Loading...
HomeMy WebLinkAbout02-12-08 Chair Scott Bronson 1245 W. Highway 96 Committee Members ARnFN Maurice Gieske HILLS Arden Hills, MN 55112 _'�� Al Hilgers 651.792.7800 Jeff Johnson Arden Hills www.ci.arden-hills.mn.us James Ostlund Council Liason Financial Planning and Stan Harpstead Analysis Committee February 12, 2008 City Vision A strong community that values our unique environment, our fiscal soundness, and our tradition as a desirable city in which to live, work, and play. Agenda Regular Committee Meeting Convenes 6:00 PM Call to Order 1. APPROVAL OF THE AGENDA 2. MINUTES A. January 8, 2008 Regular Meeting 3. UNFINISHED AND NEW BUSINESS A. Assessment Policy Discussion - Continued B. Capital Improvement Plan - New . REPORTS A. Report from the City Council B. Financial Planning and Analysis Committee Comments and Requests 5. ADJOURNMENT A quorum of the City Council may be present at this meeting. MINUTES N HILLS 111 FINANCIAL PLANNING &ANALYSIS COMMITTEE TUESDAY, January 8, 2008 6:00 P.M. Upstairs Conference Room, Arden Hills City Hall CALL MEETING TO ORDER AND ROLL CALL The meeting was called to order by Jim Ostlund at 6:01pm. MEMBERS PRESENT: Maurice Gieske; Stan Harpstead, Council Liaison; Al Hilgers; Jeff Johnson; Jim Ostlund MEMBERS NOT PRESENT: Scott Bronson OTHERS PRESENT: Sue Iverson, Finance Director; Joe Rueb, Accounting Analyst; Kristine Giga, Civil Engineer 1. APPROVAL OF AGENDA Motioned: Jeff Johnson Seconded: Al Hilgers • 2.A APPROVAL OF January 8th, 2008 MINUTES One correction noted under part 4.A. "...manufactured homes located along Hwy 10/96." Motioned: Jeff Johnson Seconded: Al Hilgers 3.A. Assessment Policy Discussion - Continued Kris Giga summarized the assessment policy discussion from the January meeting. Time of assessment: Johnson asked if the City has had any problems doing assessments up front. It was decided to keep the time of the assessment upfront as the City can refund any over assessments. The 2007 assessments came in very close to the actual bids. Reconstruction projects may cause more surprise expenses as it may uncover other replacement needs. Mill & overlay projects are assessed over five years. Complete reconstruction projects are assessed over ten years. Assessments cannot last longer than the life of the asset. In 2006 approximately 2/3 of assessments are paid up-front. We will always recover our money. Residents have the ability to pay off the assessment right away or they can make installments with interest. • MINUTES -` EN HILLS • Outstanding Discussion: Still need to address the percentage of assessments. There is a need to clarify how we determine number of units or the per unit equivalence for assessments. It was recommended to let the planning commission give feedback as to what to how to approach commercial properties, as well as multiple frontage lots. It was recommended to have a clause stating that some properties may be assess on a case by case situation. Corner lots are assessed only on the actual address. Should the City get assessed? Discussion touched on the possibilities of the City being assessment exempt and/or being assess the same as other properties. There is nothing in the policy stating whether or not city properties are exempt. Are the current assessment rates for commercial properties and residential properties set appropriately? How are double frontage lots assessed? Giga provided a background of how Roseville funds their street projects. Roseville created a two prong funding approach using bonds and assessments. In 1996 they created an infrastructure fund; tax payers pay a little each year towards this fund, resulting in a lower assessment. How much does Roseville collect every year into that fund from taxes? Has the City looked at the long term if assessments are the best option? We are going to get into the long range financial plan looking towards the future and how we want to pay • for things. We do not have a project for 2008 so we are not in a time crunch to get this policy completed; our next reconstruction project will be summer 2009. 3.B. Capital Improvement Plan- New Finance Director Iverson and Giga gave an explanation of the formatting of the CIP book. Hilgers recommended that the City looks at the possibility of sharing equipment with Roseville to decrease the cost of equipment. It was also recommended to combine some operations. We may want to have Greg Hoag, Public Works Director,join us to discuss these options. Mayor Harpstead would like this group to focus more on the strategic side of the CIP. Look towards streets and new fire departments. Parks and Trails have never been economically balanced with the rest of the needs of the City. Roads are rated on a Pavement Condition Index (PCI). We have a consultant evaluate the roads; roads are rated from 0 to 100. A rating of 0-30 is"poor" and needs to be reconstructed. 