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Home My WebLink About5D Maple Glen 2nd Assessmentf Off. ~P O ~ l,> ~ '~,~, ;~~, ~ I V ~~ 4646 Dakota Street S.E. u ' ' ~~~., x' ~ Prior Lake, MN 55372-1714 ~ __. ~~IIVIVESO`tQ' CITY COUNCIL AGENDA REPORT MEETING DATE: MARCH 2, 2009 AGENDA #: 5D PREPARED BY: LARRY POPPLER, ASSISTANT CITY ENGINEER AGENDA ITEM: CONSIDER APPROVAL OF A RESOLUTION DECLARING COSTS TO BE ASSESSED AND ORDERING PREPARATION OF AN ASSESSMENT ROLL FOR THE MAPLE GLEN SECOND PROJECT, AND ESTABLISHING THE DATE OF THE ASSESSMENT HEARING DISCUSSION: Introduction This agenda item is necessary to set an assessment hearing and the amount to be assessed for the Maple Glen Second Project. History On October 3, 2005, the City Council approved the Development Contact for Maple Glen 2"d Addition. Construction of Maple Glen 2"d Addition with the exception of final paving (wear course) and individual lot landscaping was completed in the fall of 2006. On October 16, 2007 the City notified Tollefson Development Inc. (Developer) that streets in certain areas of the plat had settled and needed to be repaired, but due to poor soil conditions the City would prefer the Developer wait to complete the final paving when weather conditions permitted in 2008. On December 1, 2008 the City Council approved an amendment to the Development Contract for Maple Glen 2"d Addition. Due to problems with the Letter of Credit and the inability to secure additional funds, the Developer petitioned the City to complete the final wear course paving and landscaping and has agreed the cost will be specially assessed against the lots within the plat still owned by the Developer. The Developer waived their right to appeal the special assessments. At the January 20, 2009 Public Hearing, no one spoke opposing the completion of the project. Current Circumstances Currently the project is out for bids. The bid opening date is set for March 18, 2009. Once the bids are opened, the City will calculate the final assessment amount and meet with the Assessment Review Committee prior to the Assessment Hearing. ISSUES: Timing This Council action allows the City to follow the noticing requirements of the 429 process properly and allow for optimum timing of the bond sale. The City plans to sell bonds for both this project and the 2009 Improvement project, Brooksville Hills Phase II, at the same time. Delay of this agenda item to the March 16t" meeting would push the potential award of this project into June. By June, the City anticipates beginning www. cityofpriorlake. com Phone 952.447.9800 /Fax 952.447.4245 the initial payments to the Contractor for the Brooksville Hills Phase II Project and therefore the bond sale is needed prior to that date. Impact of Foreclosure on the Assessment Process The City has received information suggesting that the lots still owned by the Developer may now be in foreclosure. Foreclosure is a lengthy process and before the mortgage holder comes into ownership, the mortgagee has a period of time, prescribed by statute, to redeem the property. Neither a foreclosure nor a bankruptcy can wipe out property taxes or special assessments due and owing. Failure to pay property taxes or special assessments puts the property at risk of going into tax forfeiture. When the Council approved the amendment to the Development Contract, the bank holding the mortgage withheld its consent to the amendment. Based on this information, City staff will make sure that the bank receives notice as prescribed by Minn. Stat. Chapter 429, of the Special Assessment Hearing in order to provide it an opportunity to appeal, object, or otherwise express their views. Impact of Tax Forfeiture on the Assessment Process Assuming the lots in Maple Glen 2" Addition are foreclosed, in normal economic times, it would be unlikely that a bank would allow property it has recovered through foreclosure to go into tax forfeiture. These lots in Maple Glen 2"d Addition may be the only asset the bank has to recover the money loaned to the Developer. The lots will be more valuable when the streets and landscaping are improved. In the event of tax forfeiture, the State would take ownership of the property and direct the County on its behalf, to dispose of each parcel by auction, private sale or conveyance to a governmental body. The assessments on the property would still be valid however there could be a delay in payment of the assessment until the forfeiture process is complete and the property returns to private ownership. For that reason as noted below in the Financial Impact section the City will issue a 10 year bond which minimizes impact and liability to the City. Conclusion Setting the Assessment Hearing date next step in the process for assessment of the remaining improvements. Once the bids are received on March 18, 2009, the Special Assessment Committee will meet, review the bids and make a recommendation to the Council. The City would then hold the Assessment Hearing prior to awarding the bid. FINANCIAL The Maple Glen 2"d Addition Project is proposed to be