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80-038
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80-038
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5/8/2007 1:07:22 PM
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<br />10 <br /> <br />-. <br /> <br />assuming the complete ultimate design. On the other hand, in order <br />to avoid lawsuits, I have always recommended to the Council that <br />they somewha.t decide in conjunction with the input from the <br />people, and that's why you have the feasibility hearing so <br />people can give you their input as to how much should be <br />assessed and how much spread on general taxes, but that's nci,t <br />binding on you. It's up to the~Council's discretion' at. a'later <br />date to make that decision. <br /> <br />In addition to the percentage - whether 100% or something <br />less - you also have to determine over what period of time you <br />want to assess. For example, under our law, you can go from <br />one year to 30 years. It might not be feasible to have a one <br />year assessment because the financial burden might be too great. <br />On the other hand, if you go out the full 30 years you're. paying a <br />lot of extra money for interest, plus the fact that sometimes <br />the assessments are going beyond the time of the improvement <br />itself. We used to have a rule of thumb that streets should be <br />assessed a 10 year period, sanitary sewer and water'about 20 years, <br />and long term buildings like a village hall 30 years so you get a <br />blend with all of the various taxing districts if they use <br />that kind of formula of having kind of even (inaudible) well, <br />the schools don't have any problem at this time so we don't have <br />any tax levies for that. I would not recommend the Council go <br />30 years. Our recommendation, if you decided to go, would be <br />not more than 20 years, but you should consider in today's market <br />and what is happening to interest rates that as you start running <br />on beyond 15 years the interest rates are up to 7% and we don't <br />have any way of knowing what the interest rateS will'be a year <br />from now. <br /> <br />-. <br /> <br />You know the last session of the legislature amended the <br />bond code to permit you to issue bonds up to' December 31 of <br />1982 to a maximum of 12% and after that at 9% with, the idea <br />they'll look at it in intervening legislative sessions. It <br />,also provided in the same tax bill that when you determine what <br />the assessments would be that you also, at the assessment hearing, <br />determine the interest rate and the law gives you the right to <br />have whatever the average interest rate is on your bonds plus 1% - <br />the greater of that - the interest rate or the basic law. That's <br />the Local Improvement Code which is Chapter 429 which says the <br />Council may charge interest up to 8%. On the other hand, if <br />the bond rate came through where you issued 8% bonds, you could <br />have an assessment rate on the unpaid assessments. at 9%. <br />On the other hand, if our bonds came through at 5%, obviously you <br />could then add 1% and have 6% on the carrying charge.of the <br />assessments or use Chapter 429 and go back to 8%. On recent <br />bond issues, because of the nature of the market, we had generally <br />been in this area at the 8% rate. The reason is that you should <br />always have something between your bond interest rate to cover the <br />administrative costs each year that get picked up and that's the <br />reason you always have the over-ride on special assessments. That's <br />
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