Monday, July 27, 2009

Laguna Ridge Tax Delinquencies


Last March I posted about the strange illuminated fields of Laguna Ridge. A few weeks after I posted, I had the following email exchange with the Elk Grove budget office:

From: Max Stats
Sent: Thursday, March 20, 2008 3:42 PM
Subject: Street Lighting Maintenance District Zone 2

Hello. I had a question regarding funding of the Zone 2 (Laguna Ridge) street light maintenance district. Are the $26.78 assessments made against finished properties only, or do the developers pay an assessment on the unfinished lots. I ask because it looks like the city is spending a lot of money illuminating an empty field every night...

Received: Fri, Mar 28, 2008 at 4:00 PM
RE: Street Lighting Maintenance District Zone 2
mailed-by: elkgrovecity.org

Max,

The assessments area in Laguna Ridge are levied on all parcels within the district, including unfinished lots. I’m sorry it took so long to answer your question, however I wanted to be sure about the levy amounts in the area you described.
Elk Grove failed to mention that several parcel owners were already delinquent with their special assessments at the time I asked the question. From the Sac Bee today (emphasis mine):
Elk Grove push on delinquent taxes could force property sales

For the second straight year, Elk Grove is preparing to collect delinquent special property taxes tied to the city's newest development areas – a move that could lead to forced property sales.

Starting the first week of August, the city will send letters demanding full payments of a combined $1.3 million in special taxes that were due last year from owners of 457 parcels in Laguna Ridge and Poppy Ridge.

In Laguna Ridge, the special taxes help repay $67.5 million in bonds issued in 2005 for roads, sidewalks and other public improvements in the area. More than 19 percent of the taxes due there are delinquent, or $1.1 million.

Reynen & Bardis, a Laguna Ridge entity, owes the single largest share of special taxes in the area in this year's collection effort of this year, or $668,273.
This whole thing could be a bit of strategery by the city to force the property out of the hands of a soon to be defunct developer and over to someone who will actually build. We shall see.

**Update**

I should have searched a little more thoroughly before posting. It looks like Reynen & Bardis are already bankrupt:
Chapter 11 might net developers millions
Reynen and Bardis deal offers creditors pennies on the dollar
Sacramento Business Journal - by Michael Shaw Staff writer

Veteran developers John Reynen and Christo Bardis could keep more than $1 million each while their creditors receive pennies on the dollar under a bankruptcy reorganization plan that's being defended as a better alternative than a straight liquidation of their assets.

After months of negotiations, the developers and a committee of creditors have reached an agreement that includes incentives for the pair if they increase the value of their land, reduce claims and successfully defend $57 million in tax refunds they received this year due to steep losses.

Reynen's 2008 tax refund is $24.5 million and Bardis' $32.7 million, according to court documents. The refunds likely result from losses that can be applied against income tax paid going back to 2006.

Most of the tax refunds will go to creditors but, for now, the amount is still open to challenge by the IRS. The larger that refund remains, the more the developers keep for themselves.

The plan, which spells the end of Reynen & Bardis Communities Inc., still needs approval from a judge and a majority of the pair's several hundred creditors. A hearing in the case is scheduled for May 19.

The collapse of the real estate market led to two of the largest-ever personal bankruptcy cases in Sacramento — Reynen's and Bardis' debts each are in the neighborhood of $900 million. Some lenders have recouped losses by foreclosing on some of the company's new-home projects, but the debt amounts represent claims beyond those foreclosures.

3 comments :

Mark said...

It makes me wonder what the state/local budgets are going to look like next year if people in nice areas of town aren't keeping up with their tax obligations.

Thanks for the informative post!

Anonymous said...

Did anyone see todays Case Shiller. Home prices up in San Francisco. Even on a seasonally adjusted basis, SF prices are up.

A 28 month unbroken trend of prices being down has just been broken. Ignore it at your peril...

Max said...

Ignore it at your peril...

Ignore changes in the mix and seasonality at your peril as well.