4.A. Report from the City Council Sue created a new chart of accounts. Staff is currently working on the Capital Improvement Plan (CIP). The old city hall property is going out for a RFP; it could potentially be residential land. • MINUTES AIZEN HILLS • Traverse Business Center is still waiting on a committed tenant. Mayor Harpstead anticipates that the developer may request ramp support and road improvements. This is a running TIF district; we have needs for this funding. This district is a pre-1990 district which means the funds can be used outside the district. TCAAP—the GSA negotiations moved forward in January. In the purchase document there is an escape clause for the developer and the City stating that we can rescind our purchase agreement and get our earnest money back. We have been moving the rescinding date back to give us more protection. Also, buried in the agreement is a credit category mechanism. The GSA has indicated that the land has been discounted from $80 million but has not provided any proof when we requested it. We purchased it for$45 million and the $35 million discount was a function of the demolition and the preparation for development. A confidentiality agreement has been signed between GSA and developer; the City is being left out of this agreement to keep all information confidential. If the City is involved all information must be public information. There are 12 categories within this agreement. One category includes the movement of the water purification system. Another category is the clean up cost of the land, which contains high levels of metal. This clean up will get the land up to standards for residential homes. They agreed on all 12 categories and now have to negotiating dollar amounts for each category. The agreement states that the development cannot start until all the negotiations are done. Density of the project: There is plenty of space for the IIresidential demand and the commercial density should be near the original estimates. We still have property access issues; this issue can jeopardized the whole deal. The City is still searching for a new City Administration. PTRC is working on two trails along County Road E and Old Snelling. This has not gone through as the funding for the parks and trails is not adequate funding for this project. They are looking towards a bonding referendum. Lastly, the B2 district which is south of the railroad tracks and north of County Road E from Snelling to Lexington, a moratorium on all building jeopardized the sale of the old Holiday Inn. We don't want an empty building that does not pay taxes. The small group plan is going through a RFP that will probably come back with recommendations as to what to do with this whole area to upgrade it from a commercial status. The next potential area is the Red Fox/Gray Fox area. It would be to the Cities advantage to have a plan of what we want to see developed in that area as we do not want something developed that we cannot control. • MINUTES -`ITEN HILLS 0 B. Financial Planning and Analysis Committee Comments and Requests Y q NEXT MEETING AGENDA—March 11 th, 2008 5. ADJOURNMENT Motioned: Jeff Johnson Seconded: Al Hilgers Scott Bronson, Chair Susan K. Iverson,Finance Director • • MINUTES I��EN_ HILLS FINANCIAL PLANNING & ANALYSIS COMMITTEE TUESDAY, January 8, 2008 6:00 P.M. Upstairs Conference Room, Arden Hills City Hall CALL MEETING TO ORDER AND ROLL CALL The meeting was called to order by committee chair, Scott Bronson at 6:00pm. MEMBERS PRESENT: Scott Bronson; Maurice Gieske; David Grant, Council Liaison; Al Hilgers; Jeff Johnson; Jim Ostlund OTHERS PRESENT: Sue Iverson, Finance Director; Joe Rueb, Accounting Analyst; Kristine Giga, Civil Engineer 1. APPROVAL OF AGENDA Motioned: Jeff Johnson ° Seconded: Al Hilgers 7 2.A APPROVAL OF October 9, 2007 MI TES • Motioned: Maurice Gieske Seconded: Jim Ostlund 3.A ASSESSMENT POLICY DI ; Kris Giga is the Civil Engineer fo e u of Arden Hills. Giga works for the City of Roseville and is contracted out for the Ci -e "= g needs. The current assessment policy . FTC in place for three years, and with the last two street improvement projects, several issues'`-`.ve arisen. Staff recommends some revision to the policy, to be less restrictive in some areas and have further clarification in other areas. This would minimize deviation from the policy. Assessments include the cost of street reconstruction or mill and overlay costs, plus a set overhead fee. According to the policy, assessments are set prior to the start of the project and are based off of estimates. The past two projects were modified to be based off of the contract bid prices. The first question to consider is the timing of the assessments. Do we want to assess based on estimates before the project is bid, contract bids once the contract is awarded, or actual costs after the project is done? Johnson wanted to know if it is possible to have two assessments on one project. Assess 80% prior to construction and 20% after construction. Statute 429 will not allow two assessments on one project. Residents can pay-off the assessment interest-free • City of Arden Hills 1245 West Highway 96•Arden Hills Minnesota 55112 Phone 651.792.7800•Fax 651.634.5137 www.ci.arden-hills.mn.us EN HILLS within 30 days after the assessment is adopted. Interest rates are set at the assessment hearing. City Council sets the assessment period. Residents can prepay at any time after levied. Approximately 2/3 of the assessments have been paid up-front for the last few projects. The residents' portion is 50% the project cost plus overhead. The current policy bases the assessment off of estimates; we could set the assessment after the project is completed, although the City may lose a lot of interest income. The City of Roseville assesses the year following the completion of the project. Johnson would like to know when the City makes payments to the contractor. The City retains payments and typically holds 