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FINANCIAL STATEMENT Funding of these GHADs will have a minimal financial impact on the City. Because of Proposition 218, the City now pays for one parcel within the Oak Tree Farm District assessment ($304), one parcel within the Moller Ranch District ($114), and two parcels within the Laurel Creek Estates assessment ($784) due to the City's ownership of parcels of land within these Districts. These parcels contain public facilities such as water tanks and pump stations. Staffs cost to administer these Districts will continue to be funded by the assessments. BACKGROUND GHAD - Purposes and Description Geologic Hazard Abatement Districts (GHADs) are State-authorized districts which can be formed for the purpose of prevention, mitigation, abatement or control of a geologic hazard. A "geologic hazard"' is an actual or threatened landslide, land subsidence, soil erosion, or other natural or unnatural movement of land. Movement of land/damage due to an earthquake is specifically exempted from coverage by the GHAD. GHADs are formed when a geotechnical investigation at the time of development reveals land areas within the development that are unsuitable for housing or other structures due to evidence of prior earth movement and/or the potential for future earth movement. These undevelopable areas in the project are set aside as open space. In these open spaces, based upon the findings of the geotechnical investigation, the developer constructs infrastructure designed to lessen the likelihood that earth movement will occur and damage the areas that are developed with roadways, utilities, housing, etc. The infrastructure includes slope stabilization measures such as drainage V-ditches, pipelines, rip rap armoring, etc. The GHAD is the funding mechanism to 1) operate, monitor, maintain, repair, and eventually replace the slope stabilization infrastructure and 2) repair soil movement or landslides should they occur. A GHAD, like any Special Assessment District, is designed to assess property owners for a benefit they receive that is special to them. The developers, in conjunction with the City, created each of the GHADs to operate, monitor, maintain, repair and eventually replace the slope stabilization infrastructure they built as part of their respective housing developments. The developers also dedicated in fee title all the open space to the City or in some cases, to the HOA and established that the City Council would serve as the Board of Directors of each GHAD. The developers and the Board of Directors established the initial assessments based upon "Plan of Control" documents created for each district. The Plan of Control documents utilized each development's original construction plans as the basis for the repair and maintenance plan. The developers also deposited some funding into a reserve as "seed money" for the eventual capital replacement needs. After establishment of the GHAD, annual assessments have appropriately been collected from property owners at the same time and in the same manner as property taxes. ' Damage resulting from an earthquake is specifically exempted from coverage by the GHAD. Page 2 of 6