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HomeMy WebLinkAbout2012/05/22 Item 02CITY COUNCIL AGENDA STATEMENT ~, :~~ wi, ~~ CITY OF CHULA VISTA MAY 22, 2012, Item ,~ ITEM TITLE: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACTING AS THE LEGISLATIVE BODY OF REASSESSMENT DISTRICT NO. 2001-2 OF THE CITY OF CHULA VISTA ORDERING JUDICIAL FORECLOSURE OF DELINQUENT SPECIAL ,ASSESSMENTS-PURSUANT TO THE REFUNDING ACT OF 1984 FOR 1915 IMPROVEMENT ACT BONDS RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACTING AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 06-I (EASTLAKE-WOODS, VISTAS AND LAND SWAP) OF THE CITY OF CHULA VISTA ORDERING JUDICIAL FORECLOSURE OF DELINQUENT SPECIAL ASSESSMENTS PURSUANT TO THE MELLO-ROOS COMMUNITY FACILITIES ACT OF 1982 RESOLUTION OF CITY COUNCIL OF THE CITY OF. CHULA VISTA ACTING AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 08-I (EASTLAKE - WOODS, VISTAS AND LAND SWAP) OF THE CITY OF CHULA VISTA ORDERING JUDICIAL FORECLOSURE OF DELINQUENT SPECIAL ASSESSMENTS PURSUANT TO THE MELLO-RODS COMMUNITY FACILITIES ACT OF 1982 SUBMITTED BY: DIRECTOR OF FINANCE/TREASUREIZ-'~ REVIEWED BY: CITY MANAGER ,~ ST ASSISTANT CITY MANAGER ~7 4/STHS VOTE: YES ~ NO ^X SUMMARY As part of the City's fiduciary role in administering Reassessment Districts (RADs) and Community Facilities Districts (CFDs), Finance staff has been working with NBS, the city's Special Financing District Administrator, to address delinquent payments of special assessments. Four parcels within three different districts have been identified as being delinquent in paying their special assessments 2-1 MAY 22, 2012 Page 2 of 3 and now face judicial foreclosure as required by the Bond Indenture. Letters were sent to the property owners notifying them of the judicial foreclosure and requesting payment of the delinquent assessments in order to avoid such action. To date, no payments have been received, and staff recommends adoption of the resolution to initiate the judicial foreclosm~e process. ENVIRONMENTAL REVIEW The Environmental Review Coordinator has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a "Project" as defined under Section 15378 (b) (4) of the State CEQA Guidelines; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review is necessary. RECOMMENDATION Council adopt the resolutions. BOARDS/COMMISSION RECOMMENDATION Not Applicable. DISCUSSION The City is obligated to proceed with the judicial foreclosure process required by the bond covenants. when property owners are delinquent in paying their special assessments. The foreclosure proceedings against delinquent parcels begin when certain thresholds are met as set forth in the bond documents. Four parcels were identified as being delinquent in paying their special assessments and meet the criteria necessary for judicial foreclosure proceedings pursuant to the Bond Indenture. They are located in three different districts and the delinquent payments total $19,617.46 (Attachment A). The sub-prime mortgage fallout and resulting slowdown in the economy continues to impact the City's special assessment district delinquency rates causing significant increases in many of the districts (Attachment B). Fortunately none of the districts' delinquencies have been substantial enough to ever require a draw on the districts' reserve funds to make debt service payments. This has been the case historically, but looking forward, if delinquencies continue at this rate, many districts' reserves will most likely be hit. Not only will this be a material event re uirinQ disclosure but it will also reduce the thresholds relating to the iudicial foreclosure process causing more parcels to be subject to iudicial foreclosure proceedings. In fact, some bond covenants state that all delinquent pazcels are subject to iudicial foreclosure once the reserve fund has been drawn upon re¢ardless of the amount delinquent. This would result in iudicial foreclosure for hundreds perhaps thousands of parcels. Normally, special assessments are included on the property tax bills for collection, and upon receipt, the County forwards the monies to the City who in turn pays the required debt obligation. The property taxes represent a much more substantial portion of the bill in compazison to the special assessments, but because the County does not accept partial payments, the smaller special assessments also go unpaid as property owners struggle to make their payments. 