HomeMy WebLinkAboutCity Council Packet 05-13-1998 SpecialPLYMOUTH CITY COUNCIL
SPECIAL MEETING
MAY 139 1998
7:00 PM
PUBLIC SAFETY TRAINING ROOM
I. Year 2000 Computer Issues
II. Overview of City Insurance Programs
III. Street Assessment Policies
IV. Skate Park Issues
MEMO
CITY OF PLYMOUTH
3400 PLYMOUTH BOULEVARD, PLYMOUTH, MN 55447
DATE: . May 4, 1998
TO: Dwight Johnson
FROM: Stan Birnbaum, Manager, Information Technology
Kathy Lueckert, Assistant City Manager
SUBJECT: Year -2000 project
The City's project to ensure compliance with year -2000 issues is now entering its second
and final stage. The first phase focused on analyzing information technology issues,
comprising both data and communication systems. The second phase, which is city-wide
in scope, is analyzing all control and electronic equipment which might be impacted by
the year 2000 event.
In addition to providing an overview of current status and risks to the City, we would like
to provide brief review of some key issues:
The heart of the problem is the long-standing practice (since the 1950s) of
storing electronic dates in computer systems with two -digit years. This con-
vention was designed to save computer resources at a time when such re-
sources were prohibitively expensive. In computer dates, the year usually
precedes the month and day, making it possible to do date comparisons. For
example, Feb. 1, 1998 is stored as "980201." Dec. 15, 1997 is stored as
971215." When computers compare these dates, the Feb. 1, 1998 date will
correctly appear to be a later date than "971215." However, a Feb. 1, 2000
event would be stored as "000201." This number is less than the numbers
used to store the 1997 and 1998 events. As a result, any date logic used with
these dates will not work correctly.
The most difficult problems to resolve therefore pertain to systems that do
date comparisons. For example, payroll systems typically have rules that pre-
vent persons from being paid before the work is done. To a computer system
that stores years as two digits, work done on "991231" (the day before New
Year 2000 project update page 1
Year's, 2000) appears later than a pay date of "000102" (the day after New
Year's, 2000).
It is much less difficult to resolve the problems related to systems that cannot
store the year 2000 correctly, but that do not make comparisons of dates. In
many cases, there are reasonable alternative strategies for these systems.
Fortunately, the City of Plymouth faces much lower risk than many other
units of government. Thanks to our relatively recent rapid growth and sus-
tained development, we have been able to maintain up-to-date infrastructure.
Many of the systems that would otherwise have been at risk have been super-
seded in recent years by systems that are year -2000 compliant. For every
major system in place that is not year -2000 compliant, the City has a sound
strategy to supersede the non-compliant product with a compliant product.
Our vulnerability is also reduced by relying on larger units of government for
many essential services. For example, we use Hennepin County dispatch/911
service. All but two traffic signals in Plymouth are operated by either Henne-
pin County or the State of Minnesota.
The City's approach has focused on placing priority on systems that impact citizens over
systems that perform strictly internal functions. We have also focused first on high
risk/high complexity systems. This strategy is illustrated by the following grid:
most complex/
highest risk
least
least risk
1 2
higher risk higher risk
primarily external primarily internal
3 4
lower risk lower risk
primarily external primarily internal
external internal
systens systems
Year 2000 project update page 2
Our earliest efforts have focused on quadrant 1 activities, followed by analysis of quad-
rant 2 activities. This approach assures that our review resources will be focused on ac-
tivities that have the greatest payoff for the City.
Summary status of many of our key systems analyzed during phase 1 include the follow-
ing:
Desktop computers and
Yr 2000
80% certified as compliant; re-
S stem .,x; compliant? Strategy (if not Com Lant) ? .
Telephone systems (hard- yes
lete by year-end
ware and software)
partially Upgrading to Office 97 in June
Voice mail systems yes
fully Y2K -compliant)
hardware and software)
Unisys mainframe no Plan to discontinue use by late 1998
Unix minimcomputers and partially Plan to update to fully compliant
operating software
no
operating system software by July
1, 1998
Network servers and op- yes
Two of four modules of new, Y2K-
Desktop computers and partially 80% certified as compliant; re-
operating systems maining workstations will be obso-
lete by year-end
Core office productivity partially Upgrading to Office 97 in June
systems (Microsoft Office, fully Y2K -compliant)
etc.)
Financial and payroll no Y2K compliant version due by
systems Sept. 1, 1998
Utility software no Will install Y2K product by end of
1998
Land management sys- partially Two of four modules of new, Y2K-
tems (mass appraisals, compliant product installed; bal-
permits. etc.) ance of work will be completed by
ear -end.
Parks recreation and fa- yes
cilities management
Public safety records sys- no Vendor currently working on Y2K
tem compliant system
To help complete the second phase aggressively, we have pulled together a city-wide
team representing all areas of vulnerability to year -2000 compliance problems. This
team is currently working on completing its inventory of systems at risk and either ob-
taining vendor certification or performing local testing as appropriate. This broader
phase includes all control equipment of any type used by the City (everything from radar
guns" to lawn sprinkling equipment). We will provide a more detailed report of the out-
comes of this phase next quarter.
Year 2000 project update page 3
T HE YEAR 2 0 0 0- I S YOUR CITY READY?
Defining the Problem
In a few short years, you will be faced with the possibility of your city
virtually shutting down. New Year's Day of the new millenium may be a
bad day in the annals of automation.
ByJuli-Ann Gasper, Ph.D., Barry B. Schweig, Ph. D., anc! Michael E. Echols, Ph.D.
he year 2000 computer problem, the
millennium bug, refers to computer date
field code that cannot handle the conver-
sion to the year 2000. Although technol-
ogy gurus have known about the issue for
many years, until recently, little has been
done to address the problem. This is
unfortunate, since what could have been
handled at a reasonable cost and with minimal
disruption, now may be the most difficult and
expensive technological fix in all of human his-
tory.
Despite significant progress, however, un-
controllable risks he ahead. To date, actions to
correct the problems have been a result of indi-
viduals trying to find answers on their own,
without a unified effort which crosses depart-
ments and encompasses the most vital services
provided by a city to its citizens. Most cities
have multiple software and hardware vendors
which have been used for numerous years. Re-
liance on these businesses for solutions to soft-
ware and hardware dilemmas is required, yet
the city cannot control the outcome. Some of
these vendors are already out of business, and
the vulnerability of those still in business is
great.
The greatest risk lies in the economic crunch
that will occur as the inevitable deadline ap-
proaches. As millions of governmental, busi-
ness, and individual entities begin to realize
the folly of failure to take action, planned
corrective actions will put immense pressure
on scarce resources. In addition, market
forces will push the salary of technologists to
multiples of their current levels which could
cause cities to lose their one technical person
to the private sector. That would leave cities
vulnerable and exposed, precisely when the
need is greatest. The dilemma is that cities
will not be alone, but one of millions of or-
ganizations that have run out of time—if
they don't act now.
The greatest risk lies in the
economic crunch that will
occur as the inevitable
deadline approaches. As
millions of governmental,
business, and individual
entities begin to realize the
folly of failure to take action,
planned corrective actions will
put immense pressure on
scarce resources."
The problem in general
The problem of the arrival of the year 2000 is a
real one for any enterprise that uses computers
for day-to-day operations. Accordingly, survival
of the organization is dependent upon recogniz-
ing and solving the year 2000 problems of main
frames, personal computers, and electronic -con-
trol devices. The problem arises from the nature
of the hardware and software used by all indi-
viduals in an organization, as well as the con-
nectivity between and within organizations.
The time frame is a given and not subject to
manipulation or control. There is no contin-
gency here.
When computer memory was extremely
limited and costly, programming rules dictated
that the source code be written stingily. Dates
could be expressed for the near future by abbre-
viating the year to a two digit number rather
than stating the (obvious) century, which re-
quired more bits for entry and storage. As a re-
sult, the "date" 50 could always be interpreted
to mean 1950, while 98 would always mean
1998. As long as we remained in the 20th cen-
tury, date arithmetic worked fine, because sub-
tracting 1950 from 1998 would give a positive
value of 48 regardless of whether two or four
digits were used. However, once the century
turns, two digit arithmetic will render someone
born in 1950 a negative 50 years old, instead
of that individual's actual age of 50
e.g., 00 - 50 = -50; in truth, however,
2000 - 1950 = 50).
As long as one could assume that all soft-
ware and hardware from the early days of
computing would be long gone by the turn
of the century, one didn't need to worry .
about this. "Someone else will fix it; I'll be
retired by then." What we didn't realize is
that "legacy" programming (that code still in
use after many years) and well-built, sturdy
hardware would still be part of the produc-
JANUARY / FEB R U A R Y 1 9 9 8 MINNESOTA CITIES
tion of goods and services in most cities long af-
ter they had, in theory, become technologically
obsolete.
Many cities use main frame and personal
computers which may not function properly
with respect to dates after December 31, 1999.
This is because computers are "dutiful and
dumb." They are programmed to do exactly
what we tell them to do, and they don't flag er-
rors that would be obvious to any human being.
Consider four typical data functions relied
upon by every business, government, and not-
for-profit organization. These functions are to
receive, to process or manipulate, to store, and
to transmit data. In most of these functions,
dates are used for calculations or sorting, both of
which will yield incorrect results if two digit
dates are supplied by hardware or software, or
incoming databases when four digit dates are
needed. Most computer users have already en-
countered instances in which their software is
unable to handle date functions beyond the
year 2000.
Furthermore, much of the industrialized
world is controlled and timed by electronic de-
vices. These devices are often embedded into
machinery, and whether or not they are con-
nected to computers, they may suffer from year
2000 incompatibility.
Many experts have concluded that the year
2000 problem could be the most expensive
problem in human history. Estimates include
600 billion for the fixing of hardware and soft-
ware and $1.3 trillion for the litigation which
will inevitably result when loss of human life
and wealth are traced to errors in computation
or failure of electronic control devices. Mid -
The greater the delay,
the greater will be the cost,
the more disruption of
normal processes, and
the less likely the problems
will be solved before
time runs out."
1997 was widely considered to be the latest
time in which year 2000 projects can start with
a reasonable probability of finishing before
2000. The planning of the process, therefore,
needs to be underway currently. A major part
of the project is the testing of systems before the
actual turn of the clock past midnight.
Troubling issues for local governments
Local governments must also keep in mind that
they are a political entity, with democratically
elected officials who must not only run the city,
but also answer to citizens. What happens if
members of the city council or tax -weary citi-
zens oppose spending sufficient funds in a
timely manner to carry out the master plan? We
can only speculate about the consequences of
the interminable delays which might result.
The greater the delay, the greater will be the
cost, the more disruption of normal processes,
and the less likely the problems will be solved
before time runs out. I[
Juli-Ann Gasper is associate professor offinance at
Creighton University. Barry B. Schweig is professor
offinance at Creighton University and co founder of
ERG Consultants, a division of Elizabeth Rose
Grace Associates, L.L.C. Michael E. Echols is ex-
ecutive director of the Creighton Institute for Informa-
tion Technology and Management and chairman of
the board of Double E Computer Systems in
Omaha, Neb. Excerpted with permission from The
Year 2000: When the Clock Turns, Be Ready!,
a 1997 publication of the National League of Cities
in cooperation with Public Technology, Inc.
Municipalities face several consequences fthey fail to fix or unsuccessfully attempt to fix the year 2000 problem:
Threats to human life and safety are likely to occur if systems fail to alert authorities to crisis situations or provide'incorrect
information about the nature orlocation of crisis:
Sharp increases in local taxes may be needed to defray year 2000 expenses, including the litigation expenses which may continue
for a decade or more into the new century.
Elected and appointed city officials may be held personally liable for violation of fiduciary responsibility, breach of expressed or
implied warranty, errors and omissions, or malpractice.
For municipalities with populations of approximately 20,000, estimates are that about 100 months of programmer time will be
needed to solve the major year 2000 problems. Given the time between now and 2000, that translates into approximately three
full-time persons to have a reasonable probability of success by, 2000.
For data intensive government agencies, data -repair costs will perhaps be twice those of fixing the software itself.
MINNESOTA CITIES JANUARY/FEBRUARY 1 9 9 8
THE YEAR 2000 -IS YOUR CITY READY?
