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Dedicated to protecting the interests of residents and business owners in the City of Beaumont California by shedding light on local government and challenging our local officials to lead with integrity, transparency and accountability.
  • BREAKING NEWS - December 19, 2017
  • Former Beaumont Officials Guilty in Corruption Case – Admit Engaging in Fraud Read more
  • BREAKING NEWS - August 24, 2017
  • S.E.C. Issues Official Cease and Desist Against Beaumont Financing Authority Read more
  • BREAKING NEWS - May 17, 2016
  • Arrests Made, Indictments Served, SEVEN Former Beaumont City Officials Now Jailed in Public Corruption Case Read more
  • BREAKING NEWS - May 4, 2016
  • SEC Subpoenas City Amid Investigation Into Its Finances Read more
  • Latest News
  • Audit of City of Beaumont
  • The Big Six
  • Intimidation
  • A Conflict of Interest
  • Favoritism and Cronyism
  • Cost to Taxpayers
  • Impact on Businesses
  • Tactics
  • Beaumont’s CFDs
  • State Water Quality Control Board
  • Beaumont Sewer Requisitions
  • Riverside D.A. Indictment

Beaumont’s CFDs

Property owners in Beaumont’s CFD improvement areas are paying thousands of dollars every year in Mello Roos property taxes attached to their homes illegally.  “THE COSTS ARE EFFECTIVELY HIDDEN FROM THE PROPERTY BUYERS, WHO DO NOT SEE PRICE INCREASES TO COVER DEVELOPER OUT-OF-POCKET DEVELOPMENT COSTS.”  Judge Chaffee May 22, 2014

Read the Individual Analysis of Beaumont Improvement Areas Below.

 

Area 7A Four Seasons

Beaumont property owners in Area 7A have only one bond connected to their property. On June 30, 2005 the City issued Bond Series B for $12,280,000 payable by 532 future property owners.

EMMA page 49 (53/288) lists the interest and premium payment schedule for Area 7A. 2014 premium and interest payments total $768,845 or an average of $1,445.20 per property owner. Bond payments over 30 years total $26,810,358.87. EMMA page 50 (54/288) repeats the same payment schedule, but that doesn’t authorize an duplicate collection of special taxes, right?

Bond Trustee Union Bank only request one payment from Area 7A, but the Riverside County Tax Assessor records two duplicate special tax assessment liens on the Area 7A properties. 532 property owners in Area 7A pay a total of $1,886,000 special taxes or an average of $3,545 per home.

Page 40 (45/288) lists the actual funds that were used within Area 7A at $609,250. The remainder of the funds were used for city-wide facilities which is in violation of the Mello Roos Laws. The residences of Area 7A are paying $1.8 million year for 30 years to pay for $600,000 worth of improvements.

Beaumont City Council Agenda Item 7.a.10: Resolution of Intention for Extending Payment Years for CFD Area 7A1

The City states in the Background that the Residences of Area 7A have met with the City and “the discussion centered on methods to eliminate the originally approved annual increase of 2%.”

The 2% administration fee is not a requirement, it is the maximum allowed by State law. The City does not have to charge additional fees to the property owners and these fees have no correlation to the bonds.

The City is telling the property owners that in exchange for an additional 10 years of special taxes they will wave the 2% increase. That’s not exactly a ‘generous offer’ and the City can’t ‘make a deal’ with the property owners to increase the length of their bond.

But the City isn’t changing the old bond, they are creating a new district and attaching a new bond. The proposed Resolution will change Area 7A to Area 7A1 so the City can obtain a new $25 Million bond.

This will not effect the old bond. Property owners will still be responsible for all debt incurred for 7A. The new bond will attach an additional $1,500 – $2,400/year in property taxes to Area 7A under the guise of creating a new Area.

Let’s Review:

For $600,000 worth of improvements the property owners in Four Seasons Area 7A pay $1.88 Million/year in Special Taxes with a 2% annual increase for administrative fees.

The property owners requested relief from the 2% administrative fee increase.

The City offers to exchange the 2% admin fee increase for a $25 Million bond that will add another $2,000/year to their property taxes plus a 2% administrative fee increase of course.

Exhibit B-1 states that the City plans to use the $25 million for city-wide construction, which violates the provisions of Mello Roos and is a slap in the face to the residences of Area 7A that attempted to have an honest conversation with the elected and appointed officials of the City of Beaumont.

1994 bond: http://emma.msrb.org/MS98152-MS73460-MD142327.pdf

 

Area 6 Seneca Springs

Area 6 was part of the first bond debt issued in 1994. The 1994 bond lists the owners as Coscan Stewart Partnership, but on the bond the property is referred to as Loma Linda University. The 1994 bond lists Area 6 as 446.26 acres with a plan to build 1,150 homes and Area 6B was projected to have 150 acre business park and ancillary commercial, park, and open space uses.

The bond breaks up the Area into 6A and 6B and allocates $758,108 of the debt to Area 6A and $219,219 of the debt to Area 6B. The land was not developed. It is unknown how the money was spent.