2-2 MAY 22, 2012 Page 3 of 3 Under the City's delinquency monitoring program, at least three letters have been sent to these property owners requesting payment of the delinquent taxes and assessments. To date, no payments have been received and thus the delinquent special assessments for these four parcels remain unpaid. The next step in the judicial foreclosure process is to remove the special assessments from the affected property tax bills, and then turn these delinquent accounts over to outside counsel, Stradling Yocca Carlson & Rauth, for legal action which becomes very expensive for the property owners. DECISION MAKER CONFLICT Staff has reviewed the property holdings of the City Council and has found no property holdings within 500 feet of the boundaries of the properties which are the subject of this action. CURRENT YEAR FISCAL IMPACT There is no direct fiscal impact to the General Fund from this action. Delinquencies in the current fiscal year will not cause any draws to the CFD/RAD reserve funds. All costs associated with the judicial foreclosure process are the responsibility of the delinquent property owners. ONGOING FISCAL IMPACT There is no direct ongoing fiscal impact from this action. If delinquencies increase next year, CFD/RAD reserves may need to be drawn upon. This will create a material event requiring disclosure. In addition, it will drop the thresholds relating to judicial foreclosure thereby causing more parcels to be subject to judicial foreclosure. Some of the bond covenants require that all delinquent parcels be subject to judicial foreclosure once the reserve fund has been drawn upon regardless of the amount delinquent. This could result in judicial foreclosure for hundreds, perhaps thousands of parcels. ATTACHMENTS A. APN Listing of Delinquent Properties B. Special Financing Delinquency Report -Bonded Debt Prepared by: Eric Adachi, Associate Accountant, Finance Dept. 2-3 Attachment A City of Chula Vista APN Listing of Delinquent Properties as of 5/3/2012 Installment Amount APN District Owed City State Zip Code 644-181-21-00 RAD No. 2001-2 3,357.22 CHULA VISTA CA 91911 643-514-59-00 CFD No. 06-IA 5,637.68 CHULA VISTA CA 91915 595-095-06-00 CFD No. 06-IA 5,046.92 CHULA VISTA CA 91914 643-051-41-33 CFD No. 08-I 5,575.64 CHULA VISTA CA 91913 4 Parcels $19,617.46 2-4 ATTACHi~ENT B City of Chula Vista Current Information about Bonded Special Financing District Delinquencies N cn Di9tfict Fiscal Year 2007108 Delinquency Rate(5) Fiscal Year 2008!09 Delinquency Rate(5) Fiscal Year 2009170 Delinquency Rate(5) Fiscal Year 2010111 Delinquency Rate for the 12J10120101nstaltment(5) Reassessment District NO. 87-1R (7) 11.30°~ O.fiB°/ 1.27% 4.A9°/ sessment District 88-1R{z) 0.43% 0.86°h 0.86% 2.60% Reassessment District No. 88-2R (7) 0.16% 0.50% 1.44% 8.57% sessment District 90-iR{s) 0.63% 1.40% 1.90% 6.83% Assessment District 90-2R(z) 0.1fi% 0.78°/ 4.02% 9.84% Assessment District 90-3R(s) 0.36°k 1.01 % 2.04°/ 5.31 sessment Dlstric[91-1R(a) 0.23% 0.74% 1.39% 3.94° Assessment DlstrIU 92-2R(z) 0.00% 0.00% 0.00% 0.00% sessment DlsMct94-1 0.41% D.94% 1.95% 5.33 Reassessment District No. 97.2 Retuntling Bonds {a1 0.34% (1.70% 1.60 % 4.82° ommunity Facilities Disldct No.06-I Improvement AreaASpecial Tax Bontls 0.53% 7.45% 3.47% 8.40% Community Facilities District No. 06-I Improvement Area B Special Tax Bontls 0.39% 1.14% 6.19% 8.70 Community Facilities District No. 07-I 2004 Special Tax Bonds 0.66% 1.41 % 2.70% 5.91° ommunity Facili0es Dlslrict No. 07-12006 Special Tax Bonds 0.66% 1.41% 2.70% 5.91 ommunity Facilities District No. 08.1 Special Tax Bonds 0.15 % 1.07°/ 3.54% 6.66 % Community Facilities District No. 12-I Special Tax Bonds 0.00% 0.15% 0.47 % 3.02 % ommunity FaGliOes District No. 13-I Special Tax Bonds - 0.64% 1.31 % 14.32% 17.33% ommunity Facilities District No. 2000.1 Refunding Bontls 0.00°h 0.35% 1.fi3% 4.55° Community Facilities District No. 2001-1 Improvement Area A Refunding Bonds 0.58% 1.82% 3.81% 6.1 B% Community FaGlliles District No. 2001-i Improvement Area B Special Tax Bonds 0.00% 0.98 % 0.99°h 3.54° Community Facili9es District No. 2001-2 Special Tax Bonds 0.1 B% 0.98% 7.94% 5.73% Community Faalhies District No. 97-3 Refunding Bonds 0.26% 0.97% 2.11% 5.57% Community FacilOies Distdc[ No. 99.1 Refunding Bonds 0.47% 0.95% 2.18% 4.99% 23 Districts (t) Reessesament District No. 2005-1 Limited Obligation Refunding bonds (AD e7-1 and e8-2) (2) Reassessment Distdct No. 2001-2 (AO B&t, 90-2, and 92-2J (3) Reassessment District No. 2001-t (AD 90.7, 90-3, and 91d) (4) Reassessment Distract Nc. 20052 Limited Obligation Refunding Bonds (AD 97-2) {5) Delinquency Rate as of January 10th, 2011. This data Is preliminary and unaudited. RESOLUTION NO. 2012- RESOLUTION OF CITY COUNCIL OF THE CITY OF CHULA VISTA ACTING AS THE LEGISLATIVE BODY OF REASSESSMENT DISTRICT NO. 2001-2 OF THE CITY OF CHULA VISTA ORDERING NDICIAL FORECLOSURE OF DELINQUENT SPECIAL ASSESSMENTS PURSUANT TO THE REFUNDING ACT OF 1984 FOR 1915 IMPROVEMENT ACT BONDS WHEREAS, Reassessment District No. 2001-2 of the City of Chula Vista ("RAD No. 2001-2") has incurred bonded indebtedness and levied special assessments for the payment of bonds pursuant to the provisions of the Refunding Act of 1984 for 1915 Improvement Act Bonds, Division 11.5 (commencing with Section 9500) of the Streets and_ Highways Code of the State of California (the "Refunding Act"); and WHEREAS, pursuant to the Refunding Act, RAD No. 2001-2 has duly levied and recorded the unpaid special assessments, which special assessments and each installment thereof and interest and penalties thereon constitute liens against the lots and parcels of land against which they are made, until the same are paid; and WHEREAS, certain special assessment installments have not been paid