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HomeMy WebLinkAbout7-CONS~1Agenda TRU KEE DONNER F Public Utility District ACTION To: Board of Directors From: Robert Mescher Date: September 04, 2013 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. Only the Board can adopt resolutions and contract with legal counsel. 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 110 parcels with delinquencies. Eighty-one of those parcels were owned by Gray's Station LLC, a subsidiary of East West Partners and twenty-two parcels were owned by UDC, a Texas -based developer. 3. NEW INFORMATION STATUS OF PRIOR DELINQUENCIES The East West Partners subsidiary sold their eighty-one parcels to LDK GC 81, LLC, a subsidiary large developer, LDK, from the Sacramento area. Most of the parcel owners have now paid or have arranged a payment plan. There are nine parcels in Gray's Crossing and two parcels in Old Greenwood with remaining delinquencies prior to this year. The District received Writs -of -Sale from the court on four of the parcels. The Nevada County Sheriff's Office will be scheduling a sale soon. The District successfully collected delinquent assessments and fees from a Sheriff's sale of a parcel earlier this year. The owners of the three largest parcels in Gray's Crossing with delinquent assessments have made no indication that they will pay the assessments. Previous Sheriff's sales failed to obtain the minimum bid on those parcels. We are waiting for the real estate market to improve to try again. Stradling Yocca Carlson and Rauth is continuing collection efforts on the remaining delinquent assessments of the other four parcels. NEW DELINQUENCIES Attachment 1 lists the parcels that did not pay their assessments for the most recent tax year. There are thirteen parcels in Gray's Crossing and three parcels in Old Greenwood. This list includes the eleven parcel owners described above. The three largest delinquent assessments from Gray's Crossing are the three largest parcels mentioned above. 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 three property owners in Old Greenwood that are delinquent in paying the assessments prior to the 2013/14 levy. The total past due for Old Greenwood assessments is $7,030. None of the Old Greenwood delinquencies are more than $7,500, and the total past due does not exceed 5% of the amount billed. The Board May proceed with foreclosure on the three parcels. There are thirteen property owners in Gray's Crossing that are delinquent. The delinquent assessments totaling $494,793 exceeds 5% of the amount billed. The Board must proceed with foreclosure on all of the parcels. 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. Willdan has also sent a letter to the lenders and copied the property owners. 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. OLD GREENWOOD REFINANCING After careful consideration, the financing team decided to postpone the sale of the bonds due to a sudden adverse change in market conditions that greatly reduced the anticipated benefit to the property owners. 4. FISCAL IMPACT There is no fiscal impact to the District with this action item. All charges incurred related to the judicial foreclosure process are the responsibility of the property owners in the CFD. 5. RECOMMENDATION a) Adopt the attached foreclosure Resolution 2013-20 (Attachment 2) authorizing staff and special counsel to proceed with the foreclosure process on all parcels with delinquent assessments in both Old Greenwood and 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 in both Old Greenwood and Gray's Crossing CFD. Robert Mescher Administrative Services Manager Michael D. Holley General Manager