RES 84176 - Laserfiche WebLink

of the City. Available funds consist of the balance in the Reserve Fund together with any surplus funds of the City not required for lawful municipal obligations. This duty of the City is continuing during the period of delinquency, until reinstatement, redemption or sale of the delinquent property. There is no assurance that funds will be available for this purpose and if, during the period of delinquency, there are insufficient available funds, a delay may occur in payments to the owners of the Bonds. For information on City finances, see Appendix D herein. The enactment of Article XIIIA of the California Constitution (Proposition 13) and subsequent legislative enactments effectively repeal the otherwise mandatory duty on the part of the City, under the Bond Law, to levy and collect a special tax (in an amount necessary to meet delinquencies, but not to exceed ten cents on each $100 of assessable property within the City in any one year) if surplus funds are not available to cover delinquencies. As of April 2, 1984, the City had outstanding a total of approximately $79.8 million principal amount of bonds issued under the Improvement Bond Act of 1915. There has never been a default in the payment of principal or interest on any of these bonds. Reserve Fund Out of the proceeds of assessments levied, the City Council will set aside a Reserve Fund in the amount of six percent (6%) of the principal amount of the Bonds. The City has covenanted to the Bondowners to establish the Reserve Fund in this amount and to use the fund only to make temporary advances to the Redemption Fund if delinquencies occur in the payment of assessment installments. Advances from the Reserve Fund will be restored to that fund upon reinstatement, redemption or sale of the delinquent property. However, the City reserves the right to transfer accruals of interest from the Reserve Fund to reduce assessment installments or to call Bonds. Whenever the balance in the Reserve Fund is sufficient to retire all outstanding Bonds, whether by advance retirement or otherwise, collection of the principal and interest on the assessments will be terminated and the Reserve Fund will be liquidated in retirement of the Bonds. Covenant to Commence Superior Court Foreclosure The Bond Law provides that in the event any assessment or installment thereof or any interest thereon is not paid when due, the City may order the institution of a court action to foreclose the lien of the unpaid assessment. In such an action, the real property subject to the unpaid assessment may be sold at judicial foreclosure sale. This foreclosure sale procedure is not mandatory. However, by the Resolution providing for the issuance of Bonds, the City covenants with the owners of the Bonds that, in the event any assessment or installment thereof, including any interest thereon, is not paid when due, it will order, and cause to be commenced within 150 days following the date of delinquency, and thereafter diligently prosecute to completion, court foreclosure proceedings upon the lien of any and all delinquent unpaid assessments and interest. In the event such Superior Court foreclosure or foreclosures are necessary, there may be a delay in payments to Bondowners -13-