when due, and certain installments of those special assessments may not be paid in the fixture; and WHEREAS, under the provisions of Section 8834 of the Streets and Highways Code of the State of California, the City Council of the City of Chula Vista ("City Council") acting in its capacity as the legislative body of RAD No. 2001-Z is authorized and may order that a foreclosure action be brought to collect the delinquent special assessments due against the properties within RAD No. 2001-2 not later than four (4) years afrer the date of delinquency of the last installment due on the bond; and WHEREAS, pursuant to the provisions of Section 8830, et seq. of the Streets and Highways Code of the State of California, RAD No. 2001-2 has covenanted to bondholders to institute judicial foreclosure proceedings; and WHEREAS, the City Council acting in its capacity as the legislative body of RAD No. 2001-2 has determined that the public convenience and necessity require prompt action at the City of Chula Vista's discretion, to initiate foreclosure proceedings. 2-6 Resolution No. 2012- Page 2 NOW, THEREFORE, BE IT RESOLVED by the City Council, acting in its capacity as the legislative body of RAD No. 2001-2, as follows: SECTION 1. The delinquent special assessments on parcels listed in Exhibit A attached hereto and incorporated herein, and all future installments of special assessments which are not paid when due shall be collected by action brought in the Superior Court of San Diego County to foreclose the delinquent special assessments to the extent allowed by law. SECTION 2. RAD No. 2001-2 is hereby authorized and directed to have the law firm of Stradling Yocca Carlson & Rauth ("Special Counsel"), 660 Newport Center Drive, Suite 1600, Newport Beach, California 92660, institute such actions in the name of RAD No. 2001-2 and the City of Chula Vista to foreclose delinquent special assessments. SECTION 3. The Director of Finance of the City of Chula Vista, or his/her written designee, in cooperation and in conjunction with Special Counsel, is authorized and directed to transmit a certified copy of this resolution to the Auditor/Controller's office of the County of San Diego with a letter that shall state that: a. The City Council has ordered that the delinquent special assessment installments be collected by action brought in the Superior Court of San Diego County to foreclose the delinquent special assessments b. All inquiries regarding payment of the delinquent special assessments shall be forwarded to Stradling Yocca Carlson & Rauth c/o Allison E. Burns, Esq., 660 Newport Center Drive, Suite 1600, Newport Beach, California 92660. SECTION 4. This resolution shall take effect immediately upon its adoption. Presented by Maria Kachadoorian Director of Finance Approved as to form by ? i `" \ ~N" \ ~ i6` I r 1 ~ ~-( ~ Glen R. Ood,~itis ZPCjt'y Attorney 2-7 Resolution No. 2012- Page 3 EXHIBIT A List of Delinquent Property (BV Assessor's Parcel Number)-Reassessment District No. 2001-2 644-181-21-00 2-S RESOLUTION NO. 2012- RESOLUTION OF CITY COUNCIL OF THE CITY OF CHULA VISTA ACTING AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT N0. 06-I (EASTLAKE - WOODS, VISTAS AND LAND SWAP) OF THE CITY OF CHULA VISTA ORDERING JUDICIAL FORECLOSURE OF DELINQUENT SPECIAL ASSESSMENTS PURSUANT TO THE MELLO-ROOS COMMUNITY FACILITIES ACT OF 1982 WHEREAS, Community Facilities District No. 06-I (Eastlake- Woods, Vistas and Land Swap) of the City of Chula Vista ("CFD No. 06-I") has incurred bonded indebtedness and levied special assessments for the payment of bonds pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5 of Government Code ("Mello-Roos Act"); and WHEREAS, pursuant to the Mello-Roos Act, CFD No. 06-I has duly levied and recorded the unpaid special assessments, which special assessments and each installment thereof and interest and penalties thereon constitute liens against the lots and parcels of land against which they are made, until the same are paid; and WHEREAS, certain special assessment installments have not been paid when due, and certain installments of those special assessments may not be paid in the future; and WHEREAS, under the provisions of Section 53356.1 of the Government Code of the State of California, the City Council of the City of Chula Vista ("City Council"), acting in its capacity as the legislative body of CFD No. 06-I is authorized and may order that a foreclosure action be brought to collect the delinquent special assessments due against the properties within CFD No. 06-I not later than four (4) years after the date of delinquency of the last installment due on the bond; and WHEREAS, pursuant to the provisions of Section 53356.1(b) of the Mello-Roos Act, CFD No. 06-I has covenanted with bondholders to institute judicial foreclosure proceedings against parcels within CFD No. 06-I with delinquent special taxes; and WHEREAS, the City Council, acting in its capacity as the legislative body of CFD No. 06-I has determined that the public convenience and necessity require prompt action at the City of Chula Vista's discretion, to initiate foreclosure proceedings. 