HomeMy WebLinkAboutDelinquent Special Assessments 3-31-91 VOTO, TAUTGES, REDPATH & CO., LTD.
CERTIFIED PUBLIC ACCOUNTANTS
/ Birch Lake Professional Building ® 1310 E. Hwy. 96 o White Bear Lake, MN 55110 ® Fax (612)426-3004
e Phone (612) 426 -3263
April 30, 1991
ROBERT J. VOTO, CPA
ROBERT G. TAUTGES, CPA
JAMES S. REDPATH, CPA
D. KENNETH GEORGE, CPA
DAVID ). MOL, CPA
To the Honorable Mayor and
Members of the City Council
City of Oak Park Heights
14168 N 57th St
Stillwater, MN 55082
RE: DELINQUENT SPECIAL ASSESSMENTS
Pursuant to your request, we have updated our special analysis relating to the above
delinquent developer assessment at March 31, 1991. As stated in our December 31, 1989 and
1990 Management Reports, the City has been experiencing poor assessment collection rates
and high delinquencies. However, this situation relates only to developer lots and only to this
single development project.
Our past reports to this City Council on this topic has expressed caution and concern because
of the magnitude of this situation and (most important) its effects upon future bonding by the
City. We are pleased to now report that this situation should be fully resolved in 1991.
GENERAL ASSESSMENTS
(Except 9th Addition - Developer Lots)
DELINQUENT ASSESSMENTS
General delinquent assessments were nominal ($4,400) at December 31, 1990. This level of
delinquencies is very normal and should not be of concern to the City.
CURRENT ASSESSMENTS
The 1990 current installment of general assessments totalled $47,700. This current
installment is payable at May 15, 1990 and October 15, 1990 (i.e. 50% each payment date).
Actual current payments totalled $47,445 for 1990 representing 99 % of this amount due.
Accordingly, the City's general assessments are continuing to experience a solid collection
rate through December 31, 1990.
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To the Honorable Mayor and
Members of the City Council
City of Oak Park Heights
April 30, 1991
Page 2
S`VAGER - 9TH ADDITION - DEVELOPER LOTS
DEFERRED ASSESSMENTS
The assessment roll for the 9th Addition was adopted by the City Council in 1988 to be
collected over a five -year period - 1989 through 1993. This assessment roll (except for five
non - developer lots which are included under General Assessment above) consisted of 88
individual residential lots. The following schedule summarizes the prepayments history of
these assessments:
DESCRIPTION # OF LOTS AMOUNT
Original Roll 88 $808,949
Prepayments:
1987 14 128,240
1988 17 150,862
1989 22 160,060
1990 21 114,067
1991 (to date) 2 7,359
Sub -total 76 560,588
BALANCE 12 $248,361
Current Installments:
(principle only)
1989 110,385
1990 66,230
1991 27,591
Sub -total N /A 204,206
BALANCE - March 31, 1991 12 $ 44,155
To the Honorable Mayor and
Members of the City Council
City of Oak Park Heights
April 30, 1991
Page 3
The normal payment terms of these assessments calls for annual "current" payments equal to
one -fifth of the original principle plus interest at 8 -1/2% per year. However, the developer is
not making annual "current" payments. Instead, the developer is allowing such payments to
become delinauent until individual lots are sold Upon sale of individual lots, the remaining
deferred balances are being paid directly to the City and delinquent balances are being paid to
the County. In addition, current installments are either paid to the County or held by a
mortgage escrow company until actual due dates of such current installments.
As part of this analysis, we have monitored assessment prepayments relative to dates of
issuance of the related building permits. Past payments indicate a one -to -three month time
period between issuance of a building permit and assessment prepayments. Six building
permits were issued between December, 1990 and February, 1991 for which assessment
prepayments have yet to be received. Accordingly, the City can probably expect these
payments (6 lots @ $3,680 each) during the 2nd quarter of 1991.
The six additional lots expected to be prepaid in 1991 are all owned /controlled by the
developer. The City has issued a building permit for each of these lots. Accordingly,
construction is in process and the City can reasonably expect full payment in 1991. This
would leave six lots remaining to be paid at June 30, 1991.
