After I submitted petitions from about 100 property owners asking to begin a process to amend our the package of powers granted to the Beaumont Finance Authority the city manager and mayor made some comments about our request and then stated they believed they had resolved our concerns. I told them they had not addressed all our concerns. I told them we expected them to follow state law since we had in making our request.
They have added our issue on tomorrow night's agenda to consider for future action. After meeting with a number of Stetson property owners tonight I believe there is still much confusion. I'm not surprised. Mello-Roos are a complex subject. Following is what I hope is a simplified explanation what we are seeking.
We want a platform where we can discuss our agreement with the Beaumont Finance Authority where we are not limited by 3 minutes and in which we can gain a better understanding of how the debt is financed, refinanced and retired. We understand that for a thirty year term the BFA collects our payments through the county via our property tax bill. Then the BFA makes the annual interest only payments to the majority of bond holders; pay the principle to retire the smaller bonds maturing that year; and then place the remainder of the revenue in a reserve fund. Eventually there will be large balloon payments in the final years. If this is accurate we would like to have a better understanding and accounting of the progress towards retiring the debt.
We understand the amount of bonds that have been issued with our properties as collateral is $4.75 million. It is our belief that the developer’s original agreement with the BFA authorized a larger amount that could be secured and that our payments were set to pay off the larger amount. We want to see the agreement with the BFA indicating the amount authorized. If the amount authorized is larger, we want to amend the agreement to authorize only the current debt. And if the case is as I have stated it here, we want to annually monitor the balance of our reserve funds so when there is an amount sufficient to retire some or all of the debt early we are able to work with the BFA to make this happen. We would like to amend the agreement to require the BFA to provide an annual report of the payments, debt retirement, and reserve fund balance. We’d like this report to be made available on the BFA’s (or City’s) website.
We understand the city has been refinancing other improvement areas’ debt for lower interest rates. We have been told the savings are not being passed on to the property owners and the refinancing is generating hundreds of thousands of dollars in administrative costs and commission fees. We want a better understanding of how these new fees are being paid. If the fees are paid by Stetson property owners, we want to amend our agreement to limit any refinancing fees from future bond issuances and we want to amend our agreement to insure interest savings from future refinancing are passed on to the property owners through lower payments or larger contributions to our reserve fund.
The workshop presented in the last city council meeting was helpful in understanding the projects and plans for the growth of the city but it is our understanding that the Improvement Area 18’s Mello-Roos funds are to be designated for projects that directly affect Stetson or for additional public services that are needed to support the 195 families living in Stetson. It is our understanding that the infrastructure projects that are being planned will benefit all Beaumont citizens and we believe should be paid for by all Beaumont tax payers, not just those of us who live in the CFD areas. If this is the case, the multimillion dollar projects should be approved by all taxpayers. We want to be assured with documentation that the City’s financial strategy for the financing of these projects does not put an unequitable burden on the new and future residents.
Finally, we want to thank the City Manager and former mayor for their assurances that the CFD funds are being managed ethically and appropriately but we also want the council and the administration to recognize that many of them will not be in their positions for the next 20 years and we are hesitant to rely on their verbal assurances and promises to be honored by future councils and administrators.
We think our requests are reasonable and benefit both the property owners of Stetson and the BFA.