5%until the project is complete. The current policy lists the percentage of overhead costs to be factored into the assessment. The City's administrative cost of 2.5% includes the staff time it takes to manage the assessment rolls and the costs that Ramsey County charges the City to certify the assessment rolls. Assessment Roll Preparation cost of 1% is the staff time in engineering and finance to prepare the assessment rolls and mailing costs for the preliminary hearings and the final hearing and adoption. The legal costs are for the City Attorney's work with assessment re w and appeals. In 2006, the reconstruction project cost totaled $1.8 lion, ich included water main, sanitary sewer and storm sewer work. The 2007 mill and erlay project totaled $700,000; this project cost less because it was mostly street maintenan w. not as many utility improvements. Mill and overlay projects typically involve less utility i ovements; mostly spot repairs. The 2002 Ingerson project totaled $2.2 million. Proje w_ i ry from year to year depending on the • length and extent of the proposed work. Cost° i n` uate due to rising fuel and energy costs, ultimately increasing construction costs - y r. How does this affect cash flow? We have to look at the CIP plan and our long ra ' pl . Th ity may have to consider bonding or cutting back if we want to pay cash for th o ' ncilmember Grant noted at one point the City Council projected that it costs $1 i _'er mile of reconstruction. We have about 30 miles of streets. Bronson would like to know whbeing asked of the committee. Primarily, the committee is being asked to give staff feedback to revisions that should be brought to the City Council. Currently these issues include; capturing the costs which have to be budgeted or recaptured in the budget like administrative charges, interest rate, timing of the assessments, length of the assessment payback period, and other areas that staff feels need clarification. Staff understands that not all issues involve the Financial Planning and Analysis Committee, but the committee should focus on the fiscal items and let other committees/commissions address the other areas. Timing of assessments: If the City were to assess early, the City takes a lower loss. Is it better for residents to be assessed after? The City may collect too much if residents are assessed prior to completion. There should not be a loss to the City; any interest lost should be expensed back to the residents. The feasibility report provides an estimate for the project resulting in the preliminary assessment amount. As part of the 429 process, Council orders the feasibility report for the project. Once • this is done, details are figured out and brought back to the Council for a public hearing, at which they approve or deny the project. At this hearing, residents have the opportunity voice their City of Arden Hills EN HILLS • opinion about the project. This process can take several months from the order of feasibility to the final Council approval of plans and specifications. Overhead costs: Staff recommends not listing a percentage in the policy, only listing what is considered an overhead cost. Appraisals: By state statute, we cannot assess more than what each property will benefit from the project. We have had some appeals from properties. At that point we need to get appraisals on that property. Should we consider getting appraisals upfront or on a case by case basis? Three property owners appealed their assessments for the 2007 project; there was one appeal in 2006. Upfront appraisals would be based off of global appraisals. If staff or City Council initiate a project, it needs a 4/5 approval by Council. Projects can be petitioned by more than 35% of the property owners of a street. Interest Rate: The current assessment policy set the inter rate on unpaid balances to prime plus 2%. Staff recommends that Council sets the percen based off of the Finance Director's recommendation. Finance Director Iverson recom nds over the going bond rate for a project similar to the proposed project at that time his woul e a good practice so it could be used whether the City financed the project or b ed r the project. Once established it is set for the life of the assessment. Future project in t rates would fluctuate with the current market at the time of the projects and be ,euita to the property owner. The current assessment policy states that payments are ual principal payments, which is less affordable for residents. Finance Direc very suggests that it be switched to equal annual installments (which is more like a ou- ea ent and amortized over the length of the assessment), to be more affordable . e= the residents to budget. This was done for the 2007 project. The interest rate fo * .roject was changed from 2% over prime to 2% over the interest rate the City was c ntl i on its investment portfolio. Other questions to consider: • Commercial properties are eing assessed 70%; residential properties 50%. Is 70% an appropriate rate for commercial properties? Is 50% an appropriate rate for residential properties? • Assessment for mill and overlay is based on 5 years. An assessment for reconstruction is based on 10 years. Can make deviations as needed. Typically assessment periods shouldn't last longer than the life of the asset. • Residential properties are assessed on a per unit basis; if a property is able to be subdivided, it