Beating the Clock
As ofJanuary 1, 1998, approximately 730 days remained until the year 2000. Take away
weekends, holidays, vacations, and sick time and the number of working days until January 1, 2000
are cut in half. The deadline is immovable; the problem must be addressed.
sthe year 2000 draws near, we
will adapt easily to the turn of a
new century and change our
frame of reference. But com-
puters will lack the intuition to
do the same. With the deadline
set in stone and close at hand,
local officials are charged with
the duty to coordinate the funding and
support for this unique occurrence, de-
velop a year 2000 strategy, and imple-
ment plans to combat this problem.
The following are seven steps local offi-
cials will need to consider when ad-
dressing the year 2000 issue:
Inventory the problem
Check every automated system in your
jurisdiction and either eliminate it from
the suspect roster or list it as a potential
problem. Include, at a minimum, all of
the following systems: in-house appli-
cations (main frame, mid-range, and
work stations); purchased applications;
system software (operating systems,
commercial database systems, and
BIOSs, or system clocks, for personal
computers); and telephone, elevator se-
curity and emergency systems.
Your examination will comprise
two general parts. One will be a com-
prehensive review of all central infor-
mation technology components and
functions. It will include main frames,
networks, and personal computers con-
nected to a central network or main-
tained by a central authority, as well as
all commercially purchased software.
Ask vendors for certification that their
software is year 2000 -compliant, and
list all modules in use for each applica-
tion. Through this process, you should
determine whether the source code
By Michael Humphrey
the actual words or phrases program-
mers use, which, when compiled by a
computer, becomes computer instruc-
tions) exists, and whether dates are
used in its processing. One way to as-
sess potential date flaws in a particular
code is to review the files or databases
it runs. If these systems use data that
contain date fields, then the applica-
tion should be suspect. In general,
most information technology shops
tackling the year 2000 problem are to-
taling their lines of code to estimate
the percentage affected by the prob-
lem, and the time it will take to cor-
rect and test. An effective way to per-
form this kind of inventory is to con-
duct a small pilot and review its results
carefully, then extrapolate the findings
to the complete shop.
A second, but parallel, effort will
focus on systems outside the usual re-
sponsibility of the central information
technology department. Automated
systems in this category will involve
many different departments in a juris-
diction. Elevators, for example, are
probably maintained by your
government's facilities maintenance
JANUARY/ FEBRUARY 1998 MINNESOTA CITIES
department, as are security systems. Yet
telephones may be the responsibility of
another department entirely. Working
across departments, your inventory
must encompass all systems, not else-
where examined, that use computer
technology to function.
The result of both efforts should be
a list of those systems the century
change might affect. All subsequent ef-
forts should then focus on this list.
Given that your jurisdiction's year 2000
strategy will be predicated on the find-
ings of the inventory phase, it is very
important that this initial pass be as
comprehensive as possible and that the
risk for all government units be under-
stood. Any system missed in the initial
phase will probably go overlooked un-
til it fails, exposing your government to
embarrassment, at least, but potentially
to much worse.
Identify and contact all vendors involved
in the conversion process
Using the list of affected systems and
applications your government has de-
veloped, create a register of all affected
vendors. For instance, the date problem
in personal computers appears to origi-
nate in the BIOS, or system clocks, of
those machines. Perhaps your jurisdic-
tion's personal computers carry a spe-
cific company's BIOS. If so, place that
company on your contact list: The firm
may have a fix for your problem.
The basic idea? Before devoting in-
house resources to year 2000 issues or
turning to consultants for help, use
your vendors' expertise as much as pos-
sible. These vendors have an estab-
lished relationship with your govern-
ment, and they do not want to lose you
as a satisfied customer. Chances are
they, too, are concerned about the year
2000 issue and its legal implications.
Develop a preliminary assessment and
present it to the top
Prepare a "size and scope" interim re-
port and present it to top management.
While meeting the year 2000 challenge
will take a commitment from the top,
upper management cannot address the
problem without a picture of its size
and scope and estimated cost to fix.
Your report also should suggest the
consequences of not fixing automation
problems, perhaps proposing the
implementation of manual processes if
automated processes become unreli-
able. Not every problem, after all, can
be fixed by January 1, 2000, even if
found long before.
Appoint project teams and managers
Establishing project teams with well-
defined budgets and clear lines of au-
thority to top management is very im-
portant. In forming these groups, con -
Although the millenniu m bug a"ec vans
Create awareness k z
Compile an.inventory i
Assess the nsk
r>
Develop a plan . .
The Minnesota Year 2000 Pro It Y2
Minnesota Year 2000 Bes tlsradic atid
handbook is a collectioq of indust ys esfpr Tx
Compliance assessment—describ roc
c }- z • Vendor product reports—coif , epm_
Firmware for facihti s asfuc
r
Vendor selection an =ion chn
Alternate work sites`/i;V omniut
Me
g
s
X F
Other resources: 'V
MN Y2K a -mail helplinkT 2k a to m
E-mail questions to the Y2K e- matlhelpfi.
is supported through the'helpline
MN Y2K Web site www state:mil:us/el
View the most currentcopy-of the Minnes
links to other year 2000 resources
MN Y2K newsletters:. Call (612) 297..-4
Bi -monthly and special editions. Lenin"ab
managers and technical staff.
MN Y2K Office: Minnesota Year 200 P
658 Cedar Street, St. Paul, MN 55155. T
cider crossing department lines to
combine the computer skills of one
group with the functional expertise of
another.
Analyze problems and plan solutions
In highly automated departments
within your government, year 2000
conversions will be very complex, de-
manding detailed analysis and careful
planning. Nonetheless, your city or
county should place equal emphasis on
analysis and planning in areas outside
the central information technology
department's influence, so that no
critical detail is missed. Many compa-
nies have developed software -assess-
ment tools that can help your jurisdic-
tion locate problem areas and estimate
the cost of conversion (some are listed
on the Year 2000 Information Center
Web site at <http://www.year2000.
com>).
Execute your plan
Nothing aids this process more than
the attention of management. Be sure
y of bj'nus o erations, the steps toward a solu
tar
kiJ
has;defrned and implemented a Mtnnesota'ap
avarlable on the MN. Year 2000 Project W
tices and State of Minnesota approaches_to Year
ses and contains; example templates '
ance.informatioii on applications and hardware
lines a process for handling firmware issues
glits staffing options and contract language; -,.an(
r
project managers report carefully on
their progress and make regular adjust
ments to the planning process.
Test conversions thoroughly
Those who have made year 2000 con-
versions emphasize the difficulty of
testing them. After all, testing is a se-
quential process; each phase relies on its
precursor, and each affects the next.
Before one can set computers to a fu-
ture date and test the outcome, system
software must be compliant. And be-
fore a system can process a four -digit
century, compilers must be current.
Without it, unpleasant surprises are
likely. Ir
Michael Humphrey is business director of
telecommunications and information technol-
ogy programs at Public Technology, Inc.
Excerpted with permission from The Year
2000: When the Clock Turns, Be
Ready!, a 1997 publication of the Na-
tional League of Cities in cooperation with
Public Technology, Inc.
us
e. Currently, information contained in the.Minnesota Y2K Best Practices'Handbook
arch/admin/ipo/2000/2000.html
to Y2K Best Practices Handbook, vendor compliance reports, newsletters, and
621 to subscribe.
out upcoming events, MN Y2K project status, and new issues that concern project
roject Office, Technology Management Bureau, 320 Centennial Office Building,
elephone (612) 296-5643 or TDD (800) 282-5599.
MINNESOTA CITIES JANUARY/FEBRUARY 1 9 9 8
THE YEAR 2000 -IS YOUR CITY READY?
Building Compliance
Current and on going city contracting practices must incorporate year 2000 protections
if the contracting process involves any year 2000 -vulnerable goods or services.
Just about every automated system run by a computer is vulnerable.
enerally, overlooked aspects of
the year 2000 problem are how
they impact municipal contract-
ing and how to attack the prob-
lem from a contracting stand-
point. First, local officials must
address the challenge of actually
contracting for a "fix" for their
year 2000 problem, which may require
a full-fledged request for proposal
RFP) process. Secondly, the year 2000
problem should be factored into any
ongoing contracting activities that may
implicate systems, equipment or ser-
vices that are susceptible to the year
2000 problem.
Building year 2000 compliance into
all contracting
Current contracting practices for any
year 2000 -vulnerable asset must change
to reflect the year 2000 challenge. The
U.S. Government has taken the first
step by adopting interim regulations re-
quiring all government year 2000 -vul-
nerable contracts to address the year
2000 issue head-on.
If you outsource financial service
functions (i.e., pension or benefits ad-
ministration, payroll, billings or collec-
tions), the company administering
those functions must be able to do so
without interruption or error when the
year 2000 comes into play. Similarly, if
you have a supply contract for anything
delivered on a date -oriented basis (i.e.,
electricity, office supplies, or food ser-
vices), you need to be certain that the
providers of these goods will be in
business and on schedule the first day
of and after the year 2000.
Cities may already have contracts in
place for systems or equipment that
By Gregory P. Cirillo and Daniel B. Hassett
may be year 2000 -vulnerable. If the
contracts are still in the performance
phase, or still within a testing, accep-
tance or warranty phase, now is the
time to review those contracts that
could be used to confirm year 2000
compliance. Use your leverage to try to
obtain assurances of year 2000 compli-
ance, or even process change orders to
revise the delivered product or service
to achieve year 2000 compliance.
Even if there is no opportunity to
change the contracting process or the
outcome, you have nothing to lose by
issuing a blanket notice to all providers
of year 2000 -vulnerable goods or ser-
vices indicating your municipality's
resolution to attain 100 percent year
2000 compliance. Cities contracting for
any year 2000 -vulnerable equipment,
system or service in the future should
incorporate year 2000 compatibility re-
quirements as part of the contracting
process.
What does it mean to be year
2000 compliant?
This is a complex question, and the an-
swer depends on the type of contract,
whether it is for goods or for services.
Compliance should be assessed in three
specific areas: systems, equipment, and
service.
System compliance. Define your
compliance requirements in city sys-
tems contracts. For example, the most
basic year 2000 warranty for a new
computer system is a requirement and
warranty that the new system will fun-
ction consistently, correctly and con-
tinuously, in accordance with delivery
specifications and without error prior
to, during, and after the year 2000.
JANUARY/ FEBRUARY 1998 MINNESOTA CITIES
Equipment compliance. Warranties
for equipment are relatively easy to de-
fine—users simply want the delivered
product (phone system, security system,
or traffic control equipment) to work
on and after the year 2000. Require
this in your equipment contracts.
There may be, however, a few negoti-
ating points. For example, your phone
system may be year 2000 compliant,
but your phones may not work if the
local or long-distance carrier has a year
2000 vulnerable system. In this case,
the warranty could exclude shut -downs
caused by third parties.
Service compliance. When a service
provider is contracted, require them to
be year 2000 compliant. For example,
if the city's pension administration is
outsourced, the outside administrator
must have computer systems that are
year 2000 compliant. It gets more
complex if the service provider, in
turn, relies on other parties to provide
the applicable service. To achieve full
year 2000 compliance, the service pro-
vider should warranty the ability to
provide the contracted services con-
tinuously and correctly through the
year 2000. Compliance should not be
excused by reason of third -party
failures.
Contracting for the year 2000
conversion
Some city officials have concluded that
they must either get started on the year
2000 problem, or retire prior to the
end of the century. If retirement is not
an option, then those adventurous offi-
cials will have to figure out where to
start, and when. The "when" is easy.
Planning and conversion should have
started already. "Where" is more
difficult.
If you need 15 tons of road salt, you
call the city's road salt sources, get
prices, and make a decision. Year 2000
contracting is complex, and often no
clear route is apparent. It involves a va-
riety of software and embedded systems
within your equipment, and it is likely
that more than one vendor will be re-
quired to provide the full solution. In
addition, the year 2000 date correction
industry boomed in late 1996, and it is
just now taking on a semblance of
organization.
Contracting for sound year 2000
date correction involves three phases.
Local officials must begin with the as-
sessment or audit of systems and equip-
ment using software "tools" and simple
know-how, resulting in a comprehen-
sive written report of test results and
recommendations. The second phase
involves date conversion of systems and
equipment, including software code re-
view and conversion, database conver-
sion (also using special software
tools"), and equipment repair or re-
placement. Finally, there must be test-
ing of systems and equipment, includ-
ing follow-up solutions, resulting in
delivery of compliant systems or equip-
ment.
