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<br />2009 PMP <br />5/8/2009 <br />Page 2 <br /> <br />These three parcels are large enough to be subdivided; however, the existing home would need to <br />be removed to do so. The property owners requested that their assessment for 2 REVs be <br />reevaluated. The City Council directed staff to research options for delaying the payment of the <br />assessment until such time that the property is subdivided. Attached is a letter from the City <br />Attorney with three options on how to address these parcels. <br /> <br />1433 Forest Lane: <br />This parcel could be subdivided without moving a structure. This property is listed as 2 REUs. <br /> <br />City parcels: <br />Freeway Park, which is identified as a tax-exempt equivalent unit (TEV), has been converted to <br />one REU based on the same subdividing criteria used to determine the residential lot units. <br />Lindy's Park was not included, as it is right-of-way and is not a delineated parcel. City Council <br />asked staff to determine how many lots this area could be if it were a delineated parcel. Staff <br />determined that Lindy's triangle would be the equivalent of two parcels that meet current City <br />code. <br /> <br />FINANCIAL IMPLICATIONS <br /> <br />Assessment rate <br />The total amount to be assessed is $ 594,152.22. The total project cost is $1,583,141.01; the <br />amount to be paid by the City is $988,988.79. The table below shows the cost per unit for three <br />scenanos: <br />a. Including no City parcels in the assessment roll <br />b. Including Freeway Park as 1 REU in the assessment roll <br />c. Including Freeway Park as 1 REU and Lindy's Park as 2 REU in the assessment roll <br /> <br />#REU Includes: Cost per unit <br />89 85 parcels, 4 of which are 2 REV; no City parcels $ 6,675.87 <br />90 89 REU plus 1 REU- Freeway Park $ 6,601.69 <br />92 89 REV plus 1 REU- Freeway Park, 2 REU- Lindy's $ 6,458.18 <br /> <br />Interest rate <br />For the 2007 PMP, the City Council set an interest rate 6.5%, which was 2% over the annualized <br />rate of return (4.5%, May 2007). <br /> <br />The assessment policy states that the interest rate shall be set at prime plus two percent. Prime <br />rate is currently 3.25%; this would mean an interest rate of 5.25%. The current annualized rate <br />of return on the City's portfolio is 2.8%. If the City Council were to set the interest rate at 2% <br />over the annualized rate of return, the rate would be 4.8%. <br /> <br />Payment Period <br />In 2007, the City Council deviated from the assessment policy by extending the payment period <br />from 5 years to 7 years for the mill and overlay project. The standard payment period for a <br />