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515 Little Canada Road, Little Canada, MN 55117 -1600 <br />(651) 484 -2177 / FAX: (651) 484 -4538 <br />MEMORANDUM <br />TO: Mayor Fahey and Members of the City Council <br />FROM: Joel R. Hanson, City Administrator <br />DATE: October 7, 1999 <br />RE: Interest Rates on Deferred Assessments <br />MAYOR <br />Michael I. Fahey <br />COUNCIL <br />Beverly Scalze <br />Jinn LaValle <br />Steve Morelan <br />Bob Pedersen <br />ADMINISTRATOR <br />Joel R. Hanson <br />Per the past City Council discussion to consider revising interest rates on outstanding <br />deferred assessments, we expect the interest rate for our upcoming bond sale to result in <br />an assessable rate of 7 %. We would proposed revising rates on deferred assessments <br />over that amount to the 7% rate. <br />Attached is a listing of deferred assessments and their current interest rates. We will need <br />to hold a hearing to revise these amounts, and suggest that that hearing be held at the <br />November 10th City Council meeting. <br />We are not proposing to raise the interest rates of those deferred assessments currently <br />below 7 %. (A listing of these assessments and rates is also attached for your review.) <br />Council Member Pedersen raised the suggestion to tie interest rates to an index factor. <br />We have checked this out with the League of Minnesota Cities. They indicated that <br />while the Statute does not provide specifically for this option, it does not preclude it. <br />Therefore, it may be possible subject to further legal research. However, staff is <br />concerned with the notice provisions that would be required each time the interest rate is <br />altered. Given the recent stability of longer -term interest rates, we would recommend we <br />use a fixed rate and adjust it as appropriate from time to time using the process proposed <br />for this action. <br />Page 57 <br />