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Mr. Joseph Chlebeck January 24, 1984 Page 2 However, most of the above data and Mr. Echtenkamp's computations are irrelevant for the following reasons: 1. All assessment rolls adopted by the City are payable in cash or are subject to an interest factor based upon City interest factors rather than commercial interest factors. 2. Property paying 6% interest has been paying such interest since 6% was a "fair rate "for such assessments. The property now being connected to the Utility Systems has not been paying this cost in the past. 3. The City is requiring a cash payment (rather than term payments) because this property is not located within the City. 4. The fact that property located outside the City cannot use the City to finance these costs is a fact that the City cannot effect or change. 5. If the City were able to allow term payments, it would have to decide upon an interest rate to be charged. The City would probably charge 10% as it does for other assessments adopted in 1983 and 1984. The old 6% rate was applicable years ago, but not today. No such present value factor adjustments were used in my original computations last November for the reasons stated above. These items were discussed by you, myself, the City Engineer and the City Attorney. Our conclusion (at that time) was that a cash payment (without discount nor added interest) was the best solu- tion to try to answer the question: "What would such property pay if it were located within the geographic boundaries of the City of Little Canada?" Accordingly, no such present value adjustment should be made to the November, 1983 computations. TAX LEVY FEE - ASSESSED VALUE FACTOR The tax levy fee is contingent upon the proper fair market value of the subject property. The computations contained in my November report (for the Dental Office Facility) were estimates based upon an estimated fair market value of $200,000. This value should be adjusted to a proper fair market value. Mr. Echtenkamp contends that the Ramsey County Assessor's Office has calculated the "fair market value" of the building as an independent appraiser would do. Such is just not in accordance with reality. The State of Minnesota has recognized this to be not true for many years. Accordingly, the State computes and publishes its "Assessment /Sales Ratio" studies. These studies indicate that commercial property (in Ramsey County) is under- valued by the Ramsey County Assessor's Office. Such under- valuation was 77.6% for 1982 Sales and 60.6% for 1981 Sales according to the State "Assessment /Sales Ratio" Study.