HomeMy WebLinkAboutSA 14-333 Approve SA ResolutionREPORT TO SUCESSOR AGENCY
TO: HONORABLE CHAIR AND MEMBERS OF THE SUCCESSOR AGENCY
OF THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE
ELSINORE
FROM: GRANT YATES
EXECUTIVE DIRECTOR
DATE: OCTOBER 28, 2014
SUBJECT: RESOLUTION AUTHORIZING PARTICIPATION IN PROGRAM TO
FUND PROPERTY TAX DELINQUENCIES AND APPROVING
AMENDMENTS TO FISCAL AGENT AGREEMENTS AND EXECUTION
OF OTHER AGREEMENTS AS NECESSARY FOR SUCH PURPOSES
Recommendation
It is recommended that the Successor Agency approve and adopt:
Resolution No. 2014- A RESOLUTION OF THE SUCCESSOR AGENCY OF THE
REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE APPROVING
ASSIGNMENT OF DELINQUENT TAX RECEIVABLES TO THE CALIFORNIA
STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY FOR PRIOR FISCAL
YEARS, AND AUTHORIZING EXECUTION AND DELIVERY OF RELATED
DOCUMENTS AND ACTIONS
Background
On May 27, 2014, the City Council of the City of Lake Elsinore adopted Resolution No.
2014 -028 approving assignment of delinquent tax receivables from the City's
Community Facilities Districts and Assessment District No. 93 -1 to the California
Statewide Communities Development Authority (CSCDA) for prior fiscal years, and
authorizing execution and delivery off related documents and actions. The CSCDA is a
statewide joint powers authority sponsored by the League of California Cities and the
California State Association of Counties, under which the total amount of money due for
qualified tax delinquencies will be advanced in full by the CSCDA, along with a 10%
premium, in exchange for an assignment or sale of the rights to the payments made by
the owners of tax - delinquent properties, if and when such payments are made, along
Resolution ® Participation in
October 20, 2v 1 4
Page 2
Delinquent Property Tax Program through CSCDA
'll_ the 1 1 1 ll__1 due TI designed I'1
with tie penalties and interes� uiat are due uiereon. r his program is designed like a
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levy Some taxes that are not eligible for inclusion in the County's T eeter Plan.
The former Redevelopment Agency of the City of Lake Elsinore established Community
Facilities District No. 90 -2 and issued special tax bonds captioned "$7,340,000
Redevelopment Agency of the City of Lake Elsinore Community Facilities District Ho.
90 -2 (Tuscany Hills Public Improvements) Special Tax Parity Bonds, 2007 Series A"
(the "CFD Bonds "). The Successor Agency of the Redevelopment Agency of the City of
Lake Elsinore, as successor to the former Redevelopment Agency of the City of Lake
Elsinore, acts as legislative body for CFD No. 90 -2 and Successor Agency approval is
necessary to include the special tax delinquencies from CFD No. 90 -2 in the CSCDA
tax delinquency program. Debt service on the bonds is secured solely by special taxes
levied on certain property within the CFD (the "Special Taxes ") and is not part of the
Successor Agency's recognized obligations relying on Real Property Tax Trust Funds.
The CSCDA program is financed pooling the tax delinquencies of different local
agencies, and selling Certificates of Participation for the amount of all of the
accumulated to CSCDA's selected Tower _ Capital
Management (Tower). in the first year of an agency's participation, CSCDA will
purchase delinquencies that are up to 5 years old, meaning CSCDA will pay the
Successor Agency of the Redevelopment Agency of the City of Lake Elsinore 100% of
the qualified taxes remaining delinquent from any time during the last 5 years.
CSCDA requires a three -year commitment from participating agencies that wish to sell
their delinquencies. If the attached Resolution is approved, Tower will conduct due
dilign i 1' ce. uige
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Thereafter, the results will be reviewed with qualified officers of the Successor Agency.
A schedule will then be set to proceed to closing, at which time the Successor Agency
will receive its money on a non - recourse basis for all delinquencies that are sold. After
the first year, and each year thereafter, CSCDA will request that the Successor Agency
extend the agreement for one additional year. This will ensure that a 2 to 3 year
"evergreen" term always exists. If the Successor Agency wants to exit the program, it
need only decline to extend the term and wait to exit the program when the existing
term is completed.
F e,
The CSCDA program offers a number of benefits to the Successor Agency in
connection with CFD No. 90 -2.
a. The traditional remedy of foreclosing on constituent property owners to
pay bondholders, is essentially replaced with a funding of the
delinquencies until the County Tax Collector is prepared to foreclose on
Resolution — Participation in Delinquent Property Tax Program through CSCDA
October 28, 2014
Page 3
all of the taxes together. Under State law, the Tax Collector is not
allowed to foreclose until 5 years after the first delinquency. In many
CFD bond indentures, the legislative body may be required to foreclose
well in advance of that 5 -year date, depending on the level of
delinquencies and the particular foreclosure covenant that is in the
applicable Bond Indenture. This program has the effect of "truing up"
these redemption periods so that delinquent special taxes and
assessments have the same redemption period as 1% ad valorem tax
delinquencies.
b. The Successor Agency saves the staff time and money required to send
notices to property owners, strip delinquent taxes from the tax roll and
file, pursue, monitor and complete judicial foreclosure proceedings.
