Item 14 - Community Facilities Dist 1 Debt Service Payment Due
-- AGENDA REPORT SUMMARY -
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TO: Honorable Mayor and Members of the City Council
Honorable Chairman and Members of the Redevelopment Agency
FROM: James L. Bowersox, City Manager/Executive Dire~
^
INITIATED BY: John D. Fitch, Assistant City Manager~H
Peggy A. Stewart, Director of Administ ative servic~
DATE: August 1, 1995
SUBJECI': Community Facilities District No.1 Debt Service Payment
Due August 2, 1995; and Community Facilities District
No. 88-1 Debt Service Payment Due August 8, 1995
ABSTRACI'
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. 88-1 {Parkway Business Centre} are delinquent on their first
and second installments 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 $581,602.25 and $851,907.38 to cover the debt service
payments of $1,436,366.25 and $1,745,020.00, respectively.
ENVIRONMENTAL REVIEW
Environmental review is not required for this agenda item according to CEQA guidelines.
FISCAL IMPACI'
The bond reserves for Community Facilities Districts No.1 and No. 88-1 have adequate
funds to cover a draw of $581,602.25 and $851,907.38, respectively, for the
August 2 and August 8, 1995 debt service payments.
ADDITIONAL PUBLIC NOTIFICATION AND CORRESPONDENCE
None
RECOMMENDATION
It is recommended that the City Council authorize a draw of $581,602.25 and $851,907.38
from the bond reserve fund balances of Community Facilities Districts No.1 and
No. 88-1 for payment of debt service due on August 2 and August 8, 1995.
~ ACI'ION
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AUG 1 1995 11 EM 14
AGENDA REPORT
CITY OF POW A Y
TO: Honorable Mayor and Members of the City Council
Honorable Chairman and Members of the Redevelopment Agency
FROM: James L. Bowersox, City Manager\Executi~e Dir~
INITIATED BY: John D. Fitch, Assistant City Manager~~
Peggy A. Stewart, Director of Administ tive servicetJP
DATE: August 1, 1995
SUBJECT: Community Facilities District No.1 Debt Service Payment Due
August 2, 1995; and ComIUnity Facilities District No. 88-1
Debt Service Payment Due August 8, 1995
BACKGROUND
Communi tv Facilities District No. 1
In December 1985, the City Council approved the formation of 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
and second installments of special taxes for fiscal year 1994-95. We do not
anticipate that the taxes will be collected prior to the debt service payment due
date of August 2, 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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- Agenda Report
August 1, 1995
Page 2
Communitv Facilities District No. 88-1
In October 1988, the City Council approved the formation of the Community Facilities
District No. 88-1 (Parkway Business Centre) 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.
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 Centre) 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-Il. Since that time, the City
Attorney's office has initiated and continued with the process of the judicial
foreclosure against the property.
..- To date, total payments from delinquent parcels is $1,316,011.15; however, the
District does not anticipate sufficient payment of remaining delinquent special
taxes prior to the next debt service payment due date.
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 1994-95
special tax charges for Community Facilities Districts No.1 and No. 88-1 on
August 9, 1994.
Communitv Facilities District No. 1
In order to avoid a default on the bonds, the City drew $726,397.40 from the
District's reserve fund for the January 25, 1995 debt service payment.
A debt service payment of $1,436,366.25 is due to the Fiscal Agent on the
outstanding bonds by August 2, 1995. Community Facilities District No.1 has
remaining bond reserve funds of $2,342,031. 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 an additional draw from the reserve fund in the amount of $581,602.25 to
cover the shortfall for the August 2, 1995 payment.
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1995
Agenda Report
August 1, 1995
Page 3
Communi tv Facilities District No. BB-I
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 B,
1993, and February B, 1994 debt service payments. The City drew $2,025,200.08 from
the reserve fund to pay for the August 8, 1994 and February B, 1995 debt service
payments.
A debt service payment of $1,745,020.00 is due to the Fiscal Agent on the
outstanding bonds by August 8, 1995. Community Facilities District No. 88-1 has
remaining bond reserve funds of $1,888,942. 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 $B51,907.38 to cover the August 8,
1995 debt service payment.
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 $581,602.25 and $851,907.38, respectively, for the
August 2 and August 8, 1995 debt service payments.
ADDITIONAL PUBLIC NOTIFICATION AND CORRESPONDENCE
None
RECOMMENDATION
It is recommended that the City Council authorize a draw of $581,602.25 from
Community Facilities District No.1 bond reserve fund balance for payment of debt
service due on August 2, 1995, and $B51,907.38 from the bond reserve fund balance of
Community Facilities District No. 88-1 for paYMent of debt service due on August 8,
1995.
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