LOS ANGELES -- Poway, Calif., recently resumed foreclosure proceedings on property that helps back $38 million of Mello-Roos bonds after a bankruptcy court lifted a stay on the foreclosure action, the city said in a release yesterday.
Parkway Business Centre Partners Inc., a California limited partnership and the majority property owner of land in Community Facilities District No. 88-1, remains delinquent on $2.78 million of special taxes that were due in fiscal 1993, which ended June 30.
The special taxes help secure a $30 million Series 1989 special tax bond issue and an $8 million Series 1990 issue. The bonds, commonly known as Mello-Roos debt, provided infrastructure funding for the Parkway Business Center, an industrial park. Poway is about 20 miles north of San Diego.
Last February, the Parkway Business partnership filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code. The filing resulted in an automatic stay on judicial foreclosure proceedings.
The city and community facilities district sought relief from the stay in a motion filed last summer. The bankruptcy court granted the request on Oct. 5, and "the district has now resumed judicial foreclosure proceedings in the matter," the release says.
Such foreclosure proceedings often take months. A buyer of the land, if one comes forward, would have to bring delinquencies up to date before taking control.
The Parkway partnership's delinquencies of $2.78 million compare with a total district-wide tax levy of $3.25 million in fiscal 1993.
To date, bondholders have not suffered any in effects from the delinquencies. On Feb. 15 and Aug. 15, the city loaned the district sufficient funds to pay principal, and interest due on those dates.
Accordingly, the fiscal agent for the bonds still holds $3 million on deposit in the reserve fund for the 1989 bonds and $818,272 in the reserve fund for the 1990 bonds.
Although Poway is not legally obligated to cover bond payments, a policy decision was made "not to tap into the reserve funds," a city official said yesterday.
"No decision has been made" on whether the city will continue to make such loans to cover future payments to bondholders, the official said.
The fiscal agent also holds $707,056 in the construction fund for the 1990 bonds.
"Pursuant to the resolution authorizing the issuance of the 1990 bonds, the district will apply any construction moneys not expended or committed on Jan. 1, 1994, to the redemption of 1990 bonds on Feb. 15, 1994," the city's release says.
According to the release, 52 parcels out of 91 in the district are defined as "developed."
As of yesterday, 24 developed parcels are delinquent in the payment of special taxes and all 39 undeveloped parcels are delinquent, the release says. The delinquent parcels are owned by the Parkway partnership.
The district has levied taxes totaling $3.275 million for the current fiscal year, The first special tax installment payment becomes delinquent if it is not paid by Dec. 10. The city plans to issue a supplemental release after that date to update the delinquency information.