Originally Published: June 4, 2011 9:56 p.m.
PRESCOTT VALLEY - The Town Council, meeting as the Community Facilities District board, acted Thursday to reduce debt for the StoneRidge CFD by voting to gain title to the subdivision's community center.
Under the proposed lease agreement, a limited liability corporation that StoneRidge developer SunCor created would transfer the deed of the community center to the CFD for a nominal fee of $20.
The CFD in turn would lease the center to the homeowners association for $168,609 a year through 2026, or sooner, depending on when debt on the $14.8 million bond is paid off. The HOA would gain ownership once the debt, which currently exceeds $13.4 million, is gone.
The lease requires the approval of the five-member HOA, which is scheduled to conduct its monthly meeting this coming Thursday, board member Walt Nagy said.
Nagy was among about 60 StoneRidge homeowners who attended the CFD board meeting, which lasted about an hour. The town established the CFD in 2001 to finance a bridge across StoneRidge Drive and other public improvements.
Referring to the decision of the CFD board, StoneRidge homeowner Curt Bonelli commented afterward, "I think they have done their part pretty well. However, he added, "I think it does not answer the long-term issue (of) what happens to the (SunCor) bankruptcy."
The pending SunCor bankruptcy, which town officials announced in December, threatened to create a financial burden on the homeowners, who have been paying $800 to $1,000 a year to the CFD. That figure is based on $3.30 per $100 in secondary assessed valuation.
The homeowners and SunCor have been paying a combined about $1.4 million a year to pay off the CFD bond, according to town officials.
SunCor officials also agreed to pay the CFD $1 million, minus the $161,579 bond payment due from SunCor in April, according to Town Manager Larry Tarkowski, who doubles as CFD manager.
Tarkowski discussed the lease at the CFD board meeting.
"SunCor is going to be filing for bankruptcy," Tarkowski said. "It is not a question of if but when."
Tarkowski introduced SunCor General Manager Brad Swisher, who thanked the attorneys for working out a "creative solution."
HOA attorney Gregory Huber of Prescott described the lease as a "simple and fair document by commercial standards."
He said the HOA may sublease office space on the second floor of the community center.
The HOA will be responsible for maintenance, Tarkowski said, adding the CFD will not interfere with the operations of the center.
Tarkowski said the HOA could sublease space on the first floor to a Starbucks.
The lease agreement does not amount to a "comprehensive settlement agreement with SunCor," Town Attorney Ivan Legler said. "We do not know what SunCor is going to do."
Legler said that while SunCor will no longer be paying $700,000 a year, "it won't be a poke in the eye."
He also acknowledged town staff determined HOA ownership of the building amounted to a major concern for homeowners.
"If SunCor goes into bankruptcy, everyone retains their rights," Legler said. "If SunCor does not going into bankruptcy, everyone retains their rights."
After the HOA board votes next week, the next step is for the CFD board to establish tax rates for the eight CFDs June 22. Town staff has proposed raising the rate from $3.30 to $3.90 per $100 in secondary assessed valuation to offset the near 20 percent drop in assessed valuation at StoneRidge.
Homeowners are unlikely to pay more in assessments in the fiscal year beginning July 1, Tarkowski has said.