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05-09-22-R (Amended 5/10/22)
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05-09-22-R (Amended 5/10/22)
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Page 2 of 3 <br /> <br />The project is proposed to be assessed consistent with the City’s Assessment Policy and past <br />practices, which states that 50% of the costs for roadway improvements will be assessed in <br />residential areas, with the remaining portion financed by City funds. Financing for the project is <br />consistent with City policy and past practice and is summarized in the table below. The project <br />costs include 27% engineering and overhead costs. <br /> <br />Also, the Council must establish the interest rate at tonight’s Council Meeting. Many cities set <br />their interest rate for assessments at two (2) percentage points over the bond interest rate. The <br />City’s assessment policy states that the interest rate used for the assessment shall be designated at <br />the prime rate plus two (2) percentage points. For the 2021 PMP, the assessment interest rate was <br />set at two (2) percentage points over the assumed bond interest rate which was based on current <br />market conditions at the time, our AAA rating, plus 15 basis points. The result was an assessment <br />interest rate of 3.15%. Our current assumed bond interest rate is 2.90% and the prime rate is <br />3.50%. Staff would recommend following the City’s assessment policy and setting the assessment <br />rate at 5.50%. <br /> <br />Each of these total project costs were analyzed for the assessable cost. The calculation of the <br />amount to be assessed as approved by Council Resolution 2022-014 is shown below. <br /> <br />• The assessments related to Snelling Avenue North is calculated following the residential <br />equivalent unit explained on Page 21 in the Feasibility Report: <br /> <br />Given the non-standard lot configuration and limited number of eligible properties along the <br />Snelling Avenue corridor based on mailing addresses, assessments for Area 1 street <br />improvements on Snelling Avenue were calculated by dividing 50 percent of street costs (trail <br />costs not included) by the total length of roadway improvement frontage (8220-feet) to <br />determine a cost per foot. This unit cost per foot was then multiplied by the minimum lot <br />frontage for R1 zoned properties at 95 feet to arrive at a residential equivalent unit (REU) <br />assessment rate. <br /> <br />• Snelling Avenue North assessment rate of $4,958 per unit as compared to the Feasibility <br />Report estimate of $4,524. <br /> <br />SNELLING AVENUE NORTH <br />Item Calculation (REU) Result <br />Half of Construction Cost $675,633.86/2 $337,816.93 <br />Add 27% Overhead $337,816.93 x 1.27 $429,027.50 <br />REU Assessment Rate $429,027.50/(8220-feet)x(95-feet) $4,958 <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br />
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