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Home My WebLink AboutCity Council Packet 06-26-2007 SpecialAgenda City of Plymouth Special City Council Meeting Tuesday, June 26, 2007 6:00 p.m. Medicine Lake Room 1. Call to Order 2. Discuss Special Assessment Policy (interest rate, duration of payoff period) 3. Set future Study Sessions 4. Adj ourn c i A enda Number: C CITY OF PLYMOUTH CITY. COUNCIL AGENDA REPORT TO: Laurie Ahrens, City Manager FROM: Nhia Vang, Budget Analyst, through Jean McGann, Administrative Services Director SUBJECT: For Special Assessment Interest Rate Benchmarks and Alternatives DATE: June 22, 2007 for Study Session of June 26, 2007 In February, staff presented four possible benchmark's that could be utilized as a reasonable basis for' special assessment interest rates. They are as follows (a table is also attached to show rates reported by Stifel Nicolaus): 1)-. Prime Rate represents the rate that banks charge to their most creditworthy customers. It is often used as 'a benchmark for home equity loans. The City currently uses the prime rate when doing special assessments. This prime rate was approximately 2% - 3% above both the special assessment bond rate (plus 1.5%) and the City's average return on investments during the years of 2002 2005. At this time the spread ranges between 3.5% and 4.5% using the same rates as a comparison. 2) Tax -Free Equivalent Prime Rate is the special assessment equivalent of a home equity loan benchmarked to the prime rate. Home equity loan interest is deductible to those who itemize on their income tax while special assessments are not. Historically this rate has seen a wide fluctuation and would be difficult to use for a special assessment rate and still retain consistency from year to year. 3) Agency Bond (5 Year - Non -Call 1 -Year) Plus 1% Administration Rate is the agency bond rate equivalent investment to the City financing special assessments. That is because special assessment payers have the option to pay the balance each year of the 5 -year term of the loan. Most cities charge over their investment return to cover the cost of administration. This option provides a rate of return that exceeds both the special assessment bond rate (plus 1.5%) and the Cities average rate of return. Over the past 5 -years the rate has varied from a low of 2.88% in 2003 to a high of 5.94% in 2007. Once again, the fluctuation in Agency Bonds would be difficult to use because of consistency. 4) Special Assessment Bond (5 Year) Plus 1.5% Administration Rate is what the City could borrow at to finance special assessments. Most cities charge over and above that rate by 1 % to 2% to cover the cost of issuance and administration. Staff would recommend using this option for determining the special assessment rate as it exceeds the Cities average rate of return, provides a C:\Documents and Settings\mrosenbaum\Local Settings\Temporary Internet Files\OLK97\Special Assessment Rate Benchmarks.doc Nhia VangPage 1 6/22/2007 cushion for delinquent assessments, and has less fluctuation than the other options. The rate has varied from a low of 3% in 2003 to a high of 5.45% in 2007. Rate Table Rate Options Rate Rate as of I. 06/18/07) Prime Rate 8.25% 8.25% Prime Rate (Tax Free Equivalent - 28%) 5.94% 5.94% Agency Bond ( 5 Year - N/C 1) Plus 1 % Admin 6.52% 6.79% Special Assessment Bond (5 Year) Plus 1.5% Admin 5.04% 5.45% Historical Graph The following graph shows the historical rate in June of each year for the four benchmarks compared to the City's assessment rate for street reconstruction and the City's average weighted yield on investments: 9.00 8.00 7.00 6.00 or 5.00 4.00 3.00 2.00 1.00 0.00 Historical Rates for Prime Rate, Prime Rate (Tax Free Equivalent - 28%), Agency Bond 5Yr N/C1) Plus 1%Admin and Special Assessment Bond (5Yr) Plus 1.5 Admin 01M. Agency Bond (5 Year - NIC 1) Plus 1%Admin 7 Special Assessment Bond (5 Year) Plus 1.5% Admin Prime Rate (Tax Free Equivalent - 28%) -Prime Rale 4-Street Reconstruction ($0-$5,000 Payable within 5 Years) -2 -City Investments - Average Weighted Yield 8.25 3 8.25 6.50 %= 6.00 6'2 6.00 5.05-- - - -- 4.75 4.75 4.2 4.00 4. 