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Community Recreation Facilities Bond Campaign • July 10, 2002 Page 3 $350,000, but it shows how many homes in our City that have been owned by their current owners for many years.) The General Obligation Bond would require the approval of sixty-six and two-thirds of the voting electorate. Approximately one-third of the cost for this tax would be borne by non-residential property and the remaining two-thirds would be borne by residential property owners. General Obligation Bond proceeds can be used only to buy property and build capital improvements. The proceeds cannot be used to pay any operating and maintenance costs for the projects. General Obligation Bonds will attract the lowest possible interest rate and do not require the raising of a debt service reserve fund (usually equal to about 7%-8% of the principal amount of the bonds. The biggest complaint about GO Bonds is that they unfairly tax the most recent home or business buyers since long-time property owners are protected from assessment increases in excess of 2% per year by Proposition 13. A second possible issue about using GO debt is that San Leandro Unified School District is planning a bond sale of an unspecified amount, and the District has asked that we proceed to the voters together with a joint campaign. 2 Lighting and Landscaping Assessment District — There are several possible advantages to using the Lighting and Landscaping Assessment District approach. The source of funds for this program are annual assessments set initially at a level equal to the benefit that each property receives from the improvements and services (maintenance) paid for with the assessment funds. The amount of the annual assessment can be set to grow by the Bay Area CPI index or some other reasonable measure. The City has over 23,000 parcels that would be subject to assessment, including 22,131 that are residential. If a parcel tax of $50 per year were assessed against each property owner for each property, this would raise $1.15 million annually. In fact, the actual assessment formula would undoubtedly be more complicated and more equitable, although some relationship between the assessment distribution factor and the benefit received from District operations would have to be established. The Lighting and Landscaping Assessment District proceeds could be used to pay maintenance costs and, if structured properly, could be capitalized through the sale of bonds to acquire and improve land. The boundary for the District can be drawn to include benefiting properties and exclude properties that would not benefit. The percentage of approval required to pass a Lighting and Landscaping District assessment election is 50.1% of those voting. Public Works has estimated that it would cost approximately $3 million annually for the City to take over maintenance of all school grounds, asphalt play areas and parking lots. This represents a much higher level of maintenance than is currently performed for either District's grounds. S7 