8A, Resolution 2010-039, Adopting Proposed Special Assessment Roll for the 2010 PMP

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Assessment amount, interest rate and methodology (obiections 2-7�: The assessment has been calculated according to the City's Assessment Policy. Parcels that are sub-dividable according to the current City Code (1645 Valentine Avenue and 4093 Valentine Crest Road) have been included in the assessment calculation as two residential equivalent units (REU). The City has developed agreements with these property owners not to assess the second unit until a subdivision occurs. These agreements did not result in an increase to the assessment amount. The proposed interest rate is a deviation from the City's Assessment Policy. The Assessment Policy states that the interest rate shall be set at prime plus two percent. Prime rate is currently 3.25%; this would mean an interest rate of 5.25%. The current annualized rate of return on the City's portfolio is 2.5%. The City Council directed staff to set the interest rate at 2% over the annualized rate of return, or 4.5%. The proposed interest rate has been set lower than what is stated by the policy, which is in favor of the residents. 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. The payment plan has been changed to equal annual installments, so that 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. 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 longer than the ten (10) years that is stated in the Assessment Policy. One thing to note is that with an extended payment period, residents would pay more in interest. b. The Assessment Policy does have an option for senior citizens, which was described at the August 9, 2010 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. City Council Meeting \�IVletro-inet\ardenhills�Admin\Council�Agendas & Packet Information�2010\8-30-10 Regular�Packet Information\8A 8-30- lOMemo_2010PMP AdoptAssessment.doc Page 3 of 4