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FINANCIAL STATEMENT Funding of these GHADs will have a minimal financial impact on the City. The City pays for two parcels within the Laurel Creek Estates assessment ($816), one parcel within the Moller Ranch District ($124), and one parcel within the Oak Tree Farm District assessment ($335) as the City owns parcels of land within these districts. These parcels contain public facilities, such as water tanks and pump stations. The City's cost to administer the four GHADs is funded by the assessments. BACKGROUND CHAD - Purposes and Description Geologic Hazard Abatement Districts (GHADs) are authorized by California Public Resources Code §26500. Like any special assessment district, a CHAD assesses property owners for a benefit they receive that is special to them. GHADs are formed to prevent, mitigate, abatement or control a geologic hazard within the district. A "geologic hazard" is an actual or threatened landslide, land subsidence, soil erosion, or other movement of land. Movement of land or 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 areas within the development that are unsuitable for housing or other structures due to evidence of prior or suspected earth movement. These undevelopable areas within the project are set aside as open space based upon the findings of the investigation. The developer is then obligated to construct infrastructure designed to lessen the likelihood that earth movement will occur or to minimize damage to developed areas should earth movement occur. The infrastructure often includes slope stabilization measures such as drainage ditches, pipe networks, and hillside armoring. The GHAD is the funding mechanism to operate, monitor, maintain, repair, and eventually replace the slope stabilization infrastructure or repair soil movement or landslides, should they occur. Ownership of the open space areas is generally deeded to the City or, in some cases, to the development's homeowners association. In either scenario, City Council has been designated as the Board of Directors for each GHAD. The developers, as authorized by the Board of Directors, established initial assessments based upon "Plan of Control" documents created for each GHAD. The Plan of Control documents utilized each development's original construction plans as the basis for the monitoring, maintenance and repair plan. The developers then deposited funding into a reserve as "seed money" for the eventual capital replacement needs. After establishment of each CHAD, annual assessments have been collected from property owners at the same time and in the same manner as property taxes. Page 2 of 6