2-9 Resolution No. 2012- Page 2 NOW, THEREFORE, BE IT RESOLVED by the City Council, acting in its capacity as the legislative body of CFD No. 06-I, as follows: SECTION 1. The delinquent special assessments on parcels listed in Exhibit A attached hereto and incorporated herein, and all future installments of special assessments which are not paid when due shall be collected by action brought in the Superior Court of San Diego County to foreclose the delinquent special assessments to the extent allowed by law. SECTION 2. CFD No. 06-I is hereby authorized and directed to have the law firm of Stradling Yocca Carlson & Rauth ("Special Counsel"), 660 Newport Center Drive, Suite 1600, Newport Beach, California 92660, institute such actions in the name of CFD No. 06-I and the City of Chula Vista to foreclose the delinquent special assessments. SECTION 3. The Director of Finance of the City of Chula Vista, or his/her written designee, in cooperation and in conjunction with Special Counsel, is authorized and directed to transmit a certified copy of this resolution to the Auditor/Controller's office of the County of San Diego with a letter that shall state that: a. The City Council has ordered that the delinquent special assessment installments be collected by action brought in the Superior Court of San Diego County to foreclose the delinquent special assessments; b. All inquiries regarding payment of the delinquent special assessments shall be forwarded to Stradling Yocca Carlson & Rauth c/o Allison E. Burns, Esq., 660 Newport Center Drive, Suite 1600, Newport Beach, California 92660. SECTION 4. This resolution shall take effect immediately upon its adoption. Presented by Mazia Kachadoorian Director of Finance 2-10 Approved as to form by Resolution No. 2012- Page 3 EXHIBIT A List of Delinquent Property By Assessor's Parcel Number)-Assessment District No. 06-IA 643-514-59-00 595-095-06-00 2-11 RESOLUTION NO. 2012- RESOLUTION OF CITY COUNCIL OF THE CITY OF CHULA VISTA ACTING AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 08-I (EASTLAKE - WOODS, VISTAS AND LAND SWAP) OF THE CITY OF CHULA VISTA ORDERING JUDICIAL FORECLOSURE OF DELINQUENT SPECIAL ASSESSMENTS PURSUANT TO THE MELLO-ROOS COMMUNITY FACILITIES ACT OF 1982 WHEREAS, Community Facilities District No. 08-I (Eastlake -Woods, Vistas and Land Swap) of the City of Chula Vista ("CFD No. 08-I") has incurred bonded indebtedness and levied special assessments for the payment of bonds pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part_l, Division 2, Title 5 of Government Code ("Mello-Roos Act"); and WHEREAS, pursuant to the Mello-Roos Act, CFD No. 08-I has duly levied and recorded the unpaid special assessments, which special assessments and each installment thereof and interest and penalties thereon constitute liens against the lots and parcels of land against which they are made, until the same aze paid; and WHEREAS, certain special assessment installments have not been paid when due, and certain installments of those special assessments may not be paid in the future; and WHEREAS, under the provisions of Section 53356.1 of the Government Code of the State of California, the City Council of the City of Chula Vista ("City Council"), acting in its capacity as the legislative body of CFD No. 08-I is authorized and may order that a foreclosure action be brought to collect the delinquent special assessments due against the properties within CFD No. 08-I not later than four (4) years after the date of delinquency of the last installment due on the bond; and WHEREAS, pursuant to the provisions of Section 53356.1(b) of the Mello-Roos Act, CFD No. 08-I has covenanted with bondholders to institute judicial foreclosure proceedings against parcels within CFD No. 08-I with delinquent special taxes; and WHEREAS, the City Council, acting in its capacity as the legislative body of CFD No. 08-I has determined that the public convenience and necessity require prompt action at the City of Chula Vista's discretion, to initiate foreclosure proceedings. 2-12 Resolution No. 2012- Page 2 NOW, THEREFORE, BE IT RESOLVED by the City Council, acting in its capacity as the legislative body of CFD No. 08-I, as follows: SECTION 1. The delinquent special assessments on parcels listed in Exhibit A attached hereto and incorporated herein, and all future installments of special assessments which are not paid when due shall be collected by action brought in the Superior Court of San Diego County to foreclose the delinquent special assessments to the extent allowed by law. SECTION 2. CFD No. 08-I is hereby authorized and directed to have the law firm of Stradling Yocca Carlson & Rauth ("Special Counsel"), 660 Newport Center Drive, Suite 1600, Newport Beach, California 92660, institute such actions in the name of CFD No. 08-I and the City of Chula Vista to foreclose the delinquent special assessments. SECTION 3. The Director of Finance of the City of Chula Vista, or his/her written designee, in cooperation and in conjunction with Special Counsel, is authorized and directed to transmit a certified copy of this resolution to the