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Exh 8D-~ ~ ~ g D ~-1-99 t ; AGENDA ITEM: DATE: SUBMITTED BY: CITY OF ATLANTIC BEACH CITY COMMISSION STAFF REPORT Section H Refinancing Options Apri16, 1999 David E. Thompso City Manager BACKGROUND: ~ At the Mazch 22,1999 City Commission Meeting, Commissioner Mitchelson said that he wanted this issue on the agenda for the April 12, 1999 City Commission Meeting. For that reason, this staff report has been prepared to assure that the issue is on the agenda for action by the City Commission. The issue in this matter is the idea that the City Commission authorized the refinancing of the loan that funded some of the improvements in Section H. Since the refinancing will result in savings on the loan, the issue has been raised as to passing this savings along to the citizens in Section H by reducing their assessments. If staff is directed to do this, then staff could pull each outstanding assessment account and adjust the future payments based on the new financing rate. The effective date should be November 1, 1999 since the assessments aze tied to the local tax bills through the City Clerk's office, and they are sent to the tax collector at that time. Since all of the past payments were based on the previous rate, it would not be feasible or desirable to try to go back into prior yeazs to calculate any "rebates." However, this matter places staff in an interesting position relative to dealing with the City Commission. Staff does not recommend passing the savings along, exclusively, to Section H property o`vners. n In the original Section H work in 1991, the City committed over $950,000 to the Section H project including paving and drainage costs. This $950,000 included funding that could have used throughout the city for other projects, and it was not assessed to Section H residents. The projected savings on the refinancing of the loan will amount to less than one half of the money that vas put into the project at the expense of other citizens. For this reason, Staff recommends passing the savings along to all citizens and not limiting it to Section H residents. RECOMMENDATION: We recommend passing the savings realized through the refinancing of the Gulf Breeze Loan to all citizens as designated by the City Commission. ATTACHMENT: City Manager Report, Section H and Refinancing of Gulf Breeze Loan REVIEWED BY CITY ~ ~ MANAGER: AGENDA ITEM NUMBER: l 1 City Manager Report l Section H and Refinancing of Gulf Breeze Loan A question was asked at the Mazch 8, 1999 City Commission Meeting relative to refunding money to the residents of Section H because the City will be saving money on the Gulf Breeze Loan refinancing. The following information is being provided for your consideration in this matter: The logic of rebating the money to Section H residents makes sense based on the assumption that the residents of Section H paid for the improvements to their property. If they paid for the improvements, and the City has been able to negotiate a better finance rate for the bonds, then those people who paid for the work should benefit from the improved financing. However, these assumptions are not entirely accurate, and the equation is not so simple. The improvements to Section H were not entirely funded by the residents or landowners living there. Although a significant amount of the total project expense was funded through assessments, there were other costs that were absorbed by the City. A review of ` the form letter sent out in 1991 contained the language, "Owners of developed property will not be assessed for paving or drainage as these costs will be assumed by the city." Based on Resolution 88-7, $4,280,000 of the total project cost of $5,233,256 was funded through assessments. The rest of the money came from other funding sources, including Gas Tax money that could have been used to benefit citizens throughout the City. When comparing the total projected savings on the refinancing to the money that went into the Section H development when the improvements were done, the initial investment of City money into Section H greatly exceeds the refinancing amount. Choices: A. Based on this information, it would be a reasonable decision to return the money from the refinancing to the City General Fund to benefit all of the citizens of Atlantic Beach. B. If the City Commission wishes for staff to identify each party that was assessed for these improvements and reduce their assessment consistent with the refinancing, this task can be accomplished. It will occupy significant staff time to make the calculations for every party, but it can be done. In the absence of direction from the City Commission to do otherwise, the savings will be integrated in the budget for the City Commission to utilize as they determine in the future.