Another Lien and Additional 10 Years of Debt So Beaumont Staff Can Profit From Bond Sales.
By: Libi Uremovic| Original Article at Patch.com
On Tuesday’s Beaumont City Council Agenda is Item 7.c: Refinancing of the 2005 Series B Bond. This originally started as Four Seasons’ Area 7A requesting to stop the yearly increase on their Mello Roos property Taxes which the City Staff turned into another revenue source for themselves.
Let’s be very clear: The city only has the legal right to charge an administration fee to cover the cost of processing the paperwork. Beaumont makes a total of $6 Million/year profit/administration fees from Mello Roos.
Page 20 of the 2015 Bond lists Special Tax Receipts collected for 2014 was $953,534.35. The 2005 Series B Bond lists 2014 Interest and Premium payments were $768,845. The City made $184,689 profit from Area 7A’s Mello Roos taxes last year.
Page 13 of the 2015 Bond states: “Area 7A1 consists of 537 single family homes. 60 property owners have partially or fully prepaid.”
If 60 property owners in Area 7A paid their Mello Roos taxes in advance the money should either have been used to pay Bond’s Premium, or deposited in an interest-bearing account to be used to pay the debt when due.
The 2005 November Bond Fund Account # 6711762106 lists a total of $2,038.86 in the ‘Prepayment Account’.
The 2005 Series B Bond was issued for $12,280,000. The property owners of Area 7A have paid $9 Million in the last decade, but only $1,490,000 was used to pay the Premium. There is still $10,790,000 owed from the 2005 Bond.
Of the $11,470,000 proceeds from the 2015 Bond the City will use $10,790,000 to pay off the 2005 Bond leaving a balance of $680,000 for ‘administration fees’.
Full Disclosure: What’s there, What’s not.
What’s Not Disclosed: The 2015 Bond ‘forgot’ to disclose that Alan Kapanicas and Urban Logic profit from the sale of bonds. Disclosure does not signify legality, but the fact that Kapanicas and Urban Logic directly benefit form the sale of bonds must be disclosed.
What is Disclosed: Pages 47-50 speak of the City’s insolvency and bankruptcy. Pages 69-71 discloses the WRCOG vs City Judgement.
Mello Roos attaches liens on private property as collateral for government debt. The 2015 Bond is quick to point out that the property owners will still be liable for the bond debt regardless of the City’s insolvency, but creditors will have the right to seek relief by confiscating property.
Kapanicas tells Four Seasons Area 7A that if they extend their Mello Roos debt another 10 years he will stop increasing their administration fee, but there is no plan to save the money in an account to cover future administration fees.
The 2005 Bond listed the Area 7A home values from $214,990 – $442,990. The 2015 Bond lists Area 7A home values at $199,776. A 30-year lien on property that is worth less today than it was a decade ago in a town that’s in financial ruin would be a poor choice for property owners.
But the property owners of Four Seasons Area 7A have no choice as they weren’t allowed to vote. The City states that they have a ‘choice’ to pay the flat fee for 30 years or continue to pay an increase for 20 more years, but every property owner will have a 30 year lien attached to their property regardless of their ‘choice’.
As Kapanicas repeatedly states to anyone that doesn’t like living in a corrupt town; “they can vote with their feet”. Good luck selling your houses with massive Mello Roos taxes in a bankrupt town.