MEETING DATE:
OCTOBER 28, 2014
SUBJECT:
Title
RESOLUTION NO. 2014-7994 - AUTHORIZATION TO FORECLOSE ON DELINQUENT PROPERTY OWNERS
Body
Recommendation
Recommendation
ADOPT a resolution authorizing foreclosure on property owners that are delinquent in the payment of Community Facilities District (CFD) special taxes.
Body
Board or Commission Action
Not applicable.
Relevant Council Strategic Theme
Good Governance
Relevant Department Goal
Not applicable.
Introduction
Property owners in the City's CFD 88-1 (Paloma/Santa Fe Hills), CFD 91-01 (Twin Oaks Valley Ranch), CFD 99-01 (San Elijo Hills), and CFD 2002-01 (University Commons) are taxed annually via the County property tax bill for their share of the debt service on bonds that their respective CFD has issued. The City has covenanted to the bondholders of these CFDs that judicial foreclosure proceedings will be initiated against property owners that are delinquent in the payment of their CFD special tax if certain requirements are met. For FY 2013-14 there are thirteen such property owners that have not paid their County property tax bill and have therefore not paid their corresponding CFD special tax.
Attached is a resolution that, when approved and adopted by the City Council, will authorize the City Manager to 1) have the delinquent CFD special taxes removed from the County property tax roll and relieve the County Treasurer/Tax Collector of further duty to collect on said delinquencies as they relate to all CFDs presently in existence that have outstanding bonded indebtedness; and 2) order foreclosure action to foreclose on the properties with delinquent FY 2013-14 CFD special taxes.
Discussion
Update on FY 2008-09 Delinquencies: Currently, all delinquencies have been cured except for one. The remaining property owner is in bankruptcy, thus delaying the city's ability to collect. To date, no foreclosures have been necessary.
Update on FY 2009-10 Delinquencies: Currently, all delinquencies have been cured except for two. The remaining two property owners are in bankruptcy, thus delaying the city's ability to collect. To date, no foreclosures have been necessary.
Update on FY 2010-11 Delinquencies: Currently, all delinquencies have been cured except for one. The remaining property owner is in bankruptcy, thus delaying the city's ability to collect. To date, no foreclosures have been necessary.
Update on FY 2011-12 Delinquencies: Currently, all delinquencies have been cured. No foreclosures were necessary.
Update on FY 2012-13 Delinquencies: Currently, all delinquencies have been cured except for one, no foreclosures have been necessary.
FY 2013-14 Delinquencies: Between January 2014 and September 2014, the City mailed three different letters to each of the delinquent property owners requesting said delinquencies be paid. For property owners delinquent for both the December 10, 2013, and April 10, 2014, installments of FY 2013-14 property taxes, demand letters were mailed on January 15, 2014, on May 12, 2014, and on July 21, 2014. For property owners delinquent for only the April 10, 2014, installment of FY 2013-14 property taxes, demand letters were mailed on May 12, 2014, on July 21, 2014, and on September 5, 2014. Thirteen properties still have delinquent taxes from FY 2013-14. The attached resolution authorizes foreclosure action against these parcels. Ten of said properties are delinquent for both the December 10, 2013, and April 10, 2014, installments of property taxes for FY 2013-14. The remaining three properties listed in the attached resolution are delinquent for only the April 10, 2014, installment.
Historically, the City has not had to actually foreclose on any individual property owners. Typically, once the City Council has authorized foreclosure, the City sends "last chance" letters to the delinquent property owners indicating that foreclosure proceedings have been authorized and they should take action to cure the delinquencies. Those property owners who respond to the letters are typically encouraged to, at the very least, pay their delinquent special tax directly to the City, oftentimes in up to nine-month payment plans. Once the delinquency is paid in full to the City, the County is notified of said payment. The County then issues a revised tax bill and the delinquent property owner is encouraged to work out a payment plan with the County for the balance of the delinquent property taxes. For those properties where the delinquent owners do not respond to the City's "last chance" letters, the City Attorney's Office contacts the mortgage lenders for each of the properties and notifies them of the pending foreclosure action. To date, the mortgage lenders, in an effort to secure their financial interest on the property, have paid the City on behalf of the delinquent property owner.
Conflicts of Interest
Staff has reviewed the locations of the properties in question and determined that one of them is within 500 feet of Council Member Orlando's property.
Fiscal Impact
Approval of the attached resolution will have no fiscal impact on the City's General Fund.
Attachment(s)
Resolution 2014-____
Prepared by: Alan Stutler, Management Analyst
Reviewed by: Roque Chiriboga, Manager of Financial Analysis and Debt Administration
Submitted by: Laura Rocha, Finance Director
Approved by: Jack Griffin, City Manager