Joe Nelson, Staff Writer
Posted: 01/07/2012 02:42:29 PM PST
Victorville City Manager Doug Robertson said the city’s November default on bond payments totaling $10.6 million has not prompted an inquiry from a federal agency that has been investigating the city’s bond debt for the last two years.
In an e-mail, Robertson said investigators from the Securities and Exchange Commission (SEC) has not made any inquiries about the defaults thus far, but he is expecting they will.
“We don’t believe we’ve done anything wrong so our biggest concern is the timely completion of their inquiry so we can move on,” Robertson said.
The city received a notice from the Bank of New York Mellon, dated Dec. 16, indicating it had failed to pay a total of $535,000 in principal payments that were due on Dec. 1. The bank, which holds the city’s reserve funds in trust, said reserve funds could not be used to make payments on the principal.
The city was, however, able to use the reserve funds to cover interest on the bonds totaling $1.3 million.
According to the notice, the bank could demand that the principal of all issued bonds and accrued interest be paid immediately.
In 2010, the SEC launched an investigation into the city’s bond debt and how it spent the money, and the investigation has now entered its third year.
On Dec. 1, debt service payments for seven bonds the Southern California Logistics Airport Authority, or SCLAA, took out came due. The SCLAA, of which Robertson serves as executive director, is the redevelopment agency that secures funding and oversees development of the 2,500-acre airport, formerly the George Air Force Base, which the city envisions as its future economic engine that will drive growth.
The bonds taken out by the SCLAA are secured by redevelopment tax increments, not city funds, and the state’s efforts to dissolve redevelopment agencies has thwarted Victorville’s ability to use its redevelopment funds to help pay its bond debt, according to a letter Robertson sent to bondholders dated Nov. 21.
Robertson believes the SCLAA will be able to make the payment once Victor Valley Economic Development Authority (VVEDA) property tax distributions are made, which typically occur in April.
Even under legislation eliminating redevelopment agencies, VVEDA will be entitled to receive property tax distributions for purposes of making debt service payments, Robertson said.
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