RES 90059 - Laserfiche WebLink

BONDOWNERS' RISKS General In order to pay debt service on the Bonds, it is necessary that unpaid installments of assessments on land within the District are paid in a timely manner. Should the installments not be paid on time, the City has established a Reserve Fund in the amount of $62,400. The assessments are secured by a lien on the parcels of land the City can institute foreclosure proceedings to sell land with delinquent installments for the amount of delinquent ~nstallments in order to obtain funds to pay debt service on the Bonds. Failure by owners of the parcels to pay installments of assessment when due, depletion of the Reserve Fund, or the inability of the City to sell parcels which have been subject to foreclosure proceedings for amounts sufficient to cover the delinquent installments of assessments levied again, st such parcels may result in the inability to make full or punctual payments for debt service on the Bonds and bondowners would therefore be adversely affected. Unpaid assessments do not constitute a personal indebtedness of the owners of the lots and parcels within the District. There is no assurance the owners will be able to pay the assessment installments or that they will pay such installments even though financially able to do so. Bankruptcy In the event the landowner or any future landowners filed bankruptcy, absent available funds, there could be a delay in payment of debt service on the Bonds as such bankruptcy filing may delay the City's ability to complete its Superior Court foreclosure proceedings. Moreover, amounts received upon foreclosure sales may not be sufficient to fully repay outstanding Bonds. Availability of City Funds As discussed in the section herein entitled "SECURITY FOR THE BONDS--Non- Recourse to City Upon Delin~luen. cy--Limited Liability of City", the City's liability to advance monies to pay Bond debt servme in the event of delinquent assessment installments shall not exceed the balance in the Reserve Fund. Bondowners cannot rely upon the City to advance monies to the Redemption Fund if the Reserve Fund were to ever be depleted. LEGAL MATTERS All proceedings in connection with the issuance of the Bonds are subject to the approval of Sturgis, Ness, Brunsell & Sperry, Emeryville, California, Bond Counsel. The unqualified opinion of Sturgis, Ness, Brunsell & Sperry approving the validity of the Bonds will be printed on each Bond, and is included herein as Appendix E. Certain legal matters relating to the issuance of the Bonds will be passed upon for the Underwriter, by its counsel, Arnelle & Hastie, San Francisco, California. TAX EXEMPTION In the opinion of Bond Counsel, under existing laws, regulations, rulings and judicial decision, interest on the Bonds is excluded from gross income in calculating federal income taxes and is exempt from State of California personal income taxes, except as described below.