SAN FRANCISCO — One of the Nevada local improvement districts that sold land-secured bonds to finance infrastructure at the troubled Lake Las Vegas development made an unscheduled draw on its reserve fund to pay debt service this month, according to a disclosure report filed with the Municipal Securities Rulemaking Board.
Bank of New York Mellon Trust Co., the trustee, reported a $710,929.36 draw on reserves to make the March 1 debt service payment of the Henderson Local Improvement District No. T-16.
The district issued $40.3 million in unrated limited-obligation bonds in 2005 to finance basic infrastructure for a 1,371-acre portion of the Lake Las Vegas development, which was envisioned as an upscale resort centered on its namesake artificial lake.
But development efforts stalled amid the national housing finance and foreclosure crisis, which took a particularly heavy toll on the Las Vegas region.
The master developer of the resort filed for Chapter 11 bankruptcy in July 2008, and the case is still working its way through the bankruptcy court.
According to the official statement for the District No. T-16 bonds, the scheduled debt service payment March 1 was $3.45 million, of which $1.605 million was principal. The next scheduled debt service payment is on March 1, 2011, for $3.44 million.
According to the recent disclosure filing, the debt service reserve contained $2.63 million after the March 1 draw.
According to the district’s annual financial report for calendar year 2009, accessed through the MSRB, the tax delinquency rate for the T-16 district was more than 33%.
A delinquent parcels sale is scheduled in April, but two of the parcel owners — each representing more than 10% of the assessment levy — are in bankruptcy and therefore their parcels cannot be sold, the annual report said.
Contractors have also filed many mechanics’ liens in connection with work done on the district’s infrastructure, according to bankruptcy court filings.
Earlier this year, one of the Lake Las Vegas resort’s two luxury hotels announced that it will close, as did the only casino in the development.