Another Sarpy County sanitary and improvement district has filed for Chapter 9 bankruptcy, this one encompassing Papillion’s Savanna Shores residential development, which has homes built on more than half of its single-family lots.
Sanitary and Improvement District 249 filed the petition to reorganize its finances this week in U.S. Bankruptcy Court in Omaha, citing debts of about $5 million as of June 2011 from selling bonds and warrants. The filing also cites cash and receivables of about $470,000 as of June 2011.
The bonds and warrants were sold to investors to pay for the streets, sewers, electric lines and other utilities in SID 249’s part of Savanna Shores; the investors expect to be repaid from the taxes levied on residents who live in the SID.
The bankruptcy filing said that as of May 2012, there were homes on 85 of the 136 single-family lots at the Savanna Shores development at 96th Street and Schram Road. But it hasn’t worked out as planned: The bankruptcy filing said there is not enough tax revenue.
“The debtor is insolvent,” read filings in the case. “The problem in Savanna Shores is the size of its indebtedness, lack of cash and cash equivalents and insufficient tax base.”
Savanna Shores developer Boyer Young Development Co. referred questions to SID 249 attorney Brian Doyle, who did not respond to email and telephone inquiries.
The SID 249 story has been repeated many times in Douglas and Sarpy Counties since 2009, with 14 SIDs filing for Chapter 9 bankruptcy protection.
SIDs have government powers to sell bonds and levy taxes to develop land; they are run by a board elected by the district’s property owners. Chapter 9 is the part of the federal bankruptcy code that allows municipalities and other government entities such as SIDs to seek reorganization of their finances under court supervision.
The 20 largest creditors of SID 249 without collateral, according to court documents, are investors who own the warrants; most are individual investors, many in the Omaha area.
The SID has filed a tentative exit plan with the bankruptcy court, proposing the sale of new bonds to replace the old ones. It awaits a judge’s ruling. About 71 percent of creditors have approved the plan, court filings say, and no creditors have opposed it.