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• • Gordon Heitke January 28, 2008 Page 13 of 13 As such, the significant limitations discussed in Sections 8.01 to 8.03, above, would apply even in the specified area. Subdivision 2. The revision includes only the Lake Drive/I -35 area, excluding two other areas given similar treatment under the existing Charter. The excluded areas would now be subject to all the rules in the amended Charter. Subivision 3. Similar to provisions in the existing Charter, this subdivision grants a special exemption from assessments to certain single family residences located in the special area. We have previously advised the City that the existing provision violates federal regulations that apply if bonds financed by assessments are issued on a tax - exempt basis (because one class of property has the right to "opt out" of the assessment). As a result, any improvement projects financed by assessments in the special area may be financed only with taxable bonds, which increases the cost to property owners and all taxpayers in the city (to the extent the bonds require a general tax levy). The proposed amendment retains this feature, with minor changes. Aside from the fundamental problem created permitting certain owners to opt out, there is some confusion about when a property is considered "owner- occupied." The term is not defined and is not self - evident. The language indicates a residence is deemed owner - occupied if it was "empty between owners," but property always has an owner —what happens when property is empty after the current owner moves out? Does that always count as occupied, or only when the owner expects the property to be sold (or already has a purchase agreement)? Is a residence considered empty if a short-term renter occupies the residence? If a bank has title after foreclosure? These interpretive problems exist in the existing charter and are not resolved by the proposed amendment. CONCLUSION I apologize for the length of this letter, but the issues are many and complex. The City Charter is the City's most important legal document —in a sense, its "constitution" —and amendments should be undertaken with great care. I have not attempted to suggest revisions or corrections for the problems cited. Rather, I have simply attempted to describe the legal and practical problems that, in my professional judgment, appear in the language presented. I will be available for further discussion with the City Council at its work session on February 4, 2008. If you have questions before then, please contact me. SJB urs J. ubul 327632v3 SJB LN140 -86