Auditor/Controller's office of the County of San Diego with a letter that shall state that: a. The City Council has ordered that the delinquent special assessment installments be collected by action brought in the Superior Court of San Diego County to foreclose the delinquent special assessments; b. All inquiries regarding payment of the delinquent special assessments shall be forwarded. to Stradling Yocca Carlson & Rauth c/o Allison E. Burns, Esq., 660 Newport Center Drive, Suite 1600, Newport Beach, California 92660. SECTION 4. This resolution shall take effect immediately upon its adoption. Presented by Mazia Kachadoorian Director of Finance Approved as to form by Glen oo it ~ity ttorne}{ 2-13 Resolution No. 2012-_ Page 3 EXHIBIT A List of Delinquent Property (By Assessor's Parcel Number)-Assessment District No. 08-I 643-051-41-33 2-14 i~ ~ CORRECTED SECTION IN DOUBLE UNDERLINE CITY COU NCI L AGENDA STATEMENT ~~ CITY OF .~ CHULA VISTA MAY 22, 2012, Item ITEM TITLE: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACTING AS THE LEGISLATIVE BODY OF REASSESSMENT DISTRICT NO. 2001-2 OF THE CITY OF CHULA VISTA ORDERING JUDICIAL FORECLOSURE OF DELINQUENT SPECIAL ASSESSMENTS PURSUANT TO THE REFUNDING ACT OF 1984 FOR 1915 IMPROVEMENT ACT BONDS RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACTING AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 06-I (EASTLAKE-WOODS, VISTAS AND LAND SWAP) OF THE CITY OF CHULA VISTA ORDERING JUDICIAL FORECLOSURE OF DELINQUENT SPECIAL ASSESSMENTS PURSUANT TO THE MELLO-RODS COMMUNITY FACILITIES ACT OF 1982 RESOLUTION OF CITY COUNCIL OF THE CITY OF CHULA VISTA ACTING AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 08-I O( TAY RANCH VILLAGE SIX) OF THE CITY OF CHULA VISTA ORDERING JUDICIAL FORECLOSURE OF DELINQUENT SPECIAL ASSESSMENTS PURSUANT TO THE MELLO- ROOS COMMUNITY FACILITIES ACT OF 1982 SUBMITTED BY: DIRECTOR OF FINANCE/TREASURE REVIEWED BY: CITY MANAGER~~ ASSISTANT CITY MANAGER S 1 4/STHS VOTE: YES ~ NO ^X SUMMARY As part of the City's fiduciary role in administering Reassessment Districts (RADs) and Community Facilities Districts (CFDs), Finance staff has been working with NBS, the city's Special Financing District Administrator, to address delinquent payments of special assessments. Four parcels within three different districts have been identified as being delinquent in paying their special assessments MAY 22, 2012 Page 2 of 3 and now face judicial foreclosure as required by the Bond Indenture. Letters were sent to the property owners notifying them of the judicial foreclosure and requesting payment of the delinquent assessments in order to avoid such action. To date, no payments have been received, and staff recommends adoption of the resolution to initiate the judicial foreclosure process. ENVIRONMENTAL REVIEW The Environmental Review Coordinator has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a "Project" as defined under Section 15378 (b) {4} of the State CEQA Guidelines; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to CEQA: Thus, no environmental review is necessary. RECOMMENDATION Council adopt the resolutions. BOARDS/COMMISSION RECOMMENDATION Not Applicable. DISCUSSION The City is obligated to proceed with the judicial foreclosure process required by the bond covenants. when property owners are delinquent in paying their special assessments. The foreclosure proceedings against delinquent parcels begin when certain thresholds are met as set forth in the bond documents. Four parcels were identif ed as being delinquent in paying their special assessments and meet the criteria necessary for judicial foreclosure proceedings pursuant to the Bond Indenture. They are located in three different districts and the delinquent payments total $19,617.46 (Attachment A). The sub-prime mortgage fallout and resulting slowdown in the economy continues to impact the City's special assessment district delinquency rates causing significant increases in many of the districts (Attachment B). Fortunately none of the districts' delinquencies have been substantial enough to ever require a draw on the districts' reserve funds to make debt service payments. This has been the case historically, but looking forward, if delinquencies continue at this rate, many districts', reserves will most likely be hit. Not only will this be a material event requiring disclosure but it will also reduce the thresholds relating to the judicial foreclosure process causing more parcels to be subject to judicial foreclosure proceedings. In fact, some bond covenants state that all delinquent parcels are subject to judicial foreclosure once the reserve fund has been drawn upon regardless of the amount delinquent. This would result in iudicial foreclosure for hundreds perhaps thousands of parcels. Normally, special assessments are included on the property tax bills for collection, and upon receipt, the County forwards the monies to the City who in turn pays the required debt obligation. The property taxes represent a much more substantial portion of the bill in comparison to the special assessments, but because the County does not accept