Records show that 100% of the money Removed from the City of Beaumont’s Bond Construction Funds was Transferred directly to the Developers
Beaumont’s Bonds contains a statement of assurance that the Bonds will not be used to finance a private sector business:
A Private Activity Bond Limitation Statement: “The District shall assure that the Proceeds of the Bonds of each Series are not so used as to cause such Bonds to satisfy the private business tests of Section 141(b) of the Code.”
26 U.S. Code § 141.Private activity bond; qualified bond
b) Private business tests
(1) Private business use test
Except as otherwise provided in this subsection, an issue meets the test of this paragraph if more than 10 percent of the proceeds of the issue are to be used for any private business use.
Records show that 100% of the money removed from the City of Beaumont’s Bond Construction Funds was transferred directly to the Developers Pardee Homes and K Hovnanian.
As the Bond Requisitions state; the bond money was used to pay for the Developers’ “hard and soft costs” incurred while constructing their housing developments such as roads, gutters, grading, sewers, sidewalks – everything the Developers would have to construct in the normal course of building the housing development.
The ‘Old Beaumont’ would pay Developer Mitigation Fees like TUMF out of the bond money and the Staff and Council would misuse/embezzle the rest of the bond money. The ‘New Beaumont’ transferred all of the Bond Construction Fund money to the Developers.
The City of Beaumont did not prepare a Public Bid Contract to construct the City’s infrastructure as required by State Laws nor are Pardee Homes and K Hovnanian in the business of bidding on and constructing anything besides their own housing development business.
FUNDS FROM BOND ACQUIRED IN PAST:
There was some money remaining in the Fund Accounts from Bond acquired before 2012. The first three Requisitions the City of Beaumont submitted to the Wilmington to access the money remaining in three old Bonds:
Requisition #1 acquired $2,789,550.87 from the 2012 Series A Bond Issued to Sundance Area 8C.
Requisition #2 acquired $602,469.23 from the 2011 Series A Bond Issued to Tournament Hills Area 17B.
Requisition #3 acquired $4,465,370.21 from the 2013 Series A Bond Issued to Fairway Canyon Area 19C.
There was hope that the City of Beaumont would build the needed Infrastructure with the remaining money in the old Bonds, but the money was transferred directly to the Developers Pardee Homes and Fairway Canyon.
CITY OF BEAUMONT 2018 BONDS:
As noted previously; the City of Beaumont acquired six (6) Special Tax Bonds under ‘Communities Facility District No, 93-1’. The Bond Trustee, Wilmington Trust, transferred the total amounts in all six Bond Construction Fund Accounts to the City of Beaumont without any Receipts or Invoices to verify construction occurred. The City then transferred the entire amount directly to the Developers.
May 31, 2018, Bond for $16,915,000 levied on Sundance Area 8C. Construction Fund held $16,404,065. Entire amount in Construction Fund Transferred to the City of Beaumont on 06/28/2018. Entire Amount transferred to Pardee Homes on 06/29/2018.
June 6, 2018, Bond for $7,675,000 levied on Sundance Area 8D. Construction Fund held $7,322,774.46. Wilmington Trust transferred the entire amount in the Construction Fund to the City of Beaumont on 06/28/2018. Entire Amount transferred to Pardee Homes on 06/29/2018.
June 6, 2018, Bond for $8,730,000 levied on Sundance Area 17C. Construction Fund held $8,325,282.90. Wilmington Trust transferred the entire amount in the Construction Fund to the City of Beaumont on 06/28/2018. The City transferred the entire amount to Pardee Homes on 06/29/2018.
October 25, 2018, Bond for $2,370,000 levied on Four Seasons Area 7B. Construction Fund held $2,009,555.99. Wilmington Trust transferred the entire amount in the Construction Fund to the City of Beaumont on 11/13/2018. The City transferred the entire amount to K Hovnanian on 11/13/2018.
October 25, 2018, Bond for $3,725,000 levied on Four Seasons Area 7D. Construction Fund held $3,269,022.24. Wilmington Trust transferred the entire amount in the Construction Fund to the City of Beaumont on 11/13/2018. The City transferred the entire amount to K Hovnanian on 11/13/2018.
December 4, 2018, Bond for $12,680,000 levied on Sundance Area 17C. Construction Fund held $11,605,7320.71. Wilmington Trust transferred $9,450,982.06 of the Construction Fund to the City of Beaumont on 12/13/2018. The City transferred the entire amount to Pardee Homes on 12/13/2018. Wilmington Trust transferred the remainder of the Construction Fund, $2,154,738.65 to the City of Beaumont on 12/27/2018. The City transferred the entire amount to Pardee Homes on 12/27/2018.
NO RECEIPTS, INVOICES, OR CANCELED CHECKS:
As Beaumont’s Bond Trustee; Wilmington Trust Transferred $61 Million out of Construction Fund Accounts and to the City of Beaumont without any Invoices or Receipts to validate the expenses. Pardee Homes received $49,114,509.64; K Hovanian received $7,433,620.26; and SDC Fairway Canyon
Jeff Chambers from Pardee Homes submitted a letter stating: “Also, the facility construction date started over 9 years ago and vendors have either gone out of business or no longer have records relating to this facility/project. Due to the timing, it would be extremely difficult, if not impossible for Pardee [to] retrieve such documents and therefore cannot provide documentary evidence of compliance with the prevailing wage that applies to the facility.”
It doesn’t matter if the vendors went out of business or no longer have their records; Pardee Homes is required to maintain THEIR receipts, invoices, and canceled checks to prove they paid for the construction.
“..cannot provide documentary evidence of compliance with the prevailing wage that applies to the facility…”
California Labor Laws require Contractors to submit their payroll to the State electronically every week. The Developers can not provide receipts and payroll records for the millions in bond money they’ve received because $60 Million in infrastructure was never built.
And it’s illegal for the City and the Bond Trustee to release bond money without first ensuring all State and Federal Laws were followed.
O’ what a wicked web we weave when first we practice to deceive.