In May, 2015, the San Lorenzo Valley Water District extended their agreement with Santa Cruz County’s Local Agency Formation Committee to merge with the Lompico County Water District. A prerequisite of that original agreement was that appropriate funding for capital improvements would be arranged. The latest proposal is for LCWD to raise a $2.75 million capital cost, a component of the latest agreement, by forming an Assessment District across all of the parcels that would benefit from having the capital improvements built.
The original plan was to be executed over a five year plan, but the new agreement spreads out over a 10 year schedule.
Brian Lee, District Manager of SLVWD recommended that the Board of Directors — “authorize staff to send a letter to Lompico County Water District providing a commitment to merge upon successful formation of an Assessment District for the collection of $2.75 Million of capital costs.”
“Staff has been working with Lompico and the County regarding how to utilize Lompico’s recently passed $50 per month charge as a funding mechanism for the $2.75M (million) Capital component of the LAFCo Application,” said Lee.
It is unclear if the terms of the original agreement would free SLVWD to fully manage the construction of the capital improvements of if they could be hampered in some way. It is also not clear if there might be additional costs associated with the projects or in terms of loss of interest due to a slower rate of revenue collection.
At their August 6, meeting, the SLVWD Board sent the topic back to committee for further discussion regarding these issues. On the August 20, board meeting, they are expected to decide if substituting an Assessment District plan for the original bond issue plan is acceptable. If SLVWD agrees that this is agreeable, they will be expected to vote in favor of merging with LCWD.
Lee said that “Current estimates put the time to successfully form an Assessment District at six to nine months. If successful, the District’s could complete the merger as early as February of 2016.”
The procedure for forming an Assessment District begins with a petition being signed by the property owners who want the public improvements. The proposed district will include all properties that will directly benefit from the improvements that will be built. A public hearing is held that gives the property owners the opportunity to protest the formation of an Assessment District. It would take a negative vote of 51% to prevent the process from succeeding.
If the process succeeds, the property owners have the right to prepay the assessment prior to bond issuance. After the bond is issued, the cash prepayment period is concluded and a Special Assessment lien is recorded against each property with an unpaid assessment. Each parcel will be billed on their property tax bill for annual installments until the assessment has been paid off. Property owners have the right to prepay any remaining balance of the assessment plus any prepayment fees at any time.
If Assessment District property owners fail to pay their tax bill on time, the bondholders have the right to foreclose on property when taxes are delinquent for a period of time — usually 90 to 180 days. The delinquent property owner must also pay for any penalties and collection costs.
