2005 AGN MAR 15 I21 - Laserfiche WebLink

Browse Search

CITY OF COLTON Item #21 AGENDA REPORT FOR COUNCIL MEETING OF MARCH 15, 2005 TO: HONORABLE MAYOR AND CITY COUNCIL FROM: DILU DE ALWIS, FINANCE DIRECTOR V SUBJECT: BOND CALL — COMMUNITY FACILITIES DISTRICT 89-2 DATE: March 2, 2005 BACKGROUND: On February 22, 1990, the City of Colton (the "City") established Community Facilities District 89-2 (the "CFD"). Further, the City authorized the issuance of bonds not to exceed $9,000,000 of which $3,415,000 bonds were issued for the purpose of purchasing, constructing, expanding or rehabilitating real property other than tangible property with estimated life of five (5) years or more, sewer, water, street, utility and drainage improvement. Property owners within the boundaries of the CFD pay an annual special tax in order to repay the debt. One of the major concerns in the development of the area was drainage. DISCUSSION/ANALYSIS: In 1999 the original bonds were refunded and some changes were made to the bond documents to enhance their marketability. These changes were necessary due to the level of delinquencies and the concentration of ownership in the CFD. The changes included the elimination of the ability of the City to issue additional bonds up to the maximum of $9 million even though there continued to be a need for drainage improvements. The changes were necessary to market the bonds and be able to provide savings to the property owners in the CFD. At the time of the refinance, there were funds in the Construction account that were earmarked for addressing the drainage problems. The funds were carried over to the new bond issue because the improvements were not completed. A provision was made in the new bond issue to allow bonds to be retired early with the proceeds of delinquent property taxes. On September 1, 2001, the City called $185,000 worth of outstanding bonds with funds collected from delinquent Special Taxes resulting in annual debt service savings of $11,028 for the remainder of the bond term. The City did not use bond proceeds nor earnings in the Improvement Fund to reduce the bond size in 2001 but funds collected from delinquent taxes in the CFD in order to have some funds to use for the 3-5 Storm Drain Project. As of January 30, 2005, the amount of funds being held by Union Bank, the fiscal agent, in the Improvement Fund was $818,709. After successful lobbying in Washington by the City Council and Management, the City has secured additional funds to start work on the 3-5 Storm Drain Project. $387,055 has been encumbered to fund the design of the project. City Management has allocated $459,000 out of the Improvement Fund for the first phase of this project. Phase I of the project will begin in January 2006. Efforts are in progress to secure additional funding and to use the remainder of funds in the Improvement Fund for a matching grant. The delay in completion of the drainage improvements was caused by a number of factors. One factor was the delay in the build out of CFD 89-2 because of the Delhi Sands Fly that was found in the boundaries of the CFD. This delayed the development and the issuance of the remainder of the bond authorization. Because of this delay, it was necessary for the City to seek alternative