Community Community MeetingMeetingAtwater, Atwater,

CaliforniaCaliforniaCFD 1-90CFD 1-90

July 30, 2009July 30, 2009

What is Mello Roos?What is Mello Roos?

Mello-Roos Community Facilities Act of 1982Mello-Roos Community Facilities Act of 1982 Legislative response to Prop 13Legislative response to Prop 13 Provides for Special Tax Levy within defined Provides for Special Tax Levy within defined

geographic area – geographic area – Initially required two-third of the qualified Initially required two-third of the qualified

electorate electorate Can generate facilities from broad range of Can generate facilities from broad range of

facilitiesfacilities Way for developers to shift infrastructure Way for developers to shift infrastructure

costscosts

More about Mello RoosMore about Mello Roos Authorizes the district to issue tax-exempt Authorizes the district to issue tax-exempt

bond secured by land within the districtbond secured by land within the district If a parcel does not pay the special tax levy…If a parcel does not pay the special tax levy…

Public Agency can foreclosurePublic Agency can foreclosure Proceed from foreclosure insures the bond Proceed from foreclosure insures the bond

holders receive interest and principle paymentsholders receive interest and principle payments Bonds are secured by land within the districtBonds are secured by land within the district Do not risk Public Agency General Fund Do not risk Public Agency General Fund Tax-exempt bonds – typically lower rate than Tax-exempt bonds – typically lower rate than

conventional construction financingconventional construction financing

Community Facilities Community Facilities District 1-90District 1-90(CFD 1-90)(CFD 1-90)

Created in July, 1990Created in July, 1990 Authorized to borrow up to $20 million Authorized to borrow up to $20 million

to pay for infrastructure improvements. to pay for infrastructure improvements. $17.5 million in bonds were issued.$17.5 million in bonds were issued.

Repayment was to be made by those Repayment was to be made by those who owned the land and, as homes and who owned the land and, as homes and businesses were built, the homeowners businesses were built, the homeowners and businesses located in the CFD.and businesses located in the CFD.

Community Facilities Community Facilities District 1-90District 1-90

The $17.5 million paid for:The $17.5 million paid for: Street improvementsStreet improvements Water and sewer main extensionsWater and sewer main extensions Underground utility extensions:Underground utility extensions:

electricityelectricity natural gasnatural gas cable TV and cable TV and phone servicephone service

But…But… The recession of the early 1990’s slowed The recession of the early 1990’s slowed

homebuilding in CFD 1-90.homebuilding in CFD 1-90. The closing of Castle Air Base in 1994 hurt the The closing of Castle Air Base in 1994 hurt the

local economy and further slowed growth in the local economy and further slowed growth in the area.area.

By 1994, non-payment of taxes threatened to put By 1994, non-payment of taxes threatened to put the District in default.the District in default.

In 1995, the City issued bonds to restructure the In 1995, the City issued bonds to restructure the debt and avoid a default.debt and avoid a default.

Since 1995, the taxes collected each year from Since 1995, the taxes collected each year from the land owners and the homeowners in the CFD the land owners and the homeowners in the CFD has not raised enough money to keep the debt has not raised enough money to keep the debt current and repay this debt by 2015.current and repay this debt by 2015.

Currently in CFD 1-90Currently in CFD 1-90 In 2006 the all debt payment were current In 2006 the all debt payment were current

and the reserve fund was made wholeand the reserve fund was made whole Homeowners in the CFD currently pay Homeowners in the CFD currently pay

enough special taxes to pay the bond debt enough special taxes to pay the bond debt service.service.

Homeowners pay based on the square Homeowners pay based on the square footage of their home. footage of their home.

The amount each homeowner pays The amount each homeowner pays increases by 2% each year when there is increases by 2% each year when there is not sufficient tax revenue to make the not sufficient tax revenue to make the annual debt service.annual debt service.

The remaining undeveloped land in the The remaining undeveloped land in the District has large tax liens.District has large tax liens.

CFD 1-90 Debt Service CFD 1-90 Debt Service 20092009

Bonds structured in two series A and B.Bonds structured in two series A and B. Debt service due in Fiscal Year 2008-09:Debt service due in Fiscal Year 2008-09:

Series A debt service approximately $1.2 millionSeries A debt service approximately $1.2 million Series B debt service approximately $0.6 millionSeries B debt service approximately $0.6 million

All Debt service are is current at this timeAll Debt service are is current at this time All required reserve funds have been All required reserve funds have been

restoredrestored August 31, 2008 reserve fund $1,357,201August 31, 2008 reserve fund $1,357,201

We have Improved the We have Improved the SituationSituation

2009 refinancing 2009 refinancing Took advantage of Interest rates at a 40 year Took advantage of Interest rates at a 40 year

lowlow Out year CFD debt was financed at 7 ¾%Out year CFD debt was financed at 7 ¾% CFD was refinanced, the interest rate were be CFD was refinanced, the interest rate were be

lowered to approximately 6%lowered to approximately 6% Restructuring leveled debt service on Restructuring leveled debt service on

series A bondsseries A bonds No extension of termNo extension of term Final year of debt service remains at 2015Final year of debt service remains at 2015

Development StatusDevelopment Status

2003-042003-04 2006-072006-07 2008-092008-09

Total Parcels Total Parcels in CFDin CFD

960960 1,1801,180 1,1831,183

Residential Residential ParcelsParcels

945945 1,0201,020 1,0361,036

Undeveloped Undeveloped ParcelsParcels

55 146146 131131

Going ForwardGoing Forward Increase delinquencies in District is a concernIncrease delinquencies in District is a concern We expect these to continue until the economy We expect these to continue until the economy

improvesimproves Foreclosure CovenantsForeclosure Covenants

Require foreclosure procedures for parcels Require foreclosure procedures for parcels delinquent by $3,000 as long as the reserve fund is delinquent by $3,000 as long as the reserve fund is maintainedmaintained

Increase noticing helps prevent foreclosure Increase noticing helps prevent foreclosure proceedingsproceedings

Legal issues related to foreclosures have Legal issues related to foreclosures have reached settlementreached settlement

Last year of Debt Service remains at 2015Last year of Debt Service remains at 2015

Question and Question and Answer PeriodAnswer Period