Review Draft Special Assessments Policy for City Improvement Projects

Purpose:
The purpose of this case is to review the draft Special Assessments Policy for City Improvements, and to provide input to City Staff to allow adoption of the Policy in November of 2014.

Background:
On May 20^th the Public Works Committee directed Staff to develop a draft Special Assessments Policy to establish how special assessments will be levied against properties benefiting from various types of City improvements, including street reconstruction projects. As discussed at the time, even if special assessments are not used to fund street improvement projects it would be advantageous for the City to have an adopted Special Assessments Policy. The Committee also directed staff to research other cities special assessments policies to see how they address specific situations and apply special considerations in assessing property owners for public improvements.

On June 25^th the Charter Commission voted to amend Section 8.4.5 of the City Charter, increasing the percentage of property owners required to petition against Council initiated public improvements utilizing special assessments as a funding source from greater than 50% to 60% or more. While this action will make it slightly more difficult for the public to petition against Council initiated improvement projects, it will still not prevent property owners from petitioning against Council initiated public improvements utilizing special assessments as a funding source.

On August 14^th the Public Works Committee reviewed the first draft of the Special Assessments Policy, which was developed using the model Special Assessments Policy prepared by Ehlers and Associates, Inc. as posted on the League of Minnesota Cities (LMC) web site. However, Chairperson Backous and Councilmember Kuzma were both absent so Staff was directed to bring the draft Policy back at a later date for review by the full Committee.  However, the Committee members in attendance that evening provided several comments as follows.  Any applicable MSA funds must first be applied to the City’s share of the project costs, no conflicts can exist between the Policy and the City Charter, and the Policy should provide as much flexibility as possible in considering existing property sizes, shapes, development status (developed vs. undeveloped), etc.  These comments were subsequently incorporated into the draft Policy.

On September 16^th the Public Works Committee again reviewed the draft Special Assessments Policy.  After considerable discussion, Staff was directed to revise the draft Policy to incorporate the Committee’s proposed assessment percentages, and to incorporate staff’s proposed recommendations on the use of the various assessment methods, then to bring the draft Policy directly to a City Council Work Session for review and input from the full Council.
 
Attached is the latest draft of the Special Assessments Policy.  Text shown in red strike-through format is proposed for deletion, while blue underlined text is new language as proposed by the Public Works Committee and by City Staff.

Staff is seeking Council input on the draft Policy including the proposed assessment percentages listed in Section 10, and on the special considerations listed in Section 6 including whether costs for subgrade excavation and rural to urban street conversions should be non-assessable costs paid solely by the City. Other special considerations may be desirable to reduce assessable costs as warranted, especially when considering that special assessments levied at the minimum rate of 20% as required for bonding may exceed $10,000 for larger benefiting properties, especially for properties an acre or more in size which comprises a large percentage of residential properties throughout the City.  An amount this large would likely be hard to defend if challenged.  In fact, some cities perform appraisals on one or more representative properties at the front end of projects to determine if the proposed assessments are defendable, but this in turn then increases project costs, as well as assessments.
 
Staff is also seeking Council approval of the identified assessment methods for single and multi-family residential, commercial and industrial properties. For example, multi-family residential, commercial and industrial properties often vary greatly in size and shape so staff is proposing to follow the lead of most other cities by using the front footage method for assessing improvements against these properties, and to assess single-family residential properties based on either the per unit or the area method.

Per Public Works Committee direction on May 20^th, Staff obtained assessment policies from numerous cities that apply special assessments to fund their public improvement projects. Attached are copies of assessment policies from Andover, Blaine and Champlin. These contain many of the considerations included in the attached draft Policy. Assessment policies from numerous other cities have also been obtained and will be available for review at the meeting. Attached for reference is a tabulation of the more pertinent information from the other cities assessment policies.

The draft Policy includes numerous revisions intended to reference and ensure compliance with our City Charter language. The City Attorney is currently reviewing the draft Policy to ensure it has the proper legal form and that is conforms to City Charter requirements for the use of assessments.  Chapter 8 of the City Charter addresses assessment requirements and is attached for reference.

Also attached is a Special Assessments Guide developed and distributed by LMC. This guide defines special assessments, discusses a cities authority to levy special assessments for certain improvements and the process that must be followed, and provides other relevant information and web site links that can assist in developing the City of Ramsey’s Special Assessment Policy.

Property owners in the City of Ramsey have previously been assessed primarily for seal-coat and overlay projects in the amount of $2,000 or less for residential properties, and $7,000 or less for commercial/industrial properties.  Attached is Appendix B as attached to the January 19, 2010 Public Works Committee case which lists the City’s previous Street Maintenance Program assessment practices, including several of the effective dates.

Council should be aware that Staff is waiting to finalize the Garnet Street/168^th Avenue Feasibility Report pending approval of the draft Special Assessments Policy as this project is included in the CIP for construction in 2015.  The Andrie Street/164^th Lane Feasibility Report will be finalized at a later date as this project is included in the CIP for construction in 2016, which will pair nicely with Elk River’s proposed reconstruction of Jarvis Street in 2015.
 
Lastly, several provisions for City utility assessments are included in the draft Policy.  Staff is seeking Council direction on whether such language should remain in the Policy, or whether this language should be removed and addressed at a later date.

The draft Policy is being developed in-house as part of Staff's normal duties.  The City Attorney is reviewing the draft Policy, particularly to ensure it conforms to all applicable City Charter provisions related to assessments.  Costs for the City Attorney to review the Policy will be paid from the general budget.

City Engineer Bruce Westby will present the draft Policy and lead discussion.

City Administrator Kurt Ulrich and City Attorney Joe Langel will be available to provide additional input and address any questions.

Staff requests that the City Council provide as much direction as possible to allow the draft Policy to be adopted by Council in November 2014.  This will allow the Garnet Street/168^th Avenue Street Reconstruction Feasibility Report to be completed and presented for Council approval on December 9^th, 2014, which in turn will allow plans and specifications to be prepared for bidding in February or March of 2015.