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Home My WebLink About1998-10-07 PACKET 04.T.REQUEST OF CITY COUM1ICIL ACTION COUNCIL AGENDA MEETING ITEIVI # DATE 10/7/98 � , °r ; PREPARED BY Finance Liz Johnson ORIGINA7ING DEPARTMENT STAFF AUTHOR �.��..w�>�....��.<.��<..��.�.��<�....�...�.,�. GOUNCIL ACTION REQUEST Adopt resolution revising costs to be declared for the 80th Street F2econstruction Project BUDGET IMPLICATION: $ $ BUDGETED AMOUNT ACTUAL AMOUNT FUNDING SOURCE ADVISORY COMMISSION ACTION DATE ❑ PLANNING ❑ PUBLIC SAFETY ❑ PUB�IC WORKS ❑ PARKS AND RECREATION ❑ HUMAN SERVICES/RIGHTS ❑ ECONOMIC DEV. AUTHORITY ❑ REVIEWED ❑ ❑ ❑ ❑ ❑ ❑ ❑ APPROVED ❑ ❑ ❑ ❑ ❑ ❑ ❑ DENIED ❑ ❑ ❑ ❑ ❑ ❑ ❑ SUPPORTING DOCUMENTS � MEMO/LETTER: 9/23/98, and 9/9/98 � RESOLUTION: revising costs to be declared ❑ ORDINANCE: ❑ ENGI(VEERING RECOMMENDATION: ❑ LEGAL RECOMMENDAT60fV: � OTHEE2: assessment comparisan /�1�7�iI1►�IG"�1i.7_�C�7Li.Y�I�7iLI��K.� ��1�� City Administrator Date �. cou�acoL �c�rooN �rA��: � ap�ROV�a ❑�E�i�D n a�rtaER To: Ryan Schroeder, City Administrator CC: Michelle Wolfe, Assistant City Administrator From: Elizabeth Johnson, Finance Director Date: 09/23/98 Re: 80`" street costs Introduction The City Council adopYed a resolution declaring costs for the 80 sYreet reconstruction project at the September 2, 1998 regular meeting. The Council further discussed an assessment for commercial properties at a workshop at the end of that �eating. Staff received direction from Council to contact Gerald McKinzie from 3vlcKinzie Metro Appraisal to give an opinion on the assessment basis recommended by staff. Background I contacted Gerald McKinzie on September 3, 1998 and forwarded the pertinent information to him. He reviewed the information and discussed his opinions with me on September 4, 1998. I have prepared a revised recommendation in my memo to you dated September 9, 1998. Requested Actioa Based on these revisions, the total assessments for 80` street changed to $613,430. The Council, therefore, should adopt the attached resolution revising the costs deciazed for the 80 street reconstruction project. RESOLUTION NO. 98- RESOLUTION REVISING COSTS DECLARED AND ORDERING PREPARATION OF PROPOSED ASSESSMENT RO�L FOR 80 STREET RECONSTRUCTION PROJECT WHEREAS, contracts were let for 80`" street reconstruction project and the contract price for such improvements was $2,863,033.48, with expenses incurred in the construction of improvements and other construction amounting to $310,669.77 for a total cost of improvements of $3,173,703.25 WHEREAS, the City Council of the City of Cottage Grove declared net costs to be assessed in the amount of $804,736.30 on R98-147 on September 2, 1998. WHEREAS, the net cost declared to be assessed were adjusted by Councii direction NOW THEREFORE BE IT RESOLVED, the City Councii of the City of Cottage Grove, County of Washington, State of Minnesota, as follows: 1. The net cost of such improvements to be assessed is deciared to be $613,430 2. The Finance Director, with the assistance of the City Engineer, Bonestroo, Rosene Anderlik and Associates, Inc. will calculate the proper amount to be assessed for such improvements against every assessabie lot or piece of parcel or land within the district affected without regard to cash valuation as provided by law, and shall file a copy of proposed assessment roll in the City Clerk's office for public inspection. 3. The City Clerk, shall, upon completion of such assessment roll, notify the City Council therefore AND FURTHER BE IT RESOLVED, that Resolution 98-147 be rescinded. Passed this 7th day of October, 1998. John D. Denzer, Mayor Attest: Caron M. Stransky, City Cierk To: Ryan Schroeder, City Administrator CC: Micbelle Wolfe, Assistant Ciry AdministraYor From: Elizabeth Johnson, Finance Director Date: 9/9/98 Re: 80 Street Commercial Assessments I faxed the 80�' Street Commercial assessment information to Gerald McKinzie of McKinzie Metro Appraisa] on September 3, 1998 at the request of City Council. Mr McKinzie raviewed the information and I spent some Yime talking to him on September 4,1998. His general impressions of Che assessments are described below. :1VIr iVIc3Cdnzie sCated fo me that his general approach Co residential and commercial assessments are based on judgment and opinion of how much the property would be worth before and after the improvement. He uses this basis in considering whether the improvement provides benefit. His definition of benefit is the increase in market value after Yhe project has been completed. Benefit is discussed in market value Yerms. He uses an "income approach" to detetmine the basis for a business assessment This approach may be described as the additional value of a potential lease that an investor in the business could realize as a resulY oPt11e improvement. The lessee would have to have the benefit of an improved appearance an additional traffic flow Yo realize greater revenues. oreater revenues, in turn, may translate to higher lease values. Mr. McKinzie made some specific comments on the items included. He specifioally made a comment regarding the proposed assessment amount for water mains and storm sewer. He does not believe that these cosYS would be something that would necessarily relate into a higher market value, or purchase price. I discussed the rationale for assessing costs. I suggested that the City calculate a Yotal project cosY and determine the total assessabie front feet, from which we would derive a cost per foot. We would then apply that cost per foot to the applicable number of front feet for each commercial property to arrive at a tota] assessment. This assessment would be compared to a market value range of 2.5% to 3%. We would then use the market value amount if it was less than the cost amount. Total cost would equal street and a prorated amount of storm sewer and water main. We would be basing the assessment on the September 23, 1996 prorated cost, but capped at no more than 3% of market value. Mr McKinzie felY that this approach would be reasonable. I have completed the schedule, which is attached for your review. The schedule shows a comparison of the prorated cost, which includes water main and storm sewer applied to all pazcels, to a 3% of market value. I would suggest Yhat we use the assessmenz amount column (*) to prepare the notices for the public hearing. Please review the attached information so we can discuss this. 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N tn r tfi V' W O N (6 N � N.- M N � N � O N � � � m U C — _ N N W � G� V N� � d � �(� m aYg m 'v o. a m ��= c c� ° a�i o. c m o] cn ��t0 �=CJ O�U>v>ti I�- u� t!� .- O O m e- O O(D N�' �P t0 y r a N N th V�[1 V' t� CD � N �(O ��ti��nr�rr`r�r � a Q d t y N X c O � E U N 0 U m N Project 80th Street Reconstruct Interest rate 7°/ Adopted 10/7198 Term 15 years Project SOth Street Reco�struct interest rate 7% Adopted 10l7/98 Term 15 years \\CG_FS 1 \SYSIGROUPS\FINANCEWSSESS\[80thstreetassessroll.zls]Sheett