RES 84176 - Laserfiche WebLink

Bankruptcy Until further development takes place in the District, and along with it the anticipated further diversification of ownership, payment of the assessment installments is largely dependent upon the timely payment by the existing Major Landowners. In the event the Major Landowners or any future major landowner 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 "Obligation of the City Upon Delinquency", if a delinquency occurs in the payment of any assessment installment, the City, at the end of the fiscal year of delinquency, has a duty to transfer into the Redemption Fund the amount of the delinquency out of available funds 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. In order to provide a source of surplus funds for such purpose, the City will establish a Reserve Fund out of Bond proceeds in the amount of six percent (6%) of the principal amount of the Bond issue. If the Reserve Fund were ever depleted as a result of a major or prolonged delinquency in the payment of assessment installments, the City would be obligated to advance available funds to the Redemption Fund in order to pay principal and/or interest on the Bonds. It should be noted, however, that although temporary delinquencies have occurred from time to time in other assessment districts in the City there has never been a default on any of the City's approximately 79.8 million outstanding Improvement Bonds issued pursuant to the Improvement Bond Act of 1915. Factors Which May Affect Land Development The proposed development in the District may be affected by changes in general economic conditions, fluctuations in the real estate market and other factors. In addition, the proposed development may be subject to future federal, state and local regulations. Approval may be required from various agencies from time to time in connection with the layout and design of proposed development in the District, the nature and extent of public improvements, land use, zoning and other matters. Although no such delays are anticipated, failure to meet any such future regulations or obtain any such approvals in a timely manner could delay or adversely affect the proposed development in the District. For further discussion of factors which may affect future development in the District, see section herein entitled "The District", subsection "Availability of Public Utilities: Sewers" and subsection "The North Pleasanton Assessment District" and section entitled "Proposed Development and Property Ownership", subsection "Superior Court Action and Referendum". -36-