8. Staff Report-Draft Street Assessment Policy � l J
; � � .
�� �
,�`��7 r�'. i��'�
SCANDIA
Staff Report
Date of Meeting: November 6, 2013
To: City Council
From: Kristina Handt, Administrator
Re: Draft Street Assessment Policy
Background:
At the July and August work sessions the Council began discussion on assessments and directed
staff to bring a draft to a future meeting that included assessing for initial pavement and
reconstruction. Mill and Overlays would be funded from the Local Road Improvement Fund or
other source and seal coating and crack filling would remain in the Public Work Dept of the
general fund.
A draft was reviewed at the September meeting and a few changes were requested. The draft
was also reviewed after the meeting by the City Attorney.
Issue:
What should be included in the City's assessment policy?
Proposal Details:
Included in your packet is another draft of the street assessment policy. Changes discussed at the
September work session to include "full depth" reconstruction language and change the assessed
amount for the full depth reconstruction to 30%have been included in the update. Other changes
suggested by the City Attorney are underlined in red.
Council member Ness questioned the prepayment language and asked if the property owner who
prepaid would get a refund if the costs came in lower than expected. The prepayment language
included in the policy is consistent with state stature. The City Attorney has done some review
on whether there can be a refunding of assessments as this issue came up in another Washington
County community. The legal research indicated that no refund would be given until all
assessments for the project were collected (at the end of the assessment term) and there remains
an outstanding balance in the City's account for the project. While the Council may not like this,
the law seems pretty straightforward on it.
Fiscal Impact:
Discussion on the specific impact will be determined on a project by project basis. Assessing for
roads will allow road work to be completed while limiting the impact on the tax levy. Assessing
also allows the City to borrow for funds to complete projects.
Options:
1) Direct staff to place the policy, as amended by the City Attorney, on a future Council
agenda for adoption.
2) Amend the policy further,then direct staff to prepare for placement on a future Council
agenda for adoption.
3) Table until future work session for more discussion.
4) Do not proceed with adopting a Special Assessment Policy for Public Streets.
City of Scandia,Minnesota
Assessment Policy for Public Streets
Draft,November 2013
Purpose
The purpose of this Street Assessment Policy is to establish a fair and equitable manner of
tinancin��.recovering and distributing the cost of public improvements. The procedures used by
the City of Scandia for levying special street assessments are those specified by Chapter�129 ot�
the Minnesota Statutes`�'�?O.which provides that"all or a pari of the cost of
improvements may be assessed against benefiting properties."
Thist assessment policy is intended to serve as a�enrral guide for a systematic assessment
process in the City. I lo���cver.=Fthere may be exceptions to the poliey���hich involve�unique
circumstances or situations���'��^�:�-requirir�e special consideration and discretion by Ceity
staff and the Citv Council.
Initiation of Public Street Improvements
� A public street improvement can be initiated in the following manner:
� l. Petition by property owners�t-�»+rx���ni�at least 35%of the frontage on the street to
be improved.
2. Resolution by the City Council ordering the public improvement when,in the Council's
judgment.the improvement is needed,and action is required. 'I'he criteria which the City
� Council may use as a basis to determine the public need for the improvement shall
include tratlic volume,maintenance costs.and the general public safety.
3. A resolution ordering any improvements initiatcd by the Council or by owners of less
than 35%of abutting property owners requires a four-fifths majority vote of all members �comment[Nvi�:r,os.�a�a z ao�•t auoW+o�a '
of the Council.A resolution ordering any llllpl'OVOIIlf;I1tS II11LI8tCCI hy OWtlel'S t�+3t�-It�i petition executed by less than 35%of the abutting
� property owners. We can either add another .
N�-35%ur mor�of abutting property owners requires a sim Ic majority vote of all p�o�;sio�i�a��at��g cn�:type or pe�ic�o��s pe�m�tced �
members of the CounciL A resolution ordering any improvements initiated by all owners with a 4/5 vote of the Council,or it could be the
,CounciPs position not to entertain petitions with
of abutting property,and assessing the entire cost against the property,may be adopted ,,,,ae�ss�.E�cne�WaY,tn�5 se�c�o�5no�id be
without a public hearing. The Council may consider the request of a Developer to �ia��f�ea.
construct the improvements and assess them.
Definitions
I Unit Method—The Unit Method of assessment is defined as the yuotienti of the identified
assessable costs divided by the number of lots,parcels,or properties benetiting from the
improvement. When parcels that can be further subdivided are found to benefit from the
proposed improvement,the number of lots attributed to that parcel will be determined from the
number of potential lots that could be obtained from subdivision,using current subdivision
� regulations��s outlined in thc Cit��s('ode of Ordinances.Corner lots subject to an assessable
street improvement will be assessed 100%of the unit assessment when the property address
fronts the assessable improvement. Corner lots assessed under the"uniP'method assessment
1
shall be responsible for 150%of the costs when the improvements abut the property on more
than one street.
