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• Background: In a letter dated December 19, 2001, Boos/Felner Construction has requested County financing of 80% of their road impact fees, as well as utility connection fees associated with the construction of Lindsey Gardens Apartments, a low to moderate income housing project. They would like to receive a 5 year loan on par with the conditions that builders of low income single family homes receive. Discussion and Analysis: While the County encourages the building of affordable single housing units through such programs as the Indian River County Local Housing Assistance Program, there is no ordinance or policy in place that provides financial assistance to builders of low income multi unit housing projects. Further, in recent months, the Commission has turned down requests made by other developers for similar financing. Staff asserts that extension of financing to one developer will set a precedent that could become costly to the County. Staff recommends against the foiniation of such a policy due to the very real danger that cash flow problems (or even outright failure) of a large scale project might cause a developer to renege on any loan extended by the County. We feel that such high dollar risks are best evaluated and assumed by financial institutions. Indian River County does not finance road impact fees for any type of property. Under no circumstances would staff recommend that the Board approve financing road impact fees. Staff also has concerns about the current interest rate for all County financing, which is the rate Boos/Felner has requested for Lindsey Gardens. On December 18, 2001. a rate of 4.75% was set which was equivalent to the prime rate as published in the Wall Street Journal. This is the lowest rate set to date for County financing. Between 1997 and 2001, the interest rate for County financing ranged from 6.75% to 9.50%. Currently, this rate is below the interest rates on many County bonds. The County has two utilities system bond issues outstanding at average interest rates of 5.76% and 5.75%. At this rate, our cost of borrowing is higher than the rate that would be charged if the developer's request was approved. Alternatives: Staff presents the following options for the Board's consideration: 1. Deny the request and continue policy of not financing the impact fees for multi -family developments. Finance the utility connection fees for five years at 4.75% per year, which is the current rate for County financing It is important to note that this rate is extremely low on a historical basis and is lower than the interest rate on County water & sewer bonds Under this option road impact fees would still be paid up front, rather than financed. This conforms to current policy of not allowing for road impact fee financing under any circumstances. Finance the utility connection fees for five years at 6.0% per year. This rate is slightly higher than the County's borrowing costs, but it is still below the market rate for a similar loan from a financial institution. Under this option, road Impact fees would still be paid up front, rather than financed. This conforms to current policy of not allowing for road impact fee financing under any circumstances. FEBRUARY 5, 2002 -85- • 5