is assessed additional units. The old assessment policy based assessments on front footage. There is a need to clarify how commercial lots are assessed given the range in size of commercial properties. • Residential assessments are based on address, so residential corner lots are not double assessed. How do we address alleys or lots that have other double frontage? Alleys are currently assessed. • Do we want to set a minimum number of years between assessments? However, we do Snot want to restrict ourselves. The committee asked if other cities have a policy for this situation, staff replied that they would check to see if they could find policies of other City of Arden Hills HILLS • cities that addressed this situation. ■ City lots have not been assessed in recent projects and have been removed from the assessment roll. Should City lots be factored into the assessment roll? Planning Commission should provide input as to how lots are defined. Councilmember Grant reminded the committee that the TCAAP development would be affected by this policy and future new developments were factored into the policy. We need to be aware of how our decisions will affect these policies and future development like TCAAP as the original task force did develop the policy with this in mind. Kris is available come back to recap and to discuss further questions, issues, or comments. 3.B FUND BALANCE POLICY DISCUSSION Finance Director Iverson revised the document based off of the previous meetings requests. Definitions were added the from the Cloquet policy. Remove the highlighted area of page 2 under the General Fund section. The unreserved fund b nce should be at 50%. State Auditors guidelines are 35%to 50%. Johnson recommended th " e is better flow between Reserved & Unreserved Funds and Unreserved Designated & U el-ye designated. It was requested that Finance Director Iverson makes the changes req ted and e` ail to FPAC members for final review to complete this policy. 4.A REPORT FROM THE CITY COUN'III . ou 'lmember Grant Councilmember Grant will no longer be our k � i` iaison. Our new Council Liaison will be Mayor Harpstead. As this groups sets p es , - need to look towards the future of the TCAAP property. There have been some pro s ith t location of the contamination filters; some of the piping may need to be relocated. received the CAFR award, this is an award for excellence in financial reportin Government Finance Officers Association of the United States and Canada (G . A).` re as a legislative visit for the Hwy 10/96 bonding request. This v'. made t apersdue to potential home loss for those living in the manufactured ho ated alon T0/96. The levy was approved at 4.6%. Our 2008 budget was adopted. The exington Plaza r evelopment received a lot of emails and public attention. The Planning Commission turned it down. Council put a moratorium on all building in the B2 area. Council is going to work on a development plan for that end of town. Michelle Wolfe resigned; she will be working for Aurora, Colorado. We are searching for a new City Administrator. During the interim, Jim Willis will be our interim City Administrator. He currently is on Plymouth's city council and works for the City of Rogers. Gateway, also called Traverse Business Center, has been fully approved, but needs a commitment from a tenant. The request to transfer the triangular piece of property to New Brighton was denied. No idea of what is being proposed for that property. Arden Hills, represented by the League of Minnesota Cities, is taking Clear Channel to court over electronic billboards. 4.B FPAC COMMENTS AND REQUESTS Bronson will not be at the February meeting. Ostlund will be taking his place. IIPlease note that there was not a meeting in November or December, 2007. City of Arden Hills EN HILLS NEXT MEETING AGENDA—February 12, 2008 5. ADJOURNMENT Motioned: Al Hilgers Seconded: Maurice Gieske Scott Bronson,Chair Susan K.Iverson,Finance Director • City of Arden Hills • -SIWEN. HILLS MEMORANDUM DATE: February 8, 2008 TO: Financial Planning and Analysis Committee FROM: Sue Iverson, Finance Director Kristine Giga, City Civil Engineer SUBJECT: Assessment Policy Discussions BACKGROUND: The City's Assessment Policy was revised in 2004 by a resident task force with staff and City Council liaisons. Since the adoption of this policy, we have completed several street 411) improvement projects. When applying the policy to these projects,we found some areas of the policy that staff feels need clarification or additional information. Prior to bringing proposed changes to the City Council, we would like the Financial Planning and Analysis Committee to review some of our questions. At the January 8, 2008 Financial Planning and Analysis Committee meeting, Kris Giga presented and discussed these issues with the committee. The consensus was that we summarized the issues discussed and gather information requested by the committee for further review at a future meeting. DISCUSSION: Attached is the summary list of issues from the January 8, 2008 meeting. Discussion will focus on this list for recommendations to staff and Council. Staff has also attached some articles from the StarTribune that give some insight to what other cities are doing. Please bring your copy of the Assessment Policy from your last packet for reference. RECOMMENDED ACTION: Provide feedback and discussion on the summary list of items regarding