HomeMy WebLinkAbout2011-10-05 PACKET 06.B.REQUEST OF CITY COUNCIL ACTION COUNCIL AGENDA
MEETING ITEM #
DATE 10/05/11
PREPARED BY Engineering Jennifer Levitt
ORIGINATING DEPARTMENT STAFF AUTHOR
COUNCIL ACTION REQUEST
1. Conduct a public hearing considering the assessment of the public improvements for
the 2011 Pavement Management Project,
2. Adopt resolution adopting assessments for the above project.
STAFF RECOMMENDATION
Hold the public hearing and adopt the resolutions as presented.
BUDGET IMPLICATION
1-11170c] 0 1 :4 7 G 1 P/[Sig] 0
ADVISORY COMMISSION ACTION
❑ PLANNING
❑ PUBLIC SAFETY
❑ PUBLIC WORKS
❑ PARKS AND RECREATION
❑ HUMAN SERVICES /RIGHTS
❑ ECONOMIC DEV. AUTHORITY
SUPPORTING DOCUMENTS
ACTUAL AMOUNT
DATE REVIEWED
APPROVED
DENIED
❑
❑ ❑
❑
❑ ❑
❑
❑ ❑
❑
❑ ❑
❑
❑ ❑
❑
❑ ❑
❑
❑ ❑
® MEMO /LETTER: Jennifer Levitt, September 27, 2011. Robin Roland, October 5, 2011
® RESOLUTION:
❑ ORDINANCE:
❑ ENGINEERING RECOMMENDATION:
❑ LEGAL RECOMMENDATION:
® OTHER: Final Assessment Role
COUNCIL ACTION TAKEN: [ ❑ DENIED ❑ OTHER
H:\mkock \COUNCIL FORMS \Council Action Form.doc
RESOLUTION NO. 11-
RESOLUTION ADOPTING ASSESSMENTS FOR THE 2011 PAVEMENT
MANAGEMENT HOWARD'S ADDITION (DISTRICT A) AND PINE COULEE &
COUNTRYWOOD (DISTRICT 1) ROAD PROJECT
WHEREAS, pursuant to proper notice duly given as required by law, the Council
has met and heard and passed upon all objections to the proposed assessment of the
2011 Pavement Management Howard's Addition (District A) and Pine Coulee &
Countrywood (District 1) Road Project.
NOW THEREFORE BE IT RESOLVED, the City Council of Cottage Grove,
County of Washington, State of Minnesota, as follows:
Such proposed assessment, in the amount of $515,624, a copy of which is
attached hereto and made a part hereof, is hereby accepted and shall constitute
the special assessment against the lands named therein, and each tract of land
therein included is hereby found to benefit by the proposed improvement in the
amount of the assessment levied against it.
2. Such assessment shall be payable in equal annual installments extending over a
period of 15 years, at an interest rate of 7 %, the first of the installments to be
payable on or before the first Monday in January, 2012, and shall bear interest
on the entire assessment from the date of this resolution until December 31,
2012. To each subsequent installment when due shall be added interest for one
year on all unpaid installments.
The owner, of any property so assessed may, at any time prior to certification of
the assessment to the County Auditor, pay the whole of the assessment on such
property, with interest accrued to the date of payment, to the City Treasurer,
except no interest shall be charged if the entire assessment or on any amount
$500 or greater is paid within 30 days from the adoption of this resolution; and
she /he may, at any time thereafter, pay to the City Treasurer the entire amount of
the assessment remaining unpaid, with interest accrued to December 31 of the
year in which payment is made. Such payment must be made before November
15 or interest will be charged through December 31 of the next succeeding year.
4. The Director of Finance shall transmit a certified duplicate of this assessment to
the County Auditor to be extended on the property tax lists of the County. Such
assessment shall be collected and paid over in the same manner as other
municipal taxes.
Passed this 5th day of October 2011.
