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Resolution Nos. 2021-50 and 2021-51: Proposed Assessment District No. 124 <br />(Central Balboa Island) — Approval of Preliminary Engineers Report and <br />Notice of Intent to Form Underground Utility District <br />June 8, 2021 <br />Page 2 <br />AD 124 is being proposed for the conversion of existing overhead utilities to underground <br />locations. The property owners within the boundaries of the proposed assessment district <br />will bear the cost of the improvements and the associated proceedings. <br />The Municipal Improvement Act of 1913 governs the procedures used to create the <br />assessment district. Bonds issued under the Improvement Bond Act of 1915 carry up to <br />a 40 -year term and are issued to finance assessments not paid in cash within 30 days <br />after confirmation of the assessment. Staff is recommending a 20 -year term for AD 124. <br />The Federal Income Tax Component of Contribution (ITCC) has been eliminated <br />pursuant to City Council direction. The ITCC is a tax assessed whenever private party <br />contributions in aid of construction (CIAC) are made. To date, underground utility districts <br />have not been assessed this tax as underground utility districts are viewed as providing <br />public benefit by increasing community aesthetics and public safety. <br />If following the public hearing and balloting AD 124 is formed, an assessment lien would <br />be recorded on the title of properties included in the district. Thereafter, a cash collection <br />period would take place to provide property owners with an opportunity to prepay their <br />assessment and remove the assessment lien. A second cash collection period is also <br />anticipated prior to the bond sale, which is anticipated to occur prior to construction and <br />after design is complete. <br />The total assessment for Proposed Assessment District No. 124 is estimated as follows: <br />Proposed Assessment District No. 124 <br />ITEM <br />COST <br />Cost of Design and Construction <br />$28,764,200 <br />Incidental Costs and Expenses <br />$1,262,500 <br />Financing Bond Costs <br />$2,789,000 <br />Estimated Total Cost: <br />$32,815,700 <br />In addition to the payment of the assessment, each property owner will be responsible for <br />the costs of connecting the main service conduit in the public right-of-way to the property <br />owner's home or business, if applicable. The cost to the property owner for this conversion <br />varies depending on the condition and location of the current electrical service. Each <br />property owner is encouraged to contact a licensed electrical contractor to assess its <br />particular property needs. <br />As this project is very large and in the interest of time, SCE recommends designing and <br />constructing the project in two phases. The first phase would start at the Grand Canal <br />and move westerly to the middle of the project area. That would focus SCE and the other <br />utility companies design efforts and allow the City to start the construction of portions of <br />the district sooner than later. <br />7-2 <br />