Loading...
HomeMy WebLinkAbout8C - PL Code Amendment AGENDA #: PREPARED BY: SUBJECT: DATE: INTRODUCTION: BACKGROUND: 8 (C) RALPH TESCHNER FINANCE DIRECTOR CONSIDER APPROVAL OF ORDINANCE 96-05 AMENDING SECTION 9-1-6 OF THE PRIOR LAKE CITY CODE CHANGING THE STREET OVERLAY ASSESSMENT PERCENTAGE/METHOD AND CONSIDER APPROVAL OF SPECIAL ASSESSMENT POLICY AMENDMENT WITH RESPECT TO SIDEWALK IMPROVEMENTS. FEBRUARY 5, 1996 The Council had requested that the provision within the special assessment policy which establishes the assessment policy for street overlay and reconstruction projects be discussed at their annual workshop which was conducted on January 19-20, 1996. Specifically the issue addressed was the 60/40% method of cost recovery. Also addressed was the issue of assessing sidewalk improvements along collector streets. Considerable discussion has taken place with respect to what is the appropriate level of tax subsidy that should be applied in our street overlay/reconstruction program. Currently our policy is the present 60/40% method of assessing 60% of the project cost to the property owner and the remaining 40% picked up by a general ad valorem property tax levy over a 10 year period. This practice was codified in 1985 to assure uniform consistent application and has been followed since 1985 when it was adopted as an ordinance. The reason the policy was codified was that its continued existence would be more assured as opposed to recommended policy. The following is a recap of the street reconstruction projects that have been assessed to date under the present method: Year Project Description 1985 Proj. 85-11 Green Heights/Willows 1986 Proj. 86-11 Hidden Oaks/Oakwood Hills 1989 Proj. 89-11 Downtown Area 1994 Proj. 94-01 Prior South 1995 Proj. 95-01 Ridgemont Avenue 1995 Proj. 95-02 Creekside Circle The City Council has discussed revising the policy from 60% property owner/40% city ad valorem levy to 40% property owner/60% city ad valorem levy. Reducing the lssessment percentage has apparent advantages as well as disadvantages as listed below: 16200 Eagle Creek Ave. S.L Prior Lake. Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245 AN EQUAL OPPORTUNIlY" EMPLOYER DISCUSSION: T r Advantages: 1. Project will gain more support if cost to property owner is less. 2. Property owner is less likely to appeal. 3. A lower special assessment amount is easier to prove benefit. 4. The potential of fewer appeals. Disadvantages: 1. The most compelling disadvantage would be the fact that the special levy amount associated with the improvement project would increase thereby increasing property taxes. 2. Our ability to bond for other projects ie., county road, park improvements, etc. could be limited, if lowered too far, because of the Chapter 429 requirement that a bond issue be assessed at a minimum of 20%. Lowering the 60/40% would result in fewer dollars being raised for such other projects. Staff has researched what other cities' policies are regarding cost recovery on street reconstruction and overlay projects. The survey results are illustrated below: Q!y 1. Apple Valley 2. Bumsville 3. Chanhassesn 4. Chaska 5. Eagen 6. Eden Prairie 7. Lakeville 8. Maplewood 9. Minnetonka 10. Plymouth 11. St. Louis Park 12. Savage 13. Shakopee Survey in Alphabetical Order Reconstruction Assessment Policy Annual tax levy 40/60% 60/40% - unit basis Policy development stage** Unit charge based upon market value benefit Policy development stage 50/50% 55/45% (Hat $35.00/ft)*** Annual tax levy 30/70% 60/40% No projects 25/75% Volume* $400,000 $1,000,000 $900,000 n/a $1,000,000 n/a $500,000 $100,000 $1,500,000 $2,000,000 $4,000,000 n/a $500,000 * Represents either average annual dollar amount of improvements or their most recent project. Prior Lake's number is based upon average of 1996-00 CIP street overlay totals. ** Initial stage of street reconstruction planning. *** $35.00/ff was prorated against Creekside Circle's project rate to arrive at 55/45% for comparison purposes. n/a Represents no reconstruction experience to date. T I" ALTERNATIVES: City 1. Apple Valley 2. Minnetonka 3. Shakopee 4. Plymouth 5. Burnsville 6. Lakeville 7. Maplewood 8. Prior Lake 9. Chanhassesn 10. St. Louis Park 11. Eagen 12. Chaska 13. Eden Prairie 14. Savage * Survey in Ascending Assessment Order Reconstruction Assessment Policy Annual tax levy Annual tax levy 25/75% 30/70% 40/60% 50/50% 55/45% 60/40% 60/40% - unit basis 60/40% Unit charge based upon market value benefit Policy development stage * * Policy development stage** No projects Volume* $400,000 $1,500,000 $500,000 $2,000,000 $1,000,000 $500,000 $100,000 $871,000 $900,000 $4,000,000 $1,000,000 nla nla n/a Represents either average annual dollar amount of improvements or their most recent project. Prior Lake's number is based upon average of 1996-00 CIP street overlay totals. *** ** Initial stage of street reconstruction planning. $35.oo/ff was prorated against Creekside Circle's project rate to arrive at 55/45% for comparIson purposes. nla Represents no reconstruction experience to date. As is evident practically every municipality differs in its application of special assessments ranging from no utilization to a maximum of 60%. While the alternatives are limited only by the percentage numbers available, there appear to be five choices which are the most feasible given the upsides and downsides previously outlined. They are as follows; 1. 60/40% (Retention of current method) 2. 50/50% (Requires policy amendment) 3. 