Myron Bailey, Mayor
Attest:
Caron Stransky, City Clerk
T of • ••- Gro
TO: Honorable Mayor and City Council
Ryan Schroeder, City Administrator
FROM: Robin Roland, Finance Director
Jennifer Levitt, City Engineer
Brenda Peper, Financial Analyst
DATE: September 27, 2011
T
RE: Conduct Public Hearing on the 2011 Pavement Management Project and
Consider Adopting the Assessments for the 2011 Pavement Management
Project
Introduction
On September 7, 2011 the City Council declared the costs to be assessed and called
for a public hearing to consider the assessments for the 2011 Pavement Management
Project. Notices were mailed to property owners and published in the South
Washington County Bulletin on September 21, 2011.
The action requested at this meeting is to hold the public hearing. Following the
hearing, Council is asked to consider the adoption of the assessments.
Due to staff's desire to allow for the completion of the majority of the project (substantial
completion) prior to the assessment hearing, there is no flexibility in timing for this
hearing. The assessment roll must be adopted this evening if it is to be certified to the
County by the deadline for the 2012 property taxes.
Discussion
On September 1, 2010 the City Council authorized that a feasibility report be prepared
for the 2011 Pavement Management Area. The 2011 Pavement Management Area is
for Pine Coulee and Countrywood (District 1) and Howard's Addition (District A) as
established by the 1994 Pavement Management Program. The City Council held a
workshop session on October 20, 2010 to discuss the various elements of the proposed
improvements. The workshop session provided the necessary guidance to define the
scope of the improvements.
The Council approved the feasibility report on November 3, 2010 and called for a public
hearing to be held on December 1, 2010. A neighborhood meeting was held on
November 9, 2010 for the project. A public hearing was held on December 1, 2010 for
the project and the Council ordered the improvements.
City Council
2011 Pavement Management Public Hearing
Page # 2
The plans and specifications were approved on March 3, 2011 and the project was
awarded to Hardrives, Inc. on April 20, 2011.
The City's practice is to assess for improvement projects once the project is
substantially complete which has been interpreted to mean a drivable surface (or the
wear course paving is complete). The roadway improvements are substantially
complete. There is some restoration work that continues this fall and next spring, which
is typical on most Pavement Management projects. It is challenging to get grass to
grow and establish in one growing season. This summer proved even more challenging
with significant rain events in July which caused erosion and seed to washout. The
contractor had to return numerous times to the site to re -seed. There were some yards
and ditch sections in which sod had to be placed to enable the area to stabilize to
prevent erosion. All other areas received seed. Currently, there are a few driveways in
which the contractor needs to correct defective work. It is staff's recommendation to
proceed with this corrective work in the spring to provide for a better asphalt finish on
the driveways; the cold temperatures currently would make this challenging. The end
product would be better if performed in the spring with warmer conditions.
The proposed assessment amounts follow the adopted Infrastructure Management
Task Force (IMTF) policy calling for 45% of the project costs to be assessed equally to
all properties in the improvement area. There is one exception parcel in the Pine
Coulee neighborhood that is zoned agriculture and the assessment amount is based
upon a special benefit appraisal per the IMTF policy. The assessment for that lot is
$12,000.
Recap of the project costs and funding:
The current assessment amounts for Pine Coulee /Country Wood and Howards Addition
respectively are $5,194 and $4,745. This compares to the original projected
assessment amounts based on the engineer's estimate of $6,000 for Pine Coulee and
Playground/
Total Contractor
Assessed
Storm
Park shelter
Property Tax
-. Per Lot
&Other costs
Amount
°%
utility
Funding
Levy
Equivalent
Pine Coulee & Countrywcod
Streets
$852,360.47
$383,562,21
45 %'
$
$ -
$468,798.26
$4,342.82
Storm Sewer
$166,997.69
$75,148.96
45%
$57,64518
$ -
$34,203.55
$851.50
$1,019,358.16
$458,711.17
45 %
$57,645.18
$0.00
$503,001.81
$5,194.32
Howards Addition
Streets
$105,594.89
$47,517.70
45%
$ -
$
$58,077.19
$3,959.81
Storm Sewer
$20
$9,426.57
45 %
$7,230,93
$
$4,290.44
$785,55
$126,542.83
$56,944.27
45%
$7,230.93 '
$0.00
$62,367.63
$4,745.36
Pine Coulee Park
.
