MEETING DATE:
September 24, 2024
SUBJECT:
Title
RESOLUTION NO. 2024-9354 - AUTHORIZATION TO TAKE THE NECESSARY ACTIONS AND TO FORECLOSE ON DELINQUENT SPECIAL TAX LIENS
Recommendation
Recommendation
ADOPT a resolution authorizing the City Manager and City Attorney to take the necessary actions and to foreclose 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 Themes
Good Governance
Relevant Department Goal
Not applicable
Executive Summary
Property owners in the City’s CFD 88-1 (Paloma/Santa Fe Hills), 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 2023-24 there are two such property owners that have not paid their County property tax bill and meet the bonded CFD foreclosure requirements for delinquent CFD special taxes.
To fulfill the City’s covenant to the bondholders, 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 one property in CFD 88-1 with cumulative delinquent special taxes in excess of $2,500 and the one property in CFD 99-01 with cumulative delinquent special taxes in excess of $5,000.
Discussion
Update on FY 2016-17 Delinquencies: Currently, all delinquencies, except for one, have been cured. No foreclosures have been necessary.
Update on FY 2017-18 Delinquencies: Currently, all delinquencies, except for one, have been cured. No foreclosures have been necessary.
Update on FY 2018-19 Delinquencies: Currently, all delinquencies, except for one, have been cured. No foreclosures have been necessary.
Update on FY 2019-20 Delinquencies: Currently, all delinquencies, except for two, have been cured. No foreclosures have been necessary.
Update on FY 2020-21 Delinquencies: Currently, all delinquencies, except for two, have been cured. No foreclosures have been necessary.
Update on FY 2021-22 Delinquencies: Between January 2022 and July 2022, the City mailed two different letters for each installment to each of the delinquent property owners (excluding property owner known to be in bankruptcy) requesting said delinquencies be paid. Two properties still have outstanding delinquent taxes from FY 2021-22. Of these two, one has outstanding delinquencies since FY 2016-17 and the other has outstanding delinquencies since FY 2019-20.
Update on FY 2022-23 Delinquencies: Between January 2023 and July 2023, the City mailed two different letters for each installment to each of the delinquent property owners (excluding property owner known to be in bankruptcy) requesting said delinquencies be paid. Three properties still have outstanding delinquent taxes from FY 2022-23. Of these three, one has outstanding delinquencies since FY 2016-17 while another has outstanding delinquencies since FY 2019-20.
FY 2023-24 Delinquencies: Between January 2024 and July 2024, the City mailed two different letters for each installment to each of the delinquent property owners (excluding property owner known to be in bankruptcy) requesting said delinquencies be paid. Nine properties still have outstanding delinquent special taxes for FY 2023-24. Four of these properties are delinquent for both the December 10, 2023 and April 10, 2024 installments of property taxes. The attached resolution authorizes foreclosure action against the two parcels for which foreclosure is required by the bonded CFD foreclosure covenants.
Historically, the City has not often had to initiate foreclosure actions on individual properties. 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 that 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. 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 property owners who do not respond to the City's "last chance" letters, the City Attorney's Office becomes involved. To date, the outstanding delinquencies have generally been addressed.
Environmental Review
Not applicable.
Fiscal Impact
Approval of the attached resolution will have no fiscal impact on the City’s General Fund, other than potential attorneys’ fees in the event legal proceedings are necessary.
Attachments
Resolution
Exhibit A to Resolution
Prepared/Submitted by: Jeffrey Jorgenson, Accounting and Treasury Manager
Reviewed by: Donna Apar, Finance Director
Approved by: Michelle Bender, City Manager