4.00, 3.93 - - 3.00 3.09 3.2 i 14.59 4 3.67 .88 4.60 .06 4.47 0' 6 9 5.34 5.9 5.45 .9 6/2002 6/2003 6/2004 6/2005 612006 6/2007 Reflects December 31st Average Weighted Yield C:\Documents and Settings\mrosenbaum\Local Settings\Temporary Internet Files\OLK97\Special Assessment Rate Benchmarks.doc Nhia VangPage 2 6/22/2007 Recommendation Since 2003, the City's investment return continues to yield upward growth. The City's ability to fund capital projects is dependent on the resources available. Thus, if the City adopts. the Special Assessment Bond (5 Year) Plus 1.5% Administration rate as its special assessment interest rate, the City would be able to either or possibly finance internally the cost of the special assessment project while affording the City the opportunity to invest equitably towards future projects. As such, staff recommends the Special Assessment Bond (5 Year) Plus 1.5% Administration rate. Term of Special Assessment A snapshot of the City's street reconstruction special assessment projects over the last six years shows that residents can pay their assessment amount over a. period of five, ten, or fifteen years. The amount of time the City has been able to allow residents to pay for their special assessments has always depended on the assessment amount and the City having sufficient funding available (i.e., collection of property taxes or bond sales) for the project. Bonds were sold in 2005 to finance street construction and staff anticipates the sale of bonds during 2007 as well as in subsequent years. The City's current length for assessment payment is as follows: While the Special Assessment Policy allows for the term of an assessment to be 15 years, the City has historically chosen to have the assessment length be five or ten years. In many cases the useful life of the improvement well exceeds 15 years. In those cases, the City may want to consider extending the term of the assessment to 20 years. When considering these options, the City will want to be cautious that additional improvements will not be necessary during the term of the assessment. For example, if a street is improved and the City expects that the road should last for ten years, then the special assessment term should not exceed that time frame. If the Council should decide to change the term of the assessment, staff will include this as part of the Special Assessment Policy revision in the fall of the year. C:\Documents and Settings\mrosenbaum\Local Settings\Temporary Internet Files\OLK97\Special Assessment Rate Benchmarks.doc Nhia VangPage 3 6/22/2007 Sandy Engdahl Subject: FW: Upcoming Council Meeting Original Message ----- From: Jonathan Walther <rjonwOyahoo.com> To: Council Members Sent: Mon Jun 25 07:28:35 2007 Subject: Upcoming Council Meeting Honorable Mayor and Plymouth City Council Members, Our street is all torn up, the construction trucks make lots of noise and block our path starting at 6:30 in the morning and it all serves to remind us that you won, we lost. I was at the public meeting when councilmen Tim Bildsoe remarked that the Plymouth City Council had never voted down a street project. After all it was good for the city of Plymouth and good for the residents of lith Ave N, Garland Lane and 9th Ave N, right? The new, smooth road will be nice. The curb and gutter may be unattractive but other than losing a few trees it really isn't hurting anyone. The street will be narrower which will put