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Memo ��u -aiHC .uuoa.flT. TRUE HAM TO: Honorable Mayor and City Council Members FROM: Lee Elfering, City Engineer DATE: August 17, 2007 RE: Assessment Policy Revision Urban Street Reconstruction City Staff is proposing revisions to the City assessment policy based on our cursory review of costs and associated assessments for the Thunder Bay Road reconstruction. The City Assessment Policy currently distinguishes between the reconstruction of a rural street and an urban street. In the case of a rural street reconstruction to an urban section, the policy outlines that the residential assessment calculation is based on 85% of the project costs of an 8 "/3" urban section minus storm sewer costs. In addition there is also a maximum assessment rate per front foot regardless of the calculated assessment cost; this rate is proposed at $57.97 for 2008. In the case of the reconstruction of an urban street to an urban section the same 85% of project costs can be assessed, however the maximum residential assessment per front foot is the Maximum Assessment Rate x 50 %. For the 2008 project that would result in a maximum assessment rate of $28.98 per front foot. To our knowledge, this provision of the policy has never been used in the past. The only project in which the reconstruction of an urban section has been done is on Payne Avenue, which was done prior to the creation of the current assessment policy. Review of the City records indicates that 70% of the project cost was borne by the City and 30% of the cost was assessed to the adjacent property owners. We currently estimate the total project cost for the reconstruction of Thunder Bay Road to be $940,000.00. The table below outlines what the proposed assessment verses City cost would be based on the 85% formula, the maximum residential rate, and 50% of the maximum residential rate. It is important to note that the policy does not differentiate between urban and rural reconstruction for commercial property (i.e. the City's assessment for the park property along Thunder Bay Road is approximately $65,000.00 for each option) Based on the only urban reconstruction that has been assessed in the City's recent past, it appeared to staff that the maximum assessment rate should apply without the 50% factor. We would like to ask City Council to provide some guidance on the policy application or modification based on the information provided. If you have any questions please call me at (763) 780 -0450 extension 13. 10062 Flanders Court NE — Blaine, MN 55449 — Ph: (763) 780 -0450 Fax (763) 780 -0452 Z: \PROJ \120103E - 2008 Street Improvements \0564 \Memo - 111407 -00 (Assessment Policy Revision).doc - 4 - 85% Formula Max. Rate 50% Max. Rate City Cost $540,000.00 $675,500.00 $775,000.00 Assessed Cost $400,000.00 $264,500.00 $165,000.00 % Assessed 42.5% 28% 17.5% Based on the only urban reconstruction that has been assessed in the City's recent past, it appeared to staff that the maximum assessment rate should apply without the 50% factor. We would like to ask City Council to provide some guidance on the policy application or modification based on the information provided. If you have any questions please call me at (763) 780 -0450 extension 13. 10062 Flanders Court NE — Blaine, MN 55449 — Ph: (763) 780 -0450 Fax (763) 780 -0452 Z: \PROJ \120103E - 2008 Street Improvements \0564 \Memo - 111407 -00 (Assessment Policy Revision).doc - 4 -