7A, Resolution 2009-015 Assessment Roll for 2009 PMP

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2009 PMP 6/5/2009 Page 2 The assessment policy states that the assessment shall be based on the total estimated construction cost, plus associated overhead costs. The policy also states that the City Council shall retain the right to review each project on its own merit and to deviate from any portion of the Assessment Policy Manual as it deems proper. As discussed at the public hearing and as was prepared in the feasibility report, the proposed assessments were based on the contractor's bid pnces. At the May 11, 2009, City Council meeting, the City Council directed staff to set the payment period of the assessment to 10 years, as written in the assessment policy. The interest rate was set at 4.80%, which is 2% over the current annualized rate of return on the City's portfolio. This is a deviation from the assessment policy, which states the interest rate shall be prime rate plus 2%; this would mean a rate of 5.25%. Staff also requested direction from the City Council on how to proceed with assessments on parcels that are large enough to be subdivided, but would have to move or remove the existing home to do so. Attached is a letter from the City Attorney with three options on how to address these parcels; this was provided to the City Council at the May 11, meeting, and is included again for reference. City Council directed staff to pursue option B in the City Attorney's letter, deferring the second assessment for 3544 North Snelling Avenue, 1400 Forest Lane, and 3438 Glenarden Court. Staff has met with the property owner at 1433 Forest Lane, who has indicated that the existing structure would need to be adjusted in order to subdivide the property. Staff recommends adding the second assessment for this property to the deferred assessment roll. Pursuant to Minn. Stat. 429.061, Subd. 2, the City could adopt a deferred assessment roll for future lots. A future subdivision of the property would trigger the payment of the deferred assessments. Deferred assessments are certified to the county auditor but collection is deferred. A certificate of the deferred assessment must contain the legal description and the parcel identification number (Pill) of the affected property and the amount deferred. Deferred assessments constitute liens on the property and must be paid within 30 years of the assessment levy even if the subdivision has not occurred within that time. The City Council will need to determine the amount of interest on deferred assessments. Per state statute, the City Council has three options. (1) it may require interest to be paid annually at the same times as the principal installments of the assessment would have been payable if not deferred; (2) it may add interest for this period to the principal amount of the assessment when it becomes payable; or (3) it may forgive interest to December 31 of the year before the first deferred installment is payable.