What do you need?
A full year 2000 remediation process
requires multiple talents and tools. The
audit phase requires persons familiar
with operating systems, computer lan-
guages and embedded systems in
equipment, to identify the problem. It
is probably the phase that is best left to
an outside vendor, assuming one is
found that has performed a significant
number of system/equipment evalua-
tions.
At the remediation phase, project
managers, code crunchers and the req-
uisite software tools are needed to get
the job done. The unique elements
here are managers and tools—code
crunchers could be in-house staff or
temporary hires. The selection of tools
should be left to an experienced year
2000 guru (most appropriately, in the
audit phase). The remediation phase
can be performed with a mix of in-
house personnel and outside contrac
tors. Keep in mind, howe er, that use
of in-house personnel sho ld not be al-
lowed to jeopardize on-ging projects.
The final phase—testing—requires
familiarity with testing tools as well as
testing routines that will fully "exer-
cise" the systems so that a compatibil-
ity issues are brought to li Y,ht. Keep in
mind, an insufficient test I nay yield
positive, but false, results. The testing
process will inevitably inv lve further
fixes, so management and !code
crunchers will be needed. The testing
phase is also the acceptance process for
the date correction projec . The need
for outside contractors for testing is
greater than for date correction, and
perhaps somewhat less than for audit.
When to contract
If contracting for year 2000 services be-
gan on or after you received this publi-
cation, then you are already behind in
the date correction process. This will
work against cities in the contracting
process because vendors may resist pro-
viding absolute warranties as to timely
and successful completion of the
project. However, cities still have the
ability to achieve a successful outcome.
To negotiate an effective year 2000
contract this late in the game, city offi-
cials need to consider what it is they
are buying. At a minimum, the
contractor's personnel, expertise and
best efforts are the actual product being
purchased. Perhaps cities are not buy-
ing an end -product (i.e., 4 year 2000
compliant system). Experience with
year 2000 contractors con arms this
philosophy. Any good contractor will
offer assurances that it will do its best to
achieve the best result; but officials may
be asking for too much if they expect
unconditional assurances at the ulti-
mate goal will be reached
The contractor often h Is insufficient
control over the quality o the end -
product, or the compliant system, be-
cause it must take systems as they are
and work within a tight frame. But the
contractor does control the process.
Accordingly, in preparing a form con-
tract, there is a need to fo us on defin-
ing the process and givin appropriate
resources, access; and information nec-
essary to access the progress of the
contractor.
Protect the city in your contract
Any year 2000 contract should have
built in protections for the city. You
should include protections against con-
tractors who may breach their year
2000 contracts because they cannot re-
tain the necessary personnel to get the
job(s) done. In addition, build in port-
ability provisions to protect the city if
it has to terminate or change contrac-
tors mid -stream. To do this, specify in
the contract that all work in process,
including logs, reports and records, are
at all times the property of the city,
and will be left with the city if and
when the contract is terminated; that
the contractor give the city a license to
use any tools or techniques it was us-
ing to audit, fix or test city systems;
and a post -termination transition pe-
riod during which the contractor's
personnel remain on site, or available
for consultation.
Finally, a city can try to build -in a
provision that allows them to approach
the contractor's staff to remain in the
city's employment after termination.
This final suggestion will be the most
controversial, because it will be con-
trary to the typical situation where a
city agrees not to hire away the
vendor's personnel.
None of the above devices and
techniques will be effective if the city
does not actively and effectively man-
age the contract. This. requires a dedi-
cated, qualified person or persons, act-
ing independently of the contractor, to
audit and monitor contract perfor-
mance. r
Gregory P. Cirillo and Daniel B. Hassett
are attorneys whose firm represents compa-
nies and individuals in the technology mar-
ketplace. You may visit their special-purpose
Web site devoted to the year 2000 problem
at www.y2k.com. Excerpted with permis-
sion from The Year 2000: When the
Clock Turns, Be Ready% a 1997 publi-
cation of the National League of Cities in
cooperation with Public Technology, Inc.
10 MINNESOTA dITIEs JANUARY/ FEBRUARY 1998
Agenda Number:
TO: Dwight D. Johnson, City Manager
FROM: Bob Pemberton, Risk Management Coordinator through Dale E. Hahn
Finance Director
SUBJECT: 1998 RISK MANAGEMENT REPORT
DATE: May 5, 1998 for City Council Study Session of May 13, 1998
1. BACKGROUND: Since April 1, 1989, the City of Plymouth has placed their Property/Casualty
Insurance Program with the (LMCIT) League of Minnesota Cities Insurance Trust. The LMCIT
is a non-profit organization formed by Minnesota Cities, and governed by city officials. It was
created due in part to the underwriting cycles of the Commercial Insurance Industry resulting in
price and market instability. We have also self-insured our Workers' Compensation Exposure
since April 1, 1980 and have used the savings to fund the Risk Management Reserve Fund.
Our program with the LMCIT provides us with stability of market with an insuror who
understands and is able to service our needs. The advantages of our program include low costs,
custom coverage documents, dedicated safety, claims and legal personnel who are components of
an organization who understands our needs.
2. COVERAGE SUMMARY: The following is a brief summary of the coverages provided by the
LMCIT.
a. Property Insurance:
49,529,650 All risk, blanket building, contents and property in the open written on a
replacement cost basis, subject to a $5,000 deductible per claim.
b. Inland Marine Insurance:
2,041,669 Mobile Equipment, subject to a $5,000 deductible per claim.
c. Crime Insurance:
10,000 loss inside/outside City Hall, Public Safety Building, Ice Center and other various
locations.
d. Municipal Liability Insurance:
300,000 per person, $750,000 per occurrence, Bodily Injury/Property Damage including
public official and police professional liability, subject to a $50,000 deductible per
occurrence.
e. Open Meeting Law Defense Coverage:
20,000 legal defense coverage for all elected and appointed public officials.
f. Automobile Liability Insurance:
300,000 per person, $750,000 per accident, Bodily Injury/Property Damage, subject to a
50,000 deductible per accident
Page 2
g. Automobile Physical Damage Insurance:
Collision and comprehensive coverage on all scheduled vehicles, subject to a $5,000
deductible per accident.
h. Boiler & Machinery Insurance:
5,000,000 limit for any one accident subject to a $1,000 deductible.
i. Electronic Data Processing Insurance: *
1,017,500 All risk replacement cost coverage, subject to a $500 deductible
j . Faithful Performance - Employee Dishonesty Insurance: *
1,000,000 Blanket limits all employees subject to a $500 deductible with the following sub -
limits as required by the Council:
City Manager $200,000
Finance Director $200,000
City Assessor $50,000
City Clerk $50,000
Coverages are not written through the LMCIT
3. DEDUCTIBLES: In 1989, the City raised the self-insured municipal and automobile liability
retentions (deductibles) on coverages written through the LMCIT to $50,000 per occurrence,
200,000 aggregate. The property deductibles including inland marine and automobile physical
remained at $5,000 per occurrence, $30,000 aggregate. This has resulted in premium credits
which are used to reduce our paid premiums. In the 1998/99 year we received a $129,700 credit
which reduced our paid premium to $182,575.
Because the City assumed higher risk retention levels, we have accomplished three major goals:
1. The City has insulated itself from the insurance industry's cyclical swings, which make it
difficult to make long range plans regarding risk financing.
2. The City exercises more control over claims handling and settlement, thereby maintaining
a stronger stance with the insurance carriers claims department or third party claims
administrators.
3. The investment earnings on reserves during periods of good claims experience can be
used to supplement the reserves for current claims as well as those incurred, but not
reported. During periods of adverse claims experience, these reserves are the funding
source to pay incurred claims.
4. MUNICIPAL TORT LIABILITY STATUTE: Effective January 1, 1998 the Minnesota
Legislature raised the Municipal Tort Liability Statute to $300,000 per person, $750,000 per
occurrence. This statute has effectively capped the liability of the City of Plymouth for those
claims arising out of Minnesota Torts. However, we must be aware that it doesn't apply to those
claims arising out of the alleged violation of Federal Statutes i.e. human rights, harassment and
those vehicular and personal injury accidents occurring out of state.
Page 3
5. RISK MANAGEMENT FUND: Now, more than ever, maintaining a Risk Management
Reserve is a necessity rather than an alternative to purchasing excess insurance for
municipalities. The statutory limits of liability was revised by the Minnesota Legislature but it
will be continuously reviewed by the Courts with rulings that will suggest that limiting non-
economic damage awards may be unconstitutional. We must then assume that our exposure to
higher settlement costs will increase in the years to come.
The City of Plymouth's Risk Management Fund, as of December 31, 1997, had a fund equity of
6,849,500 which was an increase of $381,707 from December 31, 1996. These reserves are
utilized to fund our conventionally insured program and those claims falling within our self-
insured retention and include not only general and automobile liability, but also workers
compensation and excess liability claims including:
Incurred but not reported claims
Claims that have not developed to their full potential
The City has continued to grow in population which means more City employees necessary to
provide the required service level expected by the taxpayer. This includes public safety, street
maintenance and snow plowing, more sewer and water mains, more miles of streets and more
public building necessary to house these activities. This increases our exposure to loss, which in
turn requires more loss control and prevention measures necessary to keep our insurance and
claim costs down.
In addition to the projected savings shown on our primary property and casualty coverages, the
City has realized savings by self-insuring our umbrella coverage. This coverage would provide
funding for Federal Actions and Vehicular/personal injury accidents occurring out of state which
exceed the Municipal Tort Liability Statute. A $1,000,000 excess policy covering those
exposures would currently cost $31,720 and a $5,000,000 policy would cost $61,458. However,
by self -funding this coverage through the Risk Management Reserve, we are able to save the cost
of the policy and increase our investment earnings in the Risk Management Fund.
6. EXCESS LIABILITY EXPOSURE: We have made the Council aware of the Municipal Tort
Liability Statute and our exposure under Federal Tort Actions. We have also advised that we
have an excess exposure for those vehicular and personal injury accidents occurring out of state.
In the event of a serious in state accident in which the liability of the City is limited by the
Municipal Tort Liability Statute, the Council has the option of waiving the existing liability cap
of $300,000 per person, $750,000 per occurrence and substituting a revised liability cap without
admitting liability.
We must be aware that the revised liability cap becomes our new liability cap whether it is
through the purchase of excess insurance or by action of Council. If Council decided to
purchase a $1,000,000 excess policy, our Municipal Tort Liability Cap would be raised to
1,300,000 per person, $1,750,000 per accident, and the premium charge would be $39,540. A
5,000,000 excess policy would cost $76,609.
Page 4
We have had excellent loss experience to date with only three claims valued in excess of
50,000. One claim involved a questionable accident occurring in a park and a compromised
settlement of $54,000 was negotiated. The second claim involved an alleged violation of civil
rights and was tried in Federal District Court. We had a defense verdict and the cost to defend
totaled $67,000. The third claim involved an underinsured motorist claim submitted by an
injured employee which was settled for an amount in excess of $200,000. In each claim, our
exposure and ultimate payment was $50,000.
However, that is not to say that a serious claim won't occur, but rather when, and we can fund
the liability through premium savings. The future value of the premium savings for a
1,000,000 policy in ten years would be $597,328 and the premium savings for a $5,000,000
would be $1,157,311. The City would be able to finance a large claims payout without
sacrificing the Risk Management Reserve Fund.
7. THE FUTURE OF RISK MANAGEMENT: To assure a "coordinated effort" the City Council
authorized the creation of the Risk Management Coordinator position in 1989. The purpose of
creating this position is to coordinate the Safety, Workers Compensation and Insurance programs
which have been growing within the City. The objectives of our program, in accordance with
Council policy will continue to:
Provide a proactive approach to risk management issues.
Coordinate risk management activities with all departments.
Develop and update City policies and procedures to address new legislation and hazards.
Develop and maintain a calendar of year round safety events and inspections.
Compile information on claims history in a risk management information system to assess
historical cost and project future loss trends.
Research and recommend maximum retention levels which the City can realistically
assume without subjecting the City's assets to unacceptable risk levels.
