The URL can be used to link to this page

Home My WebLink About1998-09-02 PACKET 12.B.REQUEST OF CITY COUNCIL ACTION COUNCIL AGENDA MEETING ITEM # DATE 9/2/98 �� . � • PREPARE BY: Finance Liz Johnson ORIGlNATING DEPARTMENT STAFF AUTHOR .�><�..��.��..��«>�..��.tr.<��>��...��<�..�<��.� COUNCIL ACTION REQUEST Fteceive information concerning assessing commercial properties alo�g 80th Street and provide direction F�UDGET IMPLICATION: $ $ BUDGETED AMOUNT ACTUAL AMOUNT FUNDING SOURCE ADVISORY COMMISSION ACTION �� REVfEWED ❑ ❑ ❑ ❑ ❑ ❑ ❑ APPROVED ❑ ❑ ❑ ❑ D ❑ ❑ DENIED ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ PLANNING ❑ PUBLIC SAFETY ❑ PUBLIC WORKS ❑ PARKS AND RECREAI'ION ❑ HUMAN SERVICES/RIGHTS ❑ ECONOMIC DEV. AUTHORITY ❑ SUPPORTING DOCUMENTS � MEMO/�El ❑ RESOLUTION: ❑ ORDINANCE: ❑ ENGINEERING REGOMMENDATION: ❑ LEGAL RECOMMENDATION: � OTHER: ;� ,, �„ � � 7 �� , City Rdministretar � �ate � ��.�«��<..��tr:��<�.��.�.��t��...��..�» couNC�� c �r��c��: ❑ a��nv�� ❑ ��i�� ❑ o�rr�� " • . !� To: Ryan Schroeder, City Adminisirator ., G From: Elizabeth Johnson, Finance Director� 4" Date: 08/24/98 Re: 80�' Sueet commercial assessments Introducrion The Council shouid provide guidance for assessing commercial properties. I received construcrion cost informarion for commercial lots along 80�' street from Tom Thompson, BRAA. His schedule is attached. The resolurions calling for a public hearing and declaring costs for the 80`� Street project aze scheduled to be approved by Council on September 2nd. The public hear¢ig for this project is scheduled for October 7th. Background The Council considered an assessment guidelme for assessing school properties on May 20, 1998. It was the consensus at that time fo assess schools 75% of actual costs for street, storm sewer and tra�c signals. It was my tmderstanding thaf the Council considered hun lanes, sidewalks, aesthetics and engineering to be community costs. The City has not had a great deal of experience in assessing commercia] properties. Commercial properties were assessed for the East Point Douglas project. At thaf rime, the City hired McKenzie Metro appraisal, wlvch prepared a guideline for what they considered to be a sustainable assessment amount for that particulaz project. The basis was a factor applied to a percentage of mazket value. The City also received an assessment amount from the Engineer, BRAA, who proposed a rate per front foot. The adopted assessment for the East Point Douglas Road project was the McKenzie amount, which was higher than the proposed BRAA amount. I have included a copy of my memo dated September 17, 1997 to Kim Lindquist, Director of Commwrity Development conceming the background of the East Point Douglas project. These assessments were adopted October 21, 1992. The City has not assessed commercial properties for street reconstruction since tF�at project. The Pavement Management Task Force proposed that commercial property be assessed 100% of cost. This guideline was presented to Council on November 5, 1997. I have included a copy of the minutes of the PMTF meeting of October 29,1997. Discussion F I. . _. _ . August 24, 1998 The costs in the attached schedule represents: Streets: Two lanes and tum lanes were appiicable. StreeT costs include removal, excavation, aggregate, bituminous, concrete curb, concrete median, marking and sod. Sidewalk: All sidewalk work and exposed aggregate Storm sewer: Storm sewer on that half of 80`� adjacent to the commercial lot Water main: costs associated with that half of 80`� directly in front and adjacent to the commercial lot Street liehts: Removal existing lights and replacing with new pole and base. LandscaoinQ: Tree transplanting and modular block retaining walls. There are tMrteen businesses situaYed along 80`� street with 80�' Street addresses. Construction costs are the following using the guidelines for what is an assessable conshvction cost versus a community cost as developed at the May 20`" workshop: Address Business Street Storm Watermain i Total 7125 Super 8 Motel 9,521.80 9,521.80 i 71�5 DQ 6,588.45 6,588.45 7201 Rapid