Pt. San Pedro Roadway: FAQs

Landscaping [Medians] Assessment District

There were many questions about the Landscape Assessment District that was approved by voters in 2011.  The following information should answer many of those questions.

How is the cost of the medians calculated?

There are two parts of the medians cost: Capital Improvement (a one-time, up-front cost for repair and enhancement of the medians) and Ongoing Maintenance (annual cost to maintain the medians). Capital Improvement is calculated to be $1.7M and would be financed by the City issuing 30-year bonds. Ongoing Maintenance is estimated to be $30/year per residential property (adjustable annually for inflation and other cost factors).

How much will I be paying for the medians?

Single residences (owners of commercial property or other special properties will have a different amount) will pay about $76 per year, and it will be added to their property tax bill.  Until July 22, 2011, there is an option (Option A in the City’s letter) to make a one-time payment of $448.48 instead of $46 annually for the Capital Improvement portion. If a property owner chooses this one-time option, the amount added to the property tax bill would be only the annual Ongoing Maintenance portion.

How should I determine whether it makes sense for me to pay the lump sum now?

This is a question that you might want to take up with your financial advisor.  Basically, you are comparing a one-time payment of $448.48 (Option A) against an annual payment of $46 for the life of the 30-year bonds (Option B) which would add up to $1,380 over that 30-year period (principal + interest). It would be a similar decision you might make when contemplating a loan or a mortgage

Since the notices only just arrived (they were postmarked July 13) regarding the pre-payment option with a deadline of July 22, can the City extend the time to pay it?

No.  The prepayment deadline was set at July 22 because the City needs to finalize the list of assessments in order to submit it to the County Assessor’s office by its deadline of July 28 in order to place the assessments on the property tax rolls for 2011-12. However, you do have the option of paying this amount using a credit card by phone (see the next question).

Can I pay the one-time amount by credit card?

Yes, the Public Works Department just made such arrangements at our request. Please have your credit card ready with the following information: Property owner name, address, phone number, parcel number, and the amount you received on your notice to prepay for the Capital Improvement (again, for residential property that amount is $448.48 but may vary for commercial or other properties). Please call the Public Works Department at 415-485-3355.

If one does not chose to pay up front now, does one have the option to prepay at some later date?

There will be the ability to pay off the remaining Capital Improvement portion of your assessment after the bonds are sold.  However, the prepayment amount will be higher because the prepayment will need to include a premium to cover the proportionate cost of redeeming bonds, plus administrative costs related to the prepayment.

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The Ongoing Maintenance costs are set for the first year at $30 and are calculated each succeeding year based on the previous year’s costs as well as expectations of cost changes in the next year (labor, materials, etc.). As a result, this portion of the annual assessment can change, including going higher. Any increase to the assessment amount is limited by the Consumer Price Index (CPI) or 3%, whichever is higher. That does not mean the assessment will increase by that amount each year, only that any increase is limited by those factors.

What happens if a property owner refuse to pay the fee that is added to their property tax bill?

The assessments will be charged as a line item on your property tax bill, so it will not be possible to refuse to pay the assessment without causing a delinquency on your property taxes with the expected consequences.

If others refuse to pay and we prepay, will we later learn we were foolish?

No.  If one owner is delinquent in paying his or her assessments/property taxes, it will not affect or cause an increased assessment on any other owners.

Who regulates and determines the changes to the assessment each year?

An annual, independent engineer’s report provides the basis for the City to alter the assessments by the greater of CPI or 3%, but no more.

What will the interest rate on the bond be?

The interest rate will be determined when the bond underwriter goes to market with the bond offering.  That will occur several months from now.  While we currently estimate the interest rate will be in the realm of 7% per annum, that is just an estimate, and the final rate will be determined by the condition of the municipal bond market at the time the bonds are offered.

How was the annual amount of $46 per Equivalent Benefit Unit (EBU) for the Capital Improvement portion of this project determined?

The Average Annual Debt Service payment for the Capital Improvement portion of this project (estimated at $1.75M to be bonded over 30 years) is $140,618. There are 3,053.15 EBUs in this assessment (a single residence is 1 EBU). $140,618 divided by 3,053.15 = $46/EBU. This is a somewhat simplified explanation that is furter detailed in the Engineer’s Report on pages 23-24.

If I elect to not prepay the bonded Capital Improvement portion and sell my house before it is paid off, does it get included in the property taxes for the new owners?

Yes.  The assessment is not your personal obligation, but rather an obligation of your property that runs with the property to all future owners.  The new owner would carry the remaining assessment.

What if I have more questions?

If you have any additional questions, please contact Nader Mansourian, Director, Department of Public Works (415-485-335) for clarification. Status of the project can be found on the City of San Rafael website.