09-26-2012 Council Agenda - Laserfiche WebLink

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Way o Wanda MAYOR Bill Biesener COUNCIL Rick Montour John Reis Michael McGraw Shelly Boss 515 Little Canada Road, Little Canada, MN 55117-1600 ADMINISTRATOR (651) 766 -4029 / FAX: (651) 766 -4048 Joel R. Ranson www.ei.little-eanada.mn.us MEMORANDUM TO: Mayor Blesener and Members of the City Council FROM: Joel Hanson, City Administrator DATE: September 21, 2012 RE: HIA Assessment — Canabury Square — Unit #350 Dana Morrone is a prospective buyer of the above referenced unit at Canabury Square. As you will recall, the "active" HIA assessments that were financed by a taxable bond issue can't be paid off due to the lower interest rates we would earn on that money versus what we are paying on the bond issue. In 2018, the bonds maturing in 2019 and beyond are subject to redemption. Depending on interest rates at that time, early payoffs may be an option at that time. Mr. Morrone has asked us to consider another option whereby he could purchase the unit, payoff the remaining principal balance ($18,149.22), and then have us levy the outstanding interest as if the principal had not been paid off. (I'm attaching the correspondence we have had on this topic.) There are a couple of problems with this concept. They are as follows: > Logistically, this is a bit complicated because the principal payment would need to be made with Ramsey County. We would then have to "re- assess" the property to spread the interest payments. The process of re- assessing could raise the possibility of legal challenges. There would also be time and costs involved with notices and processing with Ramsey County. Without imposing additional charges, we would have 110 way to recover these costs. What ever we do for one property, we would have to make available to all others. We made it clear at the onset of the HIA program that payoffs could not be made, unless a party paid off the entire principal and all outstanding interest associated with that assessment as though the assessment ran the full term. (This issue only affects Canabury Square on the active assessments due to the taxable bond issue.) One may argue that it doesn't seem logical for the City to refuse to accept a payoff of the principal of an assessment due to procedural concerns. From a financial standpoint, investing the principal payment received and still collecting the anticipated interest associated with the original assessment would gain additional interest income. However, the benefit of that interest will ultimately accrue to Canabury Square given the balance in the debt service account will be payable to their association once the bond issue is retired. The Council will need to provide guidance as to any changes in the policy you want staff to administer. 1