LOS ANGELES - Sacramento, Calif.. will initiate foreclosure proceedings next month unless certain property owners cure delinquent assessments that secure bonds in North Natomas Assessment District No. 88-03, the city's treasurer said yesterday.
Thomas P. Friery, the treasurer, said in a news release that $809,630, or 44.5%, of the assessment installments billed on Nov. 1 remain unpaid. The unpaid assessments became delinquent Dec. I 1.
Friery said that if the delinquent assessments are not brought current, Sacramento plans to initiate foreclosure proceedings against the affected property on Jan. 21 in accordance with terms of the bond resolution.
Sacramento formed the assessment district in March 1989, and the city issued $38.4 million of limited obligation improvement bonds for the district in April 1989.
The semiannual assessments on property in the district secure the bonds. If the delinquencies are not brought current, the treasurer said a special bond reserve fund would help provide a payment to bondholders that is due next March.
The balance in that reserve fund is currently $3.64 million. In addition, Friery noted that $ 1.1 million from paid assessments also is available in the redemption fund that is used to make payments to bondholders.
Property owners with delinquent assessments are the Sacramento Sports Association, with $650,748; SBE Partnership, with $75,270; and the Centennial Group, with $83,611.
Sacramento will not initiate foreclosure proceedings against he Centennial Group's property because that firm is currently under Chapter 11 bankruptcy protection.
The city faced a similar situation last spring when certain property owners had delinquent assessments, but those payments were subsequently brought current. Friery said he cannot speculate on whether the current delinquencies will be covered.
Friery added that property owners now pay the city directly because of a recent change that switched assessment billing to the city from Sacramento County. Under the county system, assessments could not be paid separately from property taxes. and any partial payment would be considered a delinquency in the payment of both taxes.
Bond proceeds reimbursed property owners for various infrastructure improvements in the district, which totals about 1,473 acres. The district's current land use includes a mix of residential, commercial, and industrial activity. The ARCO Arena, home to the Sacramento Kings professional basketball team and in the district, is not affected by the unpaid assessments.
Friery said in an interview that investors also should be aware of other recent and ongoing developments that were initially discussed under the "Bondholders' Risks" section in the official statement. Those developments specifically pertain to a section called "Constraints on Development" in the district.
Friery said the North Natomas community plan discussed in the official statement remains in place. But he noted that a task force, which included property owners, environmentalists, and city staff, has developed a new recommended community plan for the North Natomas area.
Among other things, the new plan would remove an existing requirement that blocks further development in the area until a new sports stadium is least 50% complete. The Sacramento Sports Association had started initial construction on a football stadium, but the project became stalled in its early stages and that property is affected by the delinquent assessments.
The new community plan also envisions a drainage system for the area that would be less expensive to build than a previously proposed canal alternative.
The new plan, which also involves numerous other details, is expected to be formally submitted to the Sacramento Planning Commission this spring or summer, the treasurer's release says. But the news release cautions that "it is not clear" whether the Planning Commission or City Council will approve any change to the existing plan, or approve the task force report in its entirety.
The treasurer said investors also should be aware of continuing developments regarding flood control that were initially discussed in the bondholders' risk section.
Friery noted that federal legislation in 1988 barred the Federal Emergency Management Agency for four years from preparing so-called 100-year flood-plain maps in the Sacramento area, including the North Natomas district.
That four-year window essentially gave local officials more time to prepare a flood control strategy for the region.
In October, the U.S. Army Corps of Engineers recommended a dry dam at the Auburn Dam site to provide flood protection. But Congress did not authorize the project because of controversy over the proposal, the treasurer's release notes.
In response, a local joint powers agency called the Sacramento Area Flood Control Agency has developed an interim strategy that would use the existing Folsom Reservoir for greater flood control storage capacity. "It is unknown" if that interim strategy will be approved, or if a permanent flood control project will be developed and approved, the treasurer's news release says.
Meanwhile, the legislation barring the Federal Emergency Management Agency from preparing new flood-plain maps expired in November, and the agency is in the process of preparing new maps, the release says.
The new maps are a concern because they could eventually prohibit development in certain areas of the Sacramento region - including parts of the North Natomas district - due to potential flooding concerns.