PUBLIC HEARING: Adopt Resolution #17-10-252 Adopting Assessment Roll Certifying Sunwood Drive Reconstruction Assessments, Improvement Project #17-00

Purpose:
The purpose of this case is to adopt Resolution #17-10-252 adopting a final assessment roll certifying Sunwood Drive Reconstruction assessments for 2018 payable tax year, Improvement Project #17-00.

Background:
City Improvement Project 17-00 involved reconstructing Sunwood Drive between Ramsey Boulevard/County State Aid Highway (CSAH) 56 and Bunker Lake Boulevard /County Road 116, which totals approximately 3,050 linear feet (0.58 miles).  A map showing the scope of the proposed improvements is included as Figure 1 in Appendix A of the attached Feasibility Report.

Pre-Existing Conditions
Record plans indicate this segment of Sunwood Drive was constructed in 1996 using B618 concrete curb and gutter at a consistent width of 40 feet from face-of-curb to face-of-curb, centered within an 80-foot wide right-of-way.  Record plans also show that 3½ inches of bituminous pavement was constructed over 5 inches of class 5 aggregate base.  However, soil borings and pavement corings revealed an average of about 4¾ inches of bituminous pavement along the corridor. Eight (8) foot wide parking lanes were delineated along both sides of the street using solid white pavement striping.

The existing storm sewer system consists of concrete catch basins and pipes, which drain runoff from the street to adjacent low-lying areas. Sanitary sewer and watermain also exist under the pavement.

An off-street bituminous trail exists along the north side of Sunwood Drive.  The trail is in relatively good condition so the trail was not improved with this project.

Four pavement corings were completed by WSB and Associates (WSB) during preparation of the feasibility report.  In addition, eleven soil borings were completed by Northern Technologies, Inc. (NTI).  Copies of WSB’s and NTI’s reports are included in Appendix D of the attached Feasibility Report.

Completed Improvements
Damaged sections of existing concrete curb and gutter were removed and replaced, along with all concrete cross gutters at driveways and intersections which facilitate drainage in areas where grades in gutter lines are less than 2% to minimize standing water which can cause unsafe conditions for drivers and pedestrians.

The existing bituminous pavement was reconstructed using the Stabilized Full Depth Reclamation (SFDR) process.  This process included reclaiming the existing bituminous pavement, along with a portion of the existing class 5 aggregate base.  The reclaimed material was then spread on top of the remaining class 5 aggregate base, after which about 4 inches of reclaim material was removed from site.  An asphalt emulsion was then mixed into the remaining reclaim material as a stabilizing agent to increase the strength of the reclaim material. The stabilized reclaim material was then shaped and compacted, after which 4 inches of new bituminous pavement was placed on top. The new pavement section is a 10-ton pavement design meeting current State Aid pavement design standards.

The existing storm sewer system met all current State Aid design standards so no storm sewer improvements were necessary, other than casting adjustments.  The existing sanitary sewer and watermain were tested and found to be in good condition so no utility improvements were necessary.

Public Input
Staff met with all property owners prior to construction to discuss the improvements and their preliminary assessments.  All generally understood the need for the improvements, and though many of the property owners questioned the use of special assessments to help pay for the improvements, they did not generally oppose their proposed assessments, with the exception of Connexus Energy.
 
Connexus Energy addressed the Public Works Committee on September 19, 2017, to discuss their concerns with their assessment.  Their concerns focus on the fact that the property the assessment is being levied against is currently undeveloped.  The City’s consulting appraisal firm estimates benefit based on the highest and best use of a property, not on the current development status.  This accounts for the fact that improvements made by the City serve the assessed property for decades, during which time the property may be developed.

An Assessment Hearing Notice was published in the City’s official newspaper, the Anoka Union Herald, on Friday, September 15, 2017.
 
Assessment Hearing Notices were mailed to benefiting property owners on September 25, 2017, as required per Minnesota State Statute Chapter 429.  Attached is a copy of the Affidavit of Mailing, copies of all mailed hearing notices, and mailing label lists.
 
Anoka County requires special assessments to be certified to the County Auditor by November 30^th for collection on next year’s taxes.  This deadline will be met by conducting the Assessment Hearing at the October 10^th City Council meeting.

Observations:
The project is complete and all costs are known.  Final assessments were calculated based on final project costs.
 
The proposed special assessments conform to the requirements set forth in State Statute Chapter 429, chapter 8 of the City Charter, applicable City code, and the City’s adopted Special Assessments Policy, which are attached to this case for reference.
 