pedestrians, children and pets closer to traffic but the increased risk to their safety must be worth the reduction in impermeable surface right? After all didn't that avoid key permit applications? Despite unanimous opposition from your constituents, the City View Acres road improvement project was going to happen. After all there is precedent at stake. Why then did you decide to break precedent and decide it was a good idea to assess the residents 40a? Why force us to pay so much when some nearby city councils place no additionally levy for street improvements on their residents? You all have a chance to work with the community and help us pay for your street improvement project. Our neighborhood residents can be a valuable asset to the city of Plymouth and the City Council. We can work together to build rain gardens, keep our streets clean and safe and tell our friends and neighbors what a great mayor and city council we have. The difference really won't impact the City of Plymouth. The City will continue to have a grade.A rating. However that money will help us send our children to college, make necessary home repairs and improvements and in some cases, afford to keep our homes. Yes, it is that critical. It will also go a long way to bridge the gap that has developed between the residents of City View Acres and the Plymouth City council. I'm not asking anything out of the ordinary. Actually what we need is for you to follow precedent. Please change the assessment level. Please make the payback period more in line with the life of the improvement — 1 even at 20 years it is still only half according to your engineers. The difference to the City of Plymouth financ=ally will be tiny compared to the enormous benefits it will generate. The City can afford to pay for this project, we can't. Thank You, Jonathan Walther 17005 11th Ave N Plymouth, MN 55447 Looking for earth -friendly autos? Browse Top Cars by "Green Rating" at Yahoo! Autos' Green Center. http://autos.yahoo.com/green—center/ 2 S26 QIRgendaNumber: TO: Mayor and City Council FROM: Laurie Ahrens, City Manager SUBJECT: Set Future Study Sessions DATE: June 21, 2007, for Council study session of June 26, 2007 1. ACTION REQUESTED: Review the pending study session topics list and set study sessions or amend the topics list if desired. We recommend that the Council consider setting a study session for 5:30 p.m. on July 10, prior to the regular meeting to discuss.the following topics: Update on proposed capital projects Preview future Highway 55 preferred layout Preliminary discussion with marketing consultant on City Center 2. BACKGROUND: Attached is the list of pending study session topics, as well as calendars to assist in scheduling. Pending Study Session Topics at least 3 Council members have approved the following study items on the list) Special Assessment Policy (Council; early fall) Discussion of Rental Licensing Ordinance and Point of Sale Inspection (Black, Stein, Willis; fall) Other requests for study session topics: Update with the City Manager (fall) Three Rivers Park District open space (GB) OFFICIAL CITY MEETINGS Tune 2007 Sunday Monday I Tuesday I Wednesday Thursday Friday Saturday Ju12007 1 2 May 2007 S M T W T F S S M T W T F S 1 2 3 4 5 1 2 3 4 5 6 7 6 7 8 9 10 11 12 8 9 10 11 12 13 14 13 14 15 16 17 18 19 15 16 17 18 19 20 21 20 21 22 23 24 25 26 22 23 24 25 26 27 28 27 28 29 30 31 29 30 31 3 4 5 6 7 8 9 6:30 PM YOUTH ADVISORY COUNCIL, Parkers Lake 7:00 PM PLANNING COMMISSION, Council Chambers 10 11 12 13 14 15 16 6:00 PM CITY COUNCIL STUDY SESSION -2006 AUDIT PRESENTATION, Medicine Lake Conference Room 6:00 PM -7:00 PM PUBLIC MEETING ON CITY STORM WATER POLLUTION . PREVENTION PLAN, Council Chambers 7:00 PM PARK 8 REC ADVISORY COMMISSION(PRAC), Council Chambers 7:00 PM REGULAR