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Practice Tip <br />The Guarantee Fund share for an individual parcel may be eliminated from any the assessment for the Parcel if <br />the assessment is prepaid in full. <br />Discounting LID bonds is not required but is becoming a popular financing tool to obtain a more <br />marketable bond with an Inherent iower interest rate, An investment banker provides advice on <br />the structure, timing, terms, marketing strategy, and other matters. The investment banker <br />assists the city in conducting negotiated sales or competitive sales, including preparing the <br />official statement, The investment banker assists the city with the closing process arld the <br />delivery of each bond issue. Cities that intend to use external funding sources to provide interim <br />or long term financing should hire an investment banker. <br />An underwriter purchases the bonds from the city. In a negotiated sale, the underwriter <br />commonly structures the issue, prepares the official statement, and arranges forthe closing and <br />delivery of the issue. In a non -negotiated sale, those services are performed by a financial <br />advisor. It is possible for an investment banker to be the underwriterorto be a financial advisor <br />for the city, but not both. <br />Red Flag Issues <br />The following "red flag issues" should be reviewed and considered for Lips of every size, so that <br />the LID may proceed more smoothly: <br />• Proposals for LIDS for the purpose of converting overhead utility lines to underground <br />lines should always be handled with caution. Typically, the costs of such conversions are <br />excessive in comparison to the special benefits derived. Even when costs are acceptable, <br />spreading the coststo achieve proportionate special benefit is a problem, especially if the <br />primary reason for the LID is to enhance views. For example, when the overhead lines <br />do not equally affect the views of all the properties, the assessments to individual <br />properties will need to be different; perhaps radically different. Homes with spectacular <br />views out their back windows will likely have very different special benefit than homes <br />with views out their front windows. <br />Parking facility LI Ds need to be approached with caution, using experienced legal counsel <br />and qualified real estate appraisers. The major problem is establishing special benefit. <br />LIDS that encompass only a handful of property owners must be analyzed closely by <br />bond counsel to determine whetherthe interest earnings on the bonds are taxable. (Note: <br />LIDS can be done with taxable financing; however, the interest rates will be higher.) <br />• On LIDS involving significant undeveloped property, two major problems exist. First, the <br />value placed on the properties by the county assessor's office may not be sufficient to <br />provide adequate security, thus preventing marketable financing. Second, investment <br />property is generally high risk property. Timely LID payments are often a problem. <br />Some LIDS should be closed (that is, final assessment roll adopted) prior to actual <br />construction. Underground wiring, parking facilities, "hard to interim finance" projects <br />(such as significantly undeveloped lands), controversial projects likely to result in <br />significant legal challenges to the final assessment roll, are all examples of LID that <br />36 Local and Road Improvement Districts Manual for Washington State Sixth EdNon <br />