the City's assessment policy. • Summary of January, 2008 meeting Time of assessment: City Council needs to be informed of the impacts of timing. If assessments are levied at the beginning of the project, the City will not have to front the money. However, if assessments are levied upon project completion, residents will be assessed for actual costs, ensuring that residents aren't over/underpaying. Overhead costs: List what is included in determining overhead costs, but don't list a fixed percentage- allow this to be modified for each project(ie, engineering fees, legal fees, etc.) Appraisals: Complete property appraisals as needed if/when assessments are appealed. Interest rate: Modify language so that interest rate is not set to prime rate plus two percent, but something that moves with the economy, such as two percent over going bond rate for the type of project being proposed. Other discussion points: • Consider a longer payment period for commercial/tax-exempt properties • Change the assessment payments to be equal annual installments instead of equal principal payments. Outstanding discussion points: 0 ■ Commercial properties are being assessed 70%; residential properties 50%. Is 70% an appropriate rate for commercial properties? Is 50% an appropriate rate for residential properties? • Addressing double frontage lots, whether it is two streets (non-corner) or street and alley. • Do we want to set a minimum number of years between assessments? • How should City lots be addressed in relation to assessments? Included or not included in calculations? Roseville Funding Summary Roseville adopted a Pavement Management Program (PMP) in 1985 that had a two prong funding approach. A Roseville street reconstruction project was funded using a combination of bonding and assessments. The policy was to assess 25% of the reconstruction costs to properties zoned single family residential, 70% for high density residential, and 100% for all other property zoning, including institutional uses. The City Council changed this policy in 2003 to apply the 25% of reconstruction costs to be assessed for all property zoning. Roseville's PMP also established a tax levy in 1986 to create the Street Infrastructure fund. This fund is dedicated to major street maintenance, such as mill and overlay projects. This fund has grown considerably over the years and now funds 100% of non Municipal State Aid Street mill and overlay projects. All Roseville taxable properties paid over the years in order to establish this fund. • \\Metro-inet.us\ardenhills\PR&Pw\Engineering\Assessment Policy\Summaryof Jan08_mtg.doc ABCS of Special Assessments Page 1 of 1 Star'Trjbune.corn MINNEAPDLIS -ST. PAUL, MINNESOTA • ABCS of Special Assessments January 26, 2008 ABCS of Special Assessments Special assessments are charges imposed on property owners to help pay for streets, sidewalks, sewers and other improvements that supposedly benefit that property. State law says the assessment can't be higher than the increase in the market value of the property that results from the improvement. Cities can assess homeowners for improvements ranging from roads to tree-plantings to freeway sound barriers. Many cities assess the same way for some projects: Developers usually pay for brand-new streets and sewers, and cities pay for repair of old sewer and water systems. However, cities handle road repairs and other assessments differently. Here are some examples: • Bloomington: Homeowners pay 25 percent of street reconstruction costs, with the city paying 75 percent. • • Brooklyn Park: Homeowners pay 70 percent of street reconstruction costs, with the city paying 30 percent. New street lighting is assessed at $750 per lot. • Eden Prairie: Homeowners paid 40 percent of the cost of rebuilding the one street that's been reconstructed there. • Edina: Street reconstruction costs are paid by homeowners. Curb and gutter construction is paid from a city utility fund. Most homeowners pay 75 percent of sidewalk costs; if they're close to a school they pay half. • Maple Grove: The city and homeowners share the cost of street reconstruction. • Minneapolis: Homeowners pay about 25 percent of the cost of street reconstruction while the city pays about 75 percent (the formula can vary slightly depending on the project). Sidewalk repairs are paid by homeowners. •Woodbury: Homeowners generally pay one-third of the cost of road reconstruction projects. 2008 Star Tribune. All rights reserved. • http://www.startribune.com/templates/Print This Story?sid-14446551 1/28/2008 Assessments: Not a special feeling Page 1 of 3 StarTribune.cam MINNEAPOLIS -ST. PAUL, MINNESOTA • Assessments: Not a special feeling By JEAN HOPFENSPERGER and MARY JANE SMETANKA, Star Tribune staff writers January 27, 2008 John Gina never asked for a new road in front of his hobby farm in Eagan, or for a new water and sewage extension_ But he's now facing a $77,000 special tax assessment to pay for both services, which he insists he doesn't need. ¶"The city wanted to build a road to Mary Jo Copeland's home [for children], so a road was built through my property," said Gina, a retired Minneapolis schoolteacher. "Now we have a road leading to a dead end that serves their properties -- and they haven't even built anything yet." Special assessments, by law, are supposed to provide a financial benefit to the homeowner that is roughly equal to the cost of the fee they