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policy and past practice and is summarized below. The current assessment policy states that the typical overhead rate for a public improvement project is 37% of the construction costs. Staff believes this percentage is higher than necessary and recommends that approximately 27% of the construction costs be used as overhead when calculating the assessment rates. Staff has made this recommendation on the past PMPs since 2021. The breakdown of the overhead costs can be found below. Also, the Council must establish the interest rate at tonight's Council Meeting. Many cities set their interest rate for assessments at two (2) percentage points over the bond interest rate. The City's assessment policy states that the interest rate used for the assessment shall be designated at the prime rate plus two (2) percentage points. For the past four PMPs, the assessment interest rates were set at two (2) percentage points over the assumed bond interest rates which were based on current market conditions at the time, the City's AAA bond rating, plus 15 basis points. 2022 PMP - Snelling Ave N.: 5.5% 2022 PMP - Arden Oaks: 5.5% 2021 PMP: 3.15% 2018 PMP: 5% Our current assumed bond interest rate is 2.75% and the prime rate is 8.50%. Staff would recommend following the City's assessment policy and setting the assessment rate at 4.75%. The total project costs were analyzed for the assessable cost. The calculation of the amount to be assessed as approved by Council Resolution 2024-012 is shown below. The assessments related to the project are calculated in accordance with the City's Assessment policy, is half of the street project cost for residential properties and dependent on the type of pavement rehabilitation. Attachment A can be reviewed which shows the pavement rehabilitation type rate as it relates to each property. The full detailed assessment roll is shown in Attachment B. Reclamation Areas: Total Reclamation Street Project Costs = $1,039,740 50% Estimated Street Project Costs = $519,870 Residential Equivalent Units (REUs) = 86 Estimated Assessment Rate ($519,870 divided by 86 REUs) = $6,045 Mill & Overlay Areas Total Mill & Overlay Street Project Costs = $396,612 50% Estimated Street Project Costs = $198,306 Residential Equivalent Units (REUs) = 69 Estimated Assessment Rate ($396,612 divided by 69 REUs) = $2,874 For comparison, the recent 2022 Arden Oaks Street Improvement (PMP) reclamation assessment rate was $5,834.34 per unit. Arden Hills has not completed a recent assessable mill & overlay project to compare that assessment rate but City staff s opinion is that the proposed assessment rate is reasonable. As provided for in State Statute, no appeal may be taken as to the amount of any assessment adopted unless a written objection signed by the affected property owner is filed with the City at or prior to the assessment hearing. After the adoption of the assessment roll, property owners who have submitted an objection in writing have 30 days to serve notice of an appeal to the City, and within 10 days after serving notice to file with the District Court. Page 2 of 3