I Front Foot Method—The front foot method of assessment is defined as the quotient�of the
identified assessable costs divided by the total assessable frontage benefiting from the
improvement. Adjustments shall be made far odd-shaped lots to an average front footage that
would be the equivalent to the frontage of a rectangular shaped lot ot�the same area and depth.
The purpose of this adjusted front footage is to equalize assessment calculations for lots of
similar size. Corner lots assessed under the'`front fooY'method shall be responsible for the costs
identified for the improvement for the full frontage of the property that fronts the improvement.
Assessable Street Improvement Costs—The assessable costs of a street improvement project
� includes the cost of all necessary construction work required to accomplish the improvement,
acquisition of right-of-way and easements,engineering,legal,administrative,financing_
� appraisals.and other identifiable costs rec�uired to be p<iid h� thc Citv. The sco�of a street
improvement project includes bituminous surfacing,aggregate base,sub-grade correction,
drainage improvements such as curb and gutter,ditches,swales,storm sewer,and storm�rater
� management retention or treatment as required+i�r i4�to completc thc-improvement.
Interest. The City will charge interest on special assessments at a rate specitied in the resolution
approving the assessment roll. If bonds�are sold to finance the improvement project the
interest rate shall be t�vo percent(2%)�+��reater than the average interest rate of the bonds.
rounded to the nearest quarter of a percent. If no bonds�re-are sold.the interest rate shall be
set at the same rate.
Prepayment. Property o��°ners may pay their assessments in full interest t�ree for a period of 30
� days after the assessment hearing. After such period,interest shall be computed from the date
specified in the assessment resolution. The City will transmit a certified duplicate of the
assessment roll with each installment,including interest,to the County Auditor,or in lieu of such
certification,annually certify to the County Auditor by November 30 in each year,the total
amount of installments of and interest on assessments on each parcel which are to become due in
the following year. Prior to certification of principal and interest or the tirst installment thereof,
to the County Auditor,a property owner may make a partial prepayment of the principal to the
City. Such partial prepayment must be at least$100.00. lf the partial prepayment is made after
the 30-day"interest free"period allowed by state law,interest will be charged on the amount of
the partial prepayment from the date specified in the resolution and paid along with the partial
prepayment. After the City has made the first certitication of principal and interest to the County
Auditor.prepayment will be accepted only for the total amount still owing including interest and
must be made prior to November 15 of any year. If a parcel has two or more separate special
assessments.prepayment of the remaining principal balance may be made on one or more
assessment totals. 'i'ax-exempt parcels such as churches and school properties may make only
one partial prepayment to the first certification to the Count��Auditoc The remaining principal
after the partial prepayment���ill be paid in equal installments over the remaining term of the
special assessments.
z
Extensions. Where an improvement is designed for service of an area beyond that receiving the
initial benetit,the City may pay for increased project costs due to such provisions for future
service extensions. The City���ill levv assessments to cover this cost when a new improvement
is installed as an extension of the existing improvement upon identification of such additional
amount in the notice of hearing for the extensions or new improvements. As an alternative,the
City ma��assess these costs to the area of future benefit immediately.
Collector Road—A road designated as a major or minor collector by the Comprehensive Plan
(as depicted on Map 25.Roadway Functional Classification,2008-2030 Comprehensive Plan.)
Public Improvement Procedure
'1'he following is the general procedure followed by the City Council for all public improvement
projects t�rom initiation of such a project through certification of the assessment roll to the
County Auditor. Formats for the various reports and resolutions referenced in this section are
made a part of the policies and procedures of the City.
1. Staff reviews petition or Developers request for submission to Council.
2. Council accepts or rejects petition or request. If based upon a petition,the Council
adopts a resolution declaring whether the required percentage of property owners has
� �c�e�ecuted thc petition. If the petition or request is aeeepted.Council orders
preparation of feasibilit� repon.
3. Staff prepares feasibility report. The report shall preliminary evaluate whether the
proposed improvement is necessary,cost-effective,and feasible and whether it should be
made as proposed or in conjunction�vith another pr�ject. 7'he report shall indude an
estimate of the cost of the improvement as proposed. Council may refer the report to the
Planning Commission.
4. Council accepts or rejects feasibility report. ]f accepted.Council orders public hearing
on the improvements.
5. Stafl�posts and publishes hearing notice and mails notices to affected property owners as
� �t�+�k�rcyuircd b� Minn.Stat. §429.031(a).
