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Page 2 <br />CFD 89-2 Refunding <br />June 2, 1998 Council Meeting <br />Mello Roos Bonds are sold based on the ratio of the value of property to the principal amount <br />of the lien. Typically either the property's assessed value or, appraised value (or a <br />combination) is utilized. For the completed homes, the assessed value will be much more than <br />adequate. For the approved lots and undeveloped parcels, we may need an appraisal. We <br />are investigating this issue and expect to have an answer by May 28, 1998. In addition, this <br />item was presented to the Community Facilities District Commission on June 1, 1998. Any <br />reportable action will be orally presented to the City Council. <br />FISCAL IMPACT <br />Based on the current interest rates, gross savings are approximately $590,000. After adjusting <br />for the decease in old debt service reserve compared to the new debt service reserve, actual <br />present value savings are in the neighborhood of $330,000. Cash flow savings are <br />approximately $30,000 per year. This translates into a 10% reduction in assessment <br />payments per year for the property owners. As the current annual special tax levy for <br />completed single family homes s approximately $100,000, the homeowners would save $100 <br />peryear. <br />Attached (Exhibit B) is the refunding analysis for the CFD89-2. Table 1, Sources and Uses of <br />Funds, outlines the bond amount to be issued as well as the uses. The uses of funds (costs) <br />have been estimated, however the Agreements (Exhibit C) are attached for the investment <br />banker, Bond Counsel, Disclosure Counsel and Special Tax Consultant. Those costs are: <br />Investment Banker Piper Jaffray, Inc. $46,980 <br />Bond Counsel Nossaman, Guthner, Knox & Elliott $35,000 <br />Disclosure Counsel Best Best & Kreiger $15,000 <br />Special Tax Consultant Scott & Associates $ 7,500 <br />RECOMMENDATION <br />Authorize the City Manager to sign the agreements with the above mentioned "Financing <br />Team" for Community Facilities District number 89-2. <br />Attachments: 1997-98 Annual Special Tax Report (Exhibit A) <br />Refunding Analysis (Exhibit B) <br />Agreements (Exhibit C) <br />