partial payments, the smaller special assessments also go unpaid as property owners struggle to make their payments. MAY 22, 2012 Page 3 of 3 Under the City's delinquency monitoring program, at least three letters have been sent to these property owners requesting payment of the delinquent taxes and assessments. To date, no payments have been received and thus the delinquent special assessments for these four parcels remain unpaid. The next step in the judicial foreclosure process is to remove the special assessments from the affected property tax bills, and then turn these delinquent accounts over to outside counsel, Stradling Yocca Carlson & Rauth, for legal action which becomes very expensive for the property owners. DECISION MAKER CONFLICT Staff has reviewed the property holdings of the City Council and has found no property holdings within 500 feet of the boundaries of the properties which are the subject of this action. CURRENT YEAR FISCAL IMPACT There is no direct f scal unpact to the General Fund from this action. Delinquencies in the current fiscal year will not cause any draws to the CFD/RAD reserve funds. All costs associated with the judicial foreclosure process are the responsibility of the delinquent property owners. ONGOING FISCAL IMPACT There is no direct ongoing fiscal .impact from this action. If delinquencies increase next year, CFD/RAD reserves may need to be drawn upon. This will create a material event requiring disclosure. In addition, it will drop the thresholds relating to judicial foreclosure thereby causing more parcels to be subject to judicial foreclosure. Some of the bond covenants require that all delinquent parcels be subject to judicial foreclosure once the reserve fund has been drawn upon regardless of the amount delinquent. This could result. in judicial foreclosure for hundreds, perhaps thousands of parcels. . ATTACHMENTS A. APN Listing of Delinquent Properties B. Special Financing Delinquency Report -Bonded Debt Prepared by: Eric Adachi, Associate Accountcn~t, Finance Dept. Attachment A City of Chula Vista APN Listing of Delinquent Properties as of 5/3/2012 Installment Amount APN District Owed City State Zip Code 644-181-21-00 RAD No. 2001-2 3,357.22 CHULA VISTA CA 91911 643-514-59-00 CFD No. 06-IA 5,637.68 CHULA VISTA CA 91915 595-095-06-00 CFD No. 06-IA 5,046.92 CHULA VISTA CA 91914 643-051-41-33 CFD No. 08-I 5,575.64 CHULA VISTA CA 91913 4 Parcels $19,617.46 CO '" Z Lt2 ~' T U Q IIww Q YJ ~U ~r a c 0 a.a C~ N Q C .~ C {I.~i (~ a~ ^~ •~ i ``~~~ V/ 4~ ~~f ~1~+ _ vm f~ 0 ~. }! ~~ }F ^~ W L V p p p O O P O O O O D D O O O O O O ~ O ' ' o O O 3 ~ L G1 p t., M ~ r d' O M. N N O d O h ~ ~ W <D N O M M ~ LA o] r d ~ M t~ i~ tf> L 7 O'i + + r ~ cry- ~ ~t d' LD N tq ap Op O Cp ~ C7 LL7 O M O O M tL7 d' ; M ~ to In f0 CM 1`~ V' fQ M LfJ tf) V' O O 'L"' O m y ~. 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N a y N " N Q N vL33 c N N Q ~, m Q y o~ <L y 2' a U o U 0 C? o U a U o U a U a U o U o U a U a U o U d ~ , i ~N N b I > m t~0 c ~ ~ ~7 N 3 C 7 m C a ~ .E 's nL ; 'a c ~ S ~ ~ ~ N C ~ c ~ ~ N W G fU j N LJ ~ V N_ T ~ ~ d 'D ~ ~ O N E Q ~ o t~ N r ~ ~ o O Y N N N ~ C W z z° z z -' C '~C C C ro v1 N N N a 4 R A ro N 0 m W ~ a ~ N N b N m a °m 'm' m m m ~ ~ c ~ ~ o RESOLUTION NO.2012- RESOLUTION OF CITY COUNCIL OF THE CITY OF CHULA VISTA ACTING AS THE LEGISLATIVE BODY OF REASSESSMENT DISTRICT NO. 2001-2 OF THE CITY OF CHULA VISTA ORDERING JUDICIAL FORECLOSURE OF DELINQUENT SPECIAL ASSESSMENTS PURSUANT TO THE REFUNDING ACT OF 1984 FOR 1915 IMPROVEMENT ACT BONDS WHEREAS, Reassessment District No. 2001-2 of the City of Chula Vista ("RAD No. 2001-2") has incurred bonded indebtedness and levied special assessments for the payment of bonds pursuant to the provisions of the Refunding Act of 1984 for 1915 Improvement Act Bonds, Division 11.5 (commencing with Section 9500) of the Streets and Highways Code of the State of California (the "Refunding Act"); and WHEREAS, pursuant to the Refunding Act, RAD No. 2001-2 has duly levied and recorded the unpaid special assessments, which special assessments and each installment thereof and interest and penalties thereon constitute liens against the lots and parcels of land against which they are made, until the same are paid; and WHEREAS, certain special assessment installments have not been paid when due, and certain installments of those special assessments may not be paid in the future; and WHEREAS, under the provisions of Section 8834 of the Streets and Highways Code of the State of California, the City Council of the City of Chula Vista ("City Council") acting in its capacity as the legislative body of RAD No. 2001-2 is authorized and may order that a foreclosure action be brought to collect the delinquent special assessments due against the properties within RAD No. 2001-2 not later than four {4) years after the date of delinquency of the last installment due on the bond; and WHEREAS, pursuant to the provisions of Section 8830, et seq. of the Streets and Highways Code of the State of California, RAD No. 2001-2 has covenanted to bondholders to institute judicial foreclosure