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ARDEN HILLS CITY COUNCIL—MAY 28, 2024 6 A. Special Assessment Hearing - 1370 Colleen Avenue — 2024 PMP Street And Utility Improvements Project Public Works Director/City Engineer Swearingen stated on February 12, 2024, the City Council adopted Resolution 2024-008 Approving the Plans and Specifications and Ordering the Advertisement for Bids for the 2024 PMP Street & Utility Improvement Project. Bids were solicited and opened on March 6, 2024. A portion of the costs for the 2024 PMP Street & Utility Improvement Project are proposed to be assessed against the benefitting properties according to the City's Assessment Policy. In order to assess these costs, the City must follow the process outlined in State Statute 429. On March 11, 2024, after the bids were opened, the City Council adopted Resolution 2024-012 Declaring Costs to be Assessed and the Assessment Hearing was held on April 8, 2024. Public Works Director/City Engineer Swearingen reported the Assessment Roll related to Resolution 2024-012 was then amended to remove the property at 1370 Colleen Avenue. City staff and Council received an objection of the proposed assessment amount from the property owner and Council gave direction to review the objection at a later meeting, which was held on May 13, 2024. At that meeting, the City Council adopted Resolution 2024-026, Declaring Costs to be Assessed for the property at 1370 Colleen Avenue deferring the assessment for the second lot for 20 years or until the property is sold or subdivided with the remaining REU being charged to the property. A public hearing prior to adopting the assessments is a requirement of State Statute 429. Public Works Director/City Engineer Swearingen explained 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. Public Works Director/City Engineer Swearingen indicated 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% Public Works Director/City Engineer Swearingen reported our current assumed bond interest rate is 2.75% and the prime rate is 8.50%. Staff would recommend following the City's