05-29-07 Item 6A, 2007 PMP Assessment Hearing

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2007 PMP 5/24/2007 Page 5 subsequent costs may change throughout the pre-design and final design process. As a result, residents may feel misguided if estimated and actual rates differ. Staff analvsis of financing options (3-6): In an effort to alleviate the financial burden of the assessment, the City Council could choose to make the following changes for this project: a.) The length of the payment period could be extended to ten (10) years, as opposed to the five (5) years as stated in the Assessment Policy. b.) The Assessment Policy was adopted when interest rates were at an all time low. The City's investments have about a 4.5% annualized rate of return. Council could adopt an interest rate set at 2% above this rate, which would recover the costs of carrying the debt and the administrative charges incurred from the county, auditors and staff time to track c.) The Assessment Policy states that the payments shall be equal principle payments. This means the principal payment is the same every year (total assessment divided by number of years in the payment period), but the interest payment the total interest on the balance of the principle in a given year. The payments will decrease every year, as the balance will become less, and interest to be paid will then be lower as well. Changing the payment plan to equal annual installments, the payment would be equalized for the term and more manageable for residents, as they could budget the same amount of money for a payment each year. One thing to note is that with an equal annual installment over an extended payment period, residents would pay more in interest than with equal principle payments. d.) The Assessment Policy does have an option for senior citizens, which was described at the May 14,2007 City Council meeting. For this deferral, residents must be 65 years of age or older and must establish economic hardship (an annual gross income of less than 50% of Ramsey County median household income, which is $45,722 based on the 2000 census.) Applicants need to fill out a deferral form available at City Hall and provide supporting tax documents for City approval. If approved, the assessments are deferred with interest until the property is sold. This ensures that the city receives their money, but also helps those on a fixed income while they are still in their home. Staff recommendation: Approve modifications a), b) and c) as described above. Support senior deferrals (d) to those who are eligible and request it. 7) Oral comment: 1556 Briarknoll Drive, Judy Ophaug Ms. Ophaug asked whether historic information was available as to the amount of past assessments for similar projects. She also noted the overhead included in the assessment rate seemed high. Staff analvsis: The City of Arden Hills has not had a project in which a full depth pavement replacement was completed as is being constructed on Briarlmoll Drive. The last mill and overlay project completed by the City was in 2003; this project consisted of a six foot (6') edge mill and two-