Park Improvements
$131,899.39
$000
0 %:
$ -
$45,66329
$8823610
$131,899.39
$0.00
0 %.
$0.00
$45,663.29
$86,236.10
Construction Costs
$1,277,800.38!
$515,655.45
40°%
$64,876.10
$45,663.29
i$651,605.54
The current assessment amounts for Pine Coulee /Country Wood and Howards Addition
respectively are $5,194 and $4,745. This compares to the original projected
assessment amounts based on the engineer's estimate of $6,000 for Pine Coulee and
City Council
2011 Pavement Management Public Hearing
Page # 3
Countrywood and $6,150 for Howards Addition.
Appraisals
A special benefit appraisal was conducted by BRKW Appraisals, Inc. on October 18,
2010 for two properties in the Howards Addition. The special benefit was determined to
be $7,000. The properties were approximately 1.5 acres.
A special benefit appraisal was conducted by BRKW Appraisals, Inc. on October 18,
2010 for seven properties in the Pine Coulee and Countrywood developments. The
special benefit ranged from $6,000 to $9,000. The City Council capped the assessment
at $6,000 at the time the project was ordered. The agriculturally zoned property had a
special benefit of $12,000 for the 14.60 acre parcel.
Payment Options
If the assessment roll is adopted after the public hearing, property owners will have 30
days to pay the entire assessment, or make a partial payment of at least $500, without
incurring interest charges. In the event that the assessment is not paid within 30 days,
the assessment roll will be certified to the County for collection over the next 15 years.
If certified to the County, annual principal and interest payment added to the property
taxes would be approximately $796 each year for Pine Coulee and Countrywood and
$727 each year for Howards Addition.
Action Requested
• Conduct the public hearing for the project.
• Adopt the assessment roll for the 2011 Pavement Management Project.
I I I b �... N S S 2, m�D t S .. SNbb� ° O �°p OOOS t0 --S-
M - -
M M M M M M M M M M nt M
O
v
u
a
a
a
n
a
n
v
m
0
Hill
° ° °
° o ° 08 °
° °
° o ° o ° oe °
° ° °
° 088 °
° °
° 0 ° 08880 °
° °
° oo °
° °
° ° °
° 0 ° 08 °
° °
° ° °
° ° °
° 0 ° 08 °
° 0 8
8 8
888 °
° °
° ° °
° oe °
° oS
0
° 088 °
° O Oe ° o
oo °
° ° °
° °
°°°
0 ° 08 °
° 08 °
° °
° ° °
° ° °
° ° °
° ° °
° 02888 0
00 ° 0 °
° ° °
° ° °
° ° °
° 0 ° 0 °
° °
° oo ° ° °
° oe °
° ° °
° ° °
° o ° o
� 0
0 o
o� o�m o
omm
c
o -
TF �
- o
o
V 1
N N N
N N N
N N N
N N N N
N N
N N N
N N N
N N N
N N N
N N N
N N N
N N N
N N N
N Vl N
N N N
N F
F- 1n N
N N V
Vl N V
Vl N N
N N
N N N
N N z
VIN N
N m
m N
Z Z Z
Z Z Z
Z ZZ2 2
2ZZ
� �
�Z' �CZ/I �
N U' U
�Z'' �CZI Z
Z � �
� � �
� � �
z z
z z. U' .
�CZ/I �Z'' Z
. o
oz z
Z (
z z
z U
Z 1
10 1o/o Z
Z Z Z
z V
Z Z Z
Z Z
2
__
Z
Z S
S S
S 2
2
N N
NNN N
N
9 N
N N
N V) N
N N
N N
N N
N p
. N N
N N
N W
p .
