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ARDEN HILLS CITY COUNCIL - January 12, 2009 12 Mayor Harpstead stated that the assessment hearing has not been established yet but would be in the same time line as the approval of the project. Civil Engineer Giga stated that this would be correct. Councilmember Holden asked if the City would replace grass with sod. Mr. Winter stated that sod would be used. Councilmember Grant asked Finance Director Susan Iverson to comment on the interest rate of 6%. The City recently established a policy regarding the interest rate on assessments for road projects. Finance Director Susan Iverson stated that the last assessment the City did used the City's rate of return on investment in the current investment portfolio and added 1 or 1 ~%. Currently the City's investment portfolio is earning about 3.6%-3.7%. If 1 % to 1 ~% were added to this it would be about 5.2% interest. This rate would be determined at the time of the assessment hearing. The assessment rate is not a variable rate and once it is established it is set for the duration of the assessment 6% was used in order for the City to have a basis for holding the meetings. Councilmember Holden asked what the PCI was for the streets involved in the project and what these ratings mean. Mr. Winters reviewed the PCI ratings for each of the roads involved in the project and where the ratings are according to the standards set. Civil Engineer Giga clarified that PCI stands for Pavement Condition Index. Councilmember Grant asked Civil Engineer Giga to comment on the deterioration of the streets. Civil Engineer Giga stated that the more cracks, potholes, and abnormalities in the streets the more costly it was to repair and maintain them. The newer the street the easier and less costly it is to maintain. Councilmember Grant clarified that once a road's PCI goes down the faster it deteri orates. Mayor Harpstead asked what the expected life would be for the new streets with the curb and gutter.