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Home My WebLink About#11 CFDs AGENDA ITEM #11 Public Utility District m MEETING DATE: September 4, 2024 TO: Board of Directors FROM: Michael Salmon, Chief Financial Officer SUBJECT: Consideration of Adopting Resolution 2024-17 Authorizing Staff and Special Counsel to Proceed with the Foreclosure Process on all Parcels with Delinquent Assessments within the CFDs as Required by Bond Covenant. APPROVED BY: Brian C. Wright, General Manager RECOMMENDATION: a) Adopt foreclosure Resolution 2024-17 authorizing staff and special counsel to proceed with the foreclosure process on all parcels with delinquent assessments within the CFDs as required by Bond covenant; and b) Authorize the General Manager to execute a contract for legal services with Stradling, Yocca, Carlson, & Rauth for their work relating to the foreclosure on delinquent parcels. BACKGROUND: This matter concerns the annual update to the Board on Gray's Crossing and Old Greenwood Communities Facilities Districts (CFD's) delinquencies, and the consideration of adopting a foreclosure resolution and contracting with a foreclosure attorney to facilitate the collection of delinquent CFD assessments. 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 finance infrastructure for the developments. The property owners in each CFD are annually assessed through their property tax bill to pay the principal and interest on the bonds. Each year since 2010, and in accordance with the bond covenant requirements, 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. ANALYSIS AND BODY: FORECLOSURE CRITERIA The bond covenant defines when the foreclosure proceedings apply. The criteria for Page 1 of 3 Page 31 of 72 when the Board must proceed with foreclosure are: A) A parcel or property owner is past due more than $7,500-1 or B) If more than 5% of the amount billed is past due, all past due parcels are subject to foreclosure. There are 9 property owners in Gray's Crossing who are delinquent (11 last year). The delinquent assessments totaling $612,600 ($576,004 last year) exceed 5% of the amount billed. The majority (96%) of the total assessment delinquency amount for the 23/24 tax years is due to the three large undeveloped multifamily parcels. The Board must proceed with foreclosure on all the parcels, per bond covenant. There are two property owners in Old Greenwood who are delinquent (0 last year). The delinquent assessments totaling $4,335 ($0 last year) do not exceed 5% of the amount billed. The board has routinely proceeded with foreclosure on all the delinquent parcels, but is not required by covenant to do so. All property owners have received reminder letters and demand letters prepared by Willdan Financial, the District's third party firm that administers the collection of the assessments. Foreclosure services have been performed for several years for the CFDs by Stradling, Yocca, Carlson, & Rauth (SYCR). SYCR has offices throughout California and has done an excellent job collecting delinquencies each year. The District contracts with SYCR annually for these judicial foreclosure services for the CFD, as authorized in Attachment 1 draft Resolution 2024-17. GOALS AND OBJECTIVES: District Code 1 .05.020 Objectives: 1. Responsibly serve the public. 6. Manage the District in an effective, efficient and fiscally responsible manner. District Code 1 .05.030 Goals: 1. Manage for Financial Stability and Resiliency FISCAL IMPACT: There is no fiscal impact to the 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 within the respective CFD's. In August 2024, $243,926 ($264,772 last year) was drawn from the Gray's Crossing Reserve Fund to make whole the $1.9 million bond payments due on 9/1/2024, due to the accumulated delinquencies. Post-draw, the reserve balance is $1.9M, while the covenant stipulated reserve balance is $3.3M. Drawing from the Reserve Fund is a reportable event for the bondholders, and the District completed a report. Page 2 of 3 Page 32 of 72 ATTACHMENTS: 1. r2024-17 Resolution CFD Authorizing Foreclosure Page 3 of 3 Page 33 of 72 ■UCKEE r Public RESOLUTION NO. 2024 - 17 RESOLUTION OF THE BOARD OF DIRECTORS OF THE TRUCKEE DONNER PUBLIC UTILITY DISTRICT ACTING ON ITS OWN BEHALF AND AS THE GOVERNING BODY OF ALL OF ITS COMMUNITY FACILITIES DISTRICTS (OLD GREENWOOD No. 03-1 