C. Bondholders receive an additional layer of security by knowing that
participation by the Successor Agency in this program effectively means
that there will be no delinquencies and that they will be paid in full.
d. Taxpayers receive the benefit of no foreclosures in advance of the 5-
year redemption period, not being threatened with foreclosure, and not
having to pay Successor Agency costs and attorney fees related to a
foreclosure which can sometimes dwarf the delinquent taxes due.
Property owners who pay their special taxes on time will be assured that
the amounts levied against their properties will not be increased, to
cover the delinquencies of other property owners.
For these reasons, staff recommends that the Successor Agency participate in this
funding program.
Staff has caused the attached Resolution to be prepared, authorizing the Executive
Director and the Director of Administrative Services to execute amendments as
necessary to each of the Fiscal Agent Agreements (or other agreements) governing the
bonds issued on behalf of CFD No. 90 -2 to approve a purchase and sale agreement
between the Successor Agency and CSCDA for the sale of the CFD No. 90 -2
delinquent tax receivables and authorizing staff to execute such an agreement and any
other documents, and to perform such acts as are necessary or appropriate, to
consummate the sale and assignment of qualified delinquencies to CSCDA for the
2012 -13 fiscal year (including all prior year delinquencies for the prior 4 years on the tax
roll) outstanding as of the cut -off date (being the date of last distribution of taxes from
the County and granting CSCDA the right to purchase future delinquencies of levies
made for fiscal years 2013 -14 and 2014 -15.
Resolution — Participation in Delinquent Property Tax Program through CSCDA
vctober 28. 2014
Page 4
Each of the amendments will be reviewed by Bond Counsel to the Authority (Jones nail,
San, irahcisco) vvitii the- sandarsiuhding th--i ilia vo he�.�u rh iiiutroii v ina piervnc�JV u�iu sGrw
transaction is contingent upon the agreement of the bond trustees or fiscal agents (and
their counsel) if appropriate under existing agreements and the Successor Agency's
receipt of an opinion from Bond Counsel to the effect that the amendments being made
in the attached resolution comply with the requirements of each respective Mond
indenture or Fiscal Agent Agreement, as applicable.
The primary benefit this program offers a simple process which will serve as a reduction
in costs to the delinquent property tax owner and a significant reduction in the
administrative burden to staff and outside attorney's attempting to obtain payment on
delinquencies as required by the bond documents. It is estimated that the Successor
Agency's participation in the program will generate additional revenues of approximately
$35,000 prior to or during FY 2014 -15.
Prepared by: Jason Simpson
Director of Administrative Services
Approved by: Grant Yates
CXet:raLlVe Ullt: L LUI
/ NLL I I� �C� LS.
Successor Agency Resolution No. SA 2014 -00_
RESOLUTION NO. SA -2014-
A RESOLUTION OF THE SUCCESSOR AGENCY OF THE
REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE
APPROVING ASSIGNMENT OF DELINQUENT TAX RECEIVABLES TO
THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT
AUTHORITY FOR PRIOR FISCAL YEARS, AND AUTHORIZING
EXECUTION AND DELIVERY OF RELATED DOCUMENTS AND ACTIONS
WHEREAS, under Section 6516.6 of the Government Code of the State of
California (the "Law "), a local agency is authorized to sell and assign to a joint powers
authority any or all of its right, title, and interest in and to the enforcement and collection
of delinquent and uncollected ad valorem property taxes, special taxes and
assessments, and property- related fees and charges that have been levied by or on
behalf of such agency for collection on the secured, unsecured, or supplemental
property tax rolls in accordance with such terms and conditions as are set forth in an
agreement with the joint powers authority; and
WHEREAS, the California Statewide Communities Development Authority (the
"Authority ") is an existing joint powers authority and, as such, is authorized under the
Law to issue its bonds, notes, certificates of participation or other obligations for the
purpose of providing funds to purchase delinquent taxes and assessments in
accordance with the Law upon terms and conditions which are acceptable to the local
agency from whom such delinquent taxes and assessments are acquired; and
WHEREAS, the Successor Agency of the Redevelopment Agency of the City of
Lake Elsinore (the "Successor Agency "), as successor to the former Redevelopment
Agency of the City of Lake Elsinore (the "Former Agency "), acts as legislative body for
an existing community facilities district known as Redevelopment Agency of the City of
Lake Elsinore CFD No. 90 -2 (the "CFD "); and
WHEREAS, the Former Agency previously issued is special tax bonds captioned
"$7,340,000 Redevelopment Agency of the City of Lake Elsinore Community Facilities
District No. 90 -2 (Tuscany Hills Public Improvements) Special Tax Parity Bonds, 2007
Series A" (the "CFD Bonds "), debt service on which is secured solely by special taxes
levied on certain property within the CFD (the "Special Taxes "), and