COUNCIL MEETING, Council Chambers 7:00 PM ENVIRONMENTAL QUALITYCOMMITTEE EQC), Medicine Lake Rooms A & B lag DayF 17 18 19 20 21 22 23 7:00 PM PLANNING COMMISSION, Council Chambers 24 25 26 27 28 2.9 30 6:00 PM CITY COUNCILSTUDY SESSION - SPECIAL ASSESSMENT POLICY, Medicine Lake Conference Room 7:00 PM PLYMOUTH ADVISORY COMMITTEE ON TRANSIT (PACT) , Medicine Lake Room A 7:00 PM REGULAR COUNCIL MEETING, Council Chambers modified on 6/22/2007 OFFICIAL CITY MEETINGS July 2007 Sunday Monday Tuesday Wednesday Thursday Friday Saturday 1 2 3 4 5 6 7 INDEPENDENCE DAY, City Offices closed 5:15 PM MUSIC IN PLYMOUTH, Hilda Performance Center 8 9 10 11 12 13 14 7:00 PM REGULAR COUNCIL MEETING, Council Chambers 5:30 PM ENVIRONMENTAL QUALITY COMMITTEE EQC), Ponds, Plants, and Practices Tour, Starting at Plymouth Creek Center 7:00 PM PARK & REC ADVISORY COMMISSION (PRAC), Council Chambers 15 16 17 18 19 20 21 700 PM PLANNING COMMISSION, Council Chambers 7:00 PM HOUSING & REDEVELOPMENT AUTHORITY (HRA), Medicine Lake Room A 22 23 24 25 26 27 28 7:00 PM REGULAR COUNCIL MEETING, Council Chambers 7:00 PM PLYMOUTH ADVISORY COMMITTEE ON TRANSIT (PACT) , Medicine Lake Room A 29 30 31 Jun 2007 Aug 2007 S M T W T F S S M T W T F S 1 2 1 2 3 4 3 4 5 6 7 8 9 5 6 7 8 9 10 11 10 11 12 13 14 15 16 12 13 14 15 16 17 18 17 18 19 20 21 22 23 19 20 21 22 23 24 25 24 25 26 27 28 29 30 26 27 28 29 30 31 modified on 6/22/2007 OFFICIAL CITY MEETINGS Azwust 2007 Sunday I Monday I Tuesday Wednesday Thursday Friday Saturday 1 PM PLANNING COMMISSION, Council chambers 2 3 4 Ju12007 S M T W T F S Sep 2007 S M T W T F S7:00 1 2 3 4 5 6 7 1 8 9 10 11 12 13 14 2 3 4 5 6 7 8 15 16 17 18 19 20 21 9 10 11 12 13 14 15 22 23 24 25 26 27 28 16 17 18 19 20 21 22 29 30 31 23 24 25 26 27 28 29 30 S 6 7 8 9 10 11 2:30 PM -5:00 PM NATIONAL NIGHT OUT KICK OFF EVENT, Fre Station III 7:00 PM PARK & REC ADVISORY COMMISSION (PRAC), Council Chambers 6:30 PM -9:30 PM NATIONAL NIGHT OUT 12 13 14 15 16 17 18 7:00 PM REGULAR COUNCIL MEETING, Council Chambers 7:00 PM PLANNING COMMISSION, Council Chambers 7:00 PM HOUSING & REDEVELOPMENT AUTHORITY (HRA), Medicine Lake Room A 19 20 21 22 23 24 25 6:00 PM CITY COUNCILSTUDY SESSION - DISCUSS BIENNIAL BUDGET, Medicine Lake Conference Room 7:00 PM PLYMOUTH ADVISORY COMMITTEE ON TRANSIT (PACT), Medicine Lake Room A 26 27 28 29 30 31 5:30 PM CITY COUNCIL STUDY SESSION - DISCUSS BIENNIAL BUDGET, Medicine Lake Conference Room 7:00 PM REGULAR COUNCIL MEETING, Council Chambers modified on 6/22/2007 OFFICIAL CITY MEETINGS Sentemher 2007 Sunday Monday Tuesday Wednesday Thursday Friday Saturday Aug 2007 Oct 2007 1 S M T W T F S S M T W T F S 1 2 3 4 1 2 3 4 5 6 5 6 7 8 9 10 11 7 8 9 10 11 12 13 12 13 14 15 16 17 18 14 15 16 17 18 19 20 19 20 21 22 23 24 25 21 22 23 24 25 26 27 26 27 28 29 30 31 28 29 30 31 2 3 4 5 6 7. 8 LABOR DAY - Clty6:30 Offices Closed PM CITY COUNCIL STUDY SESSION - DISCUSS BIENNIAL BUDGET, Medicine Lake Conference Room 7:00 PM PLANNING COMMISSION, Council Chambers 7:00 PM HUMAN RIGHTS COMMISSION, Parkers Lake Room 9 10 11 12 13 14 15 7:00 PM REGULAR COUNCIL MEETING, Council Chambers 7:00 PM ENVIRONMENTAL OUALMY COMMITTEE EOC), Medicine Lake Rooms A & B 7:00 PM PARK 8& REC ADVISORY COMMISSION (PRAC), Council Chambers 10:00 AM -5:00 PM AUTUMN ART FAIR, Parkers Lake Room ROSH HASHANAH BEGINS AT SUNSET 16 17 18 19 20 21 22 7:00 PM PLANNING1:00 COMMISSION, COunlil Chambers AM -3:30 PM PLYMOUTH CLEAN-UP DAY; Public Works Maintenance Facility YOM KIPPUR BEGINS AT SUNSET 7:00 PM HOUSING 8 REDEVELOPMENT AUTHORITY (HRA), Medicine Lake Room A 23 24 25 26 27 28 29 7:00 PM REGULAR COUNCIL MEETING, Council Chambers 7:00 PM PLYMOUTH ADVISORY COMMITTEE ON TRANSIT (PACT) , Medicine Lake Room A 1:00 PM Plymouth on Parade Celebration, City Cenler Area 30 modified on 6/22/2007