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Home My WebLink About2008/05/06 Item 3 CITY COUNCIL AGENDA STATEMENT MAY 06, 2008, Item ~ SUBMITTED BY: REVIEWED BY: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACTING AS THE LEGISLATIVE BODY OF ASSESSMENT DISTRICT NO. 2001-1 OF THE CITY OF CHULA VISTA ORDERING JUDICIAL FORECLOSURE OF DELINQUENT SPECIAL ASSESSMENTS PURSUANT TO THE IMPROVEMENT BOND ACT OF 1915 AND THE MUNICIPAL IMPROVEMENT ACT OF 1913 DIRECTOR OF FIN~<<;t1TREASURER cftr2- CITY MANAGER ~(\II\'J V r 4/5THS VOTE: YES D NO ~ ITEM TITLE: SUMMARY As part of the City's fiduciary role in administering Assessment Districts and Community Facilities Districts, Finance staff has been working with NBS, the city's special financing district administrator, to address delinquent payments of special assessments. Five parcels within the 2001-1 Reassessment District have been identified as being delinquent in paying their special assessments 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 judicial foreclosure. 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 resolution. BOARDS/COMMISSION RECOMMENDATION Not Applicable. 3-1 MAY 06, 2008 Page 2 of3 DISCUSSION The City is compelled under the bond covenants contained within the bond financing docurrients authorized in connection with the districts to commence foreclosure proceedings against delinquent parcels when certain thresholds are met, as set forth in the bond documents. Five parcels were identified as being delinquent in paying their special assessments and meeting the criteria necessary for judicial foreclosure pursuant to the Bond Indenture. These five parcels' delinquent payments total $5,952.70, and are all within the 2001-1 Reassessment District (see attachment). The recent sub-prime mortgage fallout and resulting slowdown in the economy has caused special assessment delinquency rates to increase and in many districts double from the prior year. Luckily none of the distJicts' delinquencies are substantial enough to require a draw on the districts' reserve funds to make debt service payments. Because of this fact, only five parcels met the criteria for judicial foreclosure. Similar action has been taken by various agencies throughout the state. Locally, San Marcos City Council approved judicial foreclosure action against 68 property owners with over $140,000 in delinquent assessments last year, and in January 2008, the City of San Diego City Council ordered judicial foreclosure on three delinquent parcels totaling over $25,000. 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 tum 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 propeliy owners struggle to make their payments. Under the City's delinquency monitoring program, at least three letters have been sent to these propeliy owners requesting payment of the delinquent taxes and assessments. Recently, the delinquent special assessments for these five parcels were removed li'om the property tax bills, and staff sent a celiified letter to the property owners requesting that they pay the special assessments directly to the City, and the affected mortgage companies also received a copy of this letter. This would have allowed the property owners to pay only the special assessments (a much smaller amount) and avoid judicial foreclosure relating to the special assessments, but they will still have to work with the County to pay the delinquent property taxes. To date, no payments have been received, and the next step in the judicial toreclosure process is to turn these delinquencies over to outside counsel, Stradling Y occa Carlson & Rauth, for legal action. 3-2 MA Y 06, 2008 Page 3 of3 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. FISCAL IMPACT There is no direct fiscal impact to the General Fund. All costs associated with the judicial foreclosure process are the responsibility of the delinquent property owners. A TT ACHMENTS A. APN Listing of Delinquent Properties Prepared by: Nadine Mandery, TreasUI)I Manager, Finance Dept. 3-3 ATTACHMENT A APN LISTING OF DELINQUENT PROPERITES Special District APN Tax Years # of Delinquent Total Amt Ending (I) Installments Delinquent (2) Reassessment 595-410-24-07 2006-2007 4 $1,184.32 District 200 I-I Reassessment 595-420-03-10 2006-2007 4 $1,004.90 District 200 I-I Reassessment 595-420-08-15 2006-2007 4 $1.015.26 District 200 I-I Reassessment 595-361-29-00 2005-2007 6 $1,437.48 District 200 I-I Reassessment 595-430-18-05 2004-2007 7 $1,310.74 District 200 I-I TOTAL $5,952.70 (I) A tax year period is from July I to June 30 and consists of two installment payment deadlines: December 10 and April 10. (2) Total delinquent amounts do not include late payment penalties. 3-4 RESOLUTION NO. 2008- RESOLUTION OF CITY COUNCIL OF THE CITY OF CHULA VISTA ACTING AS THE LEGISLATIVE BODY OF ASSESSMENT DISTRICT NO. 2001-1 OF THE CITY OF CHULA VISTA ORDERING JUDICIAL FORECLOSURE OF DELINQUENT SPECIAL ASSESSMENTS PURSUANT TO THE IMPROVEMENT BOND ACT OF 1915 AND THE MUNICIPAL IMPROVEMENT ACT OF 1913 WHEREAS, Assessment District No. 2001-1 of the City of Chula Vista ("AD No. 200 I-I") has incurred bonded indebtedness and levied special assessments for the payment of bonds pursuant to the provisions of the Improvement Bond Act of 1915 (commencing with Section 8500) of Part I of Division I 0 of the California Streets and Highway Code (the "Improvement Bond Act") and the Municipal Improvement Act of 1913 (commencing with Section 10,000) of Part I of Division 12 of the California Streets and Highway Code (the "Municipal Improvement Act"); and WHEREAS, pursuant to the Improvement Bond Act and the Municipal Improvement Act, AD No. 2001-1 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 acting in its capacity as the legislative body of AD No. 200 I-I is authorized and may order that a foreclosure action be brought to collect the delinquent special assessments due against the properties within AD No. 2001-1 not later than four (4) years after the date of delinquency of the last installment due on the bond; and WHEREAS, the City has covenanted to bondholders to institute judicial foreclosure proceedings pursuant to the provisions of Section 8830 et seq. of the Streets and Highways Code of the State of California WHEREAS, the City Council acting in its capacity as the legislative body of AD No. 2001-1 has determined that the public convenience and necessity require prompt action at the City's discretion, to initiate foreclosure proceedings. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chula Vista, acting in its capacity as the legislative body of Assessment District No. 2001-1 of the City of Chula Vista, as follows: C:\Documents and Settingsljoycem\Local SettingslTemporary Internet Files\OLKl2Vudicial foreclosure of delinquent spcl assmts_04-15-08.doc 3-5 Resolution No. 2008- Page 2 SECTION I. 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. AD No. 2001-1 is hereby authorized and directed to have the law firm of Stradling Yocca Carlson & Rauth, 660 Newport Center Drive, Suite 1600, Newport Beach, California 92660, institute such actions in the name of AD No. 2001-1 and the City of Chula Vista to foreclose delinquent special assessments. SECTION 3. The Director of Finance of the City of Chula Vista 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 Y occa 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. Maria Kachadoorian Director of Finance Approved as to form by 1 l. Presented by C:\DocumenIS and Settings\joycem\Local Seuings\Temporary Internet Files\OLK12\Judicial foreclosure of delinquent spcl assmts_04-1S-08.doc 3-6 Resolution No. 2008- Page 3 EXHIBIT A List of Delinquent Property (Bv Assessor's Parcel Number)-Assessment District No. 2001-1 595-410-24-07 595-420-03-10 595-420-08-15 595-361-29-00 595-430-18-05 C:\Do~umenlS and SetlingsljoycemlLocal SeUings\Temporary Internet Files\OLK12\JUdiCiaI30~7ure of delinquent spcl assmts_04-15-08 doc