WHEREAS, the Special Taxes may only be used to pay debt service on the CFD
Bonds and administrative costs directly related to the CFD, and for no other purpose;
and
WHEREAS, certain Special Taxes are currently delinquent (the "Delinquent
Special Taxes "); and
WHEREAS, the Authority has requested the Successor Agency to authorize the
sale of its Delinquent Special Taxes to the Authority for the fiscal years ending June 30
in each of the years 2009 through 2016 (the "Covered Fiscal Years ") at a purchase
SUCCESSOR RESOLUTION -0
Page 2
nrirc cru inl to 1100/_ of tho nrinrrinni amount of De in— 1—t Lr dal Two :n:hirh —
N::w ...1..+u: w : . v iv — a :� N: n :v:Nu: a:::vu::a v: u� nu�uc: n vr✓ci :a: : anca vvi n� i i ai c
eligible fnr sale and nSSianmont• and
a a
WHEREAS, the Authority has made arrangements to issue and sell one or more
series of certificates of participation representing a participation interest in all of the
Delinquent Special Taxes received from the Successor Agency and delinquent taxes
and assessments from other participating local agencies, which will be sold to a
designee of Tower Capital Management, LLC, a Delaware limited liability company
( "Tower Capital "); and
WHEREAS, the Board of the Successor Agency wishes at this time to approve
the foregoing financing plan and authorize the execution and delivery of all related
documents and actions;
• THEREFORE, • OF
REDEVELOPMENT ; - - , OF THE CITY OF LAKE ELSINORE DOES
RESOLVE, DETERMINE AND ORDER AS FOLLOWS:
Section 1. Authorization of Sale of Delinquent Special Taxes. The
Successor Agency hereby approves and authorizes the sale of Delinquent Special
Taxes, in whole or in part, for any one or more of the Covered f=iscal Years, to the
Authority for a minimum purchase price of 110% of the amount thereof.
Section 2. Authorization to Execute Einancina D:9cl99°1 ants_ in .orr4 r tr'
implement the financing plan approved under Section 1, the Successor Agency hereby
authorizes the Executive Director or the Director of Administrative Services (each, an
"Authorized Officer "). to execute and deliver one or more agreements between the
Authority and the Successor Agency whereby the Successor Agency sells Delinquent
Special Taxes to the Authority upon terms and conditions which are acceptable to an
Authorized Officer. An Authorized Officer is hereby authorized and directed to execute
such agreements in the name and on behalf of the Successor Agency. The material
terms of each such agreement shall include the following:
(a) the Delinquent Special Taxes shall be sold to the Authority for a
purchase price at least equal to 110% of their par amount, which shall
be paid to the Successor Agency upon the closing of the transaction in
funds that are immediately available to the Successor Agency;
(b) as a result of such sale, the Authority shall be entitled to receive all
amounts collected in respect of such Delinquent Special Taxes,
including applicable interest and penalties, provided that all such
collections shall continue to be made in the manner prescribed by law,
(c) such sale of Delinquent Special Taxes shall be without recourse to the
Successor Agency, and the Successor Agency shall not incur any
IPA
SUCCESSOR AGENCY RESOLUTION NO. SA 2014 -00_
Page 3
liability or assume any responsibility to the Authority for the collection
of the Delinquent Special Taxes;
(d) all costs of financing the purchase of Delinquent Special Taxes by the
Authority shall be the sole responsibility of the Authority, and the
Successor Agency shall not have any liability for payment of such
costs; and
(e) in order to provide funds for the financing of the Delinquent Special
Taxes, the Authority shall be authorized to sell one or more series of
certificates of participation to Tower Capital.
Section 3. Official Actions. The Chairperson, the Executive Director, the
Director of Administrative Services, the Secretary, and all other officers of the
Successor Agency are hereby authorized and directed, for and in the name and on
behalf of the Successor Agency, to do any and all things and take any and all actions,
including execution and delivery of any and all assignments, certificates, requisitions,
agreements, notices, consents, amendments to existing bond indentures or similar
instruments, instruments of conveyance, warrants and other documents, which they, or
any of them, may deem necessary or advisable in order to consummate the sale of
Delinquent Special Taxes to the Authority for the Covered Fiscal Years. Whenever in
this Resolution any officer of the Successor Agency is authorized to execute or
countersign any document or take any action, such execution, countersigning or action
may be taken on behalf of such officer by any person designated by such officer to act
on his or her behalf if such officer is absent or unavailable.
Section 4. Effective Date. This Resolution shall take effect from and after the
date of approval and adoption thereof.
PASSED, APPROVED AND ADOPTED at a regular meeting of the Successor
Agency of the Redevelopment Agency of the City of Lake Elsinore, held this 28th day of
October, 2014 by the following vote:
APPROVED AS TO FORM:
Barbara Leibold, Successor Agency Counsel
ATTEST:
Virginia J. Bloom, Secretary
-3-
Natasha Johnson, Chairperson