The final remaining six lots are not owned /controlled by the developer, rather, they are
owned /controlled by the Washington County HRA. Additionally, these lots are vacant and no
building permits have been requested nor issued. Accordingly, full payment of these
assessments is still doubtful.
CURRENT AND DELINQUENT ASSESSMENTS
The collection rate for the developer lots continued to be poor through May 25, 1990.
However, late May and June payments improved significantly. The following schedule
summarizes these developer payments through March 31, 1991 and projections (based upon
building permits) through December 31, 1991:
To the Honorable Mayor and
Members of the City Council
City of Oak Park Heights
April 30, 1991
Page 4
DESCRIPTION CURRENT DELINQUENT TOTAL
1989:
Current Installment $ 157,299
Payments (61,610)
Unpaid to Delinquent a (95,689) $ 95,689
Balance- December 31, 1989 -0- 95,689
1990:
Current Installment 88,749
Payments (60,296) (56,700)
Unpaid to Delinquent (28,453) 28,453
Balance- December 31, 1990 -0- 67,442
1991:
Current Installment 34,634
Payments -0- "(6,398)
Balance-March 31, 1991 34,634 61,044 95,678
Payments expected:
Lots Prepaid to City (6,927) (6,927)
Six Additional Lots (13,853) (30,522) (44,375)
Unpaid to Delinquent (13, 854) 13, 854 -0-
PROJECTED BALANCE -
DECEMBER 31, 1991 $ -0- $ 44,376 $ 44,376
_
The Projected Balance at December 31, 1991 represents delinquent assessments on the final
remaining six lots owned /controlled by the Washington County HRA. The total balance
owing on these lots will be $66,453 at December 31, 1991 as follows:
PER LOT
TOTAL
Deferred Balance $ 3,680 $22,077
Delinquent Balance
1989 Installment 2,622 15,730
1990 Installment 2,465 14,792
1991 Installment 2,309 13,854
TOTALS $11,076 $66,453
To the Honorable Mayor and
Members of the City Council
City of Oak Park Heights
April 30, 1991
Page 5
CASK FLOW PROTECTION - BOND ISSUE
The Swager - 9th Addition Improvements were financed by the $995,000 Improvement Bonds
of 1987. These bonds (in turn) are financed by the special assessments which are the topic of
this report.
Our analysis and review included cash -flow projections for the full retirement of these bonds.
Our projections were made based upon three sets of assumptions as shown in the attached
schedules.
A. Worst -Case Scenario
Under the Worst -Case scenario, we have assumed that the remaining twelve lots (six
developer owned /controlled with outstanding building permits plus six owned /controlled
by the HRA) will never be paid.
B. Middle -Case Scenario
Under the Middle -Case Scenario, we have assumed that the six remaining developer
owned /controlled lots will be paid in 1991 and the six HRA owned /controlled lots will
never be paid.
Ca Best -Case Scenario
Under the Best -Cast Scenario, we have assumed full payment for all lots with the six
remaining developer owned /controlled lots being paid 1991 and the six HRA
owned /controlled lots being paid in 1992.
