2016-05-09-minutes-public-works-study-session

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obtained prior to construct on. It is not likely that the property owner will agree to provide the enhancement after the protect has been completed. Structuring LIDS and UUDs LID and ULID assessment roll lengths can impact the acceptability of financing for lenders and investors. Typically, ;nvestors prefer LID bonds that have annual estimated principal maturities that are of sufficient size to attract their interest. if a smal' project has a 20 -year assessment roll, the annual estimated principal maturities couid be too small to be attractive unless the interest rate is high relative to other issues available to the investor. The financial advisor can provide guidance on setting the length of the assessment roll such that it will provide favorable market acceptance for the financing and not prove too much of a payment burden, for the property owners. Typically, fully developed residential LIDs have assessment rolls of 15 to 20 years in length. Developer and business LIDs have roll's typically of 10 to 15 years in length. However for each, the average size of the individual assessments and the likely ability of the average property owner to make the annual payments, are considered in setting the length of the roll. Also considered is the likely amount of pre -payments that will be received during the prepayment period and over the life of the assessment roll. Once again, it is important to consider and make these decisions priorto the formation of the distrietto provide adequate information to the property owner about the annual payments required. The municipality is required to call as many LID bonds as reasonably possible each year with assessment payments received. Utility Local Improvement District bond issues do not have such a requirement. ULID bonds are typically structured to match the cash flow expectations of revenues produced by the rates of the utility in combination with the estimated assessment payments. ULID bonds typically have a call date that matches revenue bonds in the market with similar maturity lengths. However, it is possible to sell ULID bonds with an annual call, which will allow the matching of bond payments: with assessment collections. The interest rates on a bond issued with an annual call will likely be higher than those of similar bonds with a standard revenue bond call feature. But, depending on the municipality's utility cash flow and outstanding bond covenants, the higher rates may be an appropriate trade-off. Consideration of the call feature of a ULID bond will not have an impact on the structure of assessment payments but !twill have an impact on the assessment rate paid. Construction or Interim Financing Project construction and its financing are approved with the passage of the assessment district's formation resolution or ordinance. Between the formation of the district and the confirmation of the final assessment roll, long term LID funding cannot be obtained because no lien has been established on the properties in the district. Construction must be funded during this period. If internal funding is not advisable or possible, it will be necessary to obtain financing from a construction lender, typically a bank. There are unique prob€ems associated with construction financing. First, a properterm or length must be set for the funding. LlDs are notorious for having unpredictable construction and roll closing periods. This is due in large partto the hearing process and the tune is takes to complete an appraisal after construction, if one is required. After the fina! roll is spread and handed to the property owner, that owner has an opportunityto challenge the amount of the assessment at the final assessment roll hearing {confirmation Local and Road improvement Districts Manual for Washingtan State Sbdh Edidon 49