The City in the Hills Assessment District 05-01 (“District”) was created in December 2005 to assist a local developer by financing various public improvements including streets, sewer and storm drains by issuing $15,595,000 in tax exempt bonds. This district was negatively impacted by the economic downturn of 2007-08 and there have been a number of assessment delinquencies since the District's inception. There are signs pointing toward improved prospects for development in the area. Tax sales held in March and in June of 2019 resulted in a total of 137 delinquent parcels sold which stands in stark contrast to tax sales held in 2013 and 2015 that had no bidders. In addition, a local school district has entered into a purchase agreement on a large parcel to construct a new school.
The City desires to refund the 2005 bonds to continue to expand the prospects of the ongoing and future developments in the district. The refunding bond will contain two series, a senior series that would be sold as a private placement and a junior series that would be sold to RLI. This junior series would contain the value of the properties with delinquent assessments which would place the senior series on a better financial standing going forward.
The proposed agreement is a good faith deposit to confirm the commitment RLI has made to purchase the junior bonds by putting half of the estimated required proceeds ($1,200,000) in an escrow account that will be drawn on when the refinancing bonds close. The refinancing bond documents are expected to be presented to the City Council at the July 15, 2020 meeting. Neither this escrow agreement nor the future bond refinancing has a cost to the City’s General Fund.