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Gordon Heitke January 28, 2008 Page 2 of 13 Subdivision 2. This subdivision heightens concerns raised above about the scope of Chapter 8. I will address the two sentences separately. First Sentence. The first sentence states that all public improvements, whether financed from general revenues or special assessments, "shall be primarily designed to give direct benefit to properly currently occupied by residents or businesses in the City." This language creates several difficulties. First, it purports to lay down a general principle for all improvements, whether financed by assessments or "general revenues." As such, it suggests that Chapter 8 now governs almost all improvements the City might undertake, including (potentially) parks, public works and city administrative facilities. That result makes little sense, as there is no apparent reason why special assessment rules and procedures should have any relevance to improvements financed without special assessments. (Indeed, Minnesota Statutes, Section 429.021, subd. 3 expressly states that improvements financed without assessments are not governed by that chapter.) This result also raises significant questions about the City's ability to finance any type of improvement supported in part by general revenues: if all such improvements must be primarily designed to benefit currently occupied property, many types of improvements will fail that test (a new fire station is one example). Aside from the problem of scope, the language itself is ambiguous, requiring that improvements financed with "general revenues" be "primarily designed" to give "direct benefit" to property "currently occupied." Each phrase is fraught with difficulty. The term "general revenues" is not defined —is it broader than general tax dollars? Does it include utility revenues? When is an improvement "primarily designed" to benefit property? Is the council's intent a factor in the analysis? What is a "direct benefit" as compared to an indirect benefit? A large body of Minnesota case law provides guidance about how "benefit" is determined in the context of special assessments (i.e., by an increase in market value), but these new terms would raise questions about whether some new standard applies under this charter. And if the improvement must benefit properties that are currently occupied by residents or businesses, what happens to property that enjoys an increase in market value but is not "occupied ?" Nor is it clear what the term "currently occupied" means. It could mean "developed with existing improvements," but there are other interpretations. Suffice it to say all these ambiguities would raise questions of fact and interpretation, in turn hampering the ability of citizens, staff and legal counsel to understand and use the Charter. Second Sentence. The second sentence seems to prohibit the use of assessments to finance "public improvements primarily designed to open up new areas of the City for development." As in the first sentence, the key terms are undefined, leaving large questions of interpretation (particularly regarding whether an improvement "opens up new areas" and whether it was "primarily designed" to do so). Further, this sentence goes beyond the arena of special assessments, barring the use of any general revenues for these types of improvements. In effect, the charter would prevent the city from undertaking these types of improvements at all unless funded with resources that are 327632v3 SJB LN140 -86 • • •