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11AR u 31997 BOOK Director Baird stated that -he is of the opinion that we should not reduce the 12% fixed interest rates that were offered at the time of the assessments. Not only are the individuals protected from any increase during the term of the loan, we also balance our portfolio using the fixed rates. The main reason for not reducing the rates is that we have pledged the majority of these assessments for bonds, and we would not be able to reduce the rates for everyone. Commissioner Scurlock assumed the 2% over prime is for servicing and administrative handling of the work associated with having a loan program, but he wondered if it should be a full 2% or something less than 2%. Director Baird explained that because assessments are not looked at as prime paper in the bonding market, the market likes to see some comfort. One of the comforts is charging 2% over prime so that money is available to pay the installments for those who don't pay since only the assessments themselves are pledged. Initially we charged only 1%, but we went to a bond issue and they didn't feel that 1% was sufficient, so we have gone to 2%. The market conditions dictate a bond issue. Commissioner Wheeler understood the intent of providing County financing was to help those who perhaps didn't have good credit or could not get financial help to pay for assessments on County projects. He pointed out that 12% is still considerably less for high risk individuals than what a bank would charge. He didn't want us to encourage people to use the County as their bank, and if the fixed rates were set at 12%, they have the option of going to the bank and borrowing money at the current rate of 6.5%. He agreed we need to help those who need our help, but he wasn't interested in seeing us get into the banking business by making loans that are comparable or better than those offered by the banks. Commissioner Scurlock just wanted it to be a fair program to help those people who are having to pay assessments in these poor economic times. Director Baird explained that presently we are charging 9- 3/4%, which he felt is reasonable. He emphasized that we cannot go back and reduce all of the 12% loans because the majority of those were pledged in our bond issues, and it wouldn't be fair if we reduced the rate for just some of the 12% loans. Discussion turned to the possibility of people getting equity loans to pay for their assessments, but Director Baird didn't think the banks would give a loan at 1% over prime rate guaranteed for 10 - years. He would not recommend having a variable interest rate. 28 _ M -.