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<br /> <br /> STAFF REPORT <br /> <br /> <br /> <br /> <br /> <br />TO: Mayor Keis and Members of City Council <br /> <br />FROM: Joel Hanson, City Administrator <br /> <br />DATE: September 23, 2016 <br /> <br />RE: Revised Canabury Square HIA Assessment Payoff Policy <br />This past summer, we adopted a Payoff Policy for Canabury Square active HIA assessments. In <br />reviewing that in greater detail, I believe the process needs to be modified in terms of how the discount <br />is applied. Specifically, the way the policy was written, we would have applied the discount to all <br />principal and interest payments. After further consideration, it seems inappropriate to discount the <br />principal amount. Much like when you prepay a loan, you only save on the interest amounts, not the <br />outstanding principal. <br />Therefore, I have revised the policy to have the discount factor applied only to outstanding interest. <br />Attachment A has been revised to reflect this change. Subject to any comments or questions you may <br />have, staff recommends adoption of the revised policy. <br />Canabury Square Active Assessment Payoff Policy: In 2009, the City assisted <br />Canabury Square Condominium Association by adopting a Housing <br />Improvement Area that financed needed improvements at the property. To help <br />with the financing, the City issued 15 year taxable General Obligation Bonds <br />with the condition that no early payoffs of these assessments could be made <br />because the City would not be able to earn enough interest on the principal <br />payoff amount to meet debt service requirements. In some cases, that has <br />made it more challenging for owners with those assessments to sell their units. <br />Based on subsequent requests by some of these property owners, the City is <br />willing to accept early payment of the outstanding assessment on the following <br />basis: <br />• Payoff amounts will be calculated for the outstanding assessment years <br />beyond the current year, assuming payment is made by no later than <br />November 15th. <br />• The payoff amount will be determined by adding the outstanding principal <br />and interest due over the remaining assessment term. <br />• A discount factor will be applied to the outstanding interest amounts to <br />reflect an approximation of interest the City can earn on those amounts. <br />The discount factor will be determined at the sole discretion of the City