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05-13-24-R
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05-13-24-R
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The project is proposed to be assessed consistent with the City's Assessment Policy and past practices, <br />which states that 50% of the costs for roadway improvements will be assessed in residential areas, <br />with the remaining portion financed by City funds. Financing for the project is consistent with City <br />policy and past practice and is summarized below. The current assessment policy states that the <br />typical overhead rate for a public improvement project is 37% of the construction costs. Staff believes <br />this percentage is higher than necessary and recommends that approximately 27% of the construction <br />costs be used as overhead when calculating the assessment rates. Staff has made this recommendation <br />on the past PMPs since 2021 and was applied to the 2024 PMP assessments on April 8, 2024. The <br />breakdown of the overhead costs can be found below. <br />Also, the Council must establish the interest rate at tonight's Council Meeting. Many cities set their <br />interest rate for assessments at two (2) percentage points over the bond interest rate. The City's <br />assessment policy states that the interest rate used for the assessment shall be designated at the prime <br />rate plus two (2) percentage points. For the past four PMPs, the assessment interest rates were set at <br />two (2) percentage points over the assumed bond interest rates which were based on current market <br />conditions at the time, the City's AAA bond rating, plus 15 basis points. <br />2022 PMP - Snelling Ave N.: 5.5% <br />2022 PMP - Arden Oaks: 5.5% <br />2021 PMP: 3.15% <br />2018 PMP: 5% <br />Our current assumed bond interest rate is 2.75% and the prime rate is 8.50%. Staff would recommend <br />following the City's assessment policy and setting the assessment rate at 4.75%, which is also the rate <br />that was set at the April 8, 2024 assessment hearing for the 2024 PMP. <br />The total project costs were analyzed for the assessable cost. The calculation of the amount to be <br />assessed as approved by Council Resolution 2024-023 is shown below. The assessments related to <br />the project are calculated in accordance with the City's Assessment policy, is half of the street project <br />cost for residential properties and dependent on the type of pavement rehabilitation. The assessment <br />roll is shown in Attachment A. <br />Mill & Overlay Areas <br />Total Mill & Overlay Street Project Costs = $396,612 <br />50% Estimated Street Project Costs = $198,306 <br />Residential Equivalent Units (REUs) = 69 <br />Estimated Assessment Rate ($396,612 divided by 69 REUs) = $2,874 <br />As provided for in State Statute, no appeal may be taken as to the amount of any assessment adopted <br />unless a written objection signed by the affected property owner is filed with the City at or prior to <br />the assessment hearing. After the adoption of the assessment roll, property owners who have <br />submitted an objection in writing have 30 days to serve notice of an appeal to the City, and within 10 <br />days after serving notice to file with the District Court. <br />Recommendation <br />The Council should hold the Assessment Hearing first. After the Assessment Hearing is closed and <br />as part of New Business, Council should consider adopting Resolution 2024-025 Adopting the <br />Assessment Roll for the 2024 PMP Street & Utility Improvement Project with any changes they deem <br />appropriate. <br />Page 2 of 3 <br />
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