06-10-1985 Council Packet - Laserfiche WebLink

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Memo 485-22 page 1 of 2 TO: Mark Bernhardson, City Administrator FROM: Tom Kuehn, finance Director DATE: May 24, 1985 SUBJECT: Alternatives Available for Collection of Special :sessments Dui ig the discussions of the Crystal Bay area sanitary sewer project an alternative collection method has been suggested as a me ns of easing the burden on those properties assessed for the improvement. The alternative suggested would be "equal payment amounts annually" over the 15 year collection period (alternative A). This method works like a mortgage type payment in that the tal payment for principal plus interest does not fluctuate - (Loe principal paid increases to offset the decrease in interest charges each year). The "equal annual amount" type of payment (a; ternat i ve A) is in contrast to the "equal principal plus cL.,:rent year interest" type of payment (alternative B), which is the normal method of collection used for special assessments. The alternative B method of collection provides for the principal to be collected in equal annual installments. To the annual principal amount is added one years' interest on the unpaid principal balance. The alternative B method of collection results in the total payment being reduced each year as the interest charges decrease. For the homeown. r assessed, Alt t i ve A has the advantage of being easy to budget for. Howe L., it does rasult in higher Interest charges over alter ative B. I have chucked with Hennepin County recjarding both methods o° special assessment collection. There are several seasons wt- should not consider using alternative A. 1. Her :pin County computer system cannot reflect the breakdown in the annual payments between principal and interest but will show Lae total payment as principal on the individual tax statement each year. 2. Hennepin County can;�ot/wi.l l not modify the computer program to accc.nodate alternative A. if they would/could the cos--: to Orono is unknown. Note! The Cty of Minnestrista is the only city in Hennepin County to have ever -ised alternati A. They ten', used it once ver-tuso of the problems it created. 3. The ternative A method wo�ild necessitate the creytion of a seperate schedule by the city enrlineor or fiscal consuita,it in order to be able to calcul,ite prepayme+t of outst.rndinq principal balances during tht.� period cavered (15 years, This special schedule shot;d n:)t