proceedings; and WHEREAS, the City Council acting in its capacity as the legislative body of RAD No. 2001-2 has determined that the public convenience and necessity require prompt action at the City of Chula Vista's discretion, to initiate foreclosure proceedings. Resolution No. 2012- Page 2 NOW, THEREFORE, BE IT RESOLVED by the City Council, acting in its capacity as the legislative body of RAD No. 2001-2, as follows: SECTION 1. The delinquent special assessments on parcels listed in Exhibit A attached hereto and incorporated herein, and all future installments of special assessments which are not paid when due shall be collected by action brought in the Superior Court of San Diego County to foreclose the delinquent special assessments to the extent allowed by raw. SECTION 2. RAD No. 2001-2 is hereby authorized and directed to have the law firm of Stradling Yocca Carlson & Rauth ("Special Counsel"), 660 Newport Center Drive, Suite 1600, Newport Beach, California 92660, institute such actions in the name of RAD No. 2001-2 and the City of Chula Vista to foreclose delinquent special assessments. SECTION 3. The Director of Finance of the City of Chula Vista, or his/her written designee, in cooperation and in conjunction with Special Counsel, is authorized and directed to transmit a certified copy of this resolution to the Auditor/Controller's office of the County of San Diego with a letter that shall state that: a. The City Council has ordered that the delinquent special assessment installments be collected by action brought in the Superior Court of San Diego County to foreclose the delinquent special assessments b. All inquiries regarding payment of the delinquent special assessments shall be forwarded to Stradling Yocca Carlson & Rauth c/o Allison E. Burns, Esq., 660 Newport Center Drive, Suite 1600, Newport Beach, California 92660. SECTION 4. This resolution shall take effect immediately upon its adoption. Presented by Maria Kachadoorian Director of Finance Approved as to form by Glen R. Googins City Attorney Resolution No. 2012- Page 3 EXHIBIT A List of Delinquent Property By Assessor's Parcel Number)-Reassessment District No. 2001-2 644-181-21-00 RESOLUTION NO.2012- RESOLUTION OF CITY COUNCIL OF THE CITY OF CHULA VISTA ACTING AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 06-I (EASTLAKE - WOODS, VISTAS AND LAND SWAP) OF THE CITY OF CHULA VISTA .ORDERING NDICIAL FORECLOSURE OF DELINQUENT SPECIAL ASSESSMENTS PURSUANT TO THE MELLO-ROOS COMMUNITY FACILITIES ACT OF 1982 WHEREAS, Community Facilities District No. 06-I (Eastlake -Woods, Vistas and Land Swap) of the City of Chula Vista ("CFD No. 06-I") has incurred bonded indebtedness and levied special assessments for the payment of bonds pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5,-Part 1, Division 2, Title 5 of Government Code ("Mello-Roos Act"}; and WHEREAS, pursuant to the Mello-Roos Act, CFD No. 06-I has duly levied and recorded the unpaid special assessments, which special assessments and each installment thereof and interest and penalties thereon constitute liens against the lots and parcels of land against which they are made, until the same are paid; and WHEREAS, certain special assessment installments have not been paid when due, and certain installments of those special assessments may not be paid in the future; and WHEREAS, under the provisions of Section 53356.1 of the Government Code of the State of California, the City Council of the City of Chula Vista ("City Council"), acting in its capacity as the legislative body of CFD No. 06-I is authorized and may order that a foreclosure action be brought to collect the delinquent special assessments due against the properties within CFD No. 06-I not later than four (4) years after the date of delinquency of the last installment due on the bond; and WHEREAS, pursuant to the provisions of Section 53356.1(b) of the Mello-Roos Act, CFD No. 06-I has covenanted with bondholders to institute judicial foreclosure proceedings against parcels within CFD No. 06-I with delinquent special taxes; and WHEREAS, the City Council, acting in its capacity as the legislative body of CFD No. 06-I has determined that the public convenience and necessity require prompt action at the City of Chula Vista's discretion, to initiate foreclosure proceedings. Resolution No. 2012- Page 2 NOW, THEREFORE, BE IT RESOLVED by the City Council, acting in its capacity as the legislative body of CFD No. 06-I, as follows: SECTION 1. The delinquent special assessments on parcels listed in Exhibit A attached hereto and incorporated herein, and all future installments of special assessments which are not paid when due shall be collected by action brought in the Superior Court of San Diego County to foreclose the delinquent special assessments to the extent allowed by law. SECTION 2. CFD No. 06-I is hereby authorized and directed to have the law firm of Stradling Yocca Carlson & Rauth {"Special Counsel"), 660 Newport Center Drive,. Suite 1600, Newport Beach, California 92660, institute such actions in the name of CFD No. 06-I and the City of Chula Vista to foreclose the delinquent