01-26-09 Council Special Minutes

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MINUTES CITY COUNCIL JANUARY 26, 2009 The City Engineer reviewed the existing road conditions and noted that based on those conditions a mill and overlay of the street is being proposed to re-establish the crown. Approximately 1 1/2" of the edges of the street will be milled off tapering toward the center of the street. The street will then be overlaid with bituminous. There will be minor curb repair and replacement of badly damaged curb sections to improve curb drainage. The Engineer noted that given the level of oil prices as well as the bidding environment, it is felt that very favorable bids will be received for this work. The Engineer then reviewed the City's Assessment Policy relative to mill and overlay projects, noting that 50% of the cost is assessed to benefitting properties with the City paying the remaining 50% of the project. The Engineer noted that the total estimated cost of the project is $289,300.00. The residential assessment rate is $18.98 per front foot. The Engineer then reviewed the proposed project schedule should the project move forward. He noted that the proposed assessment roll is also included for property owners' review, and pointed out that the condominium assessment reflected on the assessment roll would be divided by the number of condo units. The Engineer then reviewed an issues list supporting why City staff feels that the project should move forward. That listing included information on the competitive bidding environment, oil prices, the fact that the City is maintaining the assessment rate at 2008 levels, the fact that this assessment rate has been artificially suppressed for a number of years given it has been inflated by 3% annually when the market increases have been over 6% from 1996-2006, and that interest rates are at a very favorable level. The City Administrator noted the interest rates that the City has utilized over the past five year period. He pointed out that if bonds were sold today, the City would utilize an interest rate of 4.75% for a Yen year assessment, which is below the rates charged for the past five years. The Administrator presented a sample assessment calculation comparing a 6% interest rate and a 4.75% interest rate fora $1,500 assessment, noting an approximately $110 savings in interest over a 10 year assessment period. Another option would spread the assessment out over a 15 year period, however, the interest rate for that time period would be approximately 5.35%, increasing interest costs to the point where this may not be the best option. The City Administrator indicated that given the fact that oil prices are down and the bidding climate is very competitive, City staff feels that this 16