Hooking Up to the System

Unless your incoming service line is already underground, you would need to arrange and pay for hooking up to the new system.  Depending on your property, it could include new panel, upgrades to old wiring, digging trenches and refilling, new underground wires and re-landscaping.  The amount varies considerably depending on the distance to the public line, how much rock and hardscaping needs to be cut, whether you need a new panel, or upgrades to your wiring, who you hire etc.  Prior undergrounding districts have experienced costs of a few thousand dollars to $10,000 or more for this work.

 

Interest

There are three options on paying for your assessment:  below is a chart showing the advantages and disadvantages of each:

 

	Cash	Get Your Own Loan	City Bond
Advantages	No interest	You can add your hook up costs to your loan amount	It’s easy to do
	10% to 15% discount on your assessment	10% to 15% discount on your assessment
Disadvantages		Interest due in addition to all other costs	Interest due in addition to all other costs
		You have to make arrangements yourself	No discount
			You have to pay cash or find other financing for your hook up costs

 

In normal economic times, the City Bond (which is a tax-exempt municipal bond) would have a much better rate than a self-financed loan.  This year, 2009, with municipalities going bankrupt, the muni bond rates have flipped and become much higher than what an individual could get.  It is not possible to say today what the rates will be in the future when the bonds are issued.  The prudent thing to do is to have enough time to check and decide on which option you want after the vote passes.

 

Lack of Time to Act

Currently the schedule does not provide enough time for a resident to obtain private financing.  We strongly recommend that the schedule be changed so that it is at least 3 or 4 months between the passage of the vote and the time money is due.

 

No Provision for Those Who Cannot Afford It

If this passes, you will be assessed whether you want it or can afford it.  There are no funds or other mechanism in place to provide for people on low or fixed income.  There are many people in Del Mar who live on fixed income.  Their concerns must be addressed.

 

Annual and Monthly Payments

So, what will your monthly and annual payments be?  That depends on your assessment amount and financing method including term and interest rate.  To give you an idea, here is an example:  If your assessment is $25,000, you use the City’s bond and you pay your hook up costs in cash upfront, then your annual and monthly payments would be the following for the different interest rates and terms:

 

 

	Annual Payment Amounts on a $25,000 Assessment
Interest Rate >>	6%	7%	8%	9%
20 yr bond	$2,149	$2,326	$2,509	$2,699
30 yr bond	$1,799	$1,999	$2,201	$2,414

 

	Converted to Monthly Payment Amounts on a $25,000 Assessment
Interest Rate >>	6%	7%	8%	9%
20 yr bond	$179	$194	$209	$225
30 yr bond	$150	$167	$183	$201

 

If your assessment amount is higher or lower, then your annual payments would be higher or lower.  For example, if your assessment was $40,000, then your annual (or monthly) payment on a 20 year bond at 7% would be 2,326 x 40/25 = $3,722 ($310 monthly).  If you want to calculate your own specific amount, you can go to:  http://www.bankrate.com/calculators/mortgages/mortgage-calculator.aspx.

 

(At the August 4, 2009 meeting,   Warren Diven, Bond Counsel, said the bond term could be between 20 and 40 years and indicated that it could be 30 years in our case.)