special assessments. SECTION 3. The Director of Finance of the City of Chula Vista, or his/her written designee, in cooperation and in conjunction with Special Counsel, is authorized and directed to transmit a certified copy of this resolution to the Auditor/Controller's office of the County of San Diego with a letter that shall state that: a. The City Council has ordered that the delinquent special assessment installments be collected by action brought in the Superior Court of San Diego County to foreclose the delinquent special assessments; b. All inquiries regarding payment of the delinquent special assessments shall be forwarded to Stradling Yocca Carlson & Rauth c/o Allison E. Burns, Esq., 660 Newport Center Drive, Suite 1600, Newport Beach, California 92660. SECTION 4. This resolution shall take effect immediately upon its adoption. Presented by Maria Kachadoorian Director of Finance Approved as to form by Glen R. Googins City Attorney Resolution No. 2012- Page 3 EXHIBIT A List of Delinquent Property By Assessor's Parcel Number)-Assessment District No. 06-IA 643-514-59-00 595-095-06-00 CORRECTED SECTIONS 1N DOUBLE UNDERLINE RESOLUTION NO. 2012- RESOLUTION OF CITY COUNCIL OF THE CITY OF CHULA VISTA ACTING AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 08-I O( TAY RANCH VILLAGE SIX) OF THE CITY OF CHULA VISTA ORDERING JUDICIAL FORECLOSURE OF DELINQUENT SPECIAL ASSESSMENTS PURSUANT TO THE MELLO- ROOS COMMUNITY FACILITIES ACT OF 1982 WHEREAS, Community Facilities District No. 08-I (Otav Ranch Villase Six) of the City of Chula Vista ("CFD No. 08-I") has incurred bonded indebtedness and levied special assessments for the payment of bonds pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5 of Government Code ("Mello-Roos Act"); and WHEREAS, pursuant to the Mello-Roos Act, CFD No. 08-I has duly levied and recorded the unpaid special assessments, which special assessments and each installment thereof and interest and penalties thereon constitute liens against the lots and parcels of land against which they are made, until the same are paid; and WHEREAS, certain special assessment installments have not been paid when due, and certain installments of those special assessments may not be paid in the future; and WHEREAS, under the provisions of Section 53356.1 of the Government Code of the State of California, the City Council of the City of Chula Vista ("City Council"), acting in its capacity as the legislative body of CFD No. 08-I is authorized and may order that a foreclosure action be brought to collect the delinquent special assessments due against the properties within CFD No. 08-I not later than four (4) years after the date of delinquency of the last installment due on the bond; and WHEREAS, pursuant to the provisions of Section 53356.1{b} of the Mello-Roos Act, CFD No. 08-I has covenanted with bondholders to institute judicial foreclosure proceedings against parcels within CFD No. 08-I with delinquent special taxes; and WHEREAS, the City Council, acting in its capacity as the legislative body of CFD No. 08-I has determined that the public convenience and necessity require prompt action at the City of Chula Vista's discretion, to initiate foreclosure proceedings. Resolution No. 2012- Page 2 NOW, THEREFORE, BE IT RESOLVED by the City Council, acting in its capacity as the legislative body of CFD No. 08-I, as follows: SECTION 1. The delinquent special assessments on parcels listed in Exhibit A attached hereto and incorporated herein, and all future installments of special assessments which are not paid when due shall be collected by action brought in the Superior Court of San Diego County to foreclose the delinquent special assessments to the extent allowed by law. SECTION 2. CFD No. 08-I is hereby authorized and directed to have the law fnm of Stradling Yocca Carlson & Rauth ("Special Counsel"), 660 Newport Center Drive, Suite 1600, Newport Beach, California 92660, institute such actions in the name of CFD No. 08-I and the City of Chula Vista to foreclose the delinquent special assessments. SECTION 3. The Director of Finance of the City of Chula Vista, or his/her wYitten designee, in cooperation and in conjunction with Special Counsel, is authorized and directed to transmit a certified copy of this resolution to the Auditor/Controller's office of the County of San Diego with a letter that shall state that: a. The City Council has ordered that the delinquent special assessment installments be collected by action brought in the Superior Court of San Diego County to foreclose the delinquent special assessments; b. All inquiries regarding payment of the delinquent special assessments shall be forwarded to Stradling Yocca Carlson & Rauth c/o Allison E. Burns, Esq., 660 Newport Center Drive, Suite 1600, Newport Beach, California 92660. SECTION 4. This resolution shall take effect immediately upon its adoption. Presented by Approved as to form by Maria Kachadoorian Director of Finance Glen R. Googins City Attorney Resolution No. 2012- Page 3 EXHIBIT A List of Delinquent Prouerty (Sy Assessor's Parcel Number)-Assessment District No. 08-I 643-OS 1-41-33