Oi] 8,108.82 8,108.82 7200 US Bank 4,361.95 4,361.95 7350 Burnet Realry 5,541.97 5,547.94 7449 Instuance 16,432.94 1,100.00 4,140.00 21,672.94 7501 IHHCS 16,700.95 352.00 17,052.95 I 7460 Clinic 17,78028 4,900.00 22,680.28 7500 Dental 13,416.70 2,546.40 15,963.10 7606 US West 25,346.54 6,599.84 31,94638 7702 Chiropracric 33,0?3.96 'I,720.45 5,156.90 45,95131 7584 Video Kiug 14,887.57 14,88Z57 7155 Stripmall 6,489.27 2,195.60 8,684.87 Total 178,251.20 16,268.05 18,443.14 212,96239 � August 24, 1998 The total assessments for commercial properties based on 2% of market va]ue per the feasibility report equaled $100,968. An attached page illustrates the difference between assessing based on market value versus 100% of cost. The Council should consider discussing assessing 100% of the cost, assessing based on market value or assessing according to some other basis. Requested Acrion Please forward this information for Council review at a workshop session held September 2. N r s � _ � o � E a � U � � O Q � � i y C � � V J � � � m E E 0 v � « a E w � 0 � .. � 0 c� e 0 � a c 0 v a c a a u a � c � J � C « i W J C � € m � � m m h � y Y ; O � N .� 5 ai m a 0 LL w 2 � C 0 �' � � � � 0 �ri � � � E tn w � � � O J m 6 Q� E cg m 0 r Comparison of Commercial Assessments Based on Market Value versus Cost PAVEMENT MANAGEMENT TASK FORCE OCTOBER 29, 1997 MEMBERS PRESENT: Abigail Grenfell, Gary Kjellberg, Herb Japs, Terry Miller, Jeff Podoll OTAERS PRESENT: Jim Wolcott, Ryan Schroeder, Diane Archer, Les Burshten, Ron Erickson, Al1an Larson, Jersy Bourdon, Dave Hansen, Corrine Thompson Chair Grenfell asked if item 3 could be moved to item 2. Motion to approve the agenda with modifications by Gary Kjellberg, second by Aerb Japs. Motion passed. The Task Force members introduced themselves to Ryan Schroeder. There was a motion to accept the minutes of September 30, 1997 Motion passed Jeff Podoll made a motion to amend the motion passed on September 30, 1997 to make it clear that the 1� of market value assessment for mill/patch/overlay applies to residential, 100� of cost for commercial and for schools and 75� of the cost to churches and non profit organizations. Second by Motion passed. Gary Kjellberg made a motion to amend the motion passed on September 30, 1997 to make it clear that the cap of 1.25°s of market value assessment for pavement reclamation applies to residential, 100� of cost should be assessed to commercial and schools and 75% of the cost to churches and non profit organizations. Second by Terry Miller. Motion passed. David Hanson presented an update on the E4 District construction projects. The sod will be placed next year in E4a along with the final wear course. E4b street light re-working has not been complete. The mill/patch/overlay will be done next year at the same time as E4a final wear course. Chair Grenfell asked about the schedule. David Hanson replied that the project was behind schedule. Chair Grenfell asked if a problem would occur next spring with runof£ if the sod is not in place. Don Strom asked about the curb issue that was brought up at the last Council meeting. Ryan Schroeder responded that the cost would be $4�,000, about $10,000 would be assessed. The Council will decide on November 5, 1997 at the continued public hearing. Gary Kjellberg would not sugport spending $30,000 in tax dollars. Chair Grenfell agreed. $ D 'E i � Mem01Yd11dUm To: Kim Lindquist CC: From: Liz Johnson � Date: September 17, 199'7 Re: School and commercial assessments The two schools, Hillside and Armstrong, were constructed io the Pavement Management projects. The amount assessed to the schoots were: 5/3/95 Market 1996 1997 Total Letter Value Rate Total Hillsi�' 28,931 70,504 99,435 99,400 4,099,200 A2 81,984 Am�stcong 31,959 12,685 44,642 44,700 4,327,700 .02 86,554 The above compares the total amount assessed to the two schools in 1996 and 1997 to the amount Kevin Frazell notified Dave Peterson of the Schoot District in his May 1995 letter. Theses amounu were based on cost per lineal foot. The above also compares the assessment based on 2% of