N N
N w N
N w
w N F
F >
W W W
W W W
W W '
>> w
'✓1
N N
N
Qom¢¢ ¢
¢¢ >
> �¢¢¢¢¢¢¢aa¢ »
a¢¢¢¢ a
» »
» »
» »
»¢ »
»¢» �
2¢¢ o
�Naywwww a
n 0
00,
¢ p
p 0 0
> >
>
OI 6
6 0 O
O a
m z x
6 O
m m m
m¢ m
O 0
m m m
0 a
z z z
z z 2
a¢¢ Z
2° z
z z o
o z z
z z ry x
¢ c
coo n
0 0 0
0 0 0
�n Y
0 o m
m 2 .
...
z 2
2
q ° w
a {
{ s
$ a
V a
w w w
$ a
$ a
W
t�V. 0
0 0
0 0 0
0 0
0 z
z 19 t
0 0 0
0 U V
V Y V
Y¢ V
V¢ a
w W
W g
19
W W
Gl W
w w
w w
J•J o
GI G
GJ GJ W
MUM
w
w 2 w
w S S
g S N
S�� P
n C
C `w O
O O O
O O O
O U
O w
w w
g w
w
�o �
�0 0 8ry J
oo0�.+0 o
o o
o I
In o
oo m
m �
�^ v
zo o
oo O
J
---
- - e
e
-
.off r
r -
-h
.NN -
- - .
-- .
-
--
O
z y y
y N M
M L
L o N
N N
N N N
N N
c W G G
G N
N N
N N
N N
N N
N N
N N
N N N
N N
N p
p V
N N
N > W
W W> w
w w
w N
VI W
W W t
tL W W
W W m
m N
N
t b
bF- N
U Q
Q j
j ¢ ¢
¢ ¢
¢ j >
> ¢ 6
6 ¢ 6
6 6 a
a ¢ ¢
¢ ¢ ¢
¢ > >
> > >
> > >
> > >
> ¢ >
> > a
a > >
> > w
w > W
W .
.. W
W W ¢
¢ > U
U U
U
tn. ¢
¢ O O
O O
O¢ 6
6 O
O W O
O O
O O O
O a¢¢ 6
6¢ 6
6¢¢ Z
Z 6
Z a
0 0
0 p O
'd �
O W
W a O
O O O
¢
W
v W
m [
W v
¢p o
3333�3�33w J
osl�m�cc'd '
U U
U U
�i<a o
o aaa o
W W
o'.
V9 g
E W
W W
v`li� 3
W 2
2 W w
'-' S
w W
W Y
Y J
S S S
S S w
J F - I�Q�� 4
T J' _
_1 >
>' U
_YYYYYY s
o... `
W S
aU $
$o "
"� °
°8rv�of�80000 °
° o M8 °
° wo ° +n m
m� °
°w o
oo�m I
I^ °
° o °
°m °
° o °o °
° ° .
. ^
^o °
° c mrvry ^
^ N
Z
Z a
a
O
LL
Z m
Y a
m Z
m £
£ 0
0 d
d 2
2 Y
a
W o
oEr 1
1 J s
sl^ z
z �
�3 5
5€ y
ya `
`a
Z p U
W
W a Y
Y a
a u
u o o
o W N
N ¢
¢ o
o Q J
J i
iO O L
LL S
S w
w u
u u
u W
W Z W
W Y S
S E
E
¢< z
0
0 U
U 5 m
m
W E
E s
s 0
0 O
O£ Y
iu.wm x
Y ¢
z 0
a r- z
¢
r w
w o
oz m
mu z
r7 E
u
E i
x_F a
w
z ¢
Z -
oz�c m
o v
m E w
wa p QZ . -
Bi F
-. a
a< r
r r
�CC O
r> W
W
E W
W F
F.zNmw..,¢ p
mfm� E
p r
rim u
u��a Y
Ya o
- S W
W W
W o
- ' v
o u
F'O K
u ¢
¢z¢w
¢z E
E
nza m
�az<a v
v5 m
ml'- z
E x
m>
vxzce�8yfzf ¢
z�a z
z m
N z
0 t
F
Q a a
a N
N a
a Q m
m o
o Q
Q 3 o
o l
l o¢ o
o o
o w
w Q
Q o
o z
z m F
F> a
a p
p a
a N
z m
m 0
t9 w
w Q
Q F
N 3
3 z
m u¢ a
z H
a x
x m w
HH .
w m w
w O w
w x
.��s.ym >
x ^
^^ v
v 0
0 p
p °
z Si, C
n W z
W m
m
f 3 m
m S
S .
