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ARDEN HILLS CITY COUNCIL—March 14, 2011 7 8.A, Adopt Resolution 2011-012: Declaring Cost to be Assessed and Ordering Preparation of Proposed Assessments for the 2011 Pavement Management Program and Adopt Resolution 2011-013: Providing for Assessment Hearing for the 2011 Pavement Management Program (continued) Civil Engineer Kristine Giga stated on January 31, 2011, the City Council approved the plans and specifications for the 2011 Pavement Management Program and ordered advertisement for bids. Portions of the costs for the 2011 PMP project are proposed to be assessed to the benefiting properties. In order to assess these costs, the City must follow the Public Hearing steps outlined in State Statute 429. The first step in the assessment process is to adopt a resolution declaring costs to be assessed and ordering the preparation of assessment rolls. The next step is for the City Council to adopt a resolution setting a hearing date for the assessments. Public hearings are required in order to assess the cost of public improvements. Based on the bids received, Staff recommends moving forward with the project. Staff is requesting City Council direction to move forward with the assessment hearing process and preparing the assessment roll based on the contract prices submitted by the low bidder. The low bid submitted by Astech Corporation, is 16% lower than the Engineer's construction estimate. A bid alternate was included to obtain a price for the construction of a grit chamber. Staff has been working with Rice Creek Watershed District to determine the permit needs for this project, and at the time of bidding, the benefit of a grit chamber compared to other storm water treatment alternatives was unknown. At this time, Staff is proposing to include the bid alternate. The contract amount includes this cost. The City's portions of the project costs are currently budgeted in the Permanent Improvement Revolving Fund (PIR) and Utility Enterprise Funds. The project to be assessed is consistent with the City's assessment policy, which states that 50% of the costs for roadway improvements will be assessed to residential properties, and the remaining portion financed using various City funds. As part of the feasibility report, Staff recommended that the contractor's bid prices be used to calculate assessment rates, as opposed to the engineer's estimate, as stated in the assessment policy. Based on 138 single-family units and 306 multi-family/townhouse units the assessment would be: $2,732.30 for single-family homes and $592.21 for multi-family/townhouse units. There are four tax-exempt units in this project area. On past projects, the City Council has removed the tax- exempt units from the assessment roll. If the City Council decides to do so with this project, the assessment amounts would be 134 single-family units at $2,813.86 each. Staff is seeking direction from the City Council as to the interest rate to be used with the 2011 assessments. Options for the interest rate includes 5.5% which is 2% over prime, or 4.4% which is 2% over the City annualized rate of return. Staff is also recommending setting the payment period for the 2011 PMP to 7 years and setting the assessment hearing date for April 25, 2011. Councilmember Holden stated the bid was 16% lower than the engineering estimate. She asked how much of this decrease was for sewer and how much was from the road construction. Civil Engineer Giga stated the decrease in the actual contract cost versus the engineering estimate was evenly split between both the utility costs and the road construction costs. Councilmember Holden clarified that Roseville has worked with Astech Corporation in the past. Civil Engineer Giga stated this was correct. Councilmember Werner asked what a grit chamber was.