Staff, consultant present Sarah Street assessment-district costs; staff recommends pausing next phase

City staff and a consultant told the Cathedral City City Council at a study session that a proposed Sarah Street assessment district would cost substantially more than property owners expected and that there was insufficient owner support to advance the project.

An unnamed city council member introduced Phase 2A results and said staff and consultants had narrowed the project to the Sarah Street light-industrial area after earlier outreach showed limited interest in adjacent areas. The presenter said outreach included community meetings, a mailed newsletter and a postcard survey; 19 postcards were mailed and staff received no homeowner responses by the survey deadline.

Mike Medvede, a Willdan Engineering representative, presented the consultant’s preliminary engineering estimate for public improvements limited to the Sarah Street scope. “The total after everything including construction, hard and soft costs, was about $950,000,” Medvede said, and he clarified that the figure excludes financing costs but includes contingency and design-related expenses. When financing and issuance costs were added, the consultant said the estimate increased by about $236,000 to nearly $1.2 million.

Medvede said the firm included a 30% contingency to reflect the uncertainty of early-stage estimates and explained that bond issuance and interest costs would raise the total cost. He presented an example of a bonded repayment schedule spread over 30 years that would result in an estimated annual assessment on an assessed parcel of about $5,548 per year; he also said property owners could avoid financing costs by prepaying a roughly $50,000 per benefit-unit lump sum (figures presented by the consultant were labeled estimates).

The consultant emphasized that the public-improvement estimate does not include private connections: “It does not include their individual properties hooking up to the sewer,” he said, noting that those hookup costs would be an additional, variable expense for each property owner (one attendee suggested around $10,000 for a single-family hookup as a rough figure).

Council members questioned the continuation of the study after low early turnout at public meetings; staff and the consultant said the follow-up newsletter and survey were intended to confirm owner interest but returned no responses. Council members also raised limits on small bond issues, asking about minimum value-to-lien ratios and the effect of prevailing-wage requirements on public-improvement costs. The consultant said minimum coverage tests (commonly around a multi-to-one ratio) can constrain bond issuance for small projects and that prevailing wages are included in public-contract cost estimates.

Because of the limited demonstrated support from property owners and the size of the estimated costs relative to parcel values, staff recommended the council not proceed to Phase 2B of the assessment-district formation. The presentation outlined alternatives should a large private developer choose to lead improvements, including forming a community facilities district (CFD), creating a zone of benefit, oversizing facilities with reimbursement agreements, or using city funds or state loan programs as alternative financing mechanisms.

The clerk also noted two written comments for the record: one from David Bernard summarizing odor-monitoring efforts and one from Sunshine Herrera related to assessment-district process questions. With no live public speakers, the council concluded the discussion and moved on to the next agenda item.

Next steps: staff presented the item for discussion, information and direction only and recommended pausing Phase 2B given the lack of property-owner support; no formal motion or council vote on the recommendation was recorded in the study session.