.,03 m
m c
V z .
._ w m
m x a
a w
w w
w O
n<rmo., Y
O¢ v
v w
w $ m
m¢ 2
2 w
F1�., 1
w x <
< p
p w p
p i O
O x Q
Q �
o
0
a 0
000 o
o i
iO^ m
mmo. -
-+ M
M c
c �
�o o
o..N c
N N N
coo N
Nmrno -
-. N c
c.� r
ry M
Mo I
In �p m
mo.+�n �
�o r
r.mm°
X 0
0 0 0
0 S S
S O S
S S O
O O O
O O O
O O O
O O O
O O O
O S O
O O O
O O O
O O O
O O O
O O O
O 2 0
0 0 0
0 0 8
8 0 2
2 2 S
S S
SOS 0
0 0
0 0 0
2 0
0 0
q p
p m
m M
M M
M m
M M M
M M M
M M
M M M
M M t
ti N N
N M M
M M t
m C
m V
m M M
M M
M M M
M M M
M t -
- M M
M M
�N ^
^ ^
^ ^NNNNNNNNNNN �
N p p
n N N
N n r
ry n n
n n n
n n n
n n n
n n n
'~'~� N
n n n
n n n
NNN N
NN N
N N N
n n N
NNNN N
n N r
NNNN'~ t
N N N
n n
NNN N
N.NN
n
p N
O
v
u
0
m
2
6
V
d
C
9
q
6
d
R
a
0
0000000
8888888
B ° 0
8 ° o ° o
° o
0000000.
o ..
o.
o
0
0
e
o p
.
p pp
C P
P m P pp P'
P p
.
O�
.
P P
. P
O�
P.
m
pp pp
T T
P
;
P O
�
0
P
P P
p
~ b
W
N hM �. NW �
� N N
N
� O
�, N
Vt ✓t
N N
N
NW W
N �
� (0
�
a
o OOOOOOOOO.ggg
00000000
OO: 0000
......0000000OOO
°o
°o °o
°o °o
°.
N 'c6dcvc6
.N
a.mmm mmo�m
vvvvvcc
may
o�o���tim
.
o
NW�MMN��iNA
ViNN
Vi
NW
N W
��Ww
M'9'�
��'�
.h
e
m
n
V
N N
N N N N N
N N N N N
N N
N M
N N
N N
N N
. .
N N VI
N
N
N N
N N
N N
N N
lD U'
U' l9 U' 19191D
19 U' 1910
(D U'
U' w C9
V
(9
19 19
19 19 19
V'
U' (9
Z Z ` C Z. C y �
��dG¢
CC C C
a¢aQaQQ¢d¢Od�a¢�aa��QQaggaQddaE
CC C C C
CCZ ����Z-nn^^11rZrnn
Z
CZC
Z CC Z
C2C C 2
z
Z C
zz
C C
CC
.
C CCZ
1
ZC ' ^ 1 CZC 1, ^ ,
z
11CZC�^, 2
2 2
2 2 S x S
x x 2 x 2
2 2
2 U
S S
2 S
S S
S x
2 S
x S
2
2 2
2 2
2 S
S x
N N N
N
A N
N
K 5 4
n
n
a
N >
> > > > >
D
G a
a¢ Q Q a¢
u u u a
o u
u
Q a¢
w
w w
w
>
»
a
>ww
a
w w
w w
w w¢
¢
O O
ww�
u t9 19 19 19
»w
u O O O 19
O
»:
O'
m 19
u¢
» >
a¢
>
a a
a a
a l9
l9
»
a¢
»
a¢
»w
a a
u
z
z
z
Z 2
Z Z
Z
�2
Z z
0 0
z z
=q
�
y
U
V
000000.+
J
J
.
