Wildwood bond deal tabbed as financial feat
Nevada County supervisors on Tuesday approved a complex deal that allows a Los Angeles developer to pay off a failed bond issue connected to the Wildwood Ridge Phases 2-4 project by issuing new bonds.
That means people who buy homes in the new development, when it is built, will take on the payment of special taxes to fund the costs of infrastructure.
It also means the county will catch the attention of the national bond market for ridding its record of a financial black mark, said Michael Castelli, a Nevada City lawyer who has worked on the deal on the county’s behalf for eight years.
Nevada County will be able to pay every penny owed on the failed bond issue that has plagued the project.
Castelli praised county staff and the latest landowner, Stone & Youngberg LLC, for putting the deal together. The company is the state’s largest underwriter of land-secured government bonds. It was invited by the county to take on the project when it became an albatross.
“Not anyone could have done this,” Castelli said. “They’re the best in the field.”
The deal also lets the county avoid a $200,000 annual bill it would have had to pay for the upgrade of the Lake Wildwood sewage treatment plant, Castelli said.
Since 1993, when the original bond issue to pay for that infrastructure failed, the county has been paying those special taxes to the districts that are supposed to receive the tax money. That cost has been running about $20,000 annually, Castelli said.
The higher sanitation bill now will be spread among the landowners, Castelli said. Most of the affordable housing units, however, will be exempted from the special district taxes.
The new community facilities district created for Wildwood Ridge has the authority to issue up to $9 million in bonds to be paid over a period as long as 40 years. The Board of Supervisors will have to approve any bond issue separately.
The original $10 million bond issue was restructured to cost less than $9 million because much of the original principal had been paid off, Castelli said.
After the original bond failed, the county put the property’s 207 acres on the market for $1. There were no takers.
When Stone & Youngberg bought the property in 1999 for $10, the property’s value was $6.5 million less than its debt, Castelli said. Rising land values and the underwriter’s commitment to fixing the problem made Tuesday’s deal possible, he said.
“They don’t want defaulted bonds out there on the market,” Castelli said. “That gives the whole industry of land-secured bonds a bad name.”
To contact staff writer Trina Kleist, e-mail email@example.com or call 477-4231.
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