The city of Pittsburg recently elected to make a debt service payment on a 1988 bond assessment issue, even though it was not legally required to do so.
The principal and interest payment of $159,000 was due to bondholders on Sept.2. Previous withdrawals has exhausted the reserve funds, so the bonds would have gone into default if the city had not covered the payment.
"We wanted to try to protect our credit standing as much as possible," even though the bonds are not a legal obligation of the city, said James Holmes, finance directors of Pittsburg.
The move also will "buy some time" to see if problems in the assessment district can be corrected, Holmes added.
Such bonds are secured by assessments on properties that benefit from related infrastructure improvements. In this instance, the city issued $2.4 million of bonds on behalf of Assessment District No.88-3, commonly known as the Builders Industrial Park.
Bond proceeds financed streets, lighting, sewers, and water lines, Holmes said.
Pittsburg is pursuing a foreclosure sale of the affected property, though there is "no assurance" that bids will be sufficient to cure assessment delinquencies, the city said in a letter to bondholders. In addition, "no assurance can be given that the city will continue to make payments on the bonds in any subsequent period from other available funds."