City of Palmdale

Project:
Land-Secured Workout

Project Highlights

Beginning in the 1980s, the City of Palmdale used special tax bonds to fund infrastructure improvements necessary for extensive growth. By 1995, the City had four land-secured bond issues in default totaling more than $100 million. NHA Advisors worked with a financing team of underwriters, land developers and bond counsel over the course of several years to successfully restructure the debt and pay bond owners in full on 75% of the outstanding bonds. This debt restructuring allowed new development to occur in two of the four outstanding improvement areas.

The key to this workout was achieving an alignment of interests between the bond owners and the property owners. Delinquent property owners and bond owners are typically at odds with one another. This solution included new investors purchasing both the property and a substantial portion of the outstanding delinquent bonds. This process can take several years but the benefits are enormous. Delinquent bonds were terminated and key property was either developed or enabled to develop.

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