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HomeMy WebLinkAbout8 CDF ForeclosuresIfTRUCKEE DN ER ct ublic UtilityDistrict ACTION To: Board of Directors From: Tricia Phillips Date: September 02, 2015 Subject: Consideration of Foreclosures in the Community Facilities Districts; and Delinquency Updates for Old Greenwood and Gray's Crossing 1. WHY THIS MATTER IS BEFORE THE BOARD Adoption of a foreclosure resolution and contracting with a foreclosure attorney are the next steps in the collection of delinquent Community Facilities District (CFD) assessments. 2. HISTORY In 2003, the Board formed a CFD for the Old Greenwood development. In 2004, the Board formed a CFD for the Gray's Crossing development. Both CFDs were formed for the purpose of selling bonds to pay for portions of the infrastructure in both the Old Greenwood and Gray's Crossing developments. The property owners in each CFD have been annually assessed through their property tax bill to pay the principal and interest on the bonds. Each year since 2010, the Board has adopted a foreclosure resolution authorizing staff and special counsel to proceed with the foreclosure process on all parcels with delinquent assessments in both CFDs. Last year, there were approximately 46 parcels with delinquencies. Three of those parcels were large undeveloped multi -family parcels owned by the developers LDK and Gray's Station. The parcels had income restrictions and the developers had no intent to pay future and delinquent assessments. The income restrictions have since expired on the parcels. The previous Sheriff's sales failed to obtain the minimum bid on those parcels. The remaining parcels were single -residential lots owned by individuals. 3. NEW INFORMATION STATUS OF PRIOR DELINQUENCIES Of the remaining 46 parcels, 41 parcels have since paid their delinquent assessment. Sheriff sales were conducted for the remaining five parcels and were unsuccessful. On November 6th through November 9th, 2015, the Tax Collector's Office will be conducting an online auction on parcels that have five or more years of delinquent taxes. The three large undeveloped parcels along with a single family residential lot will be included in the auction. Mellos-Roos liens are in par with County property tax liens. There is a disclaimer on the auction site noting that prospective purchasers are advised that some bonds or other assessments which are levied by agencies or offices other than the treasurer - tax collector may still be outstanding after the tax sale. If the parcels sell at auction the new owner will be responsible for all past delinquencies and future assessments. NEW DELINQUENCIES Attachment 1 lists the parcels that did not pay their assessments this past year. There are 18 delinquent parcels in Gray's Crossing and no delinquent parcels in Old Greenwood. This list includes the five parcel owners described above. The three largest delinquent assessments from Gray's Crossing are the three largest parcels mentioned above. Attachment 2 is a map of the delinquent parcels in Gray's Crossing. FORECLOSURE CRITERIA The bond covenant defines when the foreclosure proceedings apply. The criteria for when the Board must proceed with foreclosure are: A) A parcel or property owner is past due more than $7,500, or B) If more than 5% of the amount billed is past due, all past due parcels are subject to foreclosure. There are 18 property owners in Gray's Crossing that are delinquent. The delinquent assessments totaling $512,446 exceeds 5% of the amount billed. The Board must proceed with foreclosure on all of the parcels, per bond convenent. All of the property owners have received reminder letters and demand letters prepared by Willdan Financial, the firm that administers the collection of the assessments. SPECIAL COUNSEL Stradling Yocca Carlson & Rauth has six offices throughout California and they have done an excellent job in collecting most of the delinquencies from last year. 4. FISCAL IMPACT There is no fiscal impact to Truckee Donner Public Utility District with this action item. All charges incurred related to the judicial foreclosure process are the responsibility of the property owners in the CFD. Approximately $360,000 will need to be drawn from the Gray's Crossing Reserve Fund to make the $1.4 million bond payment because of the accumulated Gray's Crossing delinquencies. Most of the total assessment delinquencies are due to the three large undeveloped parcels. Drawing from the Reserve Fund is a reportable event to the bond holders. Available Funds $1,004,000 Reserve Fund Draw $ 360,000 Payment due 09/1/2015 $1,364,000 5. RECOMMENDATION a) Adopt the attached foreclosure Resolution 2015-19 (Attachment 3) authorizing staff and special counsel to proceed with the foreclosure process on all parcels with delinquent assessments in Gray's Crossing CFD. b) Authorize the Board President to extend the agreement for legal services with Stradling Yocca Carlson & Rauth for their work relating to the foreclosure on delinquent parcels Gray's Crossing CFD. Tricia Phillips Michael D. Holley Senior Accountant / Analyst General Manager