Water/Wastewater System Obligation

As part of the ground lease renewal effective Nov 2016, our HOA was required to fund $5.28M of upgrades to our water, wastewater and fire protection infrastructure (subject to $225K of Public Utilities Tax). This payoff commenced in January 2019 for a 25-year term ending in December 2043.

On a per-lot basis, the initial balance owed was $20,871 and the current monthly assessment for this is $106 as part of owners' dues. The December 2022 outstanding principal balance per lot (for lots current on their dues and who haven’t yet paid off in full) is $17,918. Total payoff including utilities tax is $18,713.42.

Each year between December 15 and January 10^th lot owners have the opportunity to pay their Water/Wastewater upgrade obligation off in full. Partial payments are not allowed.

For those paying off in Dec 2022/Jan 2023, your monthly dues will decrease by $106 (until/unless they are reformulated for the coming year's budget). Estimated interest and utility tax savings by paying off this year is $19,744 vs. paying off monthly through December 2043 (assuming rates remain at present 7.5% level).

Currently, interest on this financing is at the federal Prime rate of 3.5%, which will likely be at 7.5% starting Jan 15, 2023. Per the financing agreement, the rate is adjusted each January to reflect the latest Prime rate plus applicable interest rate premiums of 0.25% each 5 years, beginning in Feb 2024. Our rate then will be Prime + .25%. In the last 5 years of the loan the applicable rate will be Prime +1%.

The attached letter below provides details on how this year's process will work.