Concentrate safety training for temporary and regular employees on the proper use of
personal protective equipment and safe lifting techniques.
Encourage safe vehicle operations through education and continue vehicular accident
review.
Implement an employee safety incentive program.
Maintain updated values on City property and equipment.
Assume responsibility for the employee right -to -know education.
Assume responsibility for the maintenance of the fixed asset system which will ensure a
tighter control of insurance to value and our liability exposures.
Promote employee wellness
Page 5
The Plymouth Employee Safety Program is considered to be one of the premier safety programs
in the State of Minnesota by both the League of Minnesota, Berkley Administrators and Berkley
Risk Services, Inc. Our efforts in 1998 as in 1999, will focus on maintaining this positive track
record. To accomplish these goals the Risk Management Coordinator continually monitors and
implements specific safety programs including, but not limited to fire extinguisher training,
defensive driving training, trench safety, confined space entry, park and facility inspections,
vehicle inspections, infectious disease education, and the orientation of temporary/seasonal Parks
Maintenance employees which complement our risk management programs.
01 ® J
CITYOF PLYMOUTH
3400 PLYMOUTH BOULEVARD, PLYMOUTH, MN- 55447
DATE: May 8, 1998, for Council Study Session of May 13
J
TO: Dwight Johnson, City Manager
FROM: Eric J. Blank, Director, Parks and Recreation
SUBJECT: REVIEW OF COUNCIL'S OPTIONS REGARDING AGGRESSIVE
SKATE PARK
Attached to this memo I have outlined six options the Council has regarding the skate park
issue and the concrete parking lot issue. On Tuesday, May 12, we will open bids on the
operation of the aggressive skate park. I will be able to report to the Council on Wednesday
evening the results of that bidding.
Staff believes that although all six options have pro's and con's, we favor option a or b.
Because the bid to construct the park came in well below our estimate of $37,000, we believe
this is an extremely good price to allow us to purchase equipment and to provide a service
which still seems to be of high interest to the youth of Plymouth. I believe an outdoor park
under the overall management of the City of Plymouth will be a very attractive program to our
citizens. This will allow us to provide a program for one of the more challenging age groups,
i.e., boys ages 10-15 that are not involved in more traditional youth athletics.
If the Council is hesitant to move forward with any of these options at this time, staff would
still recommend that we proceed with the concrete parking lot. Plymouth has always prided
itself on its long range planning, and we think to not proceed with this would be short sighted
and close doors for options future Councils might like to have.
EB/np
r
City Council Study Session
May 13
Review options Council has open at this time.
A. Award bid to build skate equipment to Legacy ($22,425.08) or True Ride
42,719.40).
Award bid to build concrete parking lot ($75,895).
B. Reject both bids for skate equipment.
Award bid for concrete parking lot.
C. Reject bid for skate equipment.
Reject bid for concrete parking lot.
Rebid parking lot with asphalt surface and no fence.
D. Reject all skate park bids.
Award bid for concrete parking lot.
Contract for rental skate park from True Ride available from Aug. 13 -Sept. 13 - cost
5,000.
E. Reject all skate park bids.
Reject concrete parking lot.
Rebid parking lot with asphalt.
Contract for one month skate park from True Ride. Locate on ice center parking lot
or paved rink at Plymouth Creek Playfield.
F. Reject both skate park bids.
Reject concrete parking lot bid, and rebid asphalt.
Do nothing with skate park.
Agenda Number: '
CITY'OF PLYMOUTH
P"CITY=COUNCIL AGENDA: REPORT„ hyk
TO: Dwight Johnson, City Manager
FROM: Eric Blank, Director of Parks and Recreation
SUBJECT: AWARD OF BID - AGGRESSIVE SKATE PARK EQUIPMENT
DATE: April 27, 1998, for Council Meeting of May 6
1. ACTION REQUESTED: Approval of one of the two attached resolutions awarding bid
for the supplying of aggressive skate park equipment.
2. BACKGROUND: In accordance with City policy, sealed bids were received at 11 a.m. on
April 21, 1998, for the furnishing of aggressive skate park equipment. The following two
bids were received:
TrueRide, Inc. $42,719.40
Legacy International, Inc. $22,425.08
One irregularity has shown up in the bidding process. Legacy International, Inc., did not
include a bid bond with their bid proposal, as required by the specifications. The
specifications were very clear that each bid proposal was to be accompanied by a bid bond
in the amount of 5 % of the bid. Since the bid opening, Legacy has submitted a 5 % bid
bond, a copy of which is attached for your review. I had the City Attorney's office review
this situation, and they have determined that if the Council so chooses, you may waive the
irregularity on the absence of the bid bond at the bid opening, and award this bid to
Legacy. A copy of the memo from the City Attorney is also attached.
3. BUDGET IMPACT: The capital improvements budget contains $85,000 for the creation
of an aggressive skate park. The estimate previously submitted for providing the
equipment was approximately $37,000. All of the funding for this project comes from park
dedication funds.
4. RECOMMENDATION: Staff has confidence that both of these bidders have the ability to
construct the equipment in accordance with the specifications. Council will have to
determine whether or not they are willing to waive the irregularity of the missing bid bond
with the Legacy bid. Staff recommends that the bid be awarded to the apparent low bidder,
Legacy International, Inc., however, I have attached approving resolutions for both
bidders.
EB/np
CITY OF PLYMOUTH
RESOLUTION 98 -
AWARDING BID FOR AGGRESSIVE SKATE EQUIPMENT
WHEREAS, The City Council previously directed the Park and Recreation Director to solicit
bid proposals for the preparation of aggressive skate park equipment, and
WHEREAS, sealed bids were received on April 21, 1998, from two bidders, and
WHEREAS, the acceptable low bidder is Legacy International, Inc.,
NOW, THEREFORE, BE IT RESOLVED BY THE PLYMOUTH CITY COUNCIL that the
bid for aggressive skate park equipment is awarded to Legacy International, Inc. in the amount
of $22,425.08.
Adopted by the City Council on
CITY OF PLYMOUTH
RESOLUTION 98 -
AWARDING BID FOR AGGRESSIVE SKATE EQUIPMENT
WHEREAS, The City Council previously directed the Park and Recreation Director to solicit
bid proposals for the preparation of aggressive skate park equipment, and
WHEREAS, sealed bids were received on April 21, 1998, from two bidders, and
WHEREAS, the acceptable low bidder is TrueRide Corporation,
NOW, THEREFORE, BE IT RESOLVED BY THE PLYMOUTH CITY COUNCIL that the
bid for aggressive skate park equipment is awarded to TrueRide Corporation in the amount of
42,719.40.
Adopted by the City Council on
04/28/98 TUE 09:58 FAX 612 452 5550 CAMPBELL .444 PLYMOUTH 2002
CAMPBELL KNUTSON
Pr4cssiemal AsSoclation
Attorneys at Law
Thnn,as J. (:o-nnpbell (612) 452-5000 1oe11 lamnik
Roger N. KnLIN(In Fax (61 Z) q52-5550 Aildre>i McLN)wcll Pochlcr
Th„ ems M. Scul[ Mottlirw K. Brok-1A
E111ty K. Knetseh lohn. F. Kelly
tincs;nl L.,.:, 1%1(x Matdkcw _). Foh
Author's Direct Ilial: 134-6215 Margu,:rite M. MC(::,rr<)rt
Gc„rgr T. srepkenson
Nims fn'.ne•1 in Wi.omyn
April 28, 1998
ry G. Fuck.
BY FAX AND MAIL
Mr. Eric Blank
City of Plymouth
3400 Plymouth Boulevard
Plymouth, MN 55447-1482
RE: AGGRESSIVE SKATE PARK BIDS
Dear Eric:
You asked me if lat submittal of a bid bond disqualifies a bidder or whether it is
a minor irregularity that can be waived by the City Council. The Minnesota Court of
Appeals has ruled that the City can waive the late submittal of a bid bond. Johnson v.
go of Jordan. 352 N. W 2d 500 (Minn. App. 1984).
0
6L KNUTSON
Association
Roger. N. Knutson
RNK: srn
Shire 317 9 EaKandale Office Cel -Mer - 1380 Coi-pov itc Center Curvc 0 Eagon, MN 55121
BID FORM FOR
AGGRESSIVE SKATE EQUIPMENT
Director of Finance
3400 Plymouth Boulevard
Plymouth, Minnesota 55447
We, the undersigned, TrueRide Ina
Located at 725 Tower Drive, Hamel MN. Ph: (612) 478-3177 Fax: (612) 478-3179
Do hereby propose to furnish, deliver and set up for the City of Plymouth, at its
designated site, all of the aggressive skate park equipment as per City specifications.
Tony Ciardelli _
Owner
i
TrueRide Inc.
612-478-3177
Equipment Priced by Individual Component
1. 18' wide x 6' Tall Mini Ramp with 12' wide Saddlebag $17,239.93
2. 4' tail x 12' wide Wedge Ramp S 2,398.14
3. Quarterpipe Slope Slide 36' wide $ 9,245.05
4. Fun Box S 4.771.72
5. Ground Rail 12' long
6. Side Car 2.879.31
7. 6' tall Hip 6.050.25
TOTAL $ 42,719.40
BID FORM FOR
AGGRESSIVE SKATE EQUIPMENT
Director of Finance
3400 Plymouth Boulevard
Plymouth, MN 55447
We, the undersigned,
located at,273S" rh,<
full address) (telephone)
do hereby propose to furnish, deliver and set up for the City of Plymouth, at its designated site,
all of the aggressive skate park equipment as per City specifications.
Signature
Title
Phone_
Equipment Priced by Individual Component
1. 18'w x 6'h min. with 12' saddlebag spine ride with extension 49
2. 4' wedge ramp
3. Quarterpipe slope slide
ow
5.
4. Fun box - ys—
5. Ground rail -7 _"
6. Side car a
Od
7. 6' tall hip aoo4
TOTAL
BID DEPOSIT
A Certified check, cashier's check, or bid bond is required to be submitted with the bid in the
amount of Five (5) Percent of the bid.
The bid deposits of unsuccessful bidders will be returned when a contract has been awarded or
forty-five (45) days after the bid opening, whichever comes first. The bid deposit of the
successful bidder will be returned after the contract has been awarded and signed.
QUESTIONS
If you have questions regarding the equipment specifications, please contact Eric Blank, 612- 509-5201.
Agenda Number:
CITY OF PLYMOUTH
CITY COUNCIL AGENDA REPORT
DATE: May 8, 1998 for the City Council Meeting of May 13, 1998
TO: Dwight D. Johnson, City Manager
FROM: Fred G. Moore, irector of Public Works
SUBJECT: STREET ASSESSMENT POLICIES
One of the topics for the special Council meeting on May 13 is Street Assessment Policies.
For City Council review and preparation for a discussion of our current policies, I am
attaching the following documents:
1. Plymouth's Special Assessment Policy
2. Local Improvement Guide
This is the summary portion of the booklet prepared by the League of
Minnesota Cities concerning the statutes for special assessments.
Special assessments as permitted under Minnesota Statute (Section 429) are considered an
improvement and a benefit to the properties. Plymouth along with most cities in the state use
special assessments to finance Capital Improvements such as streets, water, and sanitary and
storm sewers. Plymouth has done this since the early 1960s when the City began to install our
infrastructure system. 'Basically, all improved property has been assessed or the developer
installed and paid for the improvements and included their cost in the purchase price of the
property. Although Plymouth has been making special assessments for over 30 years, there
have been numerous refinements and revisions to the policies during this period of time.
I will make a brief presentation on the policies and be prepared to discuss them in more detail
and answer questions of the City Council.
Fred G. Moore, P.E.
Director of Public Works
attachments: Special Assessment Policy
Local Improvement Guide
G:\pw\Engincering\GENERAL\MEMOS\FRED\CC—Special_Asmt.doc
SPECIAL ASSESSMENT POLICY
Resolution No. 98-6
January 7, 1998
Supersedes Res. 95-126, February 21, 1995; Res. 89-154, March 6, 1989;
Res. 88-381, June 27, 1988; Res. 88-115, February 8, 1988, Res. 87-132,
February 23, 1987, Res. 85-237, April 1, 1985; Res. 83-674, December 5,
1983; Res. 82-615, November 22, 1982; Res. 81-803, November 23, 1981;
Res. 81-128, February 23, 1981; Res. 80-475, July 21, 1980; Res. 76-281,
May 17, 1976; Res. 75-624, November 3, 1975; Res. 73-342, August 20,
1973; Res. 66-156, September 12, 1966.)