To the Honorable Mayor and
Members of the City Council
City of Oak Park Heights
April 30, 1991
Page 6
A comparison of the above described projections with the original bond issue estimates or
budget is as follows:
March 31, 1991 Projections
Original Worst Middle Best
B_ udget Case Case Case
ASSETS PROVIDED /PROJECTED:
Special assessments:
Rolls adopted $995,000 $914,824 $914,824 $914,824
Less: delinquencies -0- (110,387) (55,193) -0-
Interest earnings:
On assessments 232,167 84,640 103,528 115,978
On investments 168,886 192,140 228,088
Tax Levy - 1990/91 -0- 45,600 45,600 45,600
Bond proceeds 112,873 205,187 205,187 205,187
Net Assets Provided /Projected 1,340,040 1,308,750 1,406,086 1,509,677
BOND REQUIREMENTS:
Bond principle $995,000 $995,000 $995,000 $995,000
Bond interest 261,778 261,778 261,778 261,778
Paying agent fees 1,902 1,902 1,902
Total Bond Requirements 1,256,778 1,258,680 1,258,680 1,258,680
PROJECTED FINAL BALANCE -
DECEMBER 31, 1993 $ 83,262 $ 50,070 $ 147,406 $ 250,997
As clearly shown above, recent developer payments plus action by the City to provide
additional financing have helped to assure full- financing for this bond issue even under the
Worst -Cast Scenario. Furthermore, under the Best -Cast Scenario, the Projected Final Balance
for this fund will be approximately $251,000. This projected balance is composed of the
following:
To the Honorable Mayor and
Members of the City Council
City of Oak Park Heights
April 30, 1991
Page 7
1. Normal Projected Balance -
5 % of Debt Obligations $ 83,300
2. Debt Service Tax Levy - 1990/91 -
Certified to Insure Adequate Financing 45,600
3. Excess Bond Proceeds
Committed to Debt Service 12,100
4. Excess Investment Interest Earnings 111,900
5. Other (1,900)
TOTAL PROJECTED BALANCE
(BEST -CASE SCENARIO) - December 31, 1993 $251,000
The underlying developer project consisted of 88 residential /single- family lots. The special
assessments on 73 of these lots have been fully paid at March 31, 1991. An additional 3 lots
are fully paid except for the 1991 current installment which is expected to be timely paid in
1991. The remaining 12 lots include 6 lots for which building permits have been issued and
actual construction is in process. The City can reasonably expect full payment of these
assessments in 1991.
The final remaining six lots are owned /controlled by the Washington County HRA. These
lots are all vacant and no building permits have been issued. Accordingly, the payment of
these special assessments is still uncertain at this time. However, even if such assessments are
never paid, sufficient assets will be received to fully meet the bonding requirements for this
project. See Middle -Case Scenario above.
Final maturity for the City's Improvement Bonds of 1987 is December 1, 1993 and these
bonds are non - callable. At such date, the City should realize a reserved balance of $50,000 to
$251,000 depending upon future assessment collections; tax collections; and, investment
yields. Most important, it is highly unlikely and improbable that existing committed assets
will be insufficient to meet the debt service requirements of this bond issue. We anticipate
that the December 31, 1991 balances will be such that cash and investments on hand will
exceed outstanding debt at that date.
To the Honorable Mayor and
Members of the City Council
City of Oak Park Heights
April 30, 1991
Page 8
LaVonne will be communicating with the HRA to obtain additional information relating to the
final six lots. Our office will continue to review this situation annually as part of our normal
year -end audit work.
Respectfully submitted,
VOTO, TAUTGES, REDPATH & CO., LTD.
Robert J. Voto, CPA
Attachments
RJV /lad
CAOMF0�.XL S
O[TYOF OAK PARK HEIGHTS
SPEC. A8OEOSMENTO-8YVAG8EFYD8TM. ADDITION-CASH FLOW
WORST-CASE DENAR|O
696 YEAR
SPECIAL ASSESSMENTS INVEST. TOTAL BOND PAYMENTS END
YEAR P. PD. CURR. DEUNQ. PEN' TOTAL OTHER INTER- REVEN. JUNE DEC. TOTAL BAL.
188 7 12&240 0 0 0 120,240 120 6903 255,790 24,530 2�530 231,252
188O 187,560 U 0 0 167,688 21,750 188,318 296 82 29882 58,384 301,187
1883 100081 07 0 0 248,02O 37,848 285088 28,003 229,003 259 387447
19.90 154,310 80,377 80237 1"040 308030 84 4�721 435,377 24,041 224,041 248082 574
1331'EST 7,359 12,207 "33 0 1 27,O24 45 0 27,05l 100075 17,945 217345 235,090 439727
18�-EST 0 �878 0 0 �878 20,814 25,7S2 1y�4� 21�046 224 241499.
18S3'F-8T O 4 0 0 4816 11,115 16,731 6045 201,046 207,080 50070
TOT�L8 817,53S 188.187 00.085 14.84G D8077 250.787 18�088 1,308, 110571 1,139, 01 1,268,008
WORST-CASE OFNA[U0 AO0JMFqlONO
|NVESTMENTEARM|NGOAO3MOW1AOOYE.
PF��P�YMENT8D�OBDUP0N�
��1/S1 ACTUAL-2 LOTS.
