01-26-09 Council Special Minutes

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MINUTES CITY COUNCIL JANUARY 26, 2009 concrete curb and gutter and concrete driveway aprons. The Engineer noted his preference for barrier curb, but pointed out the option of surmountable curb. He also noted that some drainage improvements are proposed, including the installation of rain water gardens for storm water treatment at intervals along the project. 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 street reconstruction projects, and noted that given the similar lot sizes and street usage, a per unit assessment is proposed, at $5,284.67 per single-family property. The Engineer noted that the City is proposing to freeze the assessment rate at the 20081eve1, and is also considering a credit for early curb deterioration of $2.67 per front foot. This was calculated based on a 30-year curb life and the fact that Thunder Bay Road is 22 years old (an 8- year credit). The cost of storm sewer work is not assessed. The Engineer noted that the total estimated cost of the project is $937,300.00. 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. The Engineer noted that City staff is proposing that the project be bid. If bids are higher than the estimate, then the City is not receiving the cost savings it is anticipating due to low oil prices and a competitive bidding climate. In that case, the project would not be likely to move forward. If the project does move forward, it 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 Administrator presented a sample assessment calculation comparing a 6% interest rate and a 4.75% interest rate, noting a savings of just under $400. Another option would spread the assessment out over a I S year period, however, the interest rate for that time period would be approximately 5