financed by IMPACT: special assessments. The total estimated project cost is $290,158. Assessment The Assessment Review Committee recommends the unit method of assessment for the Maple Glen 2"d Addition for the 23 Developer owned lots. The estimated assessment rate is proposed at $12,616/unit. Assessment Term Because of the nature of this project and the petition by the Developer, the Assessment Review Committee recommended that the assessment term be one year for this project. Upon further review with the City Attorney and financial consultants City Staff is recommending that the assessment be for a term of 10 years. Typically the City assesses road improvements over a 10-year term. This also allows the Developer additional time to pay for the improvements. By paying the assessments over a ten year period rather than paying for them in one year it reduces the risk of tax forfeiture. As a part of the Amendment to the Developers Agreement, building permits on a lot by lot basis will not be issued until the remaining assessment amount is paid in full. While the City is utilizing bond capacity for this project, the entire cost of the improvements will be paid in full to the City through the assessment process. This includes the carrying costs for the project. ALTERNATIVES: The alternatives are as follows: 1. Approve a resolution declaring the costs to be assessed, ordering the preparation of the proposed assessment rolls for the Maple Glen Second Project, and establishing April 6, 2009 for the assessment hearing date. 2. Deny the Resolutions for a specific reason and provide staff with direction. 3. Table this item for a specific reason. RECOMMENDED Staff recommends alternative #1. MOTION: r'p~ .P O O F~ / v \v ~ ~ 'e°~INNESO~P 4646 Dakota Street S.E. Prior Lake, MN 55372-1714 RESOLUTION 09- xx A RESOLUTION DECLARING COSTS TO BE ASSESSED AND ORDERING PREPARATION OF PROPOSED ASSESSMENT ROLL FOR THE MAPLE GLEN SECOND PROJECT AND ESTABLISHING THE DATE OF THE ASSESSMENT HEARING AND PUBLICATION THEREOF Motion By: Second By: WHEREAS, costs have been determined for the improvement of the Maple Glen Second Project: and WHEREAS, the City Manager notifies the City Council that such proposed assessment will be completed and filed in the City Manager's office for public inspection. NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, MINNESOTA as follows: 1. The recitals set forth above are incorporated herein. 2. The portion of the cost of such improvements to be assessed against benefited property owners is declared to be $290,158.00. 3. Assessments shall be payable on an equal principal installment method extending over a period of 10 years for street improvements. The first installment shall be the annual principal plus interest calculated from the public hearing date to the end of this year plus twelve months of the next year and shall bear interest at the rate of 6% per annum from the date of the adoption of the assessment resolution. 4. The City Manager, with the assistance of the City Engineer shall forthwith calculate the proper amount to be specially assessed for such improvements against every assessable lot, piece or parcel of land within the district affected, without regard to cash valuation, as provided by law, and shall file a copy of such proposed assessment in the office of the City Manager for public inspection. 5. The City Manager shall upon the completion of such proposed assessment notify the City Council thereof. 6. A public hearing shall be held on the 6T" day of April, 2009, in City Council Chambers at 6:00 P.M. to pass upon such proposed assessment and at such time and place all persons owning property affected by such improvement will be given the opportunity to be heard with reference to such assessment. 7. The City Manager is hereby directed to cause a notice of the public hearing on the proposed assessment to be published once in the official newspaper of the City at least two weeks prior to the hearing, and the City Manager shall also cause mailed notice to be given to the owner of each parcel described in the assessment roll not less than two weeks prior to the hearing. 8. The owner of any property so assessed may, at any time prior to certification of the assessment to the County Auditor, pay the whole of the assessment on such property, with interest accrued to the date of payment, to the City Finance Director, except that no interest will be charged if the entire assessment is paid within 30 days from the adoption of the assessment. The owner may, at any time thereafter, pay to the City Finance Director the entire ____ R:\Council\2009 Agenda Reports\03 02 09\Assess M`~'~~~'~L~~drruf9r~OC Phone 952.447.9800 /Fax 952.447.4245 amount of the assessment remaining unpaid, excepting the installment portion appearing upon the current year's property tax statement. PASSED AND ADOPTED THIS 2ND DAY OF MARCH, 2009. YES NO Haugen Haugen Erickson Erickson Hedberg Hedberg LeMair LeMair Millar Millar Frank Boyles, City Manager R:\Council\2009 Agenda Reports\03 02 09Wssess Maple Glen Second resolution.DOC