SEC Complaint to Stop Beaumont from Illegal Bond Acquisition

The Bonds are for the Sole Purpose of continuing the Same Illegal Practice of Reimbursing Developer Mitigation Fees with Bond Debt

I am requesting the SEC stop the City of Beaumont from acquiring additional Federal Municipal Bonds as the Bonds have been fraudulently prepared for the sole purpose of continuing the same practice of reimbursing Developer Mitigation Fees with Bond Funds.

The three Bonds the Beaumont City Council has approved for Pardee Homes are Community Facilities District No. 93-1 for Improvement Areas 17C, 8C, and 8D dated June 21, 2018.

Reimbursing Pardee Homes for Mitigation Fees (Developer Impact Fees, DIF )

Each Bond gives vague descriptions of what the Bond Funds ‘are authorized’ to construct. However, at the May 15, 2018, Beaumont City Council Meeting City Manager Todd Parton, Bond Counsel Brian Forebath from the Law Firm of Stradling Yocca, Financial Advisor Doug Anderson of Urban Futures, and Underwriter Katy Koster from Piper Jaffray all stated that the Bond Funds will be used to reimburse Pardee Homes for Mitigation Fees paid per an Agreement made in February, 2017.

The City of Beaumont Audited Financial Statements FYE 2017, page 106 records the Agreement with Pardee Homes to acquire bonds “.. for a total par of $35,630,000 in order to reimburse the developer for facilities and improvements completed in its improvement areas.”

Using Private Property as Collateral without Owners’ Permission or Knowledge

All three Bonds are using Private Property as collateral for the Bond, Pardee Homes does not own the property. Area 8C has 689 Private Property Owners, Area 8D has 279 Private Property Owners, and Area 17C has 216 Private Property Owners that have not been informed nor approved of their property being used as collateral.

Charging ‘Maximum Taxes’ without acquiring any Bonds

The City of Beaumont admits that not only has the City been charging the Property Owners in the Development Areas additional property taxes without acquiring any Bonds, they have been charging a ‘Maximum Tax’.

Each Bond states when the City started charging additional Property Taxes to the Owners; “Special Taxes within Improvement Area No. 8C were first levied in Fiscal Year 2008-2009”, “Special Taxes within Improvement Area No. 8D were first levied in Fiscal Year 2008-2009”

“Special Taxes within Improvement Area No. 17C were first levied in Fiscal Year 2013-2014”

It was illegal for the City of Beaumont to charge the Property Owners Mello Roos Taxes without any Bond Debt, but the City has charged, collected, and spent the money. The Bonds will begin another 30 years of additional taxes on the Property Owners.

State of the City of Beaumont

Because the City trades bond debt for Developer Mitigation Fees; the housing market in Beaumont is flooded. The City has allowed the construction of 20,000 houses using substandard materials and without following State and Federal building or environmental regulations. The National standard for Fire response times is four minutes, but Area 17C is over 20 minutes from Fire and Safety Protection.

Beaumont Police Association Statement to City Council

On June 5, 2018, a Representative from the Beaumont Police Association stated to the City Council that they Police Force was grossly understaffed, they’ve had no raises in over a decade, the City Staff was corrupt, and the Police Association will be actively campaigning against the three City Councilmen up for re-election in November.

Beaumont Audited Financial Statements FYE June 30, 2017

The first version of Beaumont’s Audited Financial Statements FYE June 30, 2017 was released at the start of the June 4, 2018, Finance and Audit Committee Meeting:…

Not one person on the Committee was allowed to review the Audit before the Meeting and not one Committee Member requested to review the Audit before the Meeting.

SEC Regulations require the City’s Finance and Audit Committee to Approve the Audit and the City Council to Accept the Audit. The Beaumont Finance and Audit Committee Motioned to ‘Receive and File’ the 2017 Audit, but never voted on it.

A very different Audit was released two weeks later at the June 19, 2018 Beaumont City Council Meeting with no Internal Controls Report:…

Finance Director Melana Taylor stated that the Internal Controls Report would be released in July. Ken Pun implied to the Council that the Internal Control’s Report was not part of Audited Financial Statements.

$360 Million in Capital Assets has been plugged into the 2017 Financial Statements, but there are no Receipts and the City refuses to release a list of the Assets claimed in the Audit. At the June 19, 2018, Council Meeting City Manager Todd Parton stated that the list of Capital Assets was “still in draft form” and would not be released until “July or August”.

$360 Million in Capital Assets is what the City should have constructed after acquiring $300 Million in Bonds and $150 Million in Taxes, but the Bond Requisitions and Bond Fund Accounts show that almost all of the money was embezzled and infrastructure was never built.

On June 19, 2018 the Beaumont City Council ‘Received and Filed’ the second version of the 2017 Audit.

Beaumont Sewer Plant

Beaumont was required to construct a Recycled Water Facility in 1995 and again in 2001, but the City stole all the Bond and Taxes collected, never built a Recycled Water Facility, and has let the Sewer Plant deteriorated beyond repair. Instead of closing down Beaumont deteriorated sewer plant the City Council voted to hire Albert Webb and Associate to forge a feasibility study.

The Beaumont Sewer Plant has a Capacity of 4.0 MGD and has exceeded capacity, which means the sewage is flowing into Coopers Creek. Beaumont needs $50 Million to increase Capacity to accommodate the thousands of new houses and millions of square feet of warehouse that have been approved by Council in the last three years. But the Council and Staff did not collect any Mitigation Fees to pay for a Sewer Expansion, so the City is illegally imposing additional Sewer Fees on the current Property Owners.

On June 19, 2018, the Beaumont City Council Approved’ Resending all past Sewer Fees and establishing all new Sewer Fees in order to have the money to acquire a $90 Million Sewer Bond:…

City of Beaumont Lawsuit Against California Department of Finance

The City of Beaumont took money out of the Mello Roos Bonds, passed it around town, and called it ‘RDA’ [Redevelopment]. When the State of California closed down RDA in 2011 the City claimed $21 Million in ‘RDA Loans’ due to the City from RDA.

The State issued a $3 Million fine against City for forging documents after it was proven that the City never had $21 Million to loan to the RDA. On the June 19, 2018, City Council Agenda Closed Session is: “5. Conference with Legal Counsel Regarding Potential Initiation of Litigation – Pursuant to Government Code Section 54956.9(d)(4): Successor Agency to the Beaumont Redevelopment Agency v. California Department of Finance”

Beaumont Lawyers are so corrupt that they are wasting the Taxpayers’ money suing the State for refusing to allow the City to Forge their Financial Statements.

Building Houses without Adhering to State and Federal Regulations

California State Law requires Environmental Impact Reports (EIR) to be filed when developments the over 500 houses are constructed. Beaumont has built over 20,000 houses without filing EIRs.

Beaumont is located in the high desert. It’s only water supply is the Beaumont Basin. California State Laws require a 20-year Reserve of water for all construction. The City of Beaumont has less than a two-year water supply.

For the above mentioned reasons I am requesting the S.E.C. prevent the City of Beaumont from acquiring additional Bonds as it will only plummet the City further into disrepair.