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the true interest cost associated with the bond issue to finance the unpaid fees to be issued by the City. The term of the fee repayment cannot exceed 20 years. Your association, with input from its members will make this decision. 10. Can I prepay the fees after the 30 days have expired or later on during the term of the bond issue? A) The City's position at this lime is no. The reason is due to [he fact that if we are paying a taxable interest rate on. our debt (6.5% or more?) and cannot prepay it, the other taxpayers in the City would be subsidizing the difference in interest costs that we still have to pay on the debt versus what we can earn on the money that would be received in a prepayment. Currently, that spread is over 2. S%. Therefore, if $1 q 000 sn~ere prepaid, the City's taxpayers would be losing $250 for each year that remains on the debt assuming the spread continues. If IO years still remained on the debt issue, then the taxpayer°s would be on the hookfor $2,500 ofinierest charges for the $1 D, 000 that was outstanding. 11. If we can't prepay the fee at a later date, what do we do if we want to sell the unit? A) This would be a negotiable term in your purchase agreement with a prospective buyer. One option would be to have the buyer assume the remaining fee payment by dealing with this issue in your selling price. Another option would be to escrow the outstanding fee balance, including an allowance for, future interest less interest your money would earn while it is being escrowed and then have the escrow company n2ake the payments for the remaining term of the debt. A third, but not a good, option that could work would be to prepay the entire balance of the fee and interest to be accrued to the City. However, this option will cost you lost dollars in terms of paying interest well ahead of its due date versus having that money earn interest,for you during that same period of time. 12. What interest rate will be charged on the fees? A) As indicated above, the interest rate will be based upon the cost dictated by the market at the time the bonds are sold. As of today, a. 1 S-year issue would be looking at about 6.60% and a 20-year issue would be around 6.85%. Rates have been trending up given the current financial climate. The estimated rate is still the projection fvr a March bond sale, but market conditions at that time could change that number up or down. If the fnancial markets stabilize, rates could trend down. They hove trended up about .75% in the last few months. 13. What if I can't afford the fees? A) For income qualified senior citizens (65 years and older) or persons retired by virtue ofa permanent and total disability, deferment of the,fees can be made by filling out an application form (copies are available from your association or Cily Hall). The income limitations currently in place are: 1 person family - $43, 050; 2 person,family - $49, 200; 3 person family - $55,350; 4 person family - $61,500, and cr 5 person family - $66,400. These limits are will be adjusted in early 2009 by the U S. Department of Housing and Urban Development. ***Keep in mind that interest will accrue during the period of the deferment based on the carne rate as is applied to the fees!*** There are provisions for deferment for situation of exceptional hardship as well. Those would be dealt with on a case-by-case basis. The deferment will become active upon death of the owner, sale of the property, loss• of homestead status on the property, or if circumstances change and the paynxent of the fees is no longer a hardship. 14. When is the deferment application due? A) It will be due after the,fee hearing is held and within the 30-day payment period, preferably as early in that period as possible to give us adequate time to process the application.