I have two confessions. I am not an attorney. I have not read all 894 pages. You may read as much as you like, and after doing so, perhaps you can ask better questions than I.
Some observations and comments: (You must click on link...then a downward pointing arrow will appear in the upper right corner of your "View History, bookmarks." Click on the download and the bond document should pop up.) Some have reported difficulty opening up the bond file. If you would send me your email address via the Contact Page, I will forward a link to you.
The initial issue of the bonds was in the amount of $36,450,000.00. They bear interest at 6.68% for 30 years. At maturity, a total of $86,891,431.50 will have been paid in interest and principal payments. The bond debt is secured by the approximately 114 acres of land south of I-30 and generally known as "South Bayside." In addition, the land owners are liable for debt, however it is a limited liability corporation. I don't know the upper limits of their liability. Were it me, I would look to the value of the land as security for the bond debt.
The signature page is not attached, however it is reasonable to assume the document is properly executed and filed of record or the bonds would have never been sold.
As we all know, there is a disagreement between the City of Rowlett and the owners of the subject land. The city is suing the landowners. Fraud is alleged. We common folk call it a "bait and switch." I am 100% on the side of the city, however I think some oversights were made. It is felt these oversights did not contribute to the recanting of the representations made by the land owners, and thus gave rise to the lawsuit. I do have separate questions for those administering to the disbursement of funds. I want my $3 million already disbursed for the lagoon "franchise fee" and other construction back. If I would have pulled a stunt like that while administering to my bank client's projects, I would have been fired a long time ago. A clean shave, a $1000 suit and a degree from your favorite personality school won't get it. You better know what you're doing in this league.
As we all know, representations were made by land owners that an 8 acre crystal lagoon, a particularly expensive water fountain, and a trolley system was proposed. There were brochures, and news stories in many media types promoting this new addition to Rowlett. The citizens of Rowlett were solidly behind the proposals. The City Council approved the representations and caused the bonds to be issued. Considerable expense was incurred. In addition, $3 million of the bond proceeds was disbursed to others.
Then, on July 26, the land owner's developer appeared at a public meeting before City Council and recanted the representations made regarding the amenity package of the crystal lagoon, the fountain and trolley. In my opinion, the contract between the city (including citizens) and the land owners had been broken by the land owners, thus the law suit. Apparently, the land owners didn't feel they were obligated to anyone.......including purchasers of the bonds.
However, on the map showing the land plan in the bond document, the crystal lagoon is clearly shown. There were also several references made about the lagoon thruout the bond document. Therefore, representations about the amenity package was clearly made to the purchasers of the bonds. If I was a purchaser of the bonds, I would be rather (pick your word(s)).
Because of the lawsuit and other apparent interruptions, the time line for development has been severely damaged. The total bond sale of $36.450 million has a cost estimate of $4,849,429.50 allocated to an account called "Deposit to Capitalized Interest Account." It is presumed this account is to make interest payments during the time of development whereby other tax revenue is still not yet available to make principal and interest payments.
The current behavior of the land owners is that they are preparing for the "long haul." They are renting billboards, printing and sending out 4 color brochures, and setting up a website. I have been told they are making some contributions to "significant organizations" in the City of Rowlett. They are clearly trying to influence the citizens of Rowlett in attempts of getting popular support for their "new Bayside."
I have a simple question, here. If they lied to you once, what do you think prevents them from lying again?
In any event, it looks like a long battle. I do not think its unreasonable to expect a 5 year delay in development. That throws off the development time line by the same amount. Therefore, it is reasonable to assume the allocation for interest expense is off by 5 years. That would amount to about $10 million, per the amortization table contained in the document.
So, in anticipation of a higher interest expense draining the prepaid expense allocation, I would pass a special assessment (which can be done) in the amount of $10 million and serve it to the landowners. If they do not pay it within the permitted time, file a lien. After waiting the legal and appropriate time again, foreclose on the lien utilizing the ad valorem tax remedies.
I don't think the land owners would like that to happen. They may want to re-think their position. There may be some legal issue here that I don't know about, but I didn't see any prevention of such in the documents. I would take the fight to them.