I. The Basis of Special Assessments.
As a statutory city, Plymouth has the authority to levy special assessments under the
provisions of the State Local Improvement Code (MSA Chapter 429). Special
assessments are levied by the City Council on particular parcels of property based upon
the special benefit those parcels derive from the improvement as determined by the City
Council.
For the purposes of allocating costs for public improvement projects in the City of
Plymouth, the Council has defined two forms of benefit:
1. Special benefit
2. General benefit
Special Benefit. The general application of both law and court decisions holds that
properties receive a special benefit from improvement projects. For example, public
utilities brought to an area not served with sanitary sewer, water, road and drainage
result in the properties in question increasing in market value. The City has historically
assessed most public project costs on the basis of special benefit to the parcels within the
improvement district.
General Benefit. The concept of general benefit holds that in some types of improvement
projects the community at large derives a benefit district from the special benefit derived
by the properties within the project boundaries. For example, a mayor thoroughfare may
be deemed to have a general benefit to the community at large, as well as the special
benefit derived by the abutting property.
In the application of its assessment policies, the City Council shall define and distinguish
between the special benefits received by particular parcels of property within an
improvement district, as compared to any general benefit derived by the community at
large. The Council shall also determine preliminary proposed public improvement
project prior to ordering such an improvement project.
II. Public Improvement Assessment Policies
A. Sanitary Sewer
la
Functional Classification. For purposes of benefit determination, the following
two functional classifications are adopted:
a. Trunk. Trunk sanitary sewers are those lines normally sized larger than
eight inches which are required to be constructed to provide service to a
sewer district or subdistrict. These trunk lines are identified in the City's
Sewer Policy Plan. The cost of trunk facilities is deemed to be a central
system cost. Trunks may provide lateral benefit and where such benefit is
determined the property will be so assessed. Trunks may be constructed
in an alignment to develop lateral benefit which requires deeper pipe
construction. In such instances, the Council shall consider the degree to
which extra depths may be treated as a trunk versus a lateral cost.
b. Laterals. Lateral sanitary sewer lines in most residential zones (FRD, R-1
through R-3) are not larger than eight inches while other zoned areas may
have lateral benefit up to twelve inches. Laterals are designed to be sized
to collect the sewage from a project area for conveyance to a trunk
facility.
2. Central System Costs. Central system costs are divided into the following two
categories:
a. Connection Charge. Sanitary Sewer Residentially Equivalent Connection
REC) charges are established by the City to finance central system costs:
sewer trunks, force mains and pumping stations, etc. These improvement
costs are incurred before property can develop.
Residential Equivalent Connection (REC) charges for sanitary sewer
service to dwelling units or other structures shall be collected at the
current rate prior to the issuance of a building permit. If Sewer
connection or REC charges were previously assessed to a parcel, or a part
of a parcel, and such land is developed with a more intensive use than was
contemplated at the time connection or REC charges were assessed,
additional REC charges shall be calculated based on the higher use.
The current REC rate (adopted March 6, 1989 to be effective April 1,
1989) for all residential zones is $370 per dwelling unit. Land uses in all
other zones will be charged on the basis of the estimated demand placed
upon the sanitary sewer system. The charge will be based on one REC
being equivalent to 72,000 gallons of sewage flow per year as projected by
the City Engineer for the specific proposed use.
b. Area Charges Sanitary sewer area assessments, to finance central system
costs, shall be levied against all benefiting properties within an
improvement district. Sanitary sewer and water area assessment will
usually be levied at the same time.
The current assessment rates (adopted March 6, 1989 to be effective April
1, 1989) for sanitary sewer area charges are:
Residential Zones $440 per 1/2 acre or
per dwelling unit
All Other Zones $1320 per acre.
lb
Area and connection charges shall be reviewed and revised each February
commencing in 1990 based upon the change in the American City and County
Construction Cost Index as published in the American City and County, with
the base index being 118.9 (December 1988).
3. Lateral Assessments. It is the policy of the City to assess fully the costs of all
lateral sanitary sewers to a given project area. These costs shall include the
costs associated with bringing the sanitary sewer to the property at a point and
depth needed to serve not only the property in question, but adjacent parcels
outside of the current project boundary if the line is to be extended in the
future. It shall be the intent of the policy to insure that the most economical
and effective sanitary sewage collection system can be constructed so as to
meet the ultimate needs of the community at large. In all but high density (R-
4) residential developments, lateral sanitary sewer special benefit shall be
limited to pipe sizes no greater than nine inches in diameter, while in
commercial and industrial zoned properties, including properties zoned high
density residential (R-4), the special benefit shall be limited to a pipe no
greater than twelve inches in diameter.
B. Water
1. Function Classification. For purposes of benefit determination, the following
two functional classifications are adopted:
a. Trunk. Trunk watermains are normally sized twelve inches or larger.
These trunk lines are identified in the City's Water Supply and
Distribution Plan. The cost of trunk facilities is deemed to be a central
system cost. Trunks may provide lateral benefit and where such benefit is
determined the property will be so assessed. There is no lateral benefit for
FRD, R-1 and R-2 development unless a direct building connection is
made to the trunk water main. It is further determined that there is lateral
benefit from trunk water mains for all developments.
b. Lateral. Lateral lines are normally not larger than eight inches in most
residential zones (FRD, R-1 through R-2) and twelve inches in other
zones. Laterals are designed to be sized to provide water in sufficient
volumes and such pressure as required to serve a project area.
2. Central System Costs. Central system costs are divided into the following
categories:
a. Connection Charge. Water Residential Equivalent Connection (REC)
charges as established by the City to finance central system costs,
representing trunk water mains, reservoirs, wells, pumping stations,
treatment facilities, etc.
Residential Equivalent Connection (REC) charges for water service to
dwelling units or other structures shall be collected at the current rate
prior to the issuance of a building permit. If water connection or REC
charges were previously assessed to a parcel, or a part of a parcel, and
such land is developed with a more intensive use than was contemplated at
the time connection or REC charges were assessed, additional REC
charges shall be calculated upon the approved higher use and payable to
the City.
lc
The current REC rate (adopted March 6, 1989 to be effective April 1,
1989) for all residential zones is $630 per dwelling unit. Land uses in all
other zones will be charged on the basis of the estimated demand placed
upon the water system. The charge will be based on one REC being
equivalent to 72,000 gallons of water flow per year as projected by the
City Engineer for the specific proposed use.
b. Area Charges. Water area assessments, to finance central system costs,
shall normally be levied against all benefiting properties within an
appropriate improvement district at the area assessment rate then currently
in effect when water is available to the property. Normally the area
assessments will not be levied unless sanitary sewer is also available.
The current assessment rate (adopted March 6, 1989 to be effective April
1, 1989) for water are charges is:
Residential Zones $790 per 1/2 acre or per
dwelling unit
All Other Zones $2,370 per acre
Area and connection charges shall be reviewed and revised each February
commencing in 1990 based upon the change in the American City and County
Construction Cost Index as published in the American City and County, with
the base index being 118.9 (December 1988).
3. Lateral Assessments. It is the policy of the City to assess fully the costs of all
lateral water mains to a given project area. These costs shall include the costs
associated with bringing the water main to the property at a point needed to
serve not only the property in question, but adjacent parcels outside of the
current project boundary if the line is to be extended in the future. It shall be
the intent of the policy to insure that the most economical and effective water
distribution system can be constructed so as to meet the ultimate needs of the
community at large. In all but high density (R-3 and R-4) residential
developments, lateral water main special benefit shall be limited to pipe sizes
no greater than eight inches in diameter, while in commercial and industrial
zones properties, including properties zoned in high density residential (R-3
and R-4) and schools, the special benefit shall be limited to a pipe no greater
than twelve inches in diameter.
C. Storm Drainage.
Storm drainage facilities are designed to convey storm and other surface water
so as to enhance the public health, safety and welfare. The benefits to the
citizens of Plymouth from such facilities are numerous. They include, but are
not limited to:
a. Protection and preservation of wetlands, marshes and ponds for the
enhancement of ground water recharging, filtration of pollutants, wildlife
habitat, and general aesthetic beauty associated with such natural areas.
b. Conveyance of surface water through piping systems to prevent flooding
and damage to property.
ld
c. Establishment and maintenance of pond and lake levels to prevent flooding
downstream in the watershed.
A comprehensive storm drainage system benefits all properties in the
watershed district. Projects undertaken within a watershed or major drainage
district, which improvements are designed as "trunk" in the Storm Drainage
Plan, are deemed to be of general benefit to all of the property within the
watershed or major drainage district. The Council shall determine whether or
not trunk benefit is present in a project. If trunk benefit is present, the cost of
that part of the project will be shared by all within the watershed or major
drainage district in the following manner:
a. Ad valorem taxes collected from property within the watershed.
b. Special assessments levied on property within the watershed or major
drainage district.
2. Storm Sewer Improvement Tax Districts. The Council has created, by
ordinance, four storm sewer improvement tax districts. The Council may levy
within each of the districts a tax levy not to exceed one mill to finance storm
drainage improvements benefiting property within the districts. The storm
sewer improvement tax district boundaries are defined as outlined in the City's
plans and are identified as follows:
Storm Sewer Improvement Tax District No. 1 - Bassett Creek Watershed
Storm Sewer Improvement Tax District No. 2 - Minnehaha Creek Watershed
Storm Sewer Improvement Tax District No. 3 - Elm Creek Watershed
Storm Sewer Improvement Tax District No. 4 - Shingle Creek Watershed
3. Storm Drainage Benefits.
For purpose of assessing storm drainage benefit, the following assessment ratio
shall normally be used:
Land Use Ratio
Commercial & Industrial Zones 2-1/2
High Density Residential (R-3 and R-4) 1 - 1/2
Low Density Residential (Other R Zones) 1
This policy is established on the basis of design run-off coefficients and City
development policies which generally require retention and preservation of
natural water courses in residential areas and permits significant dislocation of
these water retention areas and water courses in commercial and industrial
areas.
D. Streets
1. This policy outlines the general street assessment policy which will be
applicable for various street functional classifications and zoned for guided
properties. The policy will assure property owners they are being treated in an
equitable manner with respect to the special benefits their property receives
from street improvements.
le
2. Functional Classification.
Minor Arterials. Minor arterials are roadways designed to provide for the
through movement of traffic and are generally associated with the most
intense land uses. Access to such arterials is generally limited to public
streets. Arterials are normally designed to 9 -ton standards with concrete
curb and gutter and a width of 52 feet. Arterials may include medians and
turning lanes.
b. Major Collectors. Major collectors are roadways designed to distribute
traffic. from major generators or from minor collectors to the arterial
system. Access to major collectors shall be minimized, however, insuring
the abutting parcels are properly served. Major collectors are designed to
9 -ton standards with concrete curb and gutter and a width of up to 52 feet.
Major collectors may include medians and turning lanes.
c. Minor Collectors. Minor collectors are roadways designed to distribute
traffic from the major collectors and/or arterials to the local street system
and vice versa. Lane access and local traffic movement within the various
neighborhoods and areas are provided. Minor collectors are designed to
9 -ton standards with concrete curb and gutter and width between 44 and
48 feet in commercial/industrial and higher density residential area, and to
7 -ton standards and a width between 32 and 36 feet in residential zones.
d. Local Streets. Local streets are roadways designed to serve as access to
abutting residential or industrial/commercial properties. The design shall
discourage through traffic. Residential streets are designed to 7 -ton
standards and a width of 32 feet and commercial/industrial streets are
designed to 9 -ton standards and a width of 36 feet.
Assessment Procedures
a. Low Density residential (FRD, R-1 and R-2). It is the normal City policy
to fully assess the cost of residential street construction (32 feet wide, 7 -
ton design, concrete curb and gutter) to the above residential areas if the
property has direct access to the street.
b. Higher Density Residential (R-3 and R-4) and Commercial/Industrial. It is
the normal City policy to fully assess the cost of all streets to the above
residential, commercial and industrial areas if the property abuts the
roadway.
c. Special Considerations.
