City Violates Three Basic Areas of Mello Roos Laws to Illegally Acquire Bond Debt
By: Libi Uremovic| Original Article at Patch.com
The City of Beaumont is attempting to acquire $175 Million in Bond Debt through Seven (7) different avenues. All of the bonds violate three basic aspects of State Law: Purpose, Maximum Rate Calculation, and Conflict of Interest.
PURPOSE:
Mello Roos Bonds can only be used for facilities, services, and incidental expenses.
“The proceeds of any special tax may only be used to pay, in whole or part, the cost of providing public facilities, services, and incidental expenses pursuant to this chapter.” California Govt. Code 53340: (d)
California Government Code 53311.5, 53312.7, 53313, 53316.4, 53316.6, 53330, 53340, 53343
The City of Beaumont is using the same list of ‘facilities to be built’ they’ve used for the last 20 years and $320 Million. The $320 Million bond debt previously acquired is gone and the facilities were never built.
MAXIMUM RATE:
The Special Tax can be less, but it can be no more than to cover the Bond’s Interest and Premium Payments. The ‘administration fee’ can not be for profit, it can only cover the cost of processing the paperwork.
California Government Code 53343: “Any special taxes collected pursuant to this chapter may only be used for facilities and services authorized by this chapter.”
Because the final amount of the individual tax will vary slightly depending on the Bond’s Rate at the date of sale; the ‘Maximum Rate’ referenced in Mello Roos law is the estimate of the maximum amount it will cost the taxpayer for the specific improvements the bond is authorized to pay for.
California Govt Code 53312.7(4): “ A statement concerning criteria for evaluating the equity of tax allocation formulas, and concerning desirable and maximum amounts of special tax to be levied against any parcel pursuant to this chapter.”
Kapanicas charges every Property Owner in the Development Areas ‘the maximum rate’ which is states is about $30,000 per house regardless of the amount of their bond debt. This practice results in the City of Beaumont charging $30 Million/year in Mello Roos taxes to pay $15 Million in Mello Roos Bond Interest and Premium payments.
CITY STAFF PROFITS DIRECTLY FROM BOND SALES:
Beaumont City Manager Alan Kapanicas is a Bond Salesman. Beaumont Executive Staff Members/ Principals in Urban Logic Ernie Egger, Dave Dillon, and Deepak Moorjani all profit directly from the sale of each bond and again by using the bond funds to create jobs for their own companies.
“ No public official at any level of state or local government shall make, participate in making or in any way attempt to use his official position to influence a governmental decision in which he knows or has reason to know he has a financial interest.” Cali Govt. Code 87100
Govt. Code 1090, 8920, 1125, 1099
Penal Code 186.2 (a),(5),(18),(20),(21),(22),(25), 186.9