pay, Cina said, "but nothing has changed for me." And the high-profile orphanage envisioned by Copeland, one of the state's best-known advocates for the poor, still exists only on paper. Each year, tens of thousands of Minnesota homeowners like Cina are told that they must pay a special assessment fee for roads, sidewalks, sewers and other services that directly affect their property. The use of these assessments, paid by both homeowners • and commercial entities, jumped from $197 million in 1995 to $291 million in 2005, according to the state auditor's office. The increase during that decade was $39 million more than inflation. While Cina's fee is unusually high, it points to the tension between homeowners -- many already worried about rising property taxes -- and their cities and suburbs struggling to pay for new development and road repairs. Special assessments are one way cities are plugging holes created by stagnant state aid to cities and skyrocketing construction costs, experts said. While most homeowners monitor their property taxes with great interest, special assessments are "a great unknown to most taxpayers," said Bob DeBoer, director of policy development at the Citizens League, a public-policy research group based in St. Paul. No government agency tracks which cities or townships require their citizens to pay the highest or lowest assessment fees. Most homeowners who get the notices in the mail simply pay them quietly, though those who contest them can and do get some relief. "There's never a public discussion about special assessments, but there's always debates about property taxes," DeBoer said. • A new Citizens League report shows that between 2001 and 2006, St. Paul topped the list of cities with the highest special assessments at $133 million, followed by Minneapolis with $63 million. Next came two cities that are still building new roads and sewers: Maple http://www.startribune.com/templates/Print This Story?sid=14446556 1/28/2008 Assessments: Not a special feeling Page 2 of 3 Grove, which raised $41 million, and Woodbury, with $25 million. Coon Rapids, Eagan and Cottage Grove also were near the top of the list. 411 But the list doesn't say what portion of the tab was picked up by homeowners. That varies from city to city. St. Paul, however, uses special assessments for projects well beyond most municipalities. It uses special assessments to pay for everything from tree trimming to snow removal to road reconstruction, in part because of cuts in state aid to local governments, in part to avoid raising citywide property taxes, said Matt Smith, St. Paul's finance director. Assessing assessments For some homeowners, assessments seem like a fair way to pay for improvements near their property — especially if it's a couple thousand dollars to replace crumbling sidewalks. They may not be thrilled about the cost, but they understand that cities need a way to pay for special services. Paul Laederach of Edina agrees with his city that roads in his historic Country Club neighborhood are in bad shape and need replacing. But the senior citizen balks at the cost. While the city will bear half of the cost of the $19.7 million project to replace and • repair streets, street lighting, water and sewer systems, homeowners still are paying $18,210 to $22,900 each. "Taxes keep going up, but our income doesn't," Laederach said. Some of his neighbors are less charitable in their assessments. "It's unconscionable to levy such a large amount to an individual property owner," said Margo Hoppman. "A project of this scope and magnitude should be shared by all of Edina." In Edina, homeowners pay the entire cost of street replacement. Two years ago, the City Council talked about sharing that cost, but there was concern about reversing the policy when many homeowners had already paid those fees. Most homeowners simply pay their bills. In Brooklyn Park, Patricia Hoehn said she was "shocked and dismayed" several years ago when she learned the city wanted to connect her bucolic neighborhood of big lots and gravel roads to city streets, water and sewer at a cost of more than $80,000 per household. While some of her neighbors broke up their 2.5-acre lots, selling excess land to • developers, Hoehn decided to keep the big wooded lot where she has lived for 35 years. The city deferred $17,000 until she sells or divides her lot. She paid $53,000. "I raised my family here," Hoehn said. "Something this size ... does take your breath http://www.startribune.com/templates/Print This Story?sid=14446556 I/28/2008 Assessments: Not a special feeling Page 3 of 3 away. But I wanted to stay here." • Some payments deferred For senior citizens such as Hoehn, as well as disabled people, the law allows cities to defer assessment payments until the property is sold or the owners die. Other homeowners can appeal their assessments to their city council. If they don't like the council's decision, they can appeal to their district court within 30 days. But in Mounds View, Valerie and Brian Amundsen wanted to change more than their own assessment. They started a petition drive to overhaul the entire system for paying for roads. As a result, the city created a task force that examined the way it funded road construction, and ended up abolishing assessments, Valerie Amundsen said. The conclusion was that the roads benefited everyone, and everyone should pay. "Now, the typical homeowner pays