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Bond/Financial Questions: Has the bond already been sold? As of the last week in January 2008, the bonds have not been sold. As you may know, a meltdown of the global credit markets occurred in the last quarter of 2008. The interest rate environment for land secured municipal bonds, like those that will be sold to fund this project, has shown limited signs of improvement in January 2009. The District’s finance team is monitoring the credit markets on a daily basis. We expect to proceed with the bond sale in the first quarter of 2009. When will the bond go into effect? Property owners who elected to take the long term bond financing can expect to see the first bond payment due on their property tax bill in December 2009. What are the proposed interest rates of the bond? Bond interest rates are market dependent. The actual interest rates for the bonds will determined by the Bond Underwriter and approved by the District and its Financial Advisor on the day that they go to market. In August 2008 the District conservatively estimated a range of interest rates between 5.75% and 7.0%. The municipal bond market has deteriorated dramatically since that time. The District’s finance team is closely monitoring the bond market and we hope to be able to sell the bonds within this range of interest rates and not delay the project significantly. How long will the bond payment be for on my property? The term of the bond payments will be 30 years. Will the payment come on my tax bill? Yes. There will be a line item for the annual assessment on the secured property tax bill you receive each year from the County Treasurer - Tax Collector. What is the estimated yearly payment? Much like a home mortgage, the amount of the annual payments will depend on the interest rates at the time of the bond sale. The principal amount for each parcel for which the long term financing option was selected is approximately $88,000. Annual payments will be reduced at the end of the project when grant funds and residual project funds are used to pay down the total bond indebtedness. Can I pay the bond off early?Yes. There are provisions in the bond agreements for early redemption, but certain limitations on timing do apply. There are also early redemption premiums or penalties that may apply. Is there a penalty fee for early payoff, and if so, how much? There are premiums or penalties associated with early redemption of the bonds. The exact schedule and penalty amounts have not yet been determined; as they are established at the time the bonds are priced, just prior to sale. For more information on this, please contact the District’s General Manager at 805-684-7214 x12. Can individual property owners purchase the municipal bonds? Yes. The bonds, which are exempt from state and federal income tax, will be marketed and sold by Stone & Youngberg. You must be registered with Stone & Youngberg prior to the bond sale date to be eligible to buy the bonds. Contact George Williams, in Stone & Youngberg’s Los Angeles office at 213-443-5233 or 888-992-2122 for information or to register for the sale. What if the project comes in UNDER budget? If the project comes in under budget, the residual funds will be returned to the property owners in the same manner as the grant funds. Property owners that paid their assessment up front will receive a rebate in the form of a check. The remaining funds, allocated to property owners who elected the long term bond financing option, will be used to pay the annual assessments for those parcels for a period of time in a manner identical to that proposed for allocation of grant proceeds What if the project comes in OVER budget? The District’s project team has conservatively estimated the cost of construction. We believe the assessments will provide ample funding to cover the entire cost of project implementation. Recent public works construction costs have been stable or have trended downward. No additional assessments can be placed on your property without a majority vote of the homeowners within the project area. The Proposition 84 grant would provide a buffer against additional assessments in the worst case scenario. However, the District will make every effort to complete the project within the established budget and return grant proceeds to homeowners as planned. |
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