1.D Assessment Policy - Laserfiche WebLink

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4/17/2009 Page 2 Levy Limits Because levy limits currently restrict the City’s ability to increase the levy, Options 1 and 2 are not currently feasible, unless the reduced assessment revenue was offset by revenue from the sale of bonds; since a levy for debt service on bonds is outside of levy limits. Pros: A. Reduces or eliminates the amount of special assessments on property owners in the neighborhoods of the PMP projects (Rather than having special assessments in the amount of $7,000 or more, which have annual payments of about $1,000 per year, they would have assessments of $2,800 or zero. The property values in the 2009 PMP neighborhood range from $182,600 to $971,600. The proportion of the assessment amount to the property value will vary in the same way as the property values vary. B.Special assessments are not deductible from Federal income taxes. Property taxes are deductible. Cons: A. All property owners would pay an additional annual levy amount. For the average valued home, the levy would be approximately $50 under option 1 and $83 under option 2. B.Some neighborhoods have already been assessed for a PMP project, and are currently repaying the assessment amount. They may believe the additional tax levy under options 1 and 2 is overly burdensome on top of their current assessment. Street Utility The State Legislature is currently considering legislation that would allow the creation of a Street Utility for the funding of street improvement projects. The street utility would operate as a water or sewer utility, in that a fee would be charged to generate revenue to fund street projects. The street utility would provide an alternative to a levy increase as a method of offsetting the revenue reduction resulting from reduced assessment revenues. There are two benefits to a street utility. One is that it would enable the City to provide an alternative funding source despite levy limits. The other is that it would enable the City to define the area that would be within the district. This would allow those neighborhoods that are currently paying assessments for street projects to be excluded from the district (i.e. until the term of the assessment is complete). The disadvantage of a street utility is that the utility fees are not tax deductible. Council Direction Requested : Provide direction regarding whether the Council is interested in pursuing alternatives to the current assessment policy.