1) Land uses allowed by conditional use permit other than PUD's in
the FRD, R-1 and R-2 districts shall normally be presumed to
receive a special benefit from roadway construction beyond that for
the low density residential land uses.
2) The general rule is to assess platted lots on a front footage basis,
however, where curvilinear and/or cul-de-sac streets produce odd
shaped lots, consideration will be given to the "unit" assessment if
the special benefit to the property in the district is essentially the
same.
if
3) In those cases where the project street benefits undeveloped
homogeneous area, the Council may assess such project cost to the
parcels on the basis of the relationship of the area of each parcel to
the total area within the homogeneous area to be assessed.
4) City participation in street construction costs shall not be considered
unless the standards exceed 36 feet in width and/or 7 -ton design
residential)/9-ton design (commercial/industrial).
5) The following table indicates the normal assessment practices of the
City based upon the guiding or zoning of the property proposed to
be assessed:
MINOR ARTERIALS:
ZONED FRD R -IA R-111 R-2 R-3 R4 BI B2 B3 I-1
GUIDED LAI LAI LA1 LA2 LA3 LA4 L CN/CC S > ' IP
ACCESS TO
STREET
Direct X X X X X
Indirect X X X X X X X X X X
DESIGN
STANDARD
7 -ton X
9 -ton X X X X X X
Up to 36 ft. X
Up to 44 ft. X X
Up to 52 ft. I X X X X
Concrete Curb/
Gutter
X X X X X X X X X X
lg
MAJOR COLLECTORS:
ZONED FRD R -IA R -IB R-2 R-3 R4 BI B2 B3 I-1
GUIDED LAI LAI LAI LA2 LA3 LA4 L CN/CC S IP
ACCESS TO
STREET
Direct
X X X
X X X X X X X
Indirect X X X X X X X X X X
DESIGN
STANDARD
7 -Ton X X X X
9 -Ton X X X X X X
Up to 36 ft. X X X X
Up to 44 ft. X X
Up to 52 ft. X X X X
Concrete
Curb/Gutter
X X X X X X X X X X
MINOR COLLECTORS AND LOCAL:
ZONED FRD R -1A R -1B R-2 R-3 R4 Ill B2 B3 I4
GUIDED LAI LAI '' LAI LA2 LA3 LA4 L CN/CC S ` IP
ACCESS TO
STREET
Direct X X X X X X X X X X
Indirect X X X X X X X X X X
DESIGN
STANDARD
7 -Ton X X X X
9 -Ton X X X X X X
Up to 36 ft. X X X X
Up to 44 ft. X X
Up to 52 ft. X X X X
Concrete curb/
gutter
X X X X X X X X X X
lh
4. Street Reconstruction. The City Council has adopted a long-range plan providing for
the periodic reconstruction, including resurfacing, of all paved city streets. The City
Council adopted policies which are designed to ensure the orderly and fiscally
responsible implementation of this plan on a community -wide basis.
The following is the general Street Reconstruction Policy for special assessments to
benefiting property.
a. It is the policy of the City to special assess abutting benefiting property for
street reconstruction costs, but not in excess of the special benefit to the
property. This policy applies to all streets that are the responsibility of the
City.
b. The assessment rate for the reconstruction of previously paved streets shall be
determined annually by the City Council.
The assessment rate is based on the following:
1) It is the goal of this policy that benefited properties be assessed 30% of the
cost of the Pavement Management Program. The percentage of the project
assessed in any individual year will vary depending upon construction
requirements and the construction market.
2) Assessments shall not exceed any of the following:
a) the special benefit to the property being assessed;
b) the total assessments in a maintenance district may not exceed the
project cost in the maintenance district;
c) the total assessment for a project may not exceed the project.
Project cost includes both direct construction costs and all indirect costs
such as engineering and administration.
3) Assessments shall normally be levied for a period not to exceed five (5)
years. Longer assessment periods will be considered when other assessable
public improvements are being constructed at the same time.
4) Assessment for single family parcels shall be made on a per parcel (unit)
basis. The unit assessment rate for 1994 is $916. The rate shall be
adjusted annually based on the percent change in the "Construction Cost
Index" as published in the American City and County magazine, with the
base index being 138.2 (January 1994).
5) Multi -family housing parcels shall be converted into an equivalent number
of parcel units by dividing the area of the multi -family parcel by 18,500
the City's established minimum lot size). The number of equivalent units
are then multiplied by the single family assessment rate to determine the
assessment for the property.
li
6) The area of commercial/industrial parcels shall be divided by 18,500 to
establish the number of equivalent units for the property. The 1994
assessment rate for each unit is $692, based upon the industrial portions of
the 1992, 1993, and 1994 Street Reconstruction Projects. This rate shall be
adjusted annually by the percentage change of the construction cost index.
Institutional properties such as schools, churches, and public property are
assessed as commercial/industrial.
C. For the purposes of street reconstruction, the project costs will include the cost
of replacing or repairing concrete curb and gutter. In those cases where
bituminous curbing is replaced with concrete curb and gutter, an additional
special benefit will be assessed. The cost to be assessed shall be the cost of
installing the concrete curb and gutter and assessed on a front foot basis. The
addition of a wider street or a storm sewer system may also be considered an
additional special benefit and may be assessed.
lj
PART 1. INTRODUCTION
General Comments and Application of the Code
The forms and suggestions comprising this
memorandum have been prepared by the League of
Minnesota Cities as a guide to local improvement
proceedings under the uniform special assessment
code adopted by the 1953 Legislature as Laws
1953, Ch. 389, coded in Minnesota Statutes with
subsequent amendments as Section 429.011
to 429.111.
The act expressly repeals all of the prior statutes
under which the projects could be financed by
special assessments in municipalities. Consequent-
ly, the uniform special assessments code provides
the only statutory procedure for carrying on local
improvements when they are financed in whole or
in part by special assessments. (There is, however, a
statute authorizing the creation of sidewalk dis-
tricts and the levy of special assessments by the
district, M.S. 471.572. This law is the subject of a
separate League memo. See a later section of Part
I for a brief explanation of this law.) It is thus the
exclusive law for this purpose for statutory cities,
home rule cities which have charters containing no
provisions on special assessments, for towns and
urban towns." For other home rule charter cities,
the statute provides an alternative method of
procedure, unless by some charter provision
adopted after April 17, 1953 either the statutory
or charter system is made exclusive. If the statute
is used for any improvement in a charter city it
should be used throughout the proceedings.
A.G. Op. 707-a-4, Sept. 5, 1960.) The use of part
of the procedure of the statute and part of the
local improvement procedure provided by charter
may result in an invalid assessment. (However, in
some respects, as in the procedure for adoption of
resolutions and ordinances, the code is silent and
must necessarily be supplemented by charter
provisions.) Counties may utilize the provisions of
Chapter 429 in connection with the construction,
reconstruction or improvement of a county state -
aid highway, including curbs and gutters and
storm sewers and (except metropolitan area
counties) waterworks and sewer systems as des-
cribed in M.S. 444.075, Subdivision 1. This
authority is limited to areas located outside the
corporate limits of municipalities.
In cases where the local improvement code is
used by a town or county, the phrase "town
board" or "county board" should be substituted
for "council." Specifically, any town board is
1-
empowered to use No's. 1, 2, 4, 5, 6, 7, 8, and
10 of the powers listed in the following section
M.S. 429.011, Subd. 2b.)
It should be noted that the local improvement
code governs local improvement procedure only if
special assessments are used to finance all or part
of the cost of the project. Thus, a city may put in
street lights, build a water tank or plant trees
without complying with this procedure if the
project is to be financed entirely from general
funds.
Improvements Covered by the Code
Street and sidewalk improvements: Ac-
quiring, opening and widening streets and
alleys and improving them by constructing,
reconstructing, and maintaining sidewalks,
pavement, gutters, curbs, and vehicle
parking strips of any material, or by
grading, graveling, oiling or otherwise
improving them. Included is beautifica-
tion, storm sewer, or other street drainage
and installation of connections from
sewer, water or similar mains to curb lines.
2. Storm and sanitary sewer systems: Ac-
quisition, development, reconstruction, ex-
tension and maintenance. Included are
outlets, holding areas and ponds, treatment
plants, pumps, lift stations, service con-
nections, and other appurtenances either
within or without the corporate limits.
Special storm sewer improvement districts
within cities are authorized by M.S. 444.16
to 444.21 for storm sewer systems and
related facilities within the district, in-
cluding storm water holding areas and
ponds, financed under this statute by a
district -wide tax. See later section of Part
I.)
Steam heating mains: Construction,
reconstruction, extension, maintenance.
4. Street and special lighting system: In-
stallation, replacement, extension, and
maintenance.
5. Waterworks systems: Acquisition, im-
provement, construction, reconstruction,
extension, and maintenance. This includes
mains, valves, hydrants, service connec-
tions, wells, pumps, reservoirs, tanks,
treatment plants, and other appurtenances
of a waterworks system either within or
without corporate limits.
6. Parks, open space, plavgrounds, recreation-
al facilities: Acquisition, improvement, and
equipment, either within or without
corporate limits.
7. Street trees: Planting, trimming, care and
removal.
8. Abating nuisances and draining and filling
swamps, marshes and ponds on public or
private property.
9. Dikes and other flood control works:
Construction, reconstruction, extension,
maintenance.
10. Retaining walls and area walls: Con-
struction, reconstruction, extension, main-
tenance.
11. Pedestrian skyway system: Acquisition,
construction, reconstruction, improvement,
alteration, extension, operation, mainten-
ance, and promotion. Such improvement
may be made upon a petition pursuant
to section 429.031, subdivision 3.
12. Underground pedestrian concourse: Ac-
quisition, construction, reconstruction, ex-
tension, operation, maintenance, and pro-
motion.
13. Public malls, plazas, court yards: Ac-
quisition, construction, improvement, al-
teration, extension, operating, mainten-
ance, and promotion.
14. District heating systems: Construction,
reconstruction, extension, and improve-
ment.
15. Fire protection systems: To construct,
reconstruct, alter, extend, operate, main-
tain and promote fire protection systems
in existing buildings, but only upon a
petition pursuant to section 429.031,
subdivision 3.
A number of projects defined as local improve-
ments in the code may benefit the entire city -- a
sewage disposal plant, interceptor sewer, or a water
2-
treatment plant, for example. Such a project may
be a local improvement under the constitutional
provision authorizing special assessments for local
improvements as long as it confers a special benefit
on assessed property that the improvement does
not confer upon the city as a whole. (In re Village
of Burnsville, 245 N.W. 2d 445, Minn. 1976;Joint
Independent School District No. 287 v. City of
Brooklyn Park, 256 N.W. 2d 512, 1977.)
The use of special assessments for the acquisi-
tion or construction of parking facilities is
authorized in a separate law (M.S. Sec. 459.14),
but the procedures to be followed in making the
assessments are those contained in this memo-
randum.
Summary of Steps in a Special Assessment
Proceeding
1. Initiation of proceedings either by the
council or by petition of affected property
owners (fire protection system improve-
ments may only be initiated by petition.
Forms 1 - 2A of this guide).
2. Preparation of a report on the proposed
improvement. (See Forms 2 - 3.)
3. Public hearing on proposed improvement
Forms 3 and 4). When a petition signed
by 100 percent of the landowners requests
the improvement, the council may order
the improvement without a hearing.
The validity of the resolution may not be
questioned unless an action for that pur-
pose is commenced within 30 days; how-
ever, the amount of validity of the special
assessment may still be questioned pur-
suant to Section 429.081. (See Form 5A.)
4. Ordering of improvement and preparation
of plans (Form 5).
5. Performance of work under contract
Forms 7 - 16) or, in certain cases, by day
labor ( Forms 17 - 19).
6. Levy of special assessments after public
hearing on proposed assessment (Form 20 -
27).
7. Issuance of obligations to finance the
improvement (Forms 28 - 36).
The law permits the council to carry out in
advance of the improvement hearing all of the
detailed steps prior to, but short of the actual
letting of a contract for the improvement. Thus, if
the council wishes to expedite matters or to
provide firm estimates to costs at the hearing, it
may, in addition to the required preliminary
report, have completed plans and specifications
prepared, advertise for bids, and open and tabulate
them before the hearing is held.