6. Council conducts public hearing.
7. Within six(6)months of the hearing date,Council adopts or rejects resolution ordering
improvement to be constructed and advertisement of bids. If adopted,staff prepares final
plans,advertises('or and opens bids as provided in Minn.Stat. §429.041,prepares bid
tabulation,makes recommendation to City Council for award,and prepares proposed
assessment roll. Bonds to finance project costs may be issued at any time after the
improvements are ordered.
8. Council reviews proposed assessment roll and orders assessment hearing.
9. Staff publishes hearing notice,mails notice of hearing date and proposed assessments to
I Yhe affeCied propetfy owners as�'iiluired h��-i+3 Minn.Siai.§429.061. Comment[NV2�:state�aw doe:oot Pre���de
��.COUIICI�COIICjUCtS�SSt',SSlllellt�1e2]'llig 311C�aC10ptS.CCVISCS,O!iC�eCtS 1'eSO�U11011 the Assessment Hearing from being held at the
i same meeting as the Improvement Hearing.When .
detennining the amount of the total expense the City will pay.it�any,and establishing the I�c;meu�e5 a,e c;gnt,�t�5�ommo�co noid botn atcne
assessment roll. If adopted,Council authorizes certification of the assessment to the same time utilizing a proposed assessment roll.Not
sure whether you want to include the prospect of
�.OUII�'f�UdltOt', holding both at the same meeting in this outline �
1 l.Council awards contract based on the bids received. -
3
12.Staff certifies the assessment roll to the County Auditor.
13.Staff supervises construction and prepares payments.
Financine of Public Improvements
� The City encourages public improvement projects as the are�(s)benefiting and needing such
improvements develop. Examples of this policy can be seen through the subdivision regulations,
zoning ordinance.and building codes.Developers are required to provide the needed
improvements and services before development occurs,thereby avoiding unexpected hardships
on the property owners purchasing such propem�and the general public. However,it is
recognized that certain areas orthe City have developed without all needed public improvements
and that methods must be 1i�+f�1-identilicd to provide these improvements�i�ithout�:,�
crcatin�undue hardships torc�the general public or the individual property owner.
Special assessments are generally accepted as a means by which areas can obtain improvements
� or services;however.the method of financing these impr<��rments is a critical factor to both the
City and the property owner. Full project costs spread over a very short term can cause an undue
� hardship on the property owner and,likewise,Csity costs and systems costs spread over a long
period of time can produce and undue hardship on the general public of the City.
It is the policy of the Ciry to not defer assessments except in cases where hardship to senior
citizens 65 years of age or older or persons retired by virtue of a permanent and total disabilit��
���ould result. Also,the Cit��Council may elect to defer assessments on undeveloped land for a
specified length of time or until the lands are developed. Terms and eonditions of any such
deterral will be established in the resolution adopting the assessments.
�
Assessment Method
� "]'he assessmentrate shall�+�}-cust��marilr be by the"unit"method in residential or
agricultural areas. The"front foot"method of assessment may be used for streets serving
commercial or industrial development,as determined by the City Council. Corner lot properties
shall be included in the assessment roll when the property mailing address fronts the
improvement.
Design Standards
Construction and reconstruction of public improvements shall be consistent with the Engineering
Standards approved by the City Council. 'The life expectancy,or service life,for street
improvements,including concrete curb and gutter,sidewalk,trails,and storm sewer,is 20 years,
unless otherwise stated in the resolution ordering the public improvement.
Initial Bituminous Pavement Im�rovements for Gravel Streets
Initial bituminous construction for existing gravel streets in rural zoning districts consists of the
shaping of the existing aggregate surface.supplementing the existing aggregate base to specitied
thickness.constructing the bituminous base course to the specified thickness and width.
4
construction of the bituminous wear course to the specitied thickness and width. Sub-grade and
drainage improvements will be constructed as determined necessary by the City Engineer. 'The
constructed width and material thickness is to be in accordance with the Typical Rural Street
Section detailed in the Engineering Standards adopted by the City Council,unless otherwise
determined by the City Council.
Initial bituminous pavement improvements for existing gravel streets shall be assessed based on
the following formula:
1. Total bituminous cost(both base course and wear course)divided by the number
of assessable units=cost/unit
2. Cost/unit x 0.25=collector road assessment per unit
3. Cost/unit x 0.75=non-collector road assessment per unit
� The City Council may make�exceptions to this policy in the case where the�'eity is
determined to benefit from the improvement or where special conditions exist. In no case will
less than 20 percent of total project costs be assessed to benetiting properties.