AND GRAYS CROSSING No. 04-1) AUTHORIZING FORECLOSURE PROCEEDINGS AND RETENTION OF SPECIAL COUNSEL WHEREAS, the Truckee Donner Public Utility District (the "TDPUD") has conducted proceedings resulting in the formation of Community Facilities Districts ("CFDs"; the District and the CFDs are collectively referred to as "District") and the issuance and sale of bonds or debt pursuant to the Mello-Roos Community Facilities Act of 1982 (Cal. Gov. Code Section 53311, et seq.; the "Act"); and WHEREAS, pursuant to the Act, the District has duly recorded Notices of Special Tax Lien and has duly and regularly levied CFD special taxes, which special taxes and interest and penalties thereon constitute a lien against the parcel of the land against which it was levied until the same are paid, which liens secure in whole or part debt issued pursuant to the Act; and WHEREAS, certain installments of the special taxes have not been paid when due, and certain special taxes may not be paid when due in the future; and WHEREAS, pursuant to Section 53356.1(a) of the Act, the District is authorized to order the special taxes collected by an action brought in the Superior Court to foreclose their liens; and WHEREAS, pursuant to Section 53356.1(b) of the Act, the District covenanted for the benefit of owners of the debt to file such foreclosure actions on behalf of the debt holders and are authorized to order the County Auditor to credit the delinquent special taxes upon the secured tax roll, thus relieving the County Tax Collector of further duty and regard thereto; and, WHEREAS, the District wishes to retain experienced, qualified counsel to prosecute such judicial foreclosure actions, NOW THEREFORE, BE IT RESOLVED by the Board of Directors of the TDPUD acting on its own behalf and as the Legislative Body of all of the District CFDs that: 1. The Board finds that the Act authorizes the commencement of judicial foreclosure proceedings to collect delinquent special taxes, and hereby orders that the delinquent special taxes listed on the attached Exhibit A and all future delinquent special taxes as to such property, be collected by action brought in the appropriate Superior Court to foreclose the liens thereof. Resolution 2024-14 Page 34 of 72 2. The General Manager is authorized to retain Stradling Yocca Carlson & Rauth, a law firm, as special counsel on the terms set forth in the agreement presented to the Board to prosecute the foreclosure actions and to collect on behalf of the CFDs all amounts due on account of the special taxes listed in Exhibit A and any subsequent delinquent special taxes. 3. The Board finds that the Act provides for the payment of the costs and attorneys fees for prosecution of the foreclosures authorized by the District and hereby authorizes Attorneys to require payment on its behalf of all costs and all attorneys fees incurred as to each delinquent parcel as a condition of such redemption as provided in the agreement. Adopted by the Board of Directors of the Truckee Donner Public Utility District acting on its own behalf and as the Legislative Body of all of its Community Facilities Districts at a regular meeting held on September 4, 2024 by the following vote: AYES: NOES: ABSTAIN: ABSENT: TRUCKEE DONNER PUBLIC UTILITY DISTRICT Jeff Bender, President ATTEST: Brian Wright, General Manager Resolution 2024-14 Page 35 of 72 Attachment 1 EXHIBIT A Parcel Owner's Name District Tax Years) Installments) 930028111000 POPST KENNETH J.& ELIZABETH M CFD 03-1 R (Old Greenwood) 2023/24 1st&2nd TRSTES ETAL 930030000000 VELCHAMY FAMILY TRUST CFD 03-1 R (Old Greenwood) 2023/24 1st&2nd 019770002000 SIDDIQUI FAMILY PARTNERSHIP LP CFD 04-1 (Gray's Crossing) 2023/24 1st&2nd 019800020000 CROZATIER STEPHANE CFD 04-1 (Gray's Crossing) 2023/24 2nd 019840004000 BANY TENILLE &ADAM CFD 04-1 (Gray's Crossing) 2023/24 2nd 019840017000 REYES GENERAL CONSTRUCTION LLC CFD 04-1 (Gray's Crossing) 2023/24 1st&2nd 019900022000 MALAFEEV ALEXEY CFD 04-1 (Gray's Crossing) 2023/24 1st&2nd 043010005000 SIDDIQUI FAMILY PARTNERSHIP LP CFD 04-1 (Gray's Crossing) 2023/24 1st&2nd 043010007000 DK ALVISO LLC CFD 04-1 (Gray's Crossing) 2023/24 1st&2nd 043040012000 REYES GENERAL CONSTRUCTION LLC CFD 04-1 (Gray's Crossing) 2023/24 2nd 043050015000 GRIST LAUREN E ETAL CFD 04-1 (Gray's Crossing) 2023/24 2nd Resolution 2023-11 Page 36 of 72