TO: Ron Long, Assembly President
Members of the Kenai Peninsula Borough Assembly
THRU: John J. Williams
Kenai Peninsula Borough Mayor
FROM: Craig Chapman, Finance Director
DATE: May 4, 2006
SUBJECT: Ordinance 2005-19-51 appropriating funds for the Chinulna Point Subdivision Road Improvement Assessment District (”RIAD”)
The total cost of the Chinulna Point Subdivision RIAD has been determined to be $190,269.42, and the Borough plans to provide the funds from internal sources. This ordinance appropriates $190,269.42 to the assessment fund with 50 percent ($95,134.71) provided as an interfund loan from the Borough General Fund and 50 percent ($95,134.71) match from the Road Service Area RIAD Match Fund. On March 7, 2006, the Road Service Area board adopted resolution 2006-02 to fund a 50 percent match. KPB 5.10.040 allows the investment of borough monies in special assessment districts that are authorized under KPB 14.31. The total of such investments is limited to not more than $2,000,000 at the end of any fiscal year. Currently, the borough has $951,164 invested in special assessment districts. If approved, the $95,135 projected to be loaned for the Chinulna Point Subdivision RIAD will increase the total special assessment district investment to approximately $1,046,299.
The owners of property located within the RIAD will be required to make principal and interest payments each year for a ten-year period to retire the indebtedness to the borough. The rate of interest will be equal to the prime rate (currently 7.75 percent) plus 2 percent. This is the same formula used to determine the rate of interest on the interfund loans used to finance the other USAD and RIAD projects. Property owners can avoid or reduce the interest charge by making accelerated payments on the principal. Penalties will not be imposed for accelerated payments. The assessment constitutes a lien on each parcel within the district.
A resolution to form the special assessment district and proceed with the improvement will be presented to the assembly for consideration during its June 6, 2006, meeting. If for any reason the RIAD is not formed, the loan will not be made and the General Fund will absorb any administrative costs that exceed the $1,000 filing fee received with the petition.
Hearing on shortened time is justified in order that the road improvement may be constructed within this construction season.