01-26-09 Council Special Minutes

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MINUTES CITY COUNCIL JANUARY 26, 2009 would be constructed over the summer. An assessment hearing would then be held in the fall with property owners. The Engineer provided a brief outline of how the assessment process works. 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 ten year assessment, which is below the rates charged for the past five years. The Adminishator presented a sample assessment calculation comparing a 6% interest rate and a 4.75% interest rate, noting a savings of just over $900. 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 Administrator also pointed out that there assessment deferment options available, however, noted that interest continues to accrue on deferred assessments. One property owner asked what the surveyors are doing in the area. The City Administrator reported that even though the project has not been authorized for bid, the City Engineer has begun the project design work so that, if bid, the City can get into the market quickly. If the project is not bid, the design work will still have value at the time in the future that it is bid. The Administrator noted that the stimulus package will impact the bidding climate; therefore, the City will try to get out to bid ahead of stimulus projects. One property owner expressed concern about the $13,000 proposed assessment to each property for this project. He noted that he will be losing his job, and indicated that this economy it is not the time to move forward with this project. Blesener noted that the current economy also provides some unique opportunities given current oil prices and the competitive bidding process. Blesener suggested that the consensus of the Council is to take the project to bid to determine how favorable the cost will be. If bids are not under the Engineer's estimates, then the project will likely not proceed. 20