Poway Unified School District officials are taking the final steps to foreclose on several homeowners who are as much as $10,000 behind on special property taxes levied to pay bondholders.
The homeowners—who live in special districts with bond-financed schools—all owe at least $5,000 and have been sent repeat delinquency notices in recent months, officials said. The seven homeowners control 11 delinquent parcels and owe a total of $130,000 in taxes, interest and penalties. For some, the interest and penalties increase their bills by 72 percent.
The PUSD board on Monday unanimously approved a resolution authorizing Superintendent John Collins to move forward in the foreclosure process. Board member Andy Patapow was absent.
District officials said they will send another notice to homeowners giving them a chance to pay before starting foreclosure proceedings. The move comes at a time when bonds are a touchy topic for PUSD-area property owners.
A media investigation revealed that a $105 million bond (separate from the foreclosure issue) would end up costing local taxpayers nearly $1 billion to pay due to the repayment structure and interest rate district officials agreed upon. Related tax hikes are decades away, but many have wondered what impact the higher taxes will have on homeowners and the local real estate market.
In this case, the presently at-risk homes lie in what are known as Mello-Roos Community Facilities Districts (CFDs)—areas where special taxes can be levied to pay for schools and other public facilities. Under the Mello-Roos Community Facilities Act of 1982, school districts have the authority to foreclose on delinquent properties to collect the taxes. The agreements for the bonds PUSD issued to build the Mello-Roos campuses obligate the district to foreclose if the property is behind by $5,000 or more, or if less than 95 percent of the CFD taxes for that particular district have been collected, according to a staff report.
PUSD includes 32 CFDs and Improvement Areas (zones within CFDs with additional taxes for repairs and services) that encompass more than 27,000 parcels, financing 13 different schools. There is a tax delinquency rate of just 1 percent, said Sandi Burgoyne, director of PUSD's Planning Department.
The 11 delinquent parcels are behind by an average of $7,800 (see individual totals in the chart below). The annual tax rates vary among the CFDs, but can be thousands of dollars. In CFD No. 2, for example, with one of the delinquent parcels, annual taxes are about $2,186 per unit. While the county must wait to foreclose until property taxes have been delinquent for at least five years, the school district can foreclose on a faster timeline.
The faster timeline often surprises many homeowners, who skip property taxes because of the struggling economy, said Cameron Weist, a founding partner at Weist Law, who works with school districts that issue Mello-Roos bonds.
"A lot of times, they don't pay their property taxes, thinking they have a five-year hiatus or opportunity to kind of let it ride," Weist said. Instead, in as little as 150 to 180 days, districts can—and typically are bound by their bond agreements to—foreclose to ensure bondholders are repaid, he said.
By law, the Mello-Roos related foreclosure proceedings have to begin within four years of default.CFD No. Delinquent Special Tax Interest and Penalties Total Due 2 $9,629.25 $4,278.73 $14,382.98 8 $5,381.92 $1,649.18 $7,506.10 8 $5,434.68 $1,190.79 $7,100.47 10 $5,452.92 $1,483.23 $7,411.15 10 $10,707.80 $5,170.40 $16,353.20 10B $10,184.20 $4,917.61 $15,576.81 10 $7,053.01 $2,578.86 $10,106.87 10D $8,818.15 $3,224.29 $12,517.44 10 $5,521.78 $1,209.86 $7,206.64 11-1 $7,608.72 $5,460.22 $13,543.94 11A $10,273.06 $7,372.25 $18,120.31
- Elementary: Adobe Bluffs, Creekside, Highland Ranch, Park Village, Shoal Creek, Stone Ranch, Monterey Ridge, Del Sur, Willow Grove
- Middle: Mesa Verde, Oak Valley
- High School: Westview, Del Norte