Rancho Palos Verdes City Council
   

Exhibit A - Matrix of UUAD Loan Alternatives and Pro-Forma Cost Calculations
General assumption used in pro-forma financial cost modeling:    
         
Pro-forma frequency of formation of UUAD's One per year for the initial three years after the adoption of a UUAD policy; thereafter, an average of one every three years.
Pro-forma assessment amount $20,000    
Pro-forma connection fee $5,000    
Pro-forma bond issuance cost per parcel $1,000    
Pro-forma bond debt service reserve deposit $2,500 Note: The reserve fund deposit would be available for the installment due in the 20th year, unless delinquencies reduce or deplete the deposit.
Pro-forma bond term 20 years    
Pro-forma interest rate 7%    
Pro-forma annual assessment installment payment $2,405    
Pro-forma number of homes included in a UUAD 100 homes    
2003 Median household income in LA $50,300    
Pro-forma UUAD Assessment Loan eligibility criteria At least 50% of the property is owned by an occupant having attained 55 years of age with combined household income less than $50,000.  
Pro-forma number of households eligible for Assessment Loans per UUAD, based upon age and income criteria described above and demographics derived from the 2000 census 9    
  Annual Decision By City Council ("Annual Agreement" option) "Deferral Fund" option
Description of each funding option The City Council would decide whether or not to pay the annual UUAD assessment installment on behalf of eligible Assessment Loan borrowers each year, utilizing reserves from the City's General fund. The City's commitment would be for one year's assessment installment payment only. The City would use General fund reserves to provide assessment installment payments on behalf of eligible Assessment Loan borrowers for the entire term of the assessment district bond schedule (about 20 years). In order to choose this option, the City would be legally required to deposit funds equivalent to the entire stream of principal and interest installment assessment payments into a Deferral Fund during the first year that an eligible UUAD property owner's loan request is approved by the City and the assessment installment is due.
Exhibit B - Alternatives For Proposed Terms And Conditions For Assessment Loans
Assumptions specific to each funding option:    
         
Pro-forma total annual General fund expenditure for eligible UUAD Assessment Loans (annual assessment installment payment) made by City for each UUAD $21,645 $432,900  
Pro-forma total annual General fund expenditure for eligible UUAD Assessment Loans (annual assessment installment payment) made by the City for all UUAD's formed:    
1st year   $21,645 $432,900  
2nd year   $43,290 $865,800  
3rd year   $64,935 $1,298,700  
         
 Annual Decision By City Council ("Annual Agreement" option)
"Deferral Fund" option
Advantages
Disadvantages
Advantages
Disadvantages
Use of General fund reserves
1)An annual decision would enable the City Council to decide whether or not to provide UUAD Assessment Loans, based upon then current economic and budgetary conditions. 2)An annual decision would require only about 1/20 of the sum of all assessment amounts to be expended from General fund reserves in any given year, compared with the Deferral Fund option which requires the entire sum of assessment installments to be deposited.     1)The deferral fund option would require a long-term commitment (up to about 20 years) by the City to make assessment installment payments on behalf of eligible property owners. 2)Based upon 2000 census demographics and the pro-forma assumptions above, approximately 9% of the City's property owners could be eligible to participate in UUAD Assessment Loan program. The General expenditure to a Deferral Fund could be as much as $432,900 when each UUAD is formed (see Page 1 of Exhibit A) 3)Depending upon UUAD loan demand, as well as economic and budgetary considerations, the City may not be financially able to continue the UUAD Assessment Loan program beyond the first UUAD.
Lien security 
   The City Council may elect to consider applications for new UUAD Assessment Loans to be processed annually, regardless whether the Annual Agreement option or the Deferral Fund option is selected by the City Council. The process would be similar to an application for a residential mortgage, including the review of the application, confirmation of other lien balances, determination of whether an acceptable level of equity exists to secure a loan and the execution and recordation of lien documents.
         
Participation in UUAD by property owners
1)Eligible property owners will be less willing to sign the petition to participate in the UUAD if the City does not elect to commit to make Assessment Loans for the entire duration of the assessment (up to about 20 years). 2)The same eligible property owners may be more likely to protest the formation of the UUAD by casting "no" ballots. 3)Once the Assessment Loan program has begun, a decision to discontinue making assessment installment payments would be extremely unpopular with eligible property owners.
1) Eligible property owners will be more willing to sign the petition to support the formation of the UUAD if the City elects to commit to make Assessment Loans for the entire duration of the assessment (about 20 years). 2)The same eligible property owners may be less likely to protest the formation of the UUAD by casting "no" ballots.
Administrative time and cost by City Staff It appears likely that applications for Assessment Loans would be processed annually. Although the City's consultant that processes Home Improvement Loan ("HIP") application has estimated that the processing time is about 5 hours for HIP loans, Finance Staff suggests that the processing time for UUAD loans would be at least 20 hours for each application. The City currently pays the HIP loan processing consultant $24,000 annually.