Attached are copies of the final assessment map and roll for this project.
 
The proposed interest rate for special assessments is 4.60%, and assessments are proposed to carry a 10-year term.  Assessment Hearing Notices mailed to property owners included a schedule of payment showing annual payments including principal and interest.
 
No assessment deferrals have been requested.
 
Alternatives:
Alternative #1 – Motion to adopt Resolution #17-10-252 adopting the final assessment roll certifying Sunwood Drive Reconstruction assessments for 2018 payable tax year, Improvement Project #17-00.
 
Alternative #2 – Motion to deny adoption of Resolution #17-10-252 at this time.

The construction contract amount for this project is $409,385.03, which is $51,742.21 or 11.2% less than the engineer’s estimate of $461,127.24.
 
Final project costs totaled $507,244.26 and include;

• Final construction costs = $407,523.06
• Bituminous base course incentive = $2,476.89
• Bituminous wear course incentive = $2,393.76
• Indirect costs (6% admin., 15% engineering, 1% finance, 1% legal) = $94,850.55

 
Funding sources include a combination of Street Reconstruction and Overlay Program (SROP) bond funds, special assessments to benefiting properties, and stormwater utility funds.
 
Special Assessments
The City’s adopted Special Assessments Policy, which is attached to this case, calls for special assessments to pay for 25% of eligible street reconstruction improvement costs.  Final assessments as proposed total $118,940.00, which equals 23.45% of eligible final project costs.
 
Special assessments are calculated using methods resulting in reasonable and equitable distribution of assessments that are uniform upon the same class of properties within the assessable area. The test for determining the validity of a special assessment is whether the improvement for which the assessment was levied has increased the market value of the property against which the assessment was levied in at least the amount of the assessment.

The City’s Special Assessments Policy identifies three optional methods for calculating assessments.  A total of 9 benefiting properties were identified along this segment of Sunwood Drive.  All 9 properties are zoned E1 or E2 (industrial) so only two assessment methods are recommended; the “adjusted front footage” method and the “area” method.
 
Staff originally considered impacts of both methods as they would be applied in the current context of the policy.  The adjusted front footage method resulted in less variability between assessments ($9K - $40K), while the area method resulted in greater variability ($3K - $42K).  Staff initially recommended using the area method since it appeared to better assign benefit based on lot geometry, which seemed to make sense for this project considering the significant differences in lot depths along the corridor.
 
Based on input from the City’s consultant appraisal firm, Patchin, Messner, Dodd and Brumm, who prepared a benefit appraisal consultation report for this project, as well as the benefit appraisal consultation reports for all street reconstruction projects in Ramsey since 2015, and per input received from other cities that have assessed industrial parcels for street reconstruction improvements, the adjusted front footage method was used to calculate preliminary and final assessments.
 
Patchin, Messner, Dodd and Brumm calculated estimated special benefits for each assessable property.  The lesser of this amount versus the adjusted front foot amount was used to determine the final assessment for each property as shown in the attached final assessment roll (with minor rounding for finance purposes).  This is the same methodology followed in the attached Feasibility Report to determine preliminary assessments.

All project costs are eligible for special assessments since the street was reconstructed to its pre-existing width, and since the old and new pavement sections both meet 10-ton design standards.
 
As previously noted, Connexus Energy has concerns with their final assessment because the assessed property is undeveloped.  Staff met with Connexus Energy representatives on several occasions to discuss their assessment and based on feedback from our consulting appraiser, Patchin, Messner, Dodd and Brumm, as well as from other cities that utilize assessments and have not assessed properties differently based on their development status, Staff believes Connexus Energy’s assessment is equitable and fair, and recommends adopting assessments as proposed in the attached final assessment roll. Again, all assessments assume the highest and best use of the property.
 
Connexus Energy addressed the Public Works Committee on September 19, 2017, to discuss their proposed special assessment.  The Public Works Committee did not recommend any adjustments to the final assessment roll.
 
At the time this report was published, no formal objections to final assessments had been received.  Should any formal objections be received prior to the Assessment Hearing, Staff will update the City Council on such matters before the Assessment Hearing is conducted.

Staff recommends Alternative #1.  Staff does not support Alternative #2.

Motion to adopt Resolution #17-10-252 adopting the final assessment roll certifying Sunwood Drive Reconstruction assessments for 2018 payable tax year, Improvement Project #17-00.