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5. The legislative body determines within 60 days of the close of the formation hearing whether to order formation. 6. If the legislative body orders formation, it must also select an initial board of directors for the CHAD. The legislative body may choose either to select five landowners from the CHAD area, or seat itself on the initial CHAD board. Existing GHADs within the City of Pleasanton Following the steps set forth above, the City has formed four GHADs: Oak Tree Farm subdivision, Moller Ranch subdivision, Laurel Creek Estates (The Preserve, Oak Hill Estates and Kolb Ranch Estates) and Lemoine Ranch Estates. The Oak .Hill Estates subdivision and the Kolb Ranch Estates subdivision were both annexed into the Laurel Creek CHAD after the formation of the original district; those annexations occurred on August 1, 2000 and July 20, 2004 respectively. All of the four existing GHADs are located on the west side of Foothill Road and in areas where potential geologic hazards exist. The City Council has appointed itself as the Board of Directors for each CHAD and appointed the Finance Director, City Clerk, City Attorney and Public Works Director as officers of each District. Post GHAD Formation Procedures/Effects of Proposition 218 After the GHAD is formed, the Council/Board must take a number of steps before it becomes operational, including passing a budget and levying an assessment. Each year, before levying the annual assessment, the Board must adopt a resolution declaring its intention to order that the cost and expenses of maintaining and operating the district shall be assessed against the properties benefiting thereby. The resolution is to contain a report setting forth the yearly estimated budget, the proposed assessments to be levied, and a description of the method used in formulating the assessments. After the resolution is adopted, a notice is mailed to all property owners advising them of the contents of the resolution and advising them of the time, date and place of the public hearing when their protests can be heard. At the public hearing, the Board considers any protests and makes any revisions to the proposed assessments. The Board may then confirm the assessments and order the levy and collection of the assessments. Proposition 218, enacted in the November 1996 general election, makes it more procedurally complex, in certain situations, to levy the assessment. Generally speaking, after Proposition 218, property owners within an assessment district such as a GHAD must be given an opportunity to vote on the annual assessment. A majority of those actually voting must vote in favor of the assessment to levy it. For example, if only eleven (out of 100) property owners voted, six votes could defeat the assessment. Because of this annual uncertainty, staff has concerns about the continued viability of these types of districts. Nevertheless, because of the way these four GHADs .were formed, and the benefits of these types of districts, staff continues to recommend that the annual procedures be followed for these four districts. Page 4 of 7