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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 <br />practices, which states that 50% of the costs for roadway improvements will be assessed in <br />residential areas, with the remaining portion financed by City funds. Financing for the project is <br />consistent with City policy and past practice and is summarized below. The current assessment <br />policy states that the typical overhead rate for a public improvement project is 37% of the <br />construction costs. Staff believes this percentage is higher than necessary and recommends that <br />approximately 27% of the construction costs be used as overhead when calculating the assessment <br />rates. Staff has made this recommendation on the past PMPs since 2021 and was applied to the <br />2024 PMP assessments on April 8, 2024. The breakdown of the overhead costs can be found <br />below. <br />Also, the Council must establish the interest rate at tonight's Council Meeting. Many cities set <br />their interest rate for assessments at two (2) percentage points over the bond interest rate. The <br />City's assessment policy states that the interest rate used for the assessment shall be designated at <br />the prime rate plus two (2) percentage points. For the past four PMPs, the assessment interest rates <br />were set at two (2) percentage points over the assumed bond interest rates which were based on <br />current market 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 <br />recommend following the City's assessment policy and setting the assessment rate at 4.75%, which <br />is also the rate 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 <br />to the project are calculated in accordance with the City's Assessment policy, is half of the street <br />project cost for residential properties and dependent on the type of pavement rehabilitation. The <br />assessment 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 />Recommendation <br />Council should consider adopting Resolution 2024-025 Adopting the Assessment Roll for the 2024 <br />PMP Street & Utility Improvement Project as it relates to 1570 McClung Drive with any changes <br />they deem appropriate. <br />Page 2 of 3 <br />
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