Slightly under 12 years later the City reclassified Area 6A into Area 6A1 and issued 2005 Series C; a $19,155,000 bond for Area 6A1.

The 2005 bond states that out of the $19 million the amount properly allocated to Area 6A1 was $5,729,565. The remaining $13.3 million went to ‘city-wide’ uses.

The 2014 bond payments for the 2005 bond are $2,484,216. The City collects that amount three times from the property owners of Seneca Spring.

The Riverside County Tax Assessor’s Office records show that the City of Beaumont attaches the same Mello Roos special taxes on the property owners of Area 6A1 three times. Each property tax assessment on the 956 homes is over $2.8 million each for a total of $8.6 million in Mello Roos special taxes paid by Seneca Springs residences in 2012.

The City of Beaumont makes $5.7 million/year profit from Seneca Springs alone. California Government Code 50076 clearly prohibits charging excessive amounts for administrative fees.

A $5.7 million profit to push paperwork is not ‘reasonable’, it’s insane.

1994 bond: http://emma.msrb.org/MS98152-MS73460-MD142327.pdf

2005 bond: http://emma.msrb.org/MS242300-MS217608-MD423297.pdf

 

Area 14A Solera

The City of Beaumont has divided Area 14 into three divisions; 14, 14A, and 14B. However, to analyze the bonds the Areas must be examined as a whole because their property taxes and bond debt are combined. There are four bonds referencing the Area 14 property:

$14,725,000 Bond Issued June 2000 Area 14 Allocation = $10,885,000

Area 14 was owned by Westbrook Oak Valley Properties LLC when 1st bond was issued in 2000. A profile of Westbrook Investments states: “Westbrook Oak Valley Properties, LLC filed as a Foreign in the State of California on Friday, August 28, 1998. This corporation is no longer active according to documents filed with California Secretary of State.”

The 06/21/00 bond allocated $10,885,000 debt to Area 14. EMMA page 41 (47/262) states that only $1,595,474 of the funds was allocated to be used in Area 14. The remaining of the bond funds was allocated to be used for city-wide improvements, but the Area 14 land was remained untouched.

$21,420,000 Bond Issues March 2003 Area 14A Allocation = $17,415,000

On 03/19/03 a $21,420,000 bond is issued with $17,415,000 of the bond allocated to Area 14A, which is identified as ‘Oak Valley Greens AR’. The bond states that Area 14A is now owned by Pulte Homes and Temecula Valley LLC, the latter of which no longer exists.

EMMA Page 50 (56/340) lists $3,355,749 allocated to Area 14A improvements. The remaining was used on City-wide improvements, which violates the provisions of Mello Roos.

$21,175,000 Bond Issued on January 2007

Area 14 Allocation = $12,835,000 Area 14B Allocation = $5,000,000

This bond allocates funds to both Area 14 and Area 14B. The bond specifies that Area 14 includes both 14A and 14B.

EMMA Page 18 (26/226) states that at the time of sale Area 14 had $16,905,000 outstanding debt from past bonds. Page 18 lists 1,888 individual property owners, 20 homes under construction, and 14.5 acres of undeveloped commercial property.

Page 21 (29/226) states that of the $12,726,000 debt issued to Area 14 $12,726,000 was allocated to be used to pay past bonds and $109,000 used for the ‘Cost of Issuance’.

Of the $5,000,000 allocated to Area 14B $4,505,884 was allocated to a Construction Fund and $150,000 allocated to Cost of Issuance. At the time of bond sale Area 14B had 291 individual property owners , so it is unknown how the funds were utilized.

$22,490,000 and $1,105,000 Bonds Issued May 2007 Area 14A Allocated $20,958,000

EMMA page 22 (30/222) states at the time of bond sale Area 14A had 1,261 Property owners and 20 homes completed but not yet sold.

Of the $20,958,000 bond debt allocated to Area 14A; $20,908,000 was to pay the 2003 bond debt allocated to Area 14A and $50,000 allocated to ‘Cost of Issuance’.

Let’s Review:

June 2000: $10,885,000 debt attached to Area 14, but land remained unaltered.

March 2003: $17,415,000 debt attached to Area 14A with $3,355,749 allocated to improvements

January 2007: $12,835,000 debt attached to Area 14 to pay past debt

January 2007: $5,000,000 debt attached to Area B for construction

May 2007: $20,958,000 to pay past debt

The City refinanced Area 14’s bond debt increasing the debt from $28,300,000 to $33,793,000.

January 2007 bond debt yearly interest and premium payments are $1,562,525 and $50,267.50. The June 2007 bond debt yearly interest and premium payments in 2014 is $1,386,862.50 for a total of $3 million. The property owners of Area 14 pay an average of $3,153 in additional Mello Roos property taxes for a total of over $6 million yearly in additional taxes.

The City makes $3 million/year profit from special property taxes charged to Area 14. In 30 years the property owners of Area 14 will each pay over $96,000 in additional property taxes. The City of Beaumont will collect over $180 million for $3 million worth of improvements.

