.

Mello Roos Debt in Area 18

Page 2 Area 18 Letter
Page 2 Area 18 Letter

The City of Beaumont acquired the $4,735,000 Area 18 Stetson Bond on April 15, 2004. The Area 18 Bond is a 30 year bond with yearly premium payments and bi-yearly interest payments and over 50% of the bond amount due in a balloon payment of $2,545,000 in 2034.

EMMA page ii (2/282) and page 84 (88/282) lists Alan Kapanicas as City Manager and Finance Director. Kapanicas' company, General Government Management Services, is listed as Special Tax Consultant.

EMMA page ii and 84 also lists David Dillon as Director of Economic Development and his company, Urban Logic Consultants, is listed as Project Engineer. This is a clear violation of the California Administrative Code Title 2 Section 18700 et seq.

At the time the bond was issued Harris Real Estate appraised the 75 acres of undeveloped land with an 'as is' market value of $6,300,000. The one owner, Beaumont 194 LLC - which is now a defective company, given 'the vote' to acquire bond debt on the land.

The current 194 property owners of Area 18 petitioned the City of Beaumont for an open forum to discuss their Mello Roos debt. The property owners requested an official resolution from the City to prevent their bond from being refinanced and an accounting of how their property taxes are being utilized.

The Area 18 residences received no open forum and no assurance their bond would not be refunded. The Beaumont City Council sent a letter explaining that the City does not follow the laws and regulations of Mello Roos, they invented their own rules that they call: 'Fair Share Costs'. The City stated that only 2% of the Area 18 Mello Roos bond fund was used in their district. The Bond confirms that very little of the funds were intended to be used in accordance to the provisions of the law. California Govt. Code 53311 et seq mandates that funds must be used within the district.

The bonds seem to be written with the theory that disclosure absolves the participants from the letter and intent of the law. This is incorrect. Violations of the law are still applicable. Disclosure simply makes it clear that all parties involved were informed of the violations of the law.

EMMA Page 53 (57/282) lists the 2014 Interest and Premium payments for Area 18 at $342,906.26.

Riverside County Tax Assessor lists the total Special Taxes collected in Area 18 at $513,213.50. This leaves a profit of $170,307.24 per year or almost $900 per home more than needed to pay the bond debt.

The City's letter to Area 18 states that the total debt each homeowner pays is $36,592 but this is incorrect. The average Mello Roos property tax payment in Area 18 is $2,645 per year for 30 years which would bring the total amount paid by each homeowner to $79,350 and bring the total amount collected for the $4.7 million bond to $15.4 million. The residences of Stetson will pay almost 100 times the cost of the improvements they received for their district.

When the bond was written in 1994 the expected price range of the home values in Area 18 ranged from $240,000 - $295,000. Current home prices range from $160,000 - $200,000 with numerous vacant and foreclosed homes.

Read about Mello Roos and California Government Corruption at http://www.libionline.net/

EMMA Bond Searcb: http://emma.msrb.org/Search/Search.aspx

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Libi Uremovic March 10, 2014 at 07:13 AM
there's two basic premises in business law: no contract without consideration and there is no recourse under the law for an illegal activity ... ---------------------------------------------------------------------------- the bonds are illegal on their face, so once the key players are indicted the property owners will be able to sue to release the liens from their property and get back the money they paid ... ------------------------------------------------------------------------- the reason the state requires lawyers, underwriters, and bond trustee is for additional duties of care .....but if they violate the law the contract is invalid ....
Libi Uremovic March 10, 2014 at 07:32 AM
'...council needs to be replaced.......' ------------------------------------------------------------------------------------ the voters have direct control over their city council, but they need to make wise choices .... hopefully beaumont is a more informed citizenry and this election will bring in the needed changes....
Judy Bingham March 10, 2014 at 11:34 AM
Citizens vote for anyone BUT Castaldo, Berg, and DeForge in the upcoming election. We need a majority on the Council to negate the corrupt Knight and Fox (puppets of the City Manager and Urban Logic Consultants) Three new Council members can fire Kapanicas and Aklufi !
Libi Uremovic March 11, 2014 at 09:43 AM
'...The only way for this fiasco to end is for these homes not to sell. ...' --------------------------------------------------------------------------------- the homes aren't selling - they flooded the market .....which is why the developers turned to warehouses
Libi Uremovic March 11, 2014 at 10:10 AM
'... Three new Council members can fire Kapanicas and Aklufi...' ------------------------------------------------------------------------- beaumont needs 3 decent people willing to step to the plate and endure the ridicule they'll get from the city and sitting council .... -------------------------------------------------------------------------------- deforge, fox's, and berg were sitting councilmen when the stetson bond was issued.....berg has been sitting on council since the 1st bond was issued 20 years ago and he's completely ignorant on the subject - he relies totally on kanapus .... -------------------------------------------------------------------------- elections are the 1st line of defense in controlling local governments .....it's time for the citizens of beaumont to take control of their city .... judging the incumbents by their 'past achievements' should be all it takes to elect 3 new councilmen ....

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