Beaumont’s First Bond Followed State Law Requiring Actual Property Owners’ Vote

By: Libi Uremovic | Original Article at patch.com

2015-08-12aThe first bond the City of Beaumont acquired for housing developments was the 1994 Series A at $7,535,000 and Series B at $2,755,000; for a total of $10,290,000. This bond was to finance the infrastructure for 10 of the 12 original Developments:

KSE Development (Residential) – Never Developed
Olinger (Commercial) – Never Developed
3 Rings Ranch (Residential & Commercial) – 3 Rings
Rolling Hills (Residential & Commercial) – Never Developed
Heartland (Residential & Commercial) – Never Developed
Loma Linda (Residential & Commercial) – Seneca Springs
Hovchild (Residential & Commercial) – Four Seasons
Deutsch (Residential & Commercial) – Sundance
Orangewood (Residential) Cougar Ranch I
Orangewood ICI (Residential) – Cougar Ranch II
Omega Homes (Residential) – Mountain Meadows
Kulikov (Residential) – Victoria Homes

The Bond was issued to Areas 1-6 and 9-12. Area 7, Hovchild, paid Cash for their infrastructure and Area 8, Deutsch, voted not to acquire bond debt at that time.

The original Trustee was Meridian Trust Company and individual Securities were issued. Now the Trustee is Union Bank and there is only one CMO Security held by Union Bank for $7,535,000 at 7% Interest Rate with a Maturity Date of 2023. It is unknown who receives the Interest.

The 1994 Bond include important details that are no longer included in Beaumont’s Bonds:

ACTUAL PROPERTY OWNERS: The names of the property owners and principals of the corporations are listed on the bonds. The actual property owners voted to acquire bond debt.
INFRASTRUCTURE LISTED WITH COSTS: Specific infrastructure to be built is listed with amount of bond fund allocated for each item scheduled to be constructed.
DEVELOPMENTS PREDICATED UPON NEW WASTEWATER TREATMENT FACILITY: Approval to add 2,212 additional houses was based on building a Title 22 compliant recycled water facility by 1995.
NO “FUTURE PROPERTY OWNERS”: The bond is to provide financing to develop the property. There is no clause or provisions to allocate the bond debt payments onto individual “future” property owners. The Property Owners and Developers that signed for the debt were responsible for the debt.
CFD 93-1 WAS ONLY FOR ORIGINAL 12 DEVELOPMENTS: The City has repeatedly cited CFD 93-1 and proclaimed that all developments are pre-approved’, but CFD 93-1 only approves the original 12 developments for a total of 2,212 houses.

1994 Series A Bond Highlights below. Read full bond Here: http://emma.msrb.org/MS98152-MS73460-MD142327.pdf

Page 1: Overview: “Throughout the 1980’s, while other communities in western Riverside County were expanding rapidly, growth in the Beaumont area was severely restricted due to the capacity limits of the City’s wastewater treatment facility. Without new wastewater treatment facilities, several new master planned communities and mixed used developments which had been approved by the City could not be built. To build new wastewater treatment facilities the City raised $1,600,000 from developers and contributed its own sewer enterprise funds, and in 1993 sewer revenue bonds with a par value of $8,500,000 to finance the balance of the required facilities.”

Page 2: “The Bonds will fund infrastructure which will support buildout of 2,212 dwelling units. Certain infrastructure components, including limited off site extensions and on site backbone improvements will be privately financed concurrently with in tract improvements, and others will be financed on a pay as you go basis by public agencies through the payment of mitigation fees or through ad valorem tax revenues.”

Page 3 The District: “The District consists of 13 improvement areas on 3,189 acres. At this time Deutsch will not be incurring bonded indebtedness with respect to Area 8 and a portion of the Bonds proceeds are to be held by the Trustee in escrow. In addition, Hovchild (Area 7) has elected to pay cash.”

Page 5 Payment: “Principal of the Bonds will by payable in each of the years and in the amounts set forth on the cover page. Interest on the Bonds will be paid by check of the Trustee mailed by first class mail to the person entitled thereto.”

Page 24 Land Development: “The Special Taxes are to be collected from the owners of the property located within the applicable improvement area, and levy of the special taxes is not dependent on the completion of the development of the properties.”

Page 28 Government Organization: City Council Members Janice Leja, Frank Parrott, Matthew Brey, Roger Berg, and Matthew Russo. Current City Staff assigned to administer the District include Dayle Keller, City Manager; Alan Kapanicas, Interim Director of Administrative Services; David Dillion, Economic Development Director; and Deepak Moorjani, Public Works Director.

Page 30: On June 29, 1993 the City Council adopted Resolution Nos. 1993-13 and 1993-14 forming CFD 93-1 including 12 Development projects and 13 Improvement Areas.

Page 33 Facilities: The Critical, Joint, Individual Facilities listed with costs and fund distribution for each project item.

Page 34: Ratio of Debt Assigned to each Development. List the amount of the debt allocated to each Area. Out of $10,290,000 bond debt; $6,564,922 or 64% of the bond debt was allocated to Areas that were never developed.

Page 35: Area 7 paid cash to fund the District Facilities, Area 4 is awaiting Bankruptcy Court, and Area 8 has not authorized the levy of a special tax or issuance of bonded indebtedness.

Pages 35-40 Developers, Landowners, and Projects: List of actual Owners of property and Principals of Corporations.