEW
Environmental review is not required for this agenda item according to CEQA
guidelines.
FISCAL )MPACT
The bond reserves for Community Facilities Districts No. 1 and No. 88-1 have
adequate funds to cover a draw of $726,379.40 and $631,845.31, respectively, for the
January 25 and February 8, 1995 debt service payments.
ADDITIONAL PUBLIC NOTIFICATION AND CORRESPONDENCF
None
RECOHNENDATXON
It is recommended that the City Council authorize a draw of $726,379.40 from
Community Facilities District No. 1 bond reserve fund balance for payment of debt
service due on January 25, 1995, and $631,845.31 from the bond reserve fund balance
of Community Facilities District No. 88-1 for payment of debt service due on
February 8, 1995.
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