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significant event occur, this reserve amount is likely inadequate to cover the cost of needed repairs. As noted above, the proposed assessments fund geologic monitoring and related maintenance services, which provide a special benefit to the properties within the GHADs that does not benefit the public at-large. In addition, the GHADs were formed by consent of all original property owners (the developers). Since these criteria have been satisfied, the CHAD assessments are allowed to be increased by the amount not to exceed the ENR index without being subject to a Prop. 218 vote of existing property owners. Public Comment In prior years, staff held informational meetings with property owners from the four GHADs. The following are some of the issues addressed at those meetings: a) Residents were concerned whether their assessments were going to increase. In several previous years, staff was able to advise those residents that the index for the GHADs provided for no change in the assessment from the previous year. Last year, a nominal two percent increase was recommended for the Moller Ranch, Lemoine Ranch Estates, and Oak Tree Farm GHADs based upon the ENR index. No increase was recommended for the Laurel Creek Estates CHAD. b) Residents from the Laurel Creek GHAD commented about the amount of reserves in their GHAD and wanted to know if there was a cap for the reserves. Staff explained the Plan of Control for the GHAD anticipates a major event every 10 years, and since the Laurel Creek GHAD is over 10 years old and there has not been an event, the reserves have continued to grow. Staff explained that reserves are like an insurance policy: if a landslide occurred, funds from the reserves could be immediately available to repair the landslide. If there were not sufficient funds in the reserves to repair the slide, some other method of payment for the repairs would be necessary such as borrowing money or selling bonds. In either case, the property owners within the CHAD would be responsible for these costs. The City's geotechnical consultant has stated the cost of repairing a small landslide could cost over $300,000 and that a large landslide could cost over $1,000,000. Based on these numbers, staff and the City's consultant have determined that there are insufficient reserves in the Laurel Creek GHAD. In several years when the reserves grow larger, the City's consultant can update the current risk assessment based upon history of the GHAD and recalculate the probability of a major event and cost. c) Residents asked why the reserves were not earning a higher rate of return, which could then offset the amount of the assessments. Staff explained that the investment vehicles available to public entities were limited and conservative, so a high rate of return could not be expected in this low- interest-rate environment. Page 5 of 6