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l. Property owner acknowledges that bene�t will accrue upon subdivision of <br />property. <br />2. Property owner waives hearing requirements of Minn. Stat. 429 if subdivision <br />occurs. <br />3. Property owner agrees that the City does not have to approve a subdivision unless <br />the second assessment is paid. <br />Attached are draft agreements for these two properties. The City Attorney recommends <br />that these agreements are signed prior to the adoption of the assessment roll. <br />3 317 Katie Lane: <br />This lot is vacant and owned by the residents living on the adj acent lot. This vacant lot is <br />an approved platted lot and is considered buildable. The City Council directed staff to <br />proceed with this lot in the assessment roll. <br />Financial Implications <br />Assessment rate <br />The total amount to be assessed is $306,528.86. The total project cost is $982,443.88; the <br />amount to be paid by the City is $675,915.02. There are two proposed assessment rates; <br />one for the streets to be reconstructed (Valentine Avenue, Valentine Crest Road and <br />Valentine Court), and one for the streets to be milled and overlaid (Katie Lane and Katie <br />Court). <br />Reconstruction assessment rate <br />The current reconstruction assessment rate based on the low bids is $8,268.46 <br />per unit, based on 31 units. <br />Mill and overlay assessment rate <br />, <br />The current mill and overlay assessment rate based on the low bids is $1,476.67 <br />per unit, based on 34 units. <br />Interest rate <br />For the 2009 PMP, the City Council set an interest rate 4.8%, which was 2% over the <br />annualized rate of return (2.8%, May 2009). <br />The assessment policy states that the interest rate shall be set at prime plus two percent. <br />Prime rate is currently 3.25 %; this would mean an interest rate of 5.25 %. The current <br />annualized rate of return on the City's portfolio is 2.5%. If the City Council were to set <br />the interest rate at 2% over the annualized rate of return, the rate would be 4.5%. <br />Payment Period <br />The standard payment period is 5 years for a mill and overlay, and 10 years for a <br />reconstruction proj ect. The following table shows the annual assessment amount for the <br />scenarios listed above with 4.5% and 5.25% interest rates. <br />City Council Meeting <br />\�1Vletro-inet.us\ardenhills�PR&PW�Engineering\Council_Actions\2010\6-28- l OMemo_2010PMP_OrderHearing.doc <br />Page 2 of 3 <br />