The following assessment for SID 1387 (Zimmerman Trail Subdivision) has been completed by the Finance Division and is ready to be spread on the tax rolls by resolution. This project is for sanitary sewer improvements. This item was postponed from the September 28, 2009, meeting because of a renotification requirement on interest rates.

The Council must hold a public hearing and then may:

• Approve the resolution; or
• Not approve the resolution, which would result in the tax payers  not being assessed, and the General Fund being responsible for paying for the improvements.

The costs associated with SID 1387 are assessed per lot. The net effective interest rate is 3.25%. Under the State statute 7-12-4189, the City is required to add ½ of 1% to the bond interest rate. Under the same statute, bonds with a variable interest rate may add up to 2%. The terms of the loan from State of Montana Intercap Loan Program, which has a variable interest rate, requires an additional 2% be added to the 3.25% interest rate, for a total interest rate of 5.25%. This will be used as additional security on the bond issue, as stated in the final bond resolution. The interest rate may be adjusted annually, so the additional 2% will act as an interest rate cushion for the property owners.

Staff recommends that Council conduct a public hearing and adopt the resolution that spreads the costs of SID 1387 to the benefitted properties.