AgdaPkt 2012-01-09 - Laserfiche WebLink

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8.A. - Page 54 Property Value If a landowner defaults in the payment of the Special T1x, the only legal remedy is the institution of a superior court action to foreclose on the delinquent taxable parcel in an attempt to obtain funds with which to pay the Special Tax. The value of the Taxable Parcels in the District could be adversely affected by economic factors beyond the City's control, including, without limitation, (i) adverse changes in local market conditions, such as changes in the marl�et value of real property in the vicinity of the District, the supply of or demand for competitive properties in such area, and the market value of retail and commercial property in the event of sale or foreclosure; (ii) changes in real estate tax rates and other operatuzg expenses, governmental rules (including, without limitation, zoning laws and 11ws relating to endangered species and hazardous materials) and fiscal policies; and (iii) natural disasters (includi�zg, without limitation, wildfire, earthquakes, tsunamis and floods), which may result in uninsured losses. See "SPECIAL IZISK FACTORS—Natural Disasters." No assurances can be given that the real property subject to a judicial foreclosure sale will be sold or, if sold, that the proceeds of such sale will be sufficient to pay the delinquent Special Tax installment. No appraisal of the Taxable Parcels in the District has been conducted (see, however, "THE DISTRICT—Value-to-Burden Ratio" for a description of the County Assessor's valuation of the parcels in the District). Although the Act authorizes the City to cause such an action to be commenced and diligently pursued to completion, the Act does not specify any obligation of the City with regard to purchasing or otherwise acquiring any lot or parcel of property sold at the foreclosure s11e in any such action if there is no other purchaser at such sale. The City is not obligated and does not expect to be a bidder at any such foreclosure sale. See "SPECIAL IZISK FACTORS—Proceeds of Foreclosure Sale." Exempt Properties Certain properties are exempt from the Special Tax in accordance with the approved Rate and Method. In addition, the Act provides that properties or entities of the state, federal or local govemment are exempt from the Special Tax; provided, however, that property within the District acquired by a public entity through a negotiated transaction, or by gift or devise, that is not otllerwise exempt from the Special Tax, will continue to be subject to the Special Tax. It is possible that property acquired by a public entity following a tax sale or foreclosure based upon failure to pay taxes could become exempt from the Special Tax. See "SECURITY FOR THE BONDS—Summary of Rate and Method – Exemptions." In addition, the Act provides that if property subject to tlle Special Tax is acquired by a public entity through eminent domain proceedings, the obligation to pay the Special Tax with respect to that property, for outstlnding Bonds only, is to be treated as if it were a special assessment. The constitutionality and operation of these provisions of the Act have not been tested. In particular, insofar as the Act requires payment of the Special Tax by a federal entity lcquiring property within the District, it m1y be unconstitutional. If for 1ny reason property within the District becomes exempt from taxation by reason of ownership by a nontaxable entity such as the federal govenmlent or another public agency, subject to the limitation of the Maximum Aruzual Special Tax Rate, the Special Tax will be reallocated to the remaining taxable properties within the District. This would result in the owners of such property paying a greater amount of the Special Tax and could have an adverse impact upon the timely payment of the Special Tax. Moreover, if a substantial portion of land within the District becomes exempt from the Special Tax because of public ownership, or otherwise, the maximum rate that could be levied upon the remaining acreage might not be sufficient to pay principal of and interest on the Bonds when due and a default would occur with respect to the payment of such principal and interest. -30-