Timber Lakes Water SSD

Timber Lakes Water
Special Service District
190 North Main, #3, Heber, Utah 84032
435-654-0125

TIMBER LAKES WATER SPECIAL SERVICE DISTRICT

Dear Lot Owner,

The 2008 Water System Improvement Project is now done. The final financing phase will be completed in about 30 days. The following table summarizes the results:

DESCRIPTION	COST ESTIMATE		ACTUAL COST
DESCRIPTION	Initial - 10/2007	Updated - 6/2008	ACTUAL COST
Engineering & Telemetry Pipleline construction Water Tanks Contingency Springs Developement TLWSSD installed Pressure Reducing Valves saving approximately $550,000	1,114,620 8,800,900 1,732,500 - 294,569	413,000 4,930,000 1,730,000 250,000 Done by TLWSSD	517,823 4,415,200 1,354,252 - - -
TOTAL PROJECT COSTS	11,942,589	7,573,000	6,287,275
Financing Costs Construction Loan Interest due Reserve Fund	300,000 593,313 1,427,225	300,000 574,000 940,000	291,900 555,000 611,850
TOTAL ASSESSMENT:	14,272,217	9,387,000	7,746,025
DESCRIPTION	COST ESTIMATE		ACTUAL COST
DESCRIPTION	Initial - 10/2007	updated - 6/2008	ACTUAL COST
PER LOT COST If pre-paid up front Monthly Cost (financed for 20 yrs)3	8,297 64.04	5,587 44.02	4,7181 43.952

1)-	Includes $4222 for the Assessment Bond (pre-paid by some owners) and $496 for the Water Revenue Bond.
2)-	Includes costs for both the Assessmen and Water Revenue Bonds. For those owners who pre-paid the Assessment bond and don't desire to pre-pay the Water Revenue Bond the monthly cost is estimated at $2.95. The only contigencies left are the final interest rate on the second bond and the potential of it selling at a discount fo no more than 2%. The $2.95 assumes the bond will close at an interest rate of 4.2% and no discount, which is the current proposal by Zions Bnak, who has verbally agreed to purchase the Water Revenue Bond.
3)-	The Water Reserve Bond interest rate starts at 4+% for the first 10 years, but may be adjusted during the last 10 year period.

In summary, each lot owner has the option to prepay the second water revenue bond for $496.00 (if payment is received no later than February 24, 2011 at 5:00 pm), or make monthly installments throughout the bond period as outlined in the table and footnotes. We know that many of ou will have questions as we did, some which are discussed below. A hearing will be held at the Wasatch County Offices on February 16, 2011, at 3:00 pm.

We had previously indicated in our communications last fall that the total cost, including financing, could come in as high as $45.00, but expected it to come in lower. Because we had not closed the financing by December 31, 2011 we began billing at $41.00 per month in January. This will not change until after the second bond closes.

The Assessment Bond was sold on January 31 at a discount of $105,000 and instead of the 5.5% interest rate earlier projected by the Bank, the Bond actually closed at a yield rate of 8.329%. We had used 5.5% in most of our calculations until late fall of 2010, when we were advised by Zions that interest rates could reach 7% by December, but may fall back to more "normal" rates before the bond closed in January. That decrease didn't happen.

The actual total cost to pay off US Bank Bond Anticipation Notes and costs of closing was approximately $5,875,000, an increase of approximately $690,000 over the figures provided by the District in the fall of 2010. the $690,000 difference in costs is a shock. Approximately $375,000 of the difference is an underestimate of construction costs made in September, which was not completely reconciled until the payments had cleared the bank and funds were applied to pay down the debt to US Bank in early Decemeber. It was simply too late then to make an adjustment in the Assessment ordinance, which delay would have put the remaining Bond Anticipation Notes in default. The remaining difference includes increased costs of financing and increased reserves required by the bondholders, which alone would have required the extra bond.

In order to handle your personal questions orderly and effectively, please direct your questions to our representatives who will be assigned to a temporary hotline at 435-654-0301. The hotline is located temporarily in the offices of Duane W. Moss, PC, the District's attorney. You can also visit our website at www.timberlakeswaterssd.com. Our administrative staff is in the middle of our annual financial audit and are fully booked with their normal work load. The hotline was set up specifically at their request for help. Please help us honor that request.

Through the hotline, we will try to answer your questions and facilitate your payment or prepayment concerns immediately to the best of our ability and will make every effort to return phone calls within 24 hours if your call is routed to voicemail. The hotline staff has direct and ready access to those who have knowledge of the details to get answers back to you promptly if your questions go beyond their ability to answer. They will also have direct access to the administrative staff in order to set up prepayment scheduling and handle payment questions regarding the 2011 bonds.

Though these financial results are disappointing, we are confident that we will realize the benefits of our updated water system. Thank you for your valued support and continued input.

TLWSSD Board of Directors

Read Entire Document:
Letter For Lot Owners (February 2011) 110204LtrLotOwnersRe2011Bonds.pdf
Bond Analysis (February 2011) TLWSSDBondAnalysis.pdf
Payoff Analysis (February 2011) TLWSSDPayoffAnalysis.pdf

Monthly Board Meeting