�o �o�e-
n --
e
o On
�.mmm
° mm
wm�
- °
ww
w m°
-
ti
O
N
F
y
{J
h
:
N
N N N N
V I N N
K K d
N m O O
A N
K
C)
N
2
c W c
D
¢
Q
wmwNmNw
a 6 Q Q 4
4 4
4 6
a w
w W
O
w
>>>>
ww
Q
6
W W
W W
W
a
w
U
t9
w w w w
J U' 19 19 19 19
w p 2 O
19 O O O
p O
o
2
w >>
>
>
Q ¢
w
Q 0
w
�
> >
a a
> >
¢ ¢
>>
a 419
d
a0000
Q
00000��og�000�zzzzzzz�_zz�zz�m
Y Y Y
Y
Y
Y O
O O
O O
O .. O
O Y
Y
O O
O { O .
O
y y
Y
YY
U U U U U
YO�z
U Z Z
6
U U
U o
I L
o c
t Y
{
Y l i
U
{Aa
d� G
ti000000000�
c
o
0
V
tp W tp
m N� P
O� tO
P b
0 0�
-
b ^
oo-
a p
w
C O
O
--
ti.�mmwro
~
.�-��+
.a
H
---
ti
~
Q
m
w
W
Z
z
Vu
w
F
mo
= U J
m�
U Z Q
M Fz4
O
>k�urw�
x Z
O O
Y
Z
C m
m>
O W
J
4 m
-� Z 0 6
Q a Q
N a
O
F m
N
Z F
Z^
W
. O
V
z
w m
Z
c
u
.Z, a
Ez, w
z-'
Q
<<z
rZ'
D,
�
Y O �goow
�
>
3_cCUQouw=
u
g�m`too
€-W'z
��t
afg
>
o z
O
?w �z3
ww
a
zw¢ttmaaf
rl''.g
O�E Y md A
V
z
S
°1 �at `a�O
ui�a°'�im0
jam
�Q
¢�
ain
wO
V z
ciao
3
�Nyj
O
w rn• ,eS F
w
3^ Z
O
EOOa��'`�eS
z o>
19
U
�m
w
m zy
w K
Q
�w�S
zcE
Cu
( a-i
^
¢
a
Q z 2 c
N z¢
g m� m u
u� U
E �
x
a u
o o
Q a
w
o>
w
a
u
Z
a Q
w
F O
o '¢
^o a. W Gn�Q
a'�'4
.
U
2.
1 Ua192'a
w�
Z��
6
2 . W
-,zY
V1�Uf
v'"oo
oo0000
Pvn .ormrno.+N
000000
N
N:..ry
000000.
ma
Ne
rmmo
tirv�
Nmmo
-i
° o
N MP
NN
d
° o ° o
° o ° .
° o ° �gSSg
0 000 0 00 0 0 0 0 0 ... 0 0 0 0
M M
M
C'
P N
N V
V V
v v
a a
- ��
C' C
N
n N n N N
N N N N N
N N
N N
N
N
n N
N N
n n
N N
r
N N
N
r N
N
N
N
N^
N
N^
n
N N
N 1�
.......
0 0 .............
p o
Os
N
.........
