The recent decrease in tax revenues to local governments has declined due to dropping property values, loss of sales tax, and a decrease in permits fees. Relief from a decrease in property value is sought from the county assessor, the process is slow and a fight in some cases, so even if property values trend up the revenues will lag. Compounding the revenue shortfall the state has now confiscated a significant amount of the revenue which were counted upon by local agencies, fire departments, and schools to name a few. It was not just the fire departments as the link to the article above does not cover, it will affect all locals governments across the board. Having spent a few years in the securities business let me let you in on a little secret.
Municipal bonds have gone underwater! Two examples of bonds issued over the last twenty plus years are below. The areas affected would be home additions built at the top of the real estate market, property values have decreased substantially, and there are numerous vacancies in the area. Was a fire department or other municipal facility built in conjunction with the new home addition? If so and you live in the area or own the bonds you may want to call your broker and check it out!
I've borrowed the definitions from a couple of places to be most exacting, but you need to seek the advice of someone knowledgeable in the area.
The Certificate of Participation is a financial document that is often employed when a municipal government or other government entity creates a bond issue. Rather than paying interest on the bonds or guaranteeing a face value at the end of the project, the investor receives a return based on the lease revenues associated with the offering. Making use of this process can work very well for the municipality, since it will free the issuer from restrictions on the amount of debt that can be incurred during the course of the project. In the unlikely event that the municipality defaults on the arrangement, the terms of a Certificate of Participation provide investors with the ability to assume control of the facility. Once the default is complete and the transfer of title is in the hands of the investors, they are free to do with the assets as they see fit. This includes the ability to either complete the facility and sell it to a private investor, or choose to band together and use the completed structure for purposes of their own.
Mello Roos Community buildings Districts called CFDs increase money through special taxes. They are organized to finance big enhancements and services inside the district which may include schools, roads, libraries, police and fire protection services, or ambulance services. The taxes are secured by a continuing lien and are imposed annually against property inside the district. It is important for CFD property owners to pay their tax bill on time. The CFD has the right (and if bonds are issued, the obligation) to foreclose on property when special taxes are delinquent for more than 90 days. Additionally, any costs of collection and penalties must be paid by the delinquent property owner.
Make the call folks, no one minds the store like the owner!