40/60% (Requires policy amendment) 4. Percentage based unit assessment 5. Market value based unit assessment Further percentage reduction would represent a significant departure from existing policy while significantly increasing the impact upon the general property tax. Staff has examined the 1996-00 Capital Improvement Program to determine what impact each of the above methods would have in terms of increasing total property taxes associated with the street overlay program. Depending upon which alternative is chosen in 1997 the levy would range from $415,000 to $621,000. In 1998 the range would be from $360,000 to $540,000 and in 1999 the difference would be between $600,000 and $900,000. The total cumulative impact could be as high as an additional $686,000 of tax dollars if the least assessed method of 40% is approved. T 1" Staff inferred from the discussion of this subject at the City Council retreat that there appeared to be two preferred options; the market value and percentage based unit assessment methods. The reasons for favoring these options were twofold; the assessment roll determination process would be greatly streamlined and all similarly situated residents would be treated the same based upon unit ownership. The market value and percentage based unit assessment methods are described below: Market Value Unit Assessment The City would obtain appraisals on a prescribed number of parcels (ie., 5% of total parcels within the project) which represent a typical cross section of the improvement area. The average increase in market value for these parcels would result in the actual benefit sustained and would provide a flat amount to be assessed to all affected properties on a unit basis. * Percenta&e Based Unit Assessment Under this method the City would first determine what percentage would be utilized for assessment purposes. This percentage would then be multiplied by the total project cost to arrive at an amount that would be divided over the total number of parcels within the project. The result would be a flat amount to be assessed to all affected properties on a unit basis. * * A unit would be defined as a buildable lot of record. In such instances whereby a parcel may be eligible for subdivision, the number of units shall be reasonably determined according to the City's subdivision ordinance in effect at time of improvement. RECOMMENDATION: Combination of Alternative #3 and #4 which changes the assessment for street overlay and reconstruction projects from 60/40% to 40/60% on a unit basis. According to this method 40% of the project cost would be assessed and the assessment would be a flat amount that would be charged on a unit basis as defined above. The current ordinance already allows the Council to select either the front footage or unit method on a project by project basis. Therefore the percentage distribution portion of the City Code needs to be changed and a definition of what constitutes a "unit". Staff has prepared the attached Ordinance 96-05 which incorporates the assessment percentage change for street overlay/reconstruction improvements. The following language on page 11 of the City Assessment Policy with respect to sidewalk improvements is also recommended to be changed. T ,. ACTION REQUIRED: REVIEWED BY: A960I.WRT SECTION III - Improvement Type Application C. SidewalklBike Path Installation. Although construction normally occurs only on one side of the street, channelization and safety of pedestrian traffic is regarded as an overall neighborhood benefit. Therefore it shall be the policy of the City to assess-eefl.€l:lfFefl.Hy-eeili- ~i8.t:S- ef- a- stfee~ efl.- af}- aajtIstea- ffefl.~ fee~ge- basis:- pay for such improvements from the Collector Street Fund. The reason for this language change is that sidewalks occur primarily along collector or high volume roadways and that the Collector Street Fund was established to finance these costs. A motion to approve Ordinance 96-05 Amending Section 9-1-6 of the Prior Lake City Co and a second motion to approve the above refiienced 1 age endment under Section III of the City Assessment Po 1 y wi9l re ect t !financing sidewalk installations. ltJL T r 1 CITY OF PRIOR LAKE ORDINANCE NO. 96-05 AN ORDINANCE AMENDING SECTION 9-1-6 OF THE PRIOR LAKE CITY CODE The City Council of the City of Prior Lake does hereby ordain: I. Section 9-1-6 (C) of the Prior Lake City Code is hereby amended to read as follows: 9-1-6: Street Overlay Assessment Policy: (C) Assessment Policy: 1. Street Overlay, Curb and Reconstruction Improvements: Street overlay, curb and reconstruction improvements of presently paved streets in the City shall be assessed at forty (40%) of the total project cost against the benefited properties. The remaining sixty percent (60%) of the project cost shall be paid from general ad valorem property taxes. II. Section 9-1-6 (C) of the Prior Lake City Code is hereby amended to add the following: (C) Assessment Policy: 3. d. Unit assessment shall be determined in the following manner: A unit would be defined as a buildable lot of record. In instances in which a lot of record is eligible for subdivision, the number of units, for assessment purposes, shall be determined according to the City's subdivision ordinance in effect at time of assessment hearing. This ordinance shall become effective from and after its passage and publication. Passed by the City Council of the City of Prior Lake this _ day of 1996. ATTEST: City Manager Mayor Published in the Prior Lake American on the _day of , 1996 A960l.WRT T .