HomeMy WebLinkAbout2005-08-02 Council Special Meeting MINUTES
OF THE SPECIAL MEETING OF THE
EDINA CITY COUNCIL HELD AT CITY HALL
AUGUST 2,2005
5:30 P.M.
ROLLCALL Answering rollcall were Members Housh, Hulbert, Masica, Swenson and Mayor
Hovland.
Mayor Hovland stated the purpose of the Special Meeting was to review and discuss potential
changes to the City's special assessment policies.
Assistant Manager Anderson presented the proposed special assessment policy as follows:
1. Cost of Non-State Aid Residential Street curb and gutter will be financed by the
Stormwater Utility Fund. For the 2004-2005 assessment projects, this will require an
increase in Stormwater rates of approximately$2.00 per household per quarter.
Rationale - The Curb and gutter system is an above-the-ground water drainage system that
controls stormwater within the City. Staff feels very strongly about the addition of curb
and gutter in the City where it does not exist today. It is very important in areas of poor soil
condition, steep grade changes or very flat conditions. It also decreases the degradation of
the residential roadway system, reduces fall and spring street maintenance and aids in
street cleaning and snow plowing.
Projects to be reimbursed by proposed change (to be assessed Oct. 2005):
Halifax&Grimes-$137,000 (approx 24% of street costs)
Shannon Dr. -$18,000 (100% of assessable costs)
Sunnyslope-$40,000 (6% of assessable costs)
Bridge Lane-$10,000 (9% of assessable costs)
Total$205,000
Curb and Gutter Cost Projections for Future Year Assessment Projects:
Estimated cost for 2006-$441,000 (+2.14 per household per quarter)
Estimated cost for 2007-$621,000 (+1.56/per household per quarter)
Attachment:Survey of Stormwater Rates 2005
2. Street Reconstruction Cost(excluding curb and gutter) should be assessed at 100% of the
cost.
Rationale - Based on an appraisal study conducted by the Valuation Group, the consultants
indicated that the market value benefit of the street improvements equates to the cost of the
improvements being done. Assuming Council agrees with the financing of curb and gutter
improvements, the risk of losing an assessment challenge by a resident or neighborhood is
diminished due to the extensive study that was conducted and the subsidy of the curb and
gutter cost. In most projects, the street reconstruction cost represents only a percentage of
the entire project costs. Most projects include other stormwater improvements as well as
sanitary sewer and water system improvements. The table below shows the total and
assessable costs of projects that will be assessed this fall.
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Minutes/Edina City Council/Special Meeting August 2,2005
Cost of All Curb& Assessable %
Project Improvements Gutter Cost Assessable
Halifax&Grimes $ 888,900 $ 137,000 $ 420,000 47%
So. Harriet Park $ 1,029,872 $ - $ 588,000 57%
Sunn sloe $ 1,028,218 $ 40,000 $ 663,000 64%
Schaefer Rd. $ 264,290 $ - $ 195,000 74%
Shannon Dr. $ 168,719 $ 18,000 $ - 0%
Bridge Lane $ 106,601 $ 9,975 $ 97,000 91%
1. The assessable unit for non-state aid residential street projects should be the residential
equivalent unit(Lot)rather than the front footage of the lot.
Rationale - Trips generated for residential lots are the same regardless of the size of the lot.
A resident on a corner lot, cul-de-sac or circular street does not use the roads differently
than a mid-block resident on the same street.
2. If a corner lot is subject to multiple street reconstruction assessments over a period of
years,the total assessable cost should be the equivalent to 1 residential equivalent unit.
Rationale-Current policy allows the assessment of the front of a corner lot to be assessed at
one R.E.U. and the side lot for another assessment project to be assessed at 1/3 of an R.E.U.
Staff believes that the total of both assessments should not exceed one R.E.U. so that lots are
equitably assessed over the City. A corner lot does not generate more trips onto the
residential roadway system than a non-corner lot.
3. Multiple Assessments cannot be treated differently than areas with one assessment
being incurred.
