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Road Paving and Water System Pipe Replacement Project

Power Point Presentation

Below is a summary of expenses and financing options for the project.

Estimated cost to replace Water system piping to include the following:

-          Replace all water mains with new PVC-900 6' high pressure water pipe

-          Install new PVC-900 4' high pressure water pipe from main to fire hydrants

-          Install Double Water Service with meter base (no meter) to each pair of lots

-          Replace 2' Blow Off Assemblies

-          Replace all pluming in both PRV stations

-          Replace all fire hydrants with up-to-date units

-          Saw cut and remove asphalt

Estimated cost $532,487.70 - Contractor: Westerlund Excavation

Estimated cost to overlay all roads in the community with the exception of Via Kachess:

-          Prepare surface, to include oiling and grading where needed

-          Lay 172, 634 square feet of 2� mod B asphalt over existing asphalt

-          Patch Via Kachess, after water pipe is installed

Estimated cost $234,203.52 - Contractor: Sutter Paving

The total project cost should be increased by 10% ($76,669.13) to cover inflation and unexpected cost, as this project would not start until late May 2008. This brings the total project cost to an estimated $843,360.44.

At previous Board meetings, we have talked about presenting the community with a special assessment collected over a five year period to cover the cost of this project. While this makes sense, to ease the burden on the property owners it does not make sense to spread the work over a five year period. Doing so would substantially increase the cost of the project as we would be exposed to materials and labor increases through the year 2012. In addition, we would experience higher contractors cost due to five separate mobilization and de-mobilization fees and higher material cost due to lower quantity purchases.

I've investigated an alternative that would allow us to complete the work in one season and still spread the property owner's assessment over five years. Below are the details of that proposal.

Project Financing

After a successful positive vote of the property owners approving a special assessment, we could take that voting results to a bank and secure financing to pay for the project completion in one season, with a loan payback structured to meet our special assessment collection schedule. Below are the details.

-          Loan amount: $843,360.44 to be released over 90 days as requested

-          Term of loan: 5 years with single payments on Oct. 2008, Oct 2009, Oct. 2010, Oct. 2011, Oct. 2012

-          Estimated interest rate in the high 7% range based on today's prime rate

-          1.25% loan fee on total amount borrowed

-          Estimated load payments of $200,000 per year based on the above

Homeowners could be offered a discount for an upfront payment of the entire 5 year assessment equal to the interest amount being charged by the bank. This would lower the amount of money the Association would have to borrow.

How to Proceed

If the Board finds the above acceptable, two votes must be put before the community. One approving a special assessment and the other to authorize the Board to secure a loan. The relevant information requiring this is outlined below.

By-Laws:

12.1.11 To make such expenditures as the Board deems expedient; provided, however, that the members of the Association, by resolution adopted by a two-thirds (2/3) vote at any meeting of the members, may restrict the amount of expenditures which can be made by the Board without prior approval of the members. The Board of Directors shall not have power to borrow money on behalf of the Association in excess of ten percent (10%) of the asset value of the Association unless authorized by a majority vote of the members of the Association at a meeting of the members.

CC&Rs

(a)   Maximum Assessment Rates. The assessment rate for owners of residential lots and/or condominium units shall not be increased or decreased by the Board of Directors of the Association in excess of ten percent (10%) in any one year and shall not exceed twenty percent (20%) cumulatively, except such rate may be increased or decreased in a greater amount by a two-thirds vote of the owners who are voting in person or by proxy at a meeting called for that purpose.

Bottom line is that it takes a majority vote of votes cast to allow the Board to borrow the funds needed and a two-thirds vote of votes cast to approve the special assessment.

Based on the project cost and financing option suggested, a special assessment of $1,190.00 per year/per lot should be presented to the voters. Based on the final project cost, this amount could be lowered. As such, I would suggest the wording for the special assessment vote state �an amount not to exceed $1190.00 per year for a five year period starting in 2008.

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Road Paving and Water System Pipe Replacement Project Power Point Presentation Below is a summary of expenses and financing options for the project. Estimated cost to replace Water system piping to include the following: - Replace all water mains with new PVC-900 6' high pressure water pipe - Install new PVC-900 4' high pressure water pipe from main to fire hydrants - Install Double Water Service with meter base (no meter) to each pair of lots - Replace 2' Blow Off Assemblies - Replace all pluming in both PRV stations - Replace all fire hydrants with up-to-date units - Saw cut and remove asphalt Estimated cost $532,487.70 - Contractor: Westerlund Excavation Estimated cost to overlay all roads in the community with the exception of Via Kachess: - Prepare surface, to include oiling and grading where needed - Lay 172, 634 square feet of 2� mod B asphalt over existing asphalt - Patch Via Kachess, after water pipe is installed Estimated cost $234,203.52 - Contractor: Sutter Paving The total project cost should be increased by 10% ($76,669.13) to cover inflation and unexpected cost, as this project would not start until late May 2008. This brings the total project cost to an estimated $843,360.44. At previous Board meetings, we have talked about presenting the community with a special assessment collected over a five year period to cover the cost of this project. While this makes sense, to ease the burden on the property owners it does not make sense to spread the work over a five year period. Doing so would substantially increase the cost of the project as we would be exposed to materials and labor increases through the year 2012. In addition, we would experience higher contractors cost due to five separate mobilization and de-mobilization fees and higher material cost due to lower quantity purchases. I've investigated an alternative that would allow us to complete the work in one season and still spread the property owner's assessment over five years. Below are the details of that proposal. Project Financing After a successful positive vote of the property owners approving a special assessment, we could take that voting results to a bank and secure financing to pay for the project completion in one season, with a loan payback structured to meet our special assessment collection schedule. Below are the details. - Loan amount: $843,360.44 to be released over 90 days as requested - Term of loan: 5 years with single payments on Oct. 2008, Oct 2009, Oct. 2010, Oct. 2011, Oct. 2012 - Estimated interest rate in the high 7% range based on today's prime rate - 1.25% loan fee on total amount borrowed - Estimated load payments of $200,000 per year based on the above Homeowners could be offered a discount for an upfront payment of the entire 5 year assessment equal to the interest amount being charged by the bank. This would lower the amount of money the Association would have to borrow. How to Proceed If the Board finds the above acceptable, two votes must be put before the community. One approving a special assessment and the other to authorize the Board to secure a loan. The relevant information requiring this is outlined below. By-Laws: 12.1.11 To make such expenditures as the Board deems expedient; provided, however, that the members of the Association, by resolution adopted by a two-thirds (2/3) vote at any meeting of the members, may restrict the amount of expenditures which can be made by the Board without prior approval of the members. The Board of Directors shall not have power to borrow money on behalf of the Association in excess of ten percent (10%) of the asset value of the Association unless authorized by a majority vote of the members of the Association at a meeting of the members. CC&Rs (a) Maximum Assessment Rates. The assessment rate for owners of residential lots and/or condominium units shall not be increased or decreased by the Board of Directors of the Association in excess of ten percent (10%) in any one year and shall not exceed twenty percent (20%) cumulatively, except such rate may be increased or decreased in a greater amount by a two-thirds vote of the owners who are voting in person or by proxy at a meeting called for that purpose. Bottom line is that it takes a majority vote of votes cast to allow the Board to borrow the funds needed and a two-thirds vote of votes cast to approve the special assessment. Based on the project cost and financing option suggested, a special assessment of $1,190.00 per year/per lot should be presented to the voters. Based on the final project cost, this amount could be lowered. As such, I would suggest the wording for the special assessment vote state �an amount not to exceed $1190.00 per year for a five year period starting in 2008.