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c. Assess Benetiting Properties. Special assessments are a method for cities to charge certain <br /> properties for the cost of making local improvements that provide direct benefit the properties associated <br /> with the project. Several issues should be considered when establishing an assessment policy. When <br /> assessments are being levied the City is required to follow MN State Statute 429(429). This process has <br /> mandatory steps the City has to follow and the assessments cannot exceed the benefit to the adjacent <br /> properties. It is not feasible for the City to assess 100%of a street projects cost as there is always a <br /> portion of the project that benefits the wider community. The City must find a balance between assessing <br /> the benefiting properties and paying for the improvements with taxes and fees. Based on the results from <br /> the surrounding communities, it is typical to assess 20-66%of the total construction costs of the project <br /> with the City paying the remaining amount. Assessments range between $3,000 and $20,000 per lot. <br /> When assessments are in this range, most property owners can recognize the fact they are receiving a <br /> benefit from the project. A secondary benefit to establishing an assessment policy is that it provides some <br /> equity between residents who live on private residential roads and City owned residential roads. <br /> Establishing a uniform policy that meets the needs and expectations of the community is essential to a <br /> project's success. <br /> d. Franchise Fees. A franchise fee is a charge imposed by a city on utility providers who operate in <br /> the public right-of-way. Minnesota Stature 216B.36 allows a city to impose these fees. The franchise fee <br /> can be imposed on any utility company but typically involves the gas and electric utilities since there are <br /> more subscribers because of their essential nature. The utility provider typically passes these charges on <br /> to the residents. The franchise fee is an alternate source of revenue that is traditionally used towards a <br /> city's improvement projects. The franchise fee is a continuous source of revenue that can reduce the <br /> financial burden caused by street construction projects and general taxes. <br /> 6. Courses of Actions (COA). The following courses of action represent combination of the funding <br /> methods listed in the previous section. <br /> a. Combination of General Fund (Tax Levy) and Special Assessments. The City would use <br /> general funds to fund all street maintenance(Seal coating and Mill &Overlays)and then use a <br /> combination of general funds and Assessments to fund street reconstructions. This COA results in an <br /> increase in the ta�c levy and requires the City to develop an assessment policy for streets. The assessment <br /> policy would establish assessment percentages based on road type. The table below proposes percentages <br /> based on the relative benefit the reconstruction provides to the residents that abut the street and the greater <br /> community. The percentage assessed for residential streets is higher than on collector streets as collector <br /> streets provide greater benefit to the overall community while residential streets primarily benefit the <br /> residents that live on them. Bonding could be used in a variation of the COA to provide reconstruction <br /> funds. <br /> Street Reconstruction Assessment Percenta es er Street T e <br /> Street MSA% General Fund% Assessment% <br /> Collector MSA) 50 40 10 <br /> Collector 0 90 10 <br /> Low Volume(Residential) 0 30 70 <br /> Using the PMP maintenance funding requirements this COA would impact the tax levy as depicted <br /> below. Note the assessments only reduce the Street Reconstruction amounts going to the general fund. <br /> 3 <br />