By Ryan Gueningsman
In response to feedback from Delano residents, the Delano City Council has directed city staff to make a number of changes to the proposed street assessment policy.
At a special council work session Tuesday night, the council reviewed seven key points of the draft street assessment policy.
The proposed policy was drafted to determine mechanisms available to fund public improvement projects primarily street reconstruction, according to a memo to the city council from City Administrator Phil Kern.
The issue was first presented to the public in April, and there have been five public hearings on the matter since then.
Amendments to the proposed policy that were discussed include the cost share allocation between assessed properties and property taxes.
The draft policy presently indicates a 50 percent assessment/50 percent property tax share for residential properties, and a 70 percent assessment/30 percent property tax share for commercial properties.
“The 50/50 and 70/30 were determined by taking the midpoint of the assessment policies collected from other communities,” Kern said in the memo.
Following discussion, the council directed city staff to change the proposed policy to 30 percent assessment for residential properties, and 50 percent commercial.
The second item brought up for discussion was the repayment period for assessments.
The proposed policy has two options for repayment, according to the memo. The first is to pay the assessment in full during the year it was levied, and the second would be to have the assessment filed against the property and collected over a period of time up to 10 years.
The council directed city staff to change the period from 10 years to 15 years in the proposed policy.
The third item discussed was the interest rate applied for those paying over a time or deferred.
The initial presentation of the assessment policy stated the city would extend the bond rate received on the special assessment bond to those paying over time or deferring payment, plus some added interest amount for the processing and administration of the assessment.
“This practice was a common standard amongst the other assessment policies reviewed,” Kern said in the memo.
Several suggestions the council discussed were to fix the interest rate for the assessment at a rate equivalent to the special assessment bond rate. This would essentially create a pass-through payment, and the resident would be able to finance the improvement at a rate the city can garner on the open market.
Another suggestion would be to eliminate the interest rate all together. This would result in a long-term public cost as the property tax system would pick up interest payments.
“This would create a feel of a fixed fee over time,” Kern said in the memo.
The guarantee period to not be assessed again for improvements was also discussed by the council, with the council directing city staff to change this from the proposed 20 years to 30 years.
The fifth item addressed with the council was the application of assessments to multi-tenant buildings.
The policy presently treats all residential units the same. A 40-unit apartment building would have the same total assessment amount as 40 homes. The council directed staff to change this part of the proposed policy to indicate a charge of all units with three or more units on the same property at 0.5 units per dwelling.
The application of assessments for irregular “flag” lots was also brought up as a discussion point.
A “flag lot” is a lot with a narrow front street footage, but wider, larger lot size where the principal structure is built. The draft policy treats all residential structures the same, so a flag lot is not an issue for this type of property.
For commercial or institutional properties, however, the assessment calculation is based on the front footage. Kern said a lot with very little front footage but a larger developed site would not have an equitable allocation of costs.
The council decided it wanted more information before making a recommendation on the issue.
The final issue discussed revolved around the application of assessments for undeveloped property.
The proposed policy proposes an assessment against every developed and undeveloped piece of property fronting a street construction project, it was noted in the memo.
“Every individual residential lot, developed or not, would be assessed for each unit,” Kern said in the memo. “For example, if a homeowner owned two parcels, with a home construction on one parcel and the other sitting vacant, the policy would calculate an assessment against both parcels.”
One idea presented would propose a method to charge vacant lots a “street access fee.”
After discussion, the council asked city staff to redraft the proposed policy and bring it to the Tuesday, Oct. 19 city council meeting for further discussion.
“There are most likely other areas for amendment in addition to these, but these are the ones that have most clearly generated the most discussion,” Kern said in the memo.
A map showing the age of city streets was also presented and reviewed by the council at the request of several residents.