Improvements of different kinds anywhere in
the municipality may be included in one proceed-
ing and conducted as one improvement. Thus a
single proceeding may encompass sidewalk, curb
and gutter, and water and sewer mains installed
anywhere in the municipality.
If an improvement is made through a coopera-
tive agreement with the state or other political
subdivision by which the state or other subdivision
is made the agent for the municipality, it is not
necessary to comply with bid and contract require-
ments of the improvement code if in letting the
contract or performing the work the law applicable
to the state or other political subdivision with
which the agreement is made is complied with. It
is necessary, however, that the hearing on the
improvement be held and other procedural require-
ments be followed if an assessment is to be levied
for the municipal share of the cost. The coopera-
tive agreement should be made before the party
letting the improvement contract advertises for
bids (Village of Excelsior v. F.W. Pearce Corpora-
tion, 266 N.W. 2d 316, 303 Minn. 118, 1975) but
in some cases the desired cooperative improvement
may be tacked on to a unit price contract.
Assessment proceedings are technically con-
strued by the courts in order to give full protection
to the property owner. In order to provide a valid
assessment, therefore, procedural requirements
should be strictly complied with. Accordingly,
municipal councils will find it highly desirable to
have the proceedings handled by the city attorney
or some competent person hired from the outside
for the purpose. Several firms of attorneys in the
Twin Cities specialize in this kind of work. If
construction of the improvement requires the
public sale of obligations to secure money in
advance of collection of the assessments, many
councils will find it difficult, if not impossible, to
secure a market for the obligations unless they
have secured or can promise an opinion of some
such firm concluding that the proposed issue is
valid. Prospective purchasers of such municipal
obligations ordinarily insist upon such an opinion
to protect their investment.
3-
Use of Municipal Funds to Pay Part of
Cost and Postponing Assessments
The city may pay a portion of the cost of a local
improvement from general ad valorem levies or
from other available general funds. It is not
limited to paying merely for the municipal share of
the cost due to street intersections or to municipal
ownership of abutting property. However, it may
not issue full faith and credit improvement bonds
without an election unless at least 20% of the total
cost of the improvement to the municipality is
defrayed by special assessments.
If a waterworks or sanitary or storm sewer
improvement benefits property abutting on but
not initially assessed for the improvement, the
code permits the municipality to reimburse itself
for all or any portion of the cost advanced original-
ly from its own funds by levying additional assess-
ments against such property upon notice and
hearing as provided for the initial assessments.
Moreover, to the extent that a waterworks or a
sanitary or storm sewer improvement may be of
benefit to non -abutting property not initially
assessed for it, but able to use it when extensions
or other improvements are made, the code permits
all or any portion of the cost advanced originally
by the municipality from its own funds to be
included in the amounts assessed for the later
improvement if notice to that effect is included in
the notice of hearing on the matter of undertaking
the later extension or improvement.
Relation of Special Assessments to Market Value
Special assessments are intended to reflect the
influence of a specific local improvement upon the
value of the property. No matter what particular
formula or method is used to establish the amount
of the assessment, the real measure of benefits is
the increase in the market value of the land as a
result of the improvement.
In the past, councils have been given broad
discretion in determining benefits and their deter-
mination has not been overturned unless that
discretion was abused; however, the decision of the
Minnesota Supreme Court in the case of Buettner
v. City of St. Cloud, 277 N.W. 2d 199 (Minn.,
1979) has made this council determination more
vulnerable and has thus called for a re-examination
of council procedures in order to safeguard special
assessment financing. Under the decision, when a
dissatisfied property owner appeals from a special
assessment and alleges that the assessment exceeds
the increase in market value of his property result-
ing from the improvement, the reviewing court
will not grant any deference to the decision of the
council. Instead, on such appeals, the court will
take new evidence and determine the amount of
benefit as if the council had never made a decision
on that issue. As a result, special assessments made
after the decision seem much less likely than they
were in the past to be swift, inexpensive, and
certain.
Cities continuing to finance local improvements
by special assessments will be required to use much
more care in the conduct of such a proceeding.
Certainly, before ordering an improvement, the
council should, as in the past, gather as much
evidence as possible on the issue of whether or not
the benefits to be derived from installation of a
particular improvement are sufficient to justify the
cost and make specific findings as to increases in
market value. See Ewert v. City of* Winthrop, 278
N.W. 2d 545 N.W. (Minn., 1979). Where an
improvement has been petitioned for and the
benefit does not substantially exceed the cost, a
council might adopt different strategies depending
upon its objectives and what it sees as the potential
for appeals.
When the council would not order an improve-
ment unless virtually all the cost can be collected
through special assessments, it may want to obtain
waivers of rights to appeals before entering into
the contract and ordering the improvement.
That plan may be feasible only if the assessable
area is small. For similar larger projects, the
council might consider making the improvement
contract conditional on the absence of filing of
objections for 30 days after the assessment hearing.
If this plan were followed, a binding contract
would not be entered into nor would any improve-
ment work start until after both the improvement
and assessment hearings were concluded and the
time for appeal had run. While the city might be
saddled with some unforeseen cost if this plan were
used, a council might decide that avoidance of
litigation costs would be worth that chance.
Another way to reduce the number of special
assessment appeals is for the city to pay some
substantial portion of the cost of all improvements
out of general funds. The larger the portion of
cost assumed by the city, the smaller would be
the chances that any individual assessment would
exceed the benefit from the improvement as
measured by the increased market value resulting
from that improvement.
4-
Amendments made in Laws 1980, Chapter
607 to the local improvement code, M.S. 429.061,
in the light of the Buettner decision may help
minimize the impact of that decision and limit the
number- of individual assessments to which objec-
tions are made. Under one amendment, no appeal
may be made to any assessment adopted by
the council unless a written objection signed by the
affected property owner is filed with the municipal
clerk prior to the assessment hearing or is pre-
sented to the presiding officer at the hearing.
M.S. 429.061, Subd. 1.) Furthermore, if there is
an objection, it may be considered at an adjourned
hearing upon such further notice to the property
owners as the council considers advisable. At
the adjourned hearing, the council or a council
committee may hear further written or oral testi-
mony from the property owner and similar testi-
mony from appropriate city officials and other
witnesses as to the assessment amount. The
council prepares a record of the proceedings at
the adjourned hearing and written findings as to
the amount of the assessment, and this amount
becomes part of the assessment roll. Any objec-
tion not received at the assessment hearing is
waived unless the failure to object at the hearing is
due to a "reasonable cause", a phrase that is not
defined. (M.S. 429.031, Subd. 2.)
There is a hint in the Buettner opinion that the
court on appeal of an assessment should give
deference to the city council's determination of
the assessment amount if "the underlying decision-
making process is designed to effectively produce a
correct or just result or if the decision is informed
by considerable expertise." This point was re-
affirmed in Tri-State Land Company v. City
of Shoreview, 290 N.W. 2d 775 (Minn., 1980).
Whether the proceeding at the adjourned hearing as
provided in the amended statute will bring the
assessment determination within the quoted phrase
without the use of an impartial reviewing officer or
body remains to be seen. The procedure will at
least save the council from the need for a more
expert determination until a property owner
objects at the original assessment proceeding.
Another possibility may be suggested as a result
of another amendment to the local improvement
code made by Laws 1980, Chapter 607. Formerly,
the total expense of the improvement could be
calculated only after a contract had been let or the
work ordered by day labor and then the proposed
assessment roll could be prepared. (M.S. 429.061,
Subd. 1.) Under the amendment, the expense may
be calculated at any time and the council may
thereafter determine the amount to be assessed and
have the assessment roll prepared. It is now
possible, therefore, to advertise for bids and allow
sufficient time after the closing date for accepting
them to permit the assessment roll to be prepared
on the basis of the bid the council intends to
accept and then holding a hearing on that basis.
Alternatively, the council might, when the finan-
cial situation warrants, proceed with the proposed
assessment on the basis of estimates with a reserve
fund from general taxes and other uncommitted
sources of revenue making up any difference
between the assessments and the eventual project
cost. The latter method may be particularly
attractive if the city follows the policy of paying
some substantial part of improvement costs from
tax revenues. Either method would avoid the
danger of proceeding on estimates and then having
to make a substantial reassessment when actual
costs turn out to be substantially in excess of the
estimates. If a reserve fund derived from general
revenues is available, no reassessment will be
necessary unless the cost is less than estimated, and
no one will object when that process results in
reduced special assessments.
Use of Special Assessments to Collect
Current Service Charges
The code also authorizes the council to provide
for the collection of certain enumerated special
charges as a special assessment against the property
benefited. Special charges that may be assessed
include those for: (1) snow, ice or rubbish removal
from sidewalks, weed elimination from streets or
private property; (2) removal or elimination of
public health or safety hazards from private
property (except hazardous buildings as defined by
M.S. 463.15 to 463.26); (3) installation or repair
of water service lines; (4) street sprinkling or other
dust treatment of streets; (5) the trimming and
care of trees and the removal of trees from any
street and the treatment and removal of insect -
infested or diseased trees on private property; (6)
the repair of sidewalks and alleys; (7) the operation
of a street lighting system. A general ordinance to
make this authority effective is required before it
may be used in a municipality. Provisions for
the levy and collection of the assessment are the
same as for other improvements except that any
special assessment levied under this authority is
payable in no more than ten annual installments,
the number determined by the council. The
ordinance adopted under authority of this section
of the improvement code may, at the option of
the council, include provisions for placing primary
responsibility upon the property owner or occu-
pant to do the work himself (except in the case of
street sprinkling or other dust treatment, alley
repair, tree trimming, care, and removal, or the
operation of a street lighting system, where this
procedure is impractical), for notice before the
work is undertaken, and for collection from the
property owner or other person served of unpaid
charges before they are attached to the tax bill. A
sample ordinance on this subject is included in Part
III of this memorandum.
5-
Supplemental Assessments and Reassessments
The code provides that upon notice and hearing
similar to that required for the original assessment,
the council may make supplemental assessments to
correct omissions, errors or mistakes in the assess-
ment relating to the total cost of the improvement
or any other particular. If an assessment is set
aside by a court for any reason (either generally or
as to any particular parcel of land) or if the council
finds that the assessment or any part of it is
excessive or determines on advice of the municipal
attorney that it is or may be invalid for any reason,
the council may upon notice and hearing as re-
quired for the original assessment, make a reassess-
ment or a new assessment as to such parcel or
parcels. It should be noted that by this device it is
possible to make a valid assessment even though
the original assessment may have been invalid
for failure to comply with jurisdictional require-
ments.
When tax -forfeited land is returned to private
ownership and is benefited by an improvement for
which special assessments were cancelled because
of the forfeiture, the city may make a reassessment
or a new assessment against the land for the
amount unpaid on the original assessment. Notice
and hearing are required as for the original assess-
ment. (M.S. 429.071, Subd. 4.) Cf. Forthnan n.
City of Minneapolis, 212 Minn. 340, 4 N.W. 2d
349 (1942), holding an equivalent connection fee
invalid under the statutes then in force. The
amendment which added M.S. 429.071 also
permits a connection fee as an alternative in these
circumstances. (M.S. 444.076—Laws 1976, Ch.
259, Sec. 3.) These provisions do not apply,
1See In re Meyer 158 Minn. 433, 197 N.E. 970,
199, N.W. 746 (1924); A.G. Op, 59 A-53, October
4, 1963 (515al ).
however, to formerly tax -forfeited land returned to
assessable ownership prior to April 14, 1976, the
effective date of these two provisions. (A.G. Op.
425-c-15, LMC 515A1, July 15, 1977.)
Apportionment of Assessments Upon
Subdivision of Land
If a special assessment is levied against a tract of
land which is later subdivided, the installments
remaining unpaid can be apportioned among the
various lots and parcels in the tract upon a finding
that such apportionment will not materially impair
collection of the balance due. This may be done
upon application of the property owner or by the
council acting upon its own motion, but notice of
such apportionment and of the right to appeal
must be mailed to or personally served upon all
owners of any part of the tract. The council may,
and if the assessment has been pledged towards
payment of improvement warrants the council
must, require the owner or owners to furnish
surety bonds.