Rationale - Assessments must be equitable to all homes that are being assessed. This issue
was driven by the potential of a portion of the Country Club being assessed for sound walls
and residential road reconstruction. If and when the Country Club area gets assessed for
street improvements, you have the option to re-assess the sound wall improvement to a
longer term. By re-assessing, the Council opens the assessment up to a potential challenge.
If a challenge was raised, you could leave the sound wall assessment at the current term of
15 years and decide not to re-assess.
4. The term of residential roadway reconstruction assessments should stay at 10 years.
Rationale - There was some discussion of extending the term of residential roadway
reconstruction to 15 years. While this would be legal, rating agencies prefer the term for
residential assessments to match the term of the bonds. This would also increase the
interest cost to the homeowner
5. Assessment Interest Rate - The interest rate of the assessment should be pegged to the
assessment bonds that have been issued in the past 12 months or the 10 year Aaa bond
rate plus 2%.
Rationale - The City's Assessments over the past few years have charged a fixed rate of
around 6.5 %. This new index will better reflect the City's borrowing rate. Based on today's
rate the index would be around 5.8-5.95%. The additional 2% covers the cost of bond
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Minutes/Edina City Council/Special Meeting August 2, 2005
issuance, delinquencies and underpayments. Since the assessment debt is General
Obligation debt, the rating agencies would prefer the City use a conservative spread on the
interest rate to prevent the need to go to the taxpayers to cover any shortfalls in the
assessment proceeds. The table below compares the proposed new rate with other
communities:
Assessment
city Calculation Index Rate
Edina Bond Rate+2% 3.92% 5.92%
Bloomington Bond Rate + 1% 3.92% 4.92%
Plymouth Prime Rate+.5% 6.25% 16.75%
Fridley None 16.50%
Maple Grove None 16.00%
1. The City will accept both partial pre-payments and full pre-payments on assessments
before going to the County for tax rolls. For ease of administration, a minimum of 25%
of the assessable cost must be applied for a partial payment.
Rationale City past practice allowed only 100% pre-payment on assessments. Many
residents have inquired in the past about partial pre-payments to reduce their annual tax
bill. This will create some extra calculations,but this is a good public relations move with a
minor increase in workload. The full and partial pre-payments can only occur after the
assessment hearing and before the certification to the County. This gives the resident
approximately 30 days to make the payment.
2. Payment Schedule - Currently, assessments are calculated on a level principal payment
schedule. This results in a declining payment schedule which is cheaper than a
traditional amortized schedule which would have equal payments over the life of the
assessment. Staff is open to either calculation,but does not want to have the resident to
be able to choose either method. This would result in very onerous administration of
the assessments.
Rationale- Mr. Anderson presented possible payment schedules that could be utilized.
3. The new policy will not be retroactive to projects that have already been assessed.
Rationale: It would be very difficult to determine how many years to go back and re-assess
projects that have been completed and already assessed. Our research with other City's
policies indicates that all cities made a clean break when beginning their new programs.
4. A couple of elements of the Senior Deferral Program should change for equity and
fairness.
Rationale:
a. The current interest rate for the deferral program is one percentage point higher than
the standard assessment rate. This should be changed to reflect the new interest rate
adopted in this policy (bond rate plus 2%)
b. The current deferral policy requires that both spouses live in the residence. This should
be changed to reflect situations that have one of the spouses residing in a facility that
accommodates health care situations (i.e. assisted living centers,etc.)
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Minutes/Edina City Council/Special Meeting August 2,2005
Following Mr. Anderson s presentation, the Council discussed the implications of instituting a
special assessment policy, the impact upon homeowners with large assessments coming closely
together such as the sound wall improvement and roadway reconstruction within two to three
years, the interest rate charged by the City and whether or not a level payment amortization
should be allowed. The Council directed staff to further refine the policy and place it on the
August 16,2005,Council agenda for consideration.
There being no further business on the Council Agenda, Mayor Hovland declared the meeting
adjourned at 6:40 P.M.
Yp �
De ra M en,City Clerk
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