a flat $100 fee a year over the course of 10 years," said Valerie Amundsen. That property tax increase will generate about $400,000, city officials said. To make it easier for cities to fund road repair, the League of Minnesota Cities will propose the creation of"street improvement districts" at the Legislature this session. The districts would allow cities to bill residents over a 20-year period for street maintenance . and reconstruction and spread assessments over a bigger group of homeowners who don't necessarily live right on a street that's being repaired. The proposal also would avoid the requirement that homeowners' special assessments must not exceed the increased value of their property after the construction or development. In the meantime, Cina has given up his fight with the city of Eagan after going through some health problems. His assessment has been deferred until "a future point in time," such as the sale of his home or subdivision of property near his home, City Manager Tom Hedges said. Hedges said he sympathizes with Cina, one of many residents facing large assessments. But it's the price of development, he said, and that development will ultimately increase Cina's property values. Cina's not convinced, adding, "This just doesn't seem fair." hopfen@startribune.com • 651-298-1553smetan@startribune.com • 612-673-7380 ©2008 Star Tribune.All rights reserved. • http://www.startribune.com/templates/Print This Story?sid=I4446556 1/28/2008 O AIR.EN HILL S MEMORANDUM DATE: February 8,2008 TO: Financial Planning and Analysis Committee FROM: Sue Iverson, Finance Director SUBJECT: 2008—2012 Capital Improvement Plan BACKGROUND • As part of the 2008 budget process, a five-year capital improvement plan is prepared. Staff met with Council during the budget process and has incorporated all council requests into the proposed document. The attached document was approved by the Council on January 28,2008. DISCUSSION The attached document is the final version based on Council feedback and requests. Staff has been working to change the document from a spreadsheet to an actual plan document that includes project details, funding, and justifications. Please note that we have only begun to fill in all the data to complete this document and that it is a work-in-process. All expenditures amounts and funding sources are listed, but the justifications, descriptions,maps, and images are still being worked on. This document is the approved working plan until the final budget documents are completed in late February to mid-March along with the 2008 operating budget. Staff has included the worksheet version that has been used in the past along with the new version of the document for your review. As a further step in preparing for evaluating the long-range plan and appropriate fund balances and levy amounts for future capital improvements and major capital assets, we will review the as a next step in our progression toward that goal. ACTION No action required. Informational information for purposes of discussion. • \\Metro-inet.us\ardenhills\Admin\Committees\FPAC\2-12-08-CIP Plan.doc IllSummary of January, 2008 meeting Time of assessment: City Council needs to be informed of the impacts of timing. If assessments are levied at the beginning of the project, the City will not have to front the money. However, if assessments are levied upon project completion, residents will be assessed for actual costs, ensuring that residents aren't over/underpaying. Overhead costs: List what is included in determining overhead costs, but don't list a fixed percentage- allow this to be modified for each project(ie, engineering fees, legal fees, etc.) Appraisals: Complete property appraisals as needed if/when assessments are appealed. Interest rate: Modify language so that interest rate is not set to prime rate plus two percent, but something that moves with the economy, such as two percent over going bond rate for the type of project being proposed. Other discussion points: • Consider a longer payment period for commercial/tax-exempt properties • Change the assessment payments to be equal annual installments instead of equal principal payments. Outstanding discussion points:• ■ Commercial properties are being assessed 70%; residential properties 50%. Is 70% an appropriate rate for commercial properties? Is 50% an appropriate rate for residential properties? • Addressing double frontage lots, whether it is two streets(non-corner) or street and alley. • Do we want to set a minimum number of years between assessments? • How should City lots be addressed in relation to assessments? Included or not included in calculations? Roseville Funding Summary Roseville adopted a Pavement Management Program (PMP) in 1985 that had a two prong funding approach. A Roseville street reconstruction project was funded using a combination of bonding and assessments. The policy was to assess 25%of the reconstruction costs to properties zoned single family residential, 70% for high density residential, and 100% for all other property zoning, including institutional uses. The City Council changed this policy in 2003 to apply the 25% of reconstruction costs to be assessed for all property zoning. Roseville's PMP also established a tax levy in 1986 to create the Street Infrastructure fund. This fund is dedicated to major street maintenance, such as mill and overlay projects. This fund has grown considerably