04-27-2015 Council Work Session Packet

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•Allows staff to provide residents with timelines and order as to when improvements are going to take place. •Provides the City a known yearly payback process. •Allows the City to do large scale projects that normal yearly budgets would not allow for. •Distributes cost over entire tax base and provides a smaller yearly cost rather than a onetime large assessment. Drawbacks of this process include: •Bond issuance costs increase the price of the project. •Interest costs increase the total cost of the project. •Require increases in the tax levy to account for yearly payback costs. •Program does not include maintenance and reconstruction costs of private roadways. Assess Benefitting Properties This method assesses properties adjacent to the proposed improvement. When assessments are being levied the City is required to follow MN State Statute 429 (429) (see Exhibit C). This process has mandatory steps the City has to follow and the assessments cannot exceed the benefit to the adjacent properties. Of the 14 communities who responded to the survey, 50% (7 Cities) utilize assessments for street reconstruction and 29% (4 Cities) utilize assessments for mill and overlay (maintenance) projects. Based on the results from the surrounding communities, it is typical to assess 20-66% of the total construction costs of the project with the City paying the remaining amount. Assessments are typically combined with a General Fund Allotment or Bonding to make up the additional 34% - 75% of construction costs that aren’t covered by assessments. One of the main drawbacks of this process is residents generally do not like large assessments. Based on my past experiences, these results in long, contentious public hearings and often require a lot of staff time to work through the process. Benefits of this process include: •Allows staff to establish and implement a street reconstruction and maintenance program that provides a timeline when roadways are going to be addressed in the future. •Allows staff to provide residents with timelines and order as to when improvements are going to take place. •Allows the City to do large scale projects that normal yearly budgets would not allow for. •Allows residents to spread the costs of their assessment over a 10-15 year period. •Benefiting properties are paying for a portion of project costs. Drawbacks of this process include: •The assessments can be fairly significant ($2,000 - $20,000) depending on the project scope and number of assessable properties. •City still has to account significant project costs in yearly budget which may require tax levy increases or bonding. •Public Hearings and Assessment hearings can become very hostile and difficult. •Assessments cannot exceed the benefit to adjacent properties. Franchise Fees 8 Page 10 of 49