FAQs
Can I make prepayments or pay off the entire principal of the Capital Assessment?
Yes. A capital assessment, once established, or its remaining amount for that property, may be paid off at any time, in part or in full. Interest cost impact is a matter of the payment timing.
Pre-payments made before the bond issuance will be paid towards principal - there will not be an interest payment.
- Property owners will be able to do this from mid-February 2024 to around May 15, 2024. Be on the lookout for communications for pre-payment options.
Payments, after the bond is issued, will be paid towards the principal, and a portion of the payment will be for the accrued interest that has accumulated for that portion of the principal.
What happens if I pay the principal and the project costs are lower than anticipated?
If there are factors such as project performance or new grants that lower the overall project and financing costs, then the property owner obligation is lowered. So yes, if you paid off the principal and there is a “rebate” it would go to the owner of the property at the time. The point being that if you sell your property, any future new obligation or rebate goes to the new owner(s). If an adjustment would occur, it is likely to happen when the project is much further along in the 2025 or 2026 timeframe.
What happens to the assessment if I sell my property?
Generally, payment of a special assessment is between the seller and buyer of the property. A seller and buyer may choose to structure the purchase agreement so the buyer assumes the special assessments. At times, special assessments are paid in full at the time of sale (meaning the full amount is deducted from the purchase price). When a lender is involved, they may have input. No matter what a buyer and seller decide, if the assessment is not paid off, the assessment stays with the property.
What is the interest rate of the Capital Assessment?
The FLTF Plan of Financing defines that the Capital Assessment will be funded in two parts: a bond issuance and a U.S. Army Corps (USACE) CWIFP Loan, pending USACE approval.
The interest rate for the bond issuance will be set in the bond offering which is planned to occur in May 2024. To provide a calculation to homeowners, FLTF estimates a 5% interest rate but the market will ultimately determine the interest rate at the time of issuance.
For the second round of financing, if FLTF secures a loan from USACE, then the loan will have an interest rate equivalent to 30-year treasury rates plus one basis point. The rate would be locked in at the time the USACE loan is secured, which will likely be September 2024, and will fluctuate with 30-year U.S. Treasury rates until the time of the loan closing.
If FLTF does not secure the USACE CWIFP Loan, there will be a second bond issuance which will have the interest rate determined at the time of borrowing.
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