CURRENT / DELINQUENT PAYMENTO BASED UPON
ABOVE LOTS FPEpND PLUS OUTL0TS.
FINAL 12' U}T8 NEVER BEING PAID.
18801881 FRK}PEFTR' TAX BASED UPON 86%OF AMOUNT LEVIED.
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P8Oe1 !
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CITY OF OAK PARK HE{8XTS
SPEC. ASS E88MENT8-8WAQ8EFY88TH. ADDITION-CASH FLOW
MIDDLE-CASE SFNAR|O
YEAR
OPEQALADOE88MENTO INVEST. TOTAL BOND PAYMENTS END
YEAR P. PD. OURR. DEL|NQ. PEN. TOTAL OTHER INTER. REYEN' JUNE DEC. TOTAL BAL
1987 128,240 0 0 0 128 120 8 255 245 38 24538 231,262
1S00 107,50S 0 0 0 10/ 21 1O3,31S 2�032 200S2 5�J84 381,107
1888 180,001 07,958 0 0 248,020 37,040 205008 28,803 229,003 25�808 387,447
1880 154,310 08377 50 1'048 308038 04820 42721 4 24O41 22 248002 57d742
1891'E8T 29438 2�120 36920 .9230 101,708 45 3�232 181,538 17 217 235 520450
13S 0 4 u 0 0 4S70 2�820 3�73O 1�045 21�O45 22�080 331,150
1983-[ST 0 4010 0 U 4 1872 2 23 �045 201,046 207,080 147,400
TOTALS 639,018 204050 37,217 9 y278 88�163 25&787 18 1,406,000 119 1,13 1,28l880
M|DDLF-CASE 8ENAFUO ASSUMPTIONS:
INVESTMENT EARNINGS A8 SHOWN ABOVE.
PREPAYM6NTO BASED UPON'
3ri1/81 A01UAL-2 LOTS.
1091-8 ADDITIONAL LOTS VVIT H BLDG. PEF!M|T8.
0JRAENT/DEL|NQUENTPAYNENT8 BASED UPON
ABOVFLOT PRFPA|DFL1S O[
FINAL 8 LOTS MEYER OBN8 PAID.
1O80/18S1 PROPERTY Tk< BASED UPON 85%0F AMOUNT LZEY|ED.
��np;
OA SHFLOW.ALS
CITY OF OAK PARK HEIGHTS
SPEC. AO8ESOMENTS-OVYAGQER'S3TM. ADDITION-CASH FLOW
BEST-CASE QENAR|O
YEAR
SPECIAL ASSESSMENTS |NYEOl TOTAL BOND PAYMENTS END
YEAR P. PD. OUAA. DEUNQ. PEN. TOTAL OTHER INTER. REYEN. JUNE DEC. TOTAL DAL
1987 121240 0 0 0 121240 12'501 q380 25q790 2,638 21538 231152
1380 1 8y 0 0 0 107,588 21,750 100313 2%832 28032 58,384 381,107
1989 160861 87,m 0 0 241020 31846 28n000 21803 228803 268,608 307447
1300 151310 81377 61297 11046 301030 01626 41721 43V377 21041 221041 240,002 571742
1991-EST 2S,438 11120 36,820 y230 81708 Q000 Q443 171748 11345 21 T945 Q830 617801
1992-EST 11,033 11883 44,378 13,313 01021 41,105 121700 1v045 21ZO46 221000 421,297
13S3-EST 0 t010 0 0 I010 32,174 31780 1045 201,045 201090 250,997
T0TAU] 051655 20Z365 141593 31509 1131092 25R787 221008 110%677 11%571 1j33.l09 1.Z51680
BEST-CASE 0ENAFUO ASSUMPTIONS:
|NYES'TMENT EARNINGS AS SHOWN ABO
PREPAYMENTS BASED UPON:
31'31/91 ACTUAL-2 LOTS.
1991-0 ADDITIONAL LOTS WITH BLDG. PERMITS.
19924RNALLOT8 CONTROLLED BY H R A
CURRENT /DEUNQUENTPAYMENTS, BASED UPON
ABOVE LOTS PREPAID PLUS OUlIOTB.
108&1881 PROPERTY TAX BASED UPON 06% OF AMOUNT LEVIED.
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