Abandonment of Improvement Before Completion
If a local improvement is abandoned when so
incomplete that special assessments already levied
are in excess of the benefits received, a law separ-
ate from the improvement code (M.S. 435.201
and 435.202) provides machinery for cancellation
of the assessment and refunds of assessments
already collected, subject to the right to make a
reassessment for the amount of the special benefits
actually accruing. Another section of the same law
M.S. 435.203) provides for transfer to the general
fund of any surplus in the improvement fund
remaining after all costs of the improvement have
been met and all claims and obligations satisfied,
subject to the council's right to refund all or part
of this money to those who paid the assessment.
In the case of fire protection systems or skyway
systems only, the council must abandon the
improvement if so requested by the developer prior
to awarding contracts for construction. The
petitioner must then reimburse the city for any
and all expenses incurred by the city (M.S.
429.031).
Skyway and Fire Protection Systems
In the case of a petition for the installation of a
fire protection or a pedestrian skyway system, the
petition must contain or be accompanied by an
undertaking satisfactory to the city by the peti-
M
tioner that the petitioner will grant the municipali-
ty the necessary property interest in the building
to permit the city to enter upon the property
and the building to construct, maintain, and
operate the fire protection or pedestrian skyway
system. In the case of a petition for the installation
of a fire protection or pedestrian skyway system
which will be privately owned, the petition shall
also contain the plans and specifications for the
improvement, the estimated cost of the improve-
ment and a statement indicating whether the city
or the owner will contract for the construction of
the improvement. If the owner is contracting for
the construction of the improvement, the city shall
not approve the petition until it has reviewed
and approved the plans, specifications, and cost
estimates contained in the petition. The construc-
tion cost financecd under section 429.091 shall not
exceed the amount of the cost estimate contained
in the petition. M.S. 429.031, subd. 3. Abandon-
ment of these improvements is described in the
paragraph above.
Bonds for fire protection or pedestrian skyway
system are called revenue bonds and must contain
a promise to pay solely out of the proper special
fund or funds pledged to the payment. This
is somewhat anomalous since other bonds payable
solely from assessments are .called improvement
warrants. It is the duty of the municipal treasurer
to pay maturing principal and interest on these
revenue bonds out of funds on hand in the proper
funds and not otherwise, as is also the case with
improvement warrants. (M.S. 429.091, subd. 2.)
Storm Sewer Improvement Districts
A 1974 act (Laws 1974, Chapter 206, Secs. 1 to
6, M.S. 444.16 to 444.21) authorizes the council
of any city by a two-thirds vote to establish within
its limits a storm sewer improvement district
after a public hearing preceded by two -weeks'
published notice. After the district is thus estab-
lished, the council may acquire, construct, recon-
struct, extend, maintain, and otherwise improve
storm sewer systems and related facilities within
the district. Storm water holding areas and ponds
within and without the city limits may also be so
acquired, maintained, and improved for the benefit
of the district. Procedures of Chapter 429 on
doing the work and assessing the cost apply;
however, all the cost of the improvement, includ-
ing principal and interest on bonds, may be
financed by a tax levy on property in the district.
Presumably any part of the cost may be paid for
by special assessments levied on a benefit basis
under Chapter 429, though a district will ordinarily
be established in order to avoid the difficult task of
apportioning the cost by a fair special assessment.
To finance the cost, the council may issue obliga-
tions similar to improvement bonds under Chapter
429 except that they are payable primarily from
the proceeds of the district tax. After the retire-
ment of all obligations issued to finance improve-
ments within the district, the district may be
dissolved by following the procedure for establish-
ment of the district.
Sidewalk Improvement Districts
Under another 1974 act (Laws 1974, Chapter
59, M.S. 435.44, a "municipality" (the term is
undefined) by ordinance may establish a sidewalk
improvement district to pay all or part of the cost
of sidewalk construction and repair by apportion-
ing the cost throughout the property in the district
on a "direct or indirect benefit basis." The council
may establish districts in order to provide all areas
with safe pedestrian walkways to and from schools,
school bus stops, public transportation facilities
and other neighborhood and community services.
The total cost may be apportioned and assessed
to all property in the district on a uniform basis as
to each classification of property. An indirect
benefit assessment may involve all property in the
district without regard to location of sidewalks; a
direct benefit may be assessed to abutting property
for the additional cost of an extra sidewalk width.
Assessments may be spread over a five-year period,
but there is no provision in the statute for issuing
obligations to finance the cost initially, nor is any
procedure prescribed for making the assessments.
The law makes no mention of Chapter 429.
Deferral of Assessments for Age and Disability
Under M.S. 435.193 to 435.195 a city council
or a county or town board) making a special
assessment is authorized in its discretion to defer
the payment of that assessment for any homestead
property owned by a person 65 years of age or
older or retired by virtue of a permanent and
total disability for whom it would be a hardship to
make the payment. Application is made on a form
prescribed by the county auditor, who, if the
deferment is granted, notifies the county recorder.
The council may determine the amount of interest
to be charged on the deferred assessment.
The deferment is terminated and all accumu-
lated amounts plus applicable interest become due
upon (1) the death of the owner (if the spouse is
7-
not otherwise eligible for the deferment); (2) the
sale, transfer, or subdivision of any pari of the
property; (3) loss of homestead status of the
property; or (4) determination by the council that
requiring immediate or partial payment would
impose no hardship.
If the council wishes to utilize this authority, it
must adopt an ordinance or resolution establishing
standards and guidelines for determining the
existence of a hardship and for determining the
existence of a disability; however, it may still find
hardship in the case of exceptional and unusual
circumstances not covered by the standards and
guidelines of the ordinance. If the council follows
the policy of deferring payment of special assess-
ments for senior citizens or the disabled in hard-
ship cases, it may wish to include a notice of that
fact in the notice of final confirmation of the
assessment, if the city gives that notice. (See Form
25a.) It is required to give such a notice in the
notice of hearing on the proposed assessment. (See
Form 23.)
If payment of special assessments is deferred
under this law, it may determine by ordinance or
resolution the amount of interest, if any, on the
deferred assessment. If this is done by a general
policy applying to all such assessments, the rate
provision may be included in the ordinance or
resolution setting standards and guidelines.
Computation of Time
In computing the amount of time required for
the giving of notices, the first day on which the
notice is given is included and the last day is
excluded. Thus, ten days' notice of a meeting to
be held on a Monday is adequately given by
a notice first published on the Friday before the
previous Monday.
Marketing Bonds and Bond Counsel
As in all municipal proceedings it is important
that legal guidelines be carefully followed. This is
especially important in the area of improvements
involving special assessments and the issuance of
bonds by the municipality, since a legal flaw can
jeopardize the sale of bonds, and thus the entire
project.
Legal counsel should be involved in the assess-
ment and bonding process to insure a proper
bond transcript." In order to insure market-
ability of the bonds, it is best to consult with a
known bond counsel and to involve him early in
the process. A- bond counsel is known in the field
of bonding, and has knowledge of the proper
procedure to be followed. His favorable opinion
enhances the marketability of municipal bonds.
However, he cannot render such an opinion unless
the "bond transcript" is in proper legal order. To
assure this, counsel should be involved early in the
proceedings and consulted frequently so that any
errors can be corrected quickly.
Suggestions for improvement of the forms and
notations which follow are earnestly solicited by
the League office so that the forms may be prac-
tical and in compliance with statutory and con-
stitutional requirements. Suggestions for changes
in the law itself in the light of experience under it
are also invited.
Attorneys preparing proceedings under the code
will find many useful suggestions in the compre-
hensive article written by De Forest Spencer, Jr.,
entitled "The New Minnesota Improvement -
Assessment Procedure. (Ch. 398, Laws of 1953)."
Reprints of this article, which was published in 38
Minn. Law Review (May, 1954) pp. 582-611, are
available on library loan from the League. A
number of Mr. Spencer's suggestions have been
incorporated in abridged form in this local im-
provement guide. Two articles by Charles B.
Howard will also be useful in preparing proceedings
for the issuance of improvement bonds: "Current
Municipal Bond Procedures in Minnesota," 40
Minn. Law Review (January, 1956) pp. 145-154
and "Improving the Marketability of Municipal
Bonds," 35 Minnesota Municipalities (May, 1950)
pp. 149-150. Reprints of the latter article are
available at League headquarters.
Interest on Improvement Bonds
During the period of April 1, 1986 through July
1, 1987 the bond interest limit is suspended and no
limit applies. This suspension is provided by Laws
1986, Chapter 465, Article 11, Section 18. However
for other periods, Minnesota Statutes 475.55
creates a floating limit which cities may pay on
bonds they issue. That floating maximum interest
rate changes monthly. The law establishes a
method by which municipal bond interest rates are
determined using the Bond Buyer's Index of 20
Municipals. On or before the 20th day of each
month the Commissioner of Finance shall deter-
mine the most recently published yield for the
Bond Buyer's Index of 20 Municipals. This rate,
rounded to the next highest percent per year plus
one percent shall be the maximum bond interest
rate which a city may pay for the next succeeding
month. If the bonds are payable wholly or in part
with special assessments, another one percent per
year is added to the maximum rate.
This maximum interest rate will be published in
the State Register. The law further provides that
in issuing bonds a city may pay the greater of
1) the maximum rate for the month in which
the resolution authorizing the bonds to be
sold was adopted, or
2) the maximum rate for the month in which
the bonds are actually sold, or
3) the rate of 10% per year.
Interest on special assessments
Minnesota Statutes 475.55, Subdivision 3 states
that notwithstanding any contrary provision of law
or charter, special assessments pledged to the
payment of bonds may bear interest at the rate the
governing body determines, not exceeding the
greater" of
1) the maximum interest rate which the city
may pay on the bonds for the month in
which the resolution authorizing the
special assessment was adopted, or
2) the maximum interest rate permitted to be
charged on assessments under the law or
city charter pursuant to which the assess-
ments were levied.
Laws 1986, Chapter 465, Article II, Section 18,
codified as Minnesota Statutes Section 475.55,
Subdivision 7: (ASSUMED MAXIMUM INTER-
EST RATE FOR OTHER LAWS.) "If an obliga-
tion is not subject to a maximum interest rate
pursuant to subdivision 1, paragraph (1) and
another law provides for a calculation of a debt
service levy, determination of a rate of interest on
a special assessment, or other factor based on an
assumption that a maximum interest rate applies to
the obligation, the governing body of the munici-
pality may estimate or determine an assumed
maximum interest rate for purposes of that law. If
the municipality does not determine, specify or
estimate the maximum interest rate for such
purpose, then the maximum interest rate for
purposes of the other law is the maximum interest
rate that would apply if subdivision 1, paragraph
2) were not in effect. This subdivision does not
limit the interest rate that may be paid on obliga-
tions under subdivision 1."
During the period of bond interest rate limit
suspension the council apparently has power to
determine an assumed maximum interest rate by
resolution. That rate will still be available from the
commissioner of finance, or if not, you or your
financial consultant may be able to calculate it
approximately using the statutory formula. Pre-
cision doesn't seem to be required. The intention
of the drafters of the 1986 legislation was to
permit this assumed maximum interest rate limit to
substitute for the eight percent limit in Minnesota
Statutes Section 429.061 on interest rates to be
charged on outstanding special assessments when
improvements are financed by interfund borrowing
rather than issuance of obligations. However, the
1986 language is so ambiguous that if a city is
reluctant to rely on its power to reassess should a
court strike down its assessment interest rate, the
council may simply stay within the old eight
percent safe limit for improvements financed with
intercity borrowing and the actual bond rate,
where obligations are issued as clearly authorized
by Minnesota Statutes 429.061.
Cities must keep in mind that it is the maximum
interest rate on obligations for the month in which
the resolution authorizing the special assessment
was adopted which sets the maximum interest
rate chargeable on assessments and not the rate in
effect when the bonds were authorized to be issued
or actually sold.
Note: Sometimes bonds may be sold prior to
the date of the authorization of the assessment roll
or some months later, and the statutory interest
rate may be below the actual rate on the bonds.
Most bond counsel have tried to deal with this
unfortunate situation by including in the sale
resolution for the bonds a statement that the
assessments levied for the improvements are
authorized at that time, thus locking in the interest
rate In effect for the month of the bond sale.
There seems to be no reason why the assessments
cannot be authorized on the date of the bond sale.)
If bonds are not used to fund the improvement,
M.S. 429.061, Subd. 2 still applies. This statute
limits the maximum interest rate charged on
special assessments to 8% a year.