Exhibit A - Matrix
of UUAD Loan Alternatives and Pro-Forma Cost Calculations |
| General assumption used in pro-forma
financial cost modeling: |
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| 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
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| Pro-forma connection fee |
$5,000
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| Pro-forma bond issuance cost per
parcel |
$1,000
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| Pro-forma bond debt service reserve
deposit |
$2,500
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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 |
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| Pro-forma interest rate |
7% |
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| Pro-forma annual assessment installment
payment |
$2,405
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| Pro-forma number of homes included
in a UUAD |
100 homes |
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| 2003 Median household income in
LA |
$50,300
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| 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. |
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| 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 |
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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. |
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Exhibit
B - Alternatives For Proposed Terms And Conditions For Assessment Loans |
| Assumptions specific to each
funding option: |
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| Pro-forma total annual General
fund expenditure for eligible UUAD Assessment Loans (annual assessment installment
payment) made by City for each UUAD |
$21,645
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$432,900
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| 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: |
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| 1st year |
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$21,645
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$432,900
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| 2nd year |
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$43,290
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$865,800
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| 3rd year |
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$64,935
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$1,298,700
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Annual
Decision By City Council ("Annual Agreement" option) |
"Deferral Fund" option |
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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.
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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. |
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| Participation in UUAD by
property owners |
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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. |
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| 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. |
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