market value versus the amount assessed based on cost per lineal foot. Commercial Peoperties: I 6ave attached a list comparing the costs assessed in 1992 to the conunerciai properties along East Point Douglas Road. The preliminary report &om Bonestroo suggested using a fuced cost per foot. T6e BRAA report spiit cortunercial properties into two districts. A report &om McKinzie MeVo Appraisals, dated 7anuary 31, 1992, suggested using a percentage basis applied to market value. This basis was a factor (based on individual property characteristics) * percentage t assessed value. T6e factor raaged from .25,.5,.75 or 1.0. T6e percentages used were 5%oa land and 1.5%on buildings for commercial propeeties in Part Y and 3% on land and .OS% oo buildings in Part II. I tried to deterniine if there is an overall consistent rate applied to the assessc�nt by dividing the adopted assessment by the tnazket value. The rates fluctu2ted from .54%to 5%. September 17, 1997 '1Le City chose to use the McKinae suggested assessment, which is based on percentages applied to market value. The McKinzie assessment was lower in virtualty alt cases than the BRAA proposed assessn9ent. I 6ope this answers your questioos. 0 Sheetl E Pt Dougias Assessment adopted 10/21/92 Market Assessment Adopted Business Value "Rate" Assessment Dairy Oueen Super 8 Super America ei Perkins iot Perkins Norwest Bank Arbys Precision Tune McDonalds Muffler Dr Mr. Movies Sherwin Williams Village Transmission Big Wheel Rossi Hardees Hardces lot 118,700.00 465,000.00 374,000.00 62,400.00 564,100.00 379, 800.00 262,600.00 461,200.00 411,400.00 156, OOO.OD 257,200.00 290, 000.00 179, 000.00 �se,soo.00 �o�,soo.00 63,600.00 1.65% 1.38% 2.90% 5.00% 2.08% 0.54% 2.59% 2.15% 3.29% 2.91% 2.35% 2.87% 2.61 % 1.38% o.sa% 1.50% 1,825.00 s,as�.00 10,860.00 3,120.00 11,706.00 2,054.00 6,809.00 9,918.00 13,521.00 4,538.00 6,035.00 8,319.00 4,680.00 2,�aa.00 3,816.00 954.00 G: �C,SSESS�[eptdoug Iasrd.xlsjSheet 1 McKinzie Appreisal per BRAA Assessment Frontage Rate Proposed 1,925.00 s,as�.00 90,860.00 3,120.00 91,706.00 2,054.00 6,809.00 9,918.00 13,521.00 4,538.00 6,035.00 8,319.00 4,680.00 2,744.00 3,816.00 954.00 200.00 185.00 275.00 138.00 138,00 360.00 160.00 139.90 278.62 150.25 103.00 254.00 310.00 55.34 b5.34 55.34 55.34 55.34 55.34 55.34 55.34 55.34 55.34 12.04 12.04 12.04 0.00 o.00 11,068.00 10,237.90 15,218.50 0.00 7,636.92 7,636.92 19,922.40 B, 854.40 7,742.07 15,418.83 8,314.84 1,240.12 3,058.16 3,732.40 Page 9 � � �� APPRAZSER'S COMMENTS There are some very important reader o£ this report, p°ints to be understood b y the ProPertiesato not appraised any of the project benefiting merel determine the amount of benefit. I have amount whichated, (I believe co nservativelyj, an assessment amount that = feel to be ver�, pair and reasonable I expect could later be supported b � and an aPpraisal if challenged. y a full MY assessment estimates are based on the list me of the ,�SSessor�s estimated values for the affected properties y°ll provided list. � and m y n ��rs relied on the accuracy of that { You asked that I focus on the co ( that. You also asked that = �o �ercial areas. I have done report assessments �ent on the Engineer's aan onl . as to are they too high or too low. y answer that by saying that some I while others appear too low, aPPear too high ahe I discussed with you by phone, engineers often distribute reap Project costs basis e _ abutting, benefiting properties on istic�wa foot '� In my opinion a much more of value" me hod,spread the project costs is by a npercent It 1 S �Y understanding that the law does not allow the assessments to exceed; the costs of the project, or the actual benefit to the assessed properties, whichever figure is lowest. Public monies,�pwithoutt projects are paid partially with project costs any attempt to assess 100� of the back to the benefiting praperties. Such aPpears to be true With this project. Benefits to the affected properties can be defined as the value increase to the property in dollars, attributable to the project i mprovements, To meet the ��challenged�� $5,000.00 assessment on a S75,0o0.00 residence, you must be able to produce a °convincingn appraisa2 report that support a �alue (after�the�Projec�fore the project), uP to $80,0OO.Op�rease Benefit appraisals must come across to the reader as being very reasonable and believable. Common sense and imperative as the appraisal must '�prove'� convincin the benefitslasare 9iY as possible. NZ1E METRO APPRqfSA -3- I � The above discussion is to make the point that the assessment conclusions must address the property value increase amount as the benefit, not just a consideration of; how many front feet does it have? Times some cost per foot! Yes, I do feel that the motel, dairy gueen, and strip center will benefit from the project, and I have included them in my calculations. The same is true for the Norwest Bank and the K-Mart center properties. The church will also benefit some amount in my opinion. What amount, and whether the City can, or wants to assess it are questions yet to be resolved. The benefits are in many different forms. One good benefit is that of increased safety of area residents, pedestrians, bicyclists, local drivers, and outside drivers coming into the area to do business or to visit local residents. Other benefits are the better smooth, free flowing traffic with less inconveniences and time delays, and a new smooth driving surface without the existing '�potholes" that can result in costly car repairs. These type considerations can, and do, make the difference whether people will use the area streets or avoid them. The amount of the difference it makes depends on the severity of the condition of the streets. Another benefit is that of area aesthetics. Old beat up, deteriorated streets is a form of area blight. New streets, curbs & gutters, sidewalks, and such, can have a very significant affect on the revival of such an area. I have included my calculated assessments in this report. I want to explain that list. My list includes for each property; Number. (1 thru 2g) Prooertv• (From your list - for identification) �� (.25 or .5 or .75 or 1.0) to consider individual property characteristics - location - frontage - etc. Percentaae• (Part 1 I used 5� on land & 1.5� on buildinqs) (Part 2 I used 3g on land & 0.5$ on buildings) N21E METRO APPRAISAI � �� ;!�-- � Assesso.-�s Value• (Used as a basis for assessment calculation, land & building separately) Assessments Cal ulated• (Land, building, & total) Percent: (g total assessment is of total property value) the percents range from a low of 0.42g to a high of 5.0$. Assessment: Calculated assessment for each property, with District 1& District 2 totals shown. Obviously these assessment figures are not written in stone. That is, they are merely suggested assessments felt to be fair, reasonable, and consistent. You can make any or all of them higher or lower hy whatever amount you wish, for whatever reason you deem appropriate. If, for example, a commercial property owner was opposed to your assessment amount on their property, and you felt a $1,000 drop in their assessment would gain their acceptance, (and could be justified), that might be a prudent settlement rather than paying $1,000 or more for a full ° before and after" appraisal, and still running the risk of getting the assessment reduced in a costly court action. The higher any one assessment is raised, the greater the chance that it may not be supportable in an appraisal report. An appraisal to determine benefit to a property for assessment purposes, for public improvements, is a demanding appraisal. The appraisal must value the property twice, once as it is prior to the public improvements, and then a second time considering the property as it will be with the public improvements completed. The improvements must also be thoroughly discussed. This type of appraisal for commercia2 property, would generally cost from $1,000 up, depending on the property, size, type, and complexities. A couple years ago I appraised benefits on commercial properties for the City of Oakdale. This was primarily an intersection