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HomeMy WebLinkAboutSS1 - Underground Utility Assessment Loan Program - PowerPointUNDERGROUNDING UTILITY ASSESSMENT LOAN PROGRAM November 18, 2025 City Council Purpose: • Explore options to support homeowners with future underground utility assessments, requested by Council Member Barto on 10/28/25 (Al item) Overview: • Property owners have requested formation of two assessment districts in Newport Heights • Total project cost: $25-$30 million (-600 parcels = $50,000 per parcel) • City loan program would allow eligible homeowners to defer payments Q SEW PORT O 34 _ �n U yam, T e� Cq</FORN�P • Financing mechanism allowing property owners to fund public improvements that benefit their properties, such as the undergrounding of utilities • Governed by: California Streets and Highways Code; Proposition 218; 1913 Act • Formed through property owner petition and ballot approval Assessments based on each property's special benefit Secured by liens on benefited parcels Bonds issued to fund upfront project costs Annual assessments repay bonds over time, typically 20 years Standard amortization required no payment deferrals allowed Examples: Manhattan Beach, Laguna Beach • Provide financial relief for homeowners on limited or fixed incomes • City issues loans to defer annual assessment payments • Loan secured by property lien • Eligibility based on age, income, or hardship • Fixed interest rate established at program start • Deferred not forgiven obligation 6&A anhattan Beac 6eguna Beac' A Eligibility - Age Eligibility — Income Eligibility — Assets Interest Total Funding Authorized Funds Expended Owner -occupied resident must be age 62+ (or blind / disabled) Sliding scale tied to annual assessment size. Assets (excluding primary residence and life insurance) must not exceed $1 M. Fixed interest rate determined by City Council when program is established. $250, 000 $0 (0 Loans) Owner -occupied resident must be age 55+ (waiver possible) Fixed income thresholds applied uniformly. Priority given to households in need. Asset limits apply, with discretionary flexibility to account for financial hardship. Accrues at approximately 1 % above the bond assessment interest rate. $700, 000 $358,000 (11 Loans) Assessment Districts 114 & 118 • Approximately 600 parcels • Estimated cost: $25-$30 million • Assessments up to-$50,000 per parcel • Undergrounding of overhead electric and communication lines • Current status: A petition package is being prepared and will be circulated by the proponents to all affected property owners within the proposed district boundaries. Interest Engineer's Report Letter Petition & Public Hearings ❑esign Start Year 1 Year 2 Years 3-4 Construction Private Conversions Year 5 Year 5 Year 7 • If the City Council wishes to move forward with the Assessment Deferment Loan Program in time for the proposed Newport Heights district, the program would not need to be finalized for at least 3-4 years, pending property owners' approval of the assessment district and the subsequent bond sale for the district. • However, it would be helpful for residents to know that there is a program when deciding whether to vote for the assessment district. • City staff could develop program guidelines and return to the City Council in February or March 2026 for review and potential adoption. Q SEW PORT U yam, T e� Cq</FORN�P • Support financially constrained homeowners (e.g., seniors or fixed -income residents) • Maintain equity among property owners • Encourage participation in undergrounding projects • Limit the City's fiscal exposure • Loan servicing and repayment tracking • Eligibility verification and periodic review • Potential delay in repayment or foreclosure risk • Need for dedicated funding source and program oversight • Eligibility: Age, income, or hardship -based • Deferral Cap: Maximum amount per parcel • Funding Limit: City cap on total exposure • Repayment: Interest -only; principal deferred • Duration: 20 years, with 5-year renewal option • Security: Property lien recorded for deferred amount If Council would like to move forward with an assessment deferment loan program, input is requested: • Direction on program structure and eligibility criteria • Level of City funding and risk tolerance Questions?