Agenda - Council - 06/28/1983 - Laserfiche WebLink

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I I I I MEMORANDUM TO: FROM: DATE: RE: CITY COUNCIL WILLIAM K. GOODRICH JUNE 22, 1983 ASSESSMENT POLICY ORDINANCE Pursuant to a Council directive on May 31, 1983, Staff met on June 9, 1983 to discuss alternatives to the 35% escrow, letter of credit and/or mortgage issue dealing with how much security a developer need provide when requesting the City to issue bonds to finance utility improvements. On June 10, 1983, Staff met with Steve Schmidt of the Northern Bank and one of the developers and his attorney. On June 16, 1983, the AD HOC Assessment Policy Committee met to discuss and review this issue. Based on these meetings, Staff and the AD HOC Committee recommended the following amendments to the Assessment Policy Ordinance previously passed by the Council: That a minimum of the 35% project cost be escrowed with the City, which 35% must be comprised of 17-1/2% cash and the balance of 17-i/2% as a letter of credit. The City will hold the interest earned on the 17-1/2% cash and return the interest to the developer only when the balance of the outstanding assessments levied against the property are equal to or less than the City's escrow for the project. The 17-1/2% minimum letter of credit shall be subject to increases based on the developer's financial stability in relation to the project size. That is, the letter of credit could potentially vary with each developer depending on his credit worthiness. The actual letter of credit amount in excess of the 17-1/2% minimum would be determined by the City in conjunction with its Independent Public Accountant (IPA). Each applicant would be required to submit with his development application current audited financial statements. The City would then retain its IPA to review and analyze these financial statement and to then issue its "Special Letter Report" outlining the IPA's opinion as to the financial strength of the developer in relation to the proposed project. The "Special Letter Report" will then be the basis for the City to determine what, if any, additional letter of credit will be required before the project proceeds. The IPA will consult with City Staff and the Council in arriving at the letter of credit amount. In certain cases, the IPA may require the developer's records in order to test the accuracy of his audited financial statements. In summary, the letter of credit will vary between 17-1/2% and 100% of the project cost, depending on the developer's financial strength.