Successful strategies for managing the impact of special
districts under various scenarios include:
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attendant annual debt service
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annual assessments or tax levies rather than through
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products and absorptions
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credit-enhanced, or privately-placed securities
In each case, the goal is to efficiently optimize the
marketability of the asset and lower carrying costs.
Local government agencies, weary from delinquencies,
foreclosures, and defaulted bonds, will often work with
The presence of unexpended bond proceeds can also
be preserved for use by subsequent purchasers or joint
ventures, thus providing a lender or investor a means of
obtaining a higher market value for the project. The right
to use these funds, however, does not necessarily follow
ownership of the property, so subsequent purchasers of
partially completed projects must quickly arrange for the
continued effectiveness of acquisition agreements and
other operative finance documents previously executed.
In some instances, cure rights must be exercised or
bankruptcy court approval obtained to access bond
When Opportunity Meets Preparedness
Whether a lender seeking to maximize recovery
on a loan, a bond trader seeking to buy low and sell
high, a developer seeking to restructure a distressed
development, a private equity fund seeking to profit from
an opportunity purchase, or a regulator charged with
“…those with knowledge of special districts and workout techniques
can apply that knowledge to enhance asset valuations… .”
debt and equity providers to restructure special districts
in a mutually favorable manner.
The opportunity for a successful financial outcome is
often enhanced when bonds have not yet been issued
against special district levies. Customization of debt
parameters and lien burdens are much easier to structure.
Where debt is outstanding, however, special districts
still offer ample opportunity. When property is taken
back from a developer, there may be construction fund
moneys, maintenance hold-backs, unclaimed deposits,
and investment earnings available for financing additional
infrastructure improvements or as a source of repayment
for improvements already constructed.
appropriately valuing a real property asset, the impact of
special district financing in today’s real estate environment
must be understood. Through careful analysis based upon
strategic advice from experienced public finance and real
estate professionals, financial stakeholders can navigate
with clarity and optimize the opportunities presented.
Lewis G. Feldman is Chair of the Los Angeles office
and head of Goodwin Procter’s National Public/Private
Development Finance Practice. He can be reached at
(310) 788-5188 or email@example.com.
Robert M. Haight, Jr. is a partner in the Los Angeles
office of Goodwin Procter, and can be reached at
(310) 788-5150 or firstname.lastname@example.org.
REsource Spring 2009