LOS ANGELES -- If special tax obligations in the Wildwood Estates subdivision are restructured, a developer may be willing to buy the troubled property, a recent Nevada County, Calif., press release said.
Problems with special tax delinquencies in the subdivision -- the county's Community Facilities District No. 1990-1 -- have resulted in two missed payments this year to holders of Mello-Roos bonds. The county failed to make a $307,017 payment due March 1 and a $206,090 payment due Sept. 1. The bonds are secured by special taxes on property in Wildwood Estates.
The original financing in 1990 raised $9.07 million. In February, the county conducted a tender offer for a portion of unspent bond proceeds. Following the offer, $4.92 million of bond proceeds were left outstanding, of which $4.5 million is held by public finance authorities controlled by the California cities of Wasco and Avenal.
Wasco's finance authority owns $3.5 million of the Nevada County bonds; Avenal's authority owns $1 million, market sources said.
Wasco and Avenal bought the Mello-Roos bonds with proceeds from Marks-Roos bonds.
First California Capital Markets Group Inc., a San Francisco firm, acted as underwriter and financial adviser to Wasco and Avenal in the Nevada County transactions.
Despite the Nevada County default, Avenal and Wasco have reserve funds to cover any potential exposure, First California vice president Ken Yee said yesterday.
"For these bond pools, there's no need for concern because you size a pretty large reserve fund to cover the local obligations," Yee said. "We have enough funds to cover any defaults or deficiencies from Nevada County -- or any other projects."
The Nevada County press release, which was issued Sept. 23, gave a glimmer of hope that an unnamed developer might be willing to buy the Wildwood Estates property if the property tax delinquencies can be restructured.
According to the release, four installments of special property taxes have been missed. With penalties and interest, the delinquencies total $2.17 million.
Sacramento-based First Commercial Bank took title to the property earlier this year after previous owner Wildwood Estates Inc. defaulted on a private construction loan with the bank.
Earlier this month, the county obtained a court ruling allowing it to proceed with a foreclosure sale against the property after March 1, 1995.
According to the county release, First Commercial Bank officials said the bank "is not prepared to invest any more money in the property and that the delinquent taxes will not be paid by the bank. In essence, the bank stated that, in its view, the property does not have any value to the bank."
Dru Gibson, finance director for Wasco, declined to discuss the situation. Melissa Harriman, Avenal city manager, was also unavailable yesterday.