Victorville, Calif. Airport Authority Cures Some, But Not All, Defaults

LOS ANGELES — The Southern California Logistics Airport Authority is using tax increment distribution revenue received May 1 to cure most of its existing bond defaults, but also announced it will default on a June 1 payment.

The Victorville, Calif.-based authority made the announcement on a document posted on the Municipal Securities Rulemaking Board's EMMA website May 29.

Adele Mosher, the authority's chief financial officer, told The Bond Buyer last December that it could take until 2016 for the authority to make up missed bond payments and replenish reserves.

Mosher, who also is Victorville's assistant finance director, couldn't immediately be reached for comment for this article.

In addition, the airport authority is facing U.S. Securities and Exchange Commission fraud charges. Victorville, city official Keith Metzler, the airport authority, underwriter Kinsell, Newcomb & De Dios, and KND investment banker Janees Williams were all named in the lawsuit filed by the SEC in April.

Settlement/mediation conferences have been scheduled for March 2015, according to a court document filed April 9 in the U.S. District Court, Central District of California. If mediation fails, the parties are slated to go to trial on March 17, 2015.

The SCLAA will default for the sixth time on bonds it issued to redevelop the airport from military to civilian use.

The SCLAA had missed $4.2 million of payments due Dec. 1, which included principal and interest payments of $2.5 million on 2006 taxable subordinate revenue bonds and $1.6 million on 2007 subordinate tax allocation revenue bonds. It also failed to pay the $70,000 principal payment on 2008A subordinate tax allocation revenue bonds, but paid the $166,638 interest payment on that bond using the bond reserve funds.

In recent months, the authority has turned that around somewhat, according to Thursday's EMMA filing.

On March 20, according to the filing, the Victor Valley Economic Development Authority issued a check for $9.3 million to the City of Victorville for tax increment distribution revenue from May 1, 2013 through Dec., 13, 2013.

On April 4, an amount of $140,045 was used to fully fund all senior SCLA Tax Allocation Bonds reserve accounts held with trustee BNY Mellon. Additionally, $1.4 million will be used in conjunction with $1.1 million remaining in reserves to cure the default on the Dec. 1, 2013 payment on the SCLAA Taxable Subordinate Tax Allocation Revenue Bonds, Series 2006.

Interest payments for June 1 on senior non-housing bonds, housing bonds, and junior subordinate bonds totaling $7.3 million will also be made from this distribution. The remaining $473,947 will be held for the Dec. 1, 2014 payments.

The authority will default on a $1.1 million June 1 payment on its 2007 bonds. The filing also notes that $165,063 in reserve for the subordinate tax allocation revenue bonds 2007 will be used.

"The Bank of New York Mellon does not provide for partial use of reserves for interest payments," according to the filing. "Therefore, the SCLAA Subordinate Tax Allocation Revenue Bonds 2007 could not use the remainder of reserves available for interest payments."

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