2000 Bond: http://emma.msrb.org/MS168721-MS144029-MD279717.pdf

2003 Bond: http://emma.msrb.org/MS32992-MS180005-MS608960.pdf

Jan 2007 Bond: http://emma.msrb.org/MS256076-MS231384-MD451085.pdf

May 2007 Bond: http://emma.msrb.org/MS256076-MS231384-MD451085.pdf

 

Area 18 Stetson

The City of Beaumont acquired the $4,735,000 Area 18 Stetson Bond on April 15, 2004. The Area 18 Bond is a 30 year bond with yearly premium payments and bi-yearly interest payments and over 50% of the bond amount due in a balloon payment of $2,545,000 in 2034.

EMMA page ii (2/282) and page 84 (88/282) lists Alan Kapanicas as City Manager and Finance Director. Kapanicas’ company, General Government Management Services, is listed as Special Tax Consultant.

EMMA page ii and 84 also lists David Dillon as Director of Economic Development and his company, Urban Logic Consultants, is listed as Project Engineer. This is a clear violation of the California Administrative Code Title 2 Section 18700 et seq.

At the time the bond was issued Harris Real Estate appraised the 75 acres of undeveloped land with an ‘as is’ market value of $6,300,000. The one owner, Beaumont 194 LLC – which is now a defective company, given ‘the vote’ to acquire bond debt on the land.

The current 194 property owners of Area 18 petitioned the City of Beaumont for an open forum to discuss their Mello Roos debt. The property owners requested an official resolution from the City to prevent their bond from being refinanced and an accounting of how their property taxes are being utilized.

The Area 18 residences received no open forum and no assurance their bond would not be refunded. The Beaumont City Council sent a letter explaining that the City does not follow the laws and regulations of Mello Roos, they invented their own rules that they call: ‘Fair Share Costs’. The City stated that only 2% of the Area 18 Mello Roos bond fund was used in their district. The Bond confirms that very little of the funds were intended to be used in accordance to the provisions of the law. California Govt. Code 53311 et seq mandates that funds must be used within the district.

The bonds seem to be written with the theory that disclosure absolves the participants from the letter and intent of the law. This is incorrect. Violations of the law are still applicable. Disclosure simply makes it clear that all parties involved were informed of the violations of the law.

EMMA Page 53 (57/282) lists the 2014 Interest and Premium payments for Area 18 at $342,906.26.

Riverside County Tax Assessor lists the total Special Taxes collected in Area 18 at $513,213.50. This leaves a profit of $170,307.24 per year or almost $900 per home more than needed to pay the bond debt.

The City’s letter to Area 18 states that the total debt each homeowner pays is $36,592 but this is incorrect. The average Mello Roos property tax payment in Area 18 is $2,645 per year for 30 years which would bring the total amount paid by each homeowner to $79,350 and bring the total amount collected for the $4.7 million bond to $15.4 million. The residences of Stetson will pay almost 100 times the cost of the improvements they received for their district.

When the bond was written in 1994 the expected price range of the home values in Area 18 ranged from $240,000 – $295,000. Current home prices range from $160,000 – $200,000 with numerous vacant and foreclosed homes.

Read about Mello Roos and California Government Corruption at http://www.libionline.net/

EMMA Bond Searcb: http://emma.msrb.org/Search/Search.aspx

Letter to Stetson property owners:

Page 1: http://ourfocusourkids.squarespace.com/storage/stetson/stetson%20ranch%20pg%201.pdf

Page 2: http://ourfocusourkids.squarespace.com/storage/stetson/stetson%20ranch%20pg%202.pdf

Page 3: http://ourfocusourkids.squarespace.com/storage/stetson/stetson%20ranch%20pg%203.pdf

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Relevant Issues
  • A Clear Conflict of Interest

    The City of Beaumont's contract with Urban Logic presents a significant conflict of interest and therefore must be terminated.

  • Favoritism and Cronyism

    The City of Beaumont, under Urban Logic and City Manager Alan Kapanicas, has consistently demonstrated favoritism and cronyism in the awarding of pubic contracts.

  • The Big Six - Beaumont's Partners in Crime

    20 years ago a group of men were looking for cities that would subsidize private sector developments with government bonds and they found the City of Beaumont.. Today the City of Beaumont has $350 Million in Bond Debt, over $100 Million in Lawsuits, and over $100 Million in Mitigation Fees are unaccountable.

  • Cost to Taxpayers

    Urban Logic's contract with The City of Beaumont which allows it to profit from each approved development, along with their on-going practice of awarding high-dollar public contracts to a small group of friends and associates instead of to the lowest bidder, have cost Beaumont taxpayers millions.

  • Impact on Existing Businesses

    The policies of Urban Logic and City Manager Alan Kapanicas ignore the needs of existing businesses in favor of new development and big box stores.

  • Quality of Life

    Urban Logic and City Manager Alan Kapanicas have damaged our quality of life by failing to uphold high development standards, depleting local resources, making local government less accessible to residents, and by destroying the small town feel of the City of Beaumont.

  • Tactics

    Urban Logic protects its ability to extract money from the City of Beaumont at all costs, resorting to intimidation and threats when necessary.

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