Full Depth Reconstruction of ExistinQ Residential Bituminous Surfaced Streets
Full depth reconstruction of existing bituminous surfaced Local/Residential Streets shall be
assessed at a rate of 30%of the costs of the improvements to the benefitting properties,with
frontage on the street proposed for the improvement,and adjustments for corner properties. The
City of Scandia�ti�ill pariicipate in the remaining 70%of the improvement costs.
Full depth reconstruction ot'existing bituminous surfaced streets that are designated as Collector
streets shall be assessed at a rate of 30%of the costs of a typical Local/Residential Street Section
and defined in the Engineering Standards as adopted by City Council. The City of Scandia will
participate in the improvement costs that execed the Standard Local Street Section including
additional design street section thickness,additional storm drainage capacity,and additional
width required to meet the needs of the projected 20-year traffic volume projections. These City
costs are generally referred to as"street over-sizing"costs.
The City of Scandia may vary from this policy in the case of a street that has been transferred to
its jurisdiction from the County or State,typically referred to as"turn-back."depending upon the
condition of the street at the time of turn-back and considering any payments received by the city
from the otherjurisdiction.
Construction of New Streets
Construction of all new streets will be assessed at a rate of 100%of the cost of the
improvements,to the benefiting properties. The new streets will be designed in accordance with
the city's Engineering Standards and applicable provisions of the city's Subdivision Regulations.
as adopted by the City Council.
The assessed cost of the improvements to the benefiting properties with frontage on the proposed
street improvement will be limited to the construction costs of a typical City Local/Residential
5
Street Section. The City of Scandia will participate in the any street over-sizing costs for
improvements to designated Collector streets.
Non-Assessable Public Street Improvement and Maintenance Costs
The Cit��of Scandia w�ill not assess the following:
• Maintenance of�bituminous surfaced streets including bituminous patching,crack filling,seal
coating,shoulder maintenance.mowing and snow plo�i ing
• Maintenance of existing public gravel streets including periodic grading.periodic gravel
placement,mowing,dust control and snow plowing.
• Mill and Overlays will be financed through the Local Road Improvement Fund.General
Fund or some other revenue source but will not be assessed.
Maintenance frequency is determined by the City Council and staff,and described in city
policies(such as tor snow plowing,dust control,tree trimming and others)as may be adopted by
the Council.
Deferment of Soecial Assessments
� The C�it� Council ma��defer the payment of any special assessment on homcstead property
o���ned b��a person���ho is 65��ears of age or older.or w�ho is retired b��virtue of permanent and
total disability,and the Cit}�Clerk is hereb}�authorized to record the deferment of special
assessments�vhere the following conditions are met:
1. The applicant must apply for the deferment not later than 90 days after the assessment is
adopted by the City Council.
2. The applicant must be 65 years of age or older or retired by virtue of permanent and total
disability.
3. The applicant must be the owner of the property.
4. The applicant must occupy the property as his ur hrr principal place of residence.
5. The average annual payment for assessments levied against the suhject property n�ust
exceed one percent of the adjusted gross income of the applicant as evidenced by the
applicanf s most recent federal income t�return. The average annual payment of an
assessment shall be the total cost of the assessment divided by the number of years over
which it is spread.
The deferment shall be granted for as long a period of time as the hardship exists and the
conditions aforementioned have been met. However,it shall be the dut}�of the applicant to
notify the Cit��Clerk of any change in his status that would affect eligibility for deferment.
I The entire amount of thc deferred special assessment�shall be due within sixty days after loss of
eligibility by the applicanL If the special assessment is not paid within the sixty(60)days,the
City Clerk shall add thereto interest at a per annum interest rate of two percent(2%)above the
bond interest rate and the total amount of principal and interest shall be certified to the County
Auditor for collection with taxes the following year. Should the applicant demonstrate to the
I satisfaction of the('it�_CounciL-that full repayment of the deferred special assessment would
6
cause the applicant particular undue financial hardship,the Council may order that the applicant
pay within sixty days a sum equal to thc number o1�installments of deferred special assessments
outstanding and unpaid to date.including principal and interest,with the balance thereafter paid
according to the terms and conditions of the original special assessments.
The��~'���•�'���'�'���"'��~^��^��^'�1=special assessment dc(crrals shall terminate and all amounts
accumulated plus applicable interest shall become due and owin�;upon the occurrence of any one
of the following:
1. The death of the owner when there is no spouse who is eligible for deferment.
2. The sale,transfer or subdivision of all or any part of the property.
3. Loss of homestead status on the property.
4. Determination by the Council for any reason that immediate or partial payment would
impose no hardship.
State I,a���References(s): Minn.Stat. §435.193,Senior Citizens or retired&disabled persons
hardship special assessment deferral.
�;�i -��;
�,>.-m:. ����r`; ,,_:
�� ��;�•
��,� �h�~i
�r_ '
� � �� � � � �
7