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<br /> <br /> STAFF REPORT <br /> <br /> <br /> <br />TO: Mayor Keis and Members of City Council <br /> <br />FROM: Sam Magureanu, Finance Director <br />REVIEWED BY: Chris Heineman, City Administrator <br /> <br />DATE: September 28, 2022 <br /> <br />RE: Assessment Policy Revision – Interest Rate <br /> <br /> <br />ACTION REQUESTED: <br />Approve the Assessment Policy revision as presented. <br /> <br />BACKGROUND: <br />While getting ready for the 2022 Streets Assessment hearing, City staff noted that the current City <br />Assessment policy, under Section III – Subsection E Amount of Assessments – Assessment rates, <br />determines the interest rate for the certification of assessments based on the current prime rate plus one or <br />two points (at the discretion of the City Council). After a closer look at the policy when comparing with <br />other assessment policies, we noted that a popular bench mark for determining the interest rate for the <br />certification of assessments is the City’s borrowing interest rate. While using the prime rate for the past <br />several years has been a reasonable benchmark in a more stable economy, with recent changes in the <br />economy City Staff believes that continuing using the prime rate might not the most fair option for both <br />parties involved (Residents and City). The policy revision recommended will reflect more accurately the <br />actual City interest expense incurred, especially in an instance where bonds are issued. The current <br />Assessment Policy was last amended April of 2021. <br /> <br />Current City Assessment Policy and recommended revision <br />Assessment rates: Assessment rates will be determined on an annual basis by the City Council for each <br />cycle of projects. The rates may be based on factors such as assessment formulas contained in this policy, <br />appraisal recommendation, construction costs, construction cost indexes, and advice of City staff. The <br />interest rate will be determined by using the prime rate plus one or two points and is at the discretion of the <br />City Council. The interest rate will be determined by using the City’s borrowing rate or the average coupon <br />interest rate of the bonds, if bonds were issued to finance the projects, plus one or two percent points and it <br />is at the discretion of the City Council. In an instance where bonds are not issued to finance the projects, <br />the City will reach out to its Financial Advisor or Bond Council to determine the estimated City’s borrowing <br />interest rate for certified assessments. <br /> <br />STAFF RECOMMENDATION: <br />Approve the Assessment Policy revision as presented. <br /> <br />ATTACHEMENTS <br />Current Special Assessment Policy <br /> <br /> <br />