N �O
t0 tp
tO �➢
t0 d
t0 tO �➢
�O
m
M
M
M
�
0
m
2
0
0
v
r
v'
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
o
p
p
'C
vi
ui
vi
vi
vi
vi
vi
vi
tri
vi
vi
vi
�
vva=
vvcvva'a'a
= v
i
N
�
F
0
o
0
0
0
0
0
0
0
0
0
0
0
0
0
o
0
a
0
o
0
0
0
0
y
to
N
N
N
N
N
lfl
V1
N
N
lfl
Ifl
c
vvvcvcvavadv
�vva
w
=v
a'v
va'v
a=vv
N
C
7
>
>
>
>
>
>
>
>
>
>
>
Q
Q
Q
6
Q
a
Q
Q
a
Q
Q
4
O1N
Q
Q
Q
Q
Q
<<
Q
<<<
J
C
<
°
°
O
°
00
J
_
Q
a
a
Q
a
a
Q
a
a
Z
Z
Z
Q Z
Z
Q Z
Q Z
Q Z
QZ
Z Q
Q Z
Q Z
F O
O
O
O
O
V
N
Q
M
Z
N
r
n
L U c
N
V
uj Q
V
N
N
N
N
VI
U1
N
VI
to
to
1/1
9
G
W
>
W
>
w
>
w
>
w
>
w
>
w
>
w
>
w
>
W
>
W
>
Q
Q 3
�"'QQQaQQQaaaa
aaaaaaaaQaa
zzzzzzzzzzz
py
9e
mov�v
w�n�
GY
W
J
g
<z :UQ�
J
U z i
Q9^5
=
^�
J
y>
J
W
J °
E
U
N
J
c}
O
w
W
Q }
Z
a
Z
U
Q
a'
w
pa��a_3aZz"zzz
w
=
°o�oc^`c
z
ai����
>>
Q
U.
Q
2
°
J
Z
p.
J
K
z
Y
V=
w
Q
w
w m
Z
n<�E0
OEM
zU
Q
o
ry
0
M
0
a
0
N.oN
0
0
0
mrno-+N
0
0
�„�
0
0
00000000000
0
0
0
0
0
0
0
0
0
0
0
d
ti
H
ti
ti
-+
.
N -
ti
ff
,
N
O
N
O
N
O
N
O
N
O
N
O
N
O
N
O
N
O
N
O
N
O
N
O
y
G
City of Cottage Grove
Finance Department
TO: Honorable Mayor and City Council
Ryan Schroeder, City Administrator
FROM: Robin Roland, Finance Director
DATE: October 5, 2011
SUBJECT: Interest rate on Special Assessments
Introduction
The City charges a standard 7% interest rate if pavement management assessments are
certified to residents' property taxes.
Discussion
The IMTF Special Assessment Policy for public improvements Section 6.2 - Interest rate reads
"The interest rate of special assessments shall be at a rate established annually by the City
Council at the time of the certification of the levy." Effectively, this provision is satisfied each
year when the special assessment public hearing is held.
The interest rate on all pavement management special assessments has been 7% since the
program's inception in 1994. Certain 'equity' between payers exists over the last 15 years as
all have paid the same interest rate on certified assessments.
According to a December 2007 memo from Ron Hedberg "Council policy on this matter was
apparently set through approval of bond documents that related to the first pavement
management project in 1994. The documents stated that the rate of interest would be at a rate
of 1.5% greater than the TIC (total issuance costs) but not less than 7 %."
Special assessments may be paid in the first 30 days after adoption without interest. It is only
after the assessment is certified that interest is applied. The certified assessment is a
financing tool that is offered to residents and as such, interest rates applied should be
compared to the interest rates of other available financing tools. Current interest rates range
from 4 % on home equity credit lines to 9.25 % to 13.25% unsecured lines of credit at a bank
and up to 24% on credit cards.
Special assessments are collected to repay the costs of the project. If project costs are paid
for through the issuance of bonds, the bonds must be repaid over time at a specified interest
rate. Special assessment payments received during the first 30 days are invested by the City
and used to make future debt payments on bonds. All other special assessments (principal
and interest) are collected through property tax payments over the specified time period and
are used as they are received for bond payments. As the documentation in this packet attests,
other cities use a policy formula to determine the interest rate on certified special assessments
Honorable Mayor, City Council, and Ryan Schroeder
Page 2 of 2
which takes into account the interest rate on the bonds to be paid. Although this policy has its
justification, it is not the only acceptable policy on special assessment interest rates.
In the case of the 2011 Pavement Management project, the City has used existing funds on
hand to pay for project costs, subject to potential reimbursement from future bonding. Special
Assessment principal and interest payments collected will be returned to the pavement
management capital project fund and used to reduce any subsequent debt service on bonding.