over the years and now funds 100% of non Municipal State Aid Street mill and overlay projects. All Roseville taxable properties paid over the years in order to establish this fund. • \\Metro-inet.us\ardenhills\PR&PW\Engineering\Assessment_Policy\Summaryof Jan08_mtg.doc • Summary of January, 2008 meeting Time of assessment: City Council needs to be informed of the impacts of timing. If assessments are levied at the beginning of the project, the City will not have to front the money. However, if assessments are levied upon project completion, residents will be assessed for actual costs,ensuring that residents aren't over/underpaying. Overhead costs: List what is included in determining overhead costs, but don't list a fixed percentage-allow this to be modified for each project(ie, engineering fees, legal fees, etc.) Appraisals: Complete property appraisals as needed if/when assessments are appealed. Interest rate: Modify language so that interest rate is not set to prime rate plus two percent, but something that moves with the economy, such as two percent over going bond rate for the type of project being proposed. Other discussion points: • Consider a longer payment period for commercial/tax-exempt properties • Change the assessment payments to be equal annual installments instead of equal principal payments. • Outstanding discussion points: • Commercial properties are being assessed 70%; residential properties 50%. Is 70%an appropriate rate for commercial properties? Is 50% an appropriate rate for residential properties? • Addressing double frontage lots, whether it is two streets (non-corner) or street and alley. • Do we want to set a minimum number of years between assessments? • How should City lots be addressed in relation to assessments? Included or not included in calculations? Roseville Funding Summary Roseville adopted a Pavement Management Program (PMP) in 1985 that had a two prong funding approach. A Roseville street reconstruction project was funded using a combination of bonding and assessments. The policy was to assess 25% of the reconstruction costs to properties zoned single family residential, 70% for high density residential, and 100% for all other property zoning, including institutional uses. The City Council changed this policy in 2003 to apply the 25%of reconstruction costs to be assessed for all property zoning. Roseville's PMP also established a tax levy in 1986 to create the Street Infrastructure fund. This fund is dedicated to major street maintenance, such as mill and overlay projects. This fund has grown considerably over the years and now funds 100%of non Municipal State Aid Street mill and overlay projects. All Roseville taxable properties paid over the years in order to establish this fund. • Wetro-inet.us\ardenhills\PR&MEngineering\Assessment Policy\Summary of Jan08_mtg.doc • Summary of January,2008 meeting Time of assessment: City Council needs to be informed of the impacts of timing. If assessments are levied at the beginning of the project, the City will not have to front the money. However, if assessments are levied upon project completion, residents will be assessed for actual costs, ensuring that residents aren't over/underpaying. Overhead costs: List what is included in determining overhead costs, but don't list a fixed percentage- allow this to be modified for each project(ie, engineering fees, legal fees, etc.) Appraisals: Complete property appraisals as needed if/when assessments are appealed. Interest rate: Modify language so that interest rate is not set to prime rate plus two percent, but something that moves with the economy, such as two percent over going bond rate for the type of project being proposed. Other discussion points: • Consider a longer payment period for commercial/tax-exempt properties • Change the assessment payments to be equal annual installments instead of equal principal payments. • Outstanding discussion points: • Commercial properties are being assessed 70%; residential properties 50%. Is 70%an appropriate rate for commercial properties? Is 50% an appropriate rate for residential properties? • Addressing double frontage lots, whether it is two streets(non-corner)or street and alley. • Do we want to set a minimum number of years between assessments? • How should City lots be addressed in relation to assessments? Included or not included in calculations? Roseville Funding Summary Roseville adopted a Pavement Management Program(PMP) in 1985 that had a two prong funding approach. A Roseville street reconstruction project was funded using a combination of bonding and assessments. The policy was to assess 25% of the reconstruction costs to properties zoned single family residential, 70% for high density residential, and 100% for all other property zoning, including institutional uses. The City Council changed this policy in 2003 to apply the 25%of reconstruction costs to be assessed for all property zoning. Roseville's PMP also established a tax levy in 1986 to create the Street Infrastructure fund. This fund is dedicated to major street maintenance, such as mill and overlay projects. This fund has grown considerably over the years and now funds 100%of non Municipal State Aid Street mill and overlay projects. All Roseville taxable properties paid over the years in order to establish this fund. • \\Metro-inet.us\ardenhills\PR&Pw\Engineering\Assessment_Policy\Summary of Jan08_mtg.doc