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City Council Memorandum <br /> TO: HONORABLE MAYOR AND CITY COUNCIL DATE: DECEMBER 18, 2012 <br /> FROM: FINANCE DEPARTMENT ITEM NO: 25 <br /> WARDS: ALL <br /> SUBJECT: FUNDING DELINQUENT TAXES IN COMMUNITY FACILITIES DISTRICTS AND <br /> ASSESSMENT DISTRICTS - RESOLUTION <br /> ISSUE: <br /> The issue for City Council consideration is approval of a Resolution authorizing the sale and <br /> assignment of certain delinquent special taxes and assessments to the California Finance <br /> Authority for Delinquent Special Taxes and Assessments ("CFA"). <br /> RECOMMENDATION: <br /> That the City Council adopt the attached Resolution approving the sale, assignment and grant of <br /> options for certain delinquent tax receivables and assessments to the California Finance Authority <br /> and authorize execution and delivery of related documents and actions. <br /> BACKGROUND: <br /> The City has formed a number of Community Facilities Districts ("CFDs') and Assessment Districts <br /> ("Ads") over the years dating back to the 1980's. These special districts finance certain authorized <br /> facilities which benefit properties within the districts. Under the Fiscal Agent Agreements (or other <br /> similar agreements) associated with the bonds issued by each district, the City is required to levy <br /> special taxes or special assessments. The funds received must be used to repay the bonded <br /> indebtedness for which they were levied. These bonds are special obligations for which the City <br /> has no liability to pay the debt. Rather, the bonds are payable only from the proceeds of the levy <br /> of special taxes or special assessments within each district. <br /> If a property owner within one of these districts does not pay their property tax bill timely, under the <br /> terms of the Fiscal Agent Agreement, the City has an obligation in the following tax year, to pursue <br /> collection of the special taxes or assessments through enforcement actions up to and including <br /> foreclosure against the delinquent properties. The proceeds of foreclosure actions are to be used <br /> for the original purpose of repaying bonded indebtedness within the district. While this has never <br /> occurred, pursuing delinquent property owners for their special taxes/assessments is an <br /> unpleasant task and it occurs well ahead of the County's routine process for collection of <br /> delinquent property taxes — a process which takes several years but allows a struggling <br /> homeowner the opportunity to work out of their difficult circumstance before losing their home to a <br /> tax sale. <br /> 25-1 <br />