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HomeMy WebLinkAbout5B - Assessment Policy Amendment Report o "19 4) H 4646 Dakota Street SE Prior Lake, MN 55372 4I INNESO 1-1 " CITY COUNCIL AGENDA REPORT MEETING DATE: MARCH 10, 2014 AGENDA #: 5B PREPARED BY: LARRY POPPLER, CITY ENGINEER / INSPECTIONS DIRECTOR PRESENTED BY: LARRY POPPLER AGENDA ITEM: CONSIDER APPROVAL OF A RESOLUTION AMENDING THE ASSESSMENT POLICY WITH RESPECT TO TRUNK OVERSIZING DISCUSSION: Introduction This agenda item reviews recommendations from the Assessment Review Committee (ARC) to amend the City's assessment policy. History The City's Assessment Policy was created in 1989 for the purpose of interpreting, calculating and spreading special assessments against benefiting properties. Since that time the City has amended the policy on numerous occasions in an effort to assure conformity to law, reflect new practices in special assessments, or provide clarification to the document. The latest amendment in 2011 completely rewrote the policy. On January 27, 2014 as a part of the discussion for the Mushtown Road Improvement project, the City Council directed the Assessment Review Committee to review the assessment policy and suggest changes to the policy to provide additional flexibility for projects which involve first time improvements within developed neighborhoods. Current Circumstances The Assessment Review Committee met on February 12, 2014. The committee reviewed the following: • Future Prior Lake projects involving first time improvements • Neighboring City Assessment Policies • Development costs (First time improvement costs) • Project costs for similar projects within Prior Lake and from other communities. The goal of reviewing this information was to refine the assessment policy as it applies to projects like Mushtown which include utility trunk extensions as part of the contemplated improvements. Several potential assessment policy revisions were discussed, but ultimately the ARC recommends the following language: 1. ADD SENTENCE IN SECTION IV G. - "Regardless of pipe size when a sewer or water line is extended through a developed area but also would serve an undeveloped area or provide for looping of the system, the cost of Phone 952.447.9800 / Fax 952.447.4245 / www.cityofpriorlake.com the pipes may be divided between assessments, trunk funds, or other funds at the discretion of the City Council. The Assessment Review Committee felt that because the improvements also benefit future undeveloped land, the Trunk Fund, which is paid by the trunk acreage charge by developers, should bear a portion of the cost for the Mushtown Road Project. Conclusion The proposed revision provides flexibility in using Trunk Funds or other funds for the public improvement projects which involve pipe networks that would extend to undeveloped areas or provide system looping. Other minor revisions to the policy were completed as well. City Staff recommends that the City Council adopt the revised assessment policy as written. ISSUES: The sewer and water systems are composed of trunk and neighborhood pipes. Like their name a neighborhood pipe generally serves only one neighborhood. A trunk pipe by contrast serves more than one neighborhood and may also provide looping which allows for the same area to receive service from different pipes in the event of a break or increase in demand. The City charges developers an acreage charge for trunk improvements. These dollars are deposited in the Trunk Fund for use on future City projects involving trunk improvements. Projects like the County Road 12 project or the Eagle Creek Estates project have used the trunk funds to build trunk facilities for the City. The trunk acreage charge is evaluated periodically to determine the appropriate amount to charge. Modifying the assessment policy to allow use of Trunk Funds as proposed in the assessment policy amendment will slightly increase the trunk acreage charge. Currently the trunk sewer acreage charge is $3,040, the trunk water acreage charge is $5,500, and the trunk stormwater acreage charge is $2,790 per acre for low density residential property. Had the original fee determination study for trunk acreage charges contemplated the use of $262,000 for the Mushtown Road project, the trunk acreage charges would increase by $75 /acre split evenly between trunk sewer and trunk water acreage charges. This proposed amendment was supported as well because it may be applied to similar circumstances throughout the community where a trunk line or function exists. We know that in future years our Capital Improvement Program calls for the installation of similarly situated public utilities. Several other assessment policy changes were reviewed including reducing the assessment percentage charged to property owners for reconstruction and new construction. Ultimately these options were not recommended as they increased tax levy contributions which would have a dramatic impact on the Capital Improvement Plan as a whole. 2 Another idea was to modify street oversize fund contributions when improvements involve a collector street serving a regional City facility. Adding language could reduce assessments on the Mushtown Road project, but not other similar future projects and was therefore not recommended by the ARC. FINANCIAL The last time a trunk fee determination study was completed was in 2004. As IMPACT: discussed above, if the assessment policy is amended as proposed, the Trunk Fund would be used to fund a greater portion of projects through developed areas. The trunk acreage charge should be modified to accommodate the change in policy. ALTERNATIVES: 1. Approve a resolution amending the assessment policy as proposed. 2. Deny the amendment to the policy and provide direction on specific language changes. 3. Table this item to some point in the future. RECOMMENDED The assessment review committee recommends alternative 1. MOTION: 3 PRI9 E 4646 Dakota Street SE 44 /vNEsol l ' Prior Lake, MN 55372 RESOLUTION 14 -xxx A RESOLUTION AMENDING THE CITY ASSESSMENT POLICY WITH RESPECT TO TRUNK IMPROVEMENTS Motion By: Second By: WHEREAS, Assessments are used in part of finance the cost of public improvements; and WHEREAS, The Assessment Policy provides guidance to City Staff, Assessment Review Committee, developers, and residents in applying assessments to properties benefitted by the improvements. 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 revised Assessment Policy which refines the trunk improvements with an adoption date of March 10, 2014 is hereby adopted. PASSED AND ADOPTED THIS 10TH DAY OF MARCH 2014. YES NO Hedberg Hedberg Keeney Keeney McGuire McGuire Morton Morton Soukup Soukup Frank Boyles, City Manager