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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 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 and was applied to the 2024 PMP assessments on April 8, 2024. 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%, which is also the rate that was set at the April 8, 2024 assessment hearing for the 2024 PMP. The total project costs were analyzed for the assessable cost. The calculation of the amount to be assessed as approved by Council Resolution 2024-023 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. The assessment roll is shown in Attachment A. 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 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. Recommendation The Council should hold the Assessment Hearing first. After the Assessment Hearing is closed and as part of New Business, Council should consider adopting Resolution 2024-025 Adopting the Assessment Roll for the 2024 PMP Street & Utility Improvement Project with any changes they deem appropriate. Page 2 of 3