The URL can be used to link to this page

Home My WebLink About13.A.2. Assessment Policy for Future Bituminous Overlay Projects /3. ��, CITY OF SHAKOPEE Memorandum TO: Mayor & City Council Mark McNeill, City Administrator FROM: Jeff Weyandt, Assistant City Engineer SUBJECT: Assessment Policy for Future Overlays DATE: June 15, 2010 BACKGROUND: Given the economy and the recent discussion with regards to the impacts the City's assessment projects have on residents, staff looked at the impacts of eliminating assessments for future overlay projects. Currently, the City assesses 30% of the project costs to benefitting properties. Following is a summary of assessments paid for overlay projects since 2004. Tax Impact Average Cost Per Year Assessment Amount Household Per Month 2004 $ 46,893.00 $0.20 2005 $ 42,893.00 $0.18 2006 $143,561.00 $0.60 2007 $176,896.00 $0.73 2008 $268,054.00 $1.11 2009 $103,310.00 $0.43 2010 (Projected) $136,000.00 $0.57 Total $917,695.00 $0.55 The average cost per household per month is just a rough estimate assuming 62% of the City's property tax revenue comes from residential properties, therefore, 62% of the cost will be funded by residential property taxes. The number of households was based on the following: 34,000 population with an average household size of 2.73 people equals roughly 12,454 households. Over the years, many residents have stated that overlays are a maintenance activity and should be included in the taxes and would prefer a small yearly increase versus a $500.00 assessment bill. As the numbers above show, if the City did not assess overlays over the last seven years, the average cost per household would have been approximately $0.55 /month. An advantage to not assessing overlays is project costs will go down. The extra time required to prepare the feasibility study and assessment roll, along with the extra mailings, costs the City an additional $10,000 to $15,000 per project. Also, bonding for the project adds an additional cost of 1% to the project, which is an additional $10,000.00 for every $1,000,000.00 of project cost. Another advantage to not assessing overlays is that the City could add streets to the project if the bids received are favorable. Currently, we cannot add streets to the project and assess for the improvements if the improvements were not included in the feasibility study. The one advantage to assessing the project is the City is allowed to combine it with the reconstruction project and bond for the whole works and the tax levy portion is not currently subject to levy limits. However, due to there being an annual overlay project, Finance is trying to transition away from bonding overlay projects because of debt levels, interest rates and to increase the levy limit under which the City is subject. Therefore, due to the fact that not assessing overlays would lower project costs, give the City flexibility to add streets to the project and lessen the financial burden on benefitted properties by eliminating assessment bills, staff believes it is time to reconsider the policy of assessing bituminous overlay projects. The current 5 -year CIP apportions costs based on the current Assessment Policy. If Council chooses to eliminate assessments on overlay projects, the City could fund the assessable portion of the projects with the State Aid/Street Fund. Attached is the projected fund balance of the State Aid /Street Fund, if projected overlay assessments in the current CIP are funded by the State Aid/Street Fund. ALTERNATIVES: 1. Direct staff to revise the Special Assessment Policy to eliminate the assessment of future bituminous overlay projects beginning in 2011. 2. Direct staff to continue assessing overlay projects consistent with the current Special Assessment Policy. 3. Table for additional information. RECOMMENDATION: Direct staff to revise the Special Assessment Policy to eliminate the assessment of future bituminous overlay projects beginning in 2011. ACTION REQUESTED: Direct staff to revise the Special Assessment Policy to eliminate the assessment of future bituminous overlay projects beginning in 2011. Jeff Weyandt, P.E. Assistant City Engineer ENGR/2010- PROJECTS /2010- COUNCIL✓AS SES SMENT- POLICY - OVERLAYS State Aid / Street Fund 2008 2009 2010 2011 2012 2013 2014 2015 (actual) (actual) Balance 1/1 $3,068,948 $4,299,103 $4,337,295 $3,709,101 $4,193,919 $4,652,707 $4,298,551 $4,753,001 Maintenance Allocation $215,010 $248,331 $378,131 $380,000 $382,000 $383,000 $384,000 $385,000 Construction Allocation $1,039,812 $320,547 $510,000 $750,000 $750,000 $750,000 $750,000 Turn Back Funds $1,320,000 Interest $194,788 $163,732 $151,805 $129,819 $146,787 $162,845 $150,449 $166,355 Total Revenue $4,518,558 $5,031,713 $4,867,232 $6,048,919 $5,472,707 $5,948,551 $5,583,001 $6,054,356 Misc Transfer $29,054 $4,699 Expenditure $190,401 $351,388 $780,000 $1,450,000 $405,000 $1,200,000 $380,000 $240,000 Transfer to general fund $338,331 $378,131 $405,000 $415,000 $450,000 $450,000 $450,000 Balance $4,299,103 $4,337,295 $3,709,101 $4,193,919 $4,652,707 $4,298,551 $4,753,001 $5,364,356 Assumes 3.5% interest on previous end of the year balance. UPDATED 6/10/10 State Aid / Street Fund (Funding overlay assessments) 2008 2009 2010 2011 2012 2013 2014 2015 (actual) (actual) Balance 1/1 $3,068,948 $4,299,103 $4,337,295 $3,709,101 $3,903,919 $3,932,557 $3,493,196 $3,844,458 Maintenance Allocation $215,010 $248,331 $378,131 $380,000 $382,000 $383,000 $384,000 $385,000 Construction Allocation $1,039,812 $320,547 $510,000 $750,000 $750,000 $750,000 $750,000 Turn Back Funds $1,320,000 Interest $194,788 $163,732 $151,805 $129,819 $136,637 $137,639 $122,262 $134,556 Total Revenue $4,518,558 $5,031,713 $4,867,232 $6,048,919 $5,172,557 $5,203,196 $4,749,458 $5,114,014 Misc Transfer $29,054 $4,699 Expenditure $190,401 $351,388 $780,000 $1,450,000 $405,000 $1,200,000 $380,000 $240,000 Transfer to general fund $338,331 $378,131 $405,000 $415,000 $450,000 $450,000 $450,000 Overlay Assessments $290,000 $420,000 $60,000 $75,000 $450,000 Balance $4,299,103 $4,337,295 $3,709,101 $3,903,919 $3,932,557 $3,493,196 $3,844,458 $3,974,014 Assumes 3.5% interest on previous end of the year balance. UPDATED 6/10/10