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ARDEN HILLS CITY COUNCIL — APRIL 8, 2024 8 Public Works Director/City Engineer Swearingen explained the Assessment Roll related to Resolution 2024-012 has been amended to remove the property at 1570 McClung Drive. City staff was notified of an error with the property owner information from the Ramsey County recorder's office. Per advice from the City Attorney, the assessment process must be redone for the actual property owner, but the amended assessment roll can continue as it relates to Resolution 2024-021 (New Business Item I ID). Brad Fisher, Bolton & Menk, reviewed the bid process that was followed and broke down the costs for this project. He stated the project is proposed to be assessed consistent with the City's Assessment Policy and past practices, which states that 50% of the costs for roadway improvements will be assessed in residential areas, with the remaining portion financed by City funds. Financing for the project is consistent with City policy and past practice. 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 were further discussed. Mr. Fisher reported 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. Mr. Fisher indicated 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 was further discussed. 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. Staff commented on the project in further detail and recommended the Council hold the Assessment Hearing. Councilmember Rousseau requested further information on why the City charges 2% above the bond interest. Mr. Fisher explained this was written out in the City's assessment policy and was to cover administrative costs as well as the expense for certifying the assessments. Councilmember Holden reported the City would only be assessing for 50% for streets costs and all other expenses would be paid 100% by the City. She stated out of an almost $3 million project, the City would only be assessing $718,000. Mr. Fisher reported this was the case. He indicated the City had received a $70,000 grant from Rice Creek Watershed for this project that would assist with covering the expense of the stormwater improvements.