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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: (1) all lands included within a district shall be specially benefitted by construction proposed in a plan of control approved by the legislative body and (2) the assessments were previously approved by all property owners at the time the assessment was created. Since these criteria have been satisfied, the GHAD assessments can be increased by an amount not exceeding the ENR index without being subject to a Proposition 218 vote of current 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 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. For the past few years, however, a nominal two percent increase was recommended which is less than or equal to the ENR index. 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 CHAD anticipates a major event every 10 years. Since the Laurel Creek CHAD 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 municipal 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 CHAD. In several years when the reserves grow larger, the City's consultant can update the current risk assessment based upon history of the CHAD 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 are limited and conservative, so a high rate of return should not be expected. d) Residents of The Preserve sought an explanation of the prior annexation of Kolb Ranch and Oak Hill Estates to the Laurel Creek GHAD due to concerns Page 5of6