improvement project at lOth & Hadley. The roadway was widened with right & left turn lanes and a new signal system added for all the turning & straight ahead traffic movements. Z have experience on benefit appraisal for numerous other projects, working for the cities in most cases, but also working for the property owners on several occasions. cKINZiE METRO APPRAISAL -5- My value conc2usions are very consistent no matter which � side I'm working with. That is, I do not work to try to say ,� what the ciient wants to hear. I simply call them as I see them. My point is, that if the project "owners" had grouped together and asked me to do what you have asked me to do, my calculations would be no different. "'G e NZIE METRO APPRAISA � � PROPERTY 1. Dairy Queen 2. Motel .5 x.05 x$ 169,900 =$ 4,248 .5 x .015 x $ 2qF �00 = �� $ 465,000 $ 6,451 = (1.39$) $ 6,461 � � � ■ � � ❑ � � � e I � 3. Strip Center 4. Super- America 5. Perkins (Lot) CALCULATIONS (ASSESSMENTSI Commercial Assessment D�str�ct No 1 CALCULATIONS ASSESSMENT .5 x .05 x $ 60,000 = $ 1,500 .5 x.015 X S 56 = 4 5 $ 116,700 $ 1,925 = (1.65$) $ 1,925 .5 x .05 x $ 323,900 = $ 8,098 .5 x.025 x$ 576,100 = 4 321 $ 900,000 $12,419 = (1.38$) $ 12,419 1.0 x.05 x$ 150,000 =$ 7,500 1.0 x.015 x� 224.000 = 3 360 $ 374,000 $10,860 = (2.90%) $ 10,860 1.0 x.05 x$ 62,400 =$ 3,120 =(5.00$) $ 3,120 6. Perkins 1.0 x.05 x$ 92,700 =$ 4,635 1.0 x.015 x S 471:400 = '7 7 $ 564,100 $11,706 = (2 $ 11,7'06 �. Norwest Bank .25 x.05 x$ 72,000 =$ gpp .25 x.015 x� 30�.SOn = i i5� $ 379,800 $ 2,054 = (0.54$) $ 2,054 '�- •� ... A1 � � � L! LI C ' � r � ,� PROPERTY 8. K-Mart Etc. 9. K-Mart (��) CALCULATIONS ASSESSMENT 25 x .05 x $1,600,000 = $20,000 25 x.015 x$5 773,000 = 21 649 $7,3�3,000 $41,649 = (0.56$) $ 41,649 .25 x .05 X $ 7�,200 = $ 965 = (1.25$) $ 965 10. Arby's 1.0 x.05 x$ 82,000 =$ 4,100 1.0 X.015 X$ 180.600 = �p $ 262,600 $ 6,809 = (2.59�) $ 6,809 il. Precision Tune 1.0 x.05 x$ 85,700 =$ 4,285 1.0 X.015 X S 375.500 = 5 633 $ 461,200 $ 9,918 = (2.15$) $ 9,918 12. McDonald's 1.0 x.05 x$ 210,000 =$10,500 1.0 x.015 x� 201 400 = 021 $ 411,40p $13,521 = (3.29%) $ 13,521 13. Muffler Doctor 14. Old Super Valu 1.0 x.05 x$ 62,800 =$ 3,140 1.0 X.015 X$ 93 200 = 1 398 $ 156,000 $ 4,538 = (z,91$) $ 4,538 1.0 x .05 x $ 300,000 = $15,000 1.0 x.015 X$ 652 900 = S 9.794 $ 952,900 $24,794 = (2.60$} $ 24,794 NZIE METRO APPRAISAL � �` � PROPERTY 15. Mr. Movies 16. Sherwin Williams 17. Old Fashion Eatery 18. Village Trans- mission 19. 5 State Auto 20. Flower Shop CALCULATSONS ASSESSMENT 1.0 x.05 x$ 62,200 =$ 3,110 1.0 x.015 X S 195,000 = S 2.925 $ 25�,200 $ 6,035 = (2.35$) $ 6,035 1.0 x.05 x$ 113,400 =$ 5,670 1.0 X.015 X$ 176,600 = S 2.649 $ 290,000 $ 8,319 = (2.87$) $ 8,329 1.0 X.05 X$ 38,400 =$ 1,920 1.0 x.015 x S 48.100 = S 722 $ 86,500 $ 2,642 = (3.05$) $ 2,642 1.0 X.05 X$ 5'7,000 =$ 2,850 1.0 x.015 X� 122,OOQ =$ 1,830 $ 179,000 $ 4,680 = (2.61�) $ 4,680 1.0 x.OS x$ 56,300 =$ 2,815 1.0 X.015 X S 61,607 = 24 $ 117,907 $ 3,�39 = (3.1�$j $ 3,739 1.0 x.05 x$ 35,800 =$ 1,790 1.0 x.015 x S 31,600 = 474 $ 69,400 $ 2,264 = (3.36�) S 2,264 TOTAL = $198,418 K(NZIE METRO APPRAISAL � � � �I 0 PROPERTY 21. Glendale Shopping Center 22. Old Cub Foods 23. Future Car Wash 24• Big Wheel Rossi 25. Day Care CALCtJLATIONS (ASSESSMENTSI Commercial Assessment District No 2 CALCULATTONS ASSESSMENT .75 x .03 x $ 268,500 = $ 6,041 = (2_25g� $ 6,041 .5 x .03 x $ 575,000 = $ 8,625 .5 x.005 x�1.850.000 = 4 6 5 52,425,000 $13,250 = (0.55$) $13,250 .5 X .03 x $ 96,800 = $ 1,452 = (1.50$j $ 1,452 .75 X .03 X $ 106,700 = $ 2,401 .75 X .005 X � 9�-500 = 343 $ 198,200 $ 2,744 = (1.38%) $ 2,744 • X .03 X $ 183,100 = $ 2,747 .5 X.005 X S 3�p� = 33 $ 556,100 $ 3,680 = (0.66$) 26. Land West of Hardee's 27. Hardee's $ 3,680 .�5 X .03 x $ 157,300 = $ 3,539 = (2,25g� $ 3,539 .25 X .03 x $ 469,000 = $ 3,518 .25 x.005 x S 23g 5�� _�r au $ 70�,500 $ 3.816 = (0.54$) $ 3,816 IN21E METRO APPRAISA _�p_ .� � � � M M� . � 0 � �I � 0 ��` -�,_ � xoHs 53,600 = $ ASSESSMENT 954 = (1.50$) $ 954 Z7,400 = $ 956 43.700 = $ 180 71,100 $ 1,136 = (0.42�) 36 TOTAL = 36 6 . ,, ...;