Agenda - Council - 10/22/1996 - Laserfiche WebLink

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I I I I I ! I I ! I I CASE #4 INTRODUCTION OF ORDINANCE TO IMPLEMENT CHAPTER 8 OF THE RAMSEY CITY CHARTER By: Ryan R. Schroeder, City Administrator Background: At the Council meeting of October 8, 1996, Council adopted an assessment role for Public Improvement Project ~t95-14; Haubrich Addition, wherein owners of three parcels of property exercised their rig ~hts under the Charter to avoid a benefit assessment and utility system connection. At the conclusion~.of that action, I informed Council that we would be back at this meeting to discuss the resultirig revenue shortfall and what to do about that. Council should also be reminded that, in passing tlle maximum levy for 1997, Council set aside extra funds within the Council contingency to all6w for the expected shortfall in this project fund to be recovered within the 1997 budget year. That shortfall is $80,287.89. It has been asserted that this amount is overstated. However, in contetnplating whether to complete the project, Council assumed receipt of this level of revenue which: will now not be forthcoming. Further, the entire expense (including the $80,287.89) has been realized by the project fund and revenues below this amount will result in a project deficit which must be recovered from either the General Fund of the City or such other fund as Council deems appropriate. The Charter amen ~.drnent, as approved by the voters, allows for discretion on the part of the Council as to how it should be administered. Proposed is an ordinance that is intended to provide direction regarding: 2. 3. 4. The definition of a functioning well and septic system What process must be followed in order to invoke the Chartc-;r provisions of this chapter What happY_ns in the case of one or more non-functioning private systems What happgns in the case of a lot split or property sale as it relates to the possible cloud on the title of a pending utility connection The Council by policy also needs to determine how to proceed on future petitioned-for projects and how the City will provide for revenue shortfalls. The project fund for g95-14 is now expected to have a project shortfall as a result of the implementation of {he amendment to Chapter 8 of the Charter. This shortfall, as noted above, is $80,287.89. It was contemplated upon entertaining this project that this revenue would either be received within 301 days of completion of the assessment hearing or that it would be assessed against the benefitted properties at a 9% interest rate over a 10-year term. Using a simple straight line amortization, the amount of revenue necessary to make the project fund whole is 10 annual payments of $12,5~0.47. A second option is to provide for only the 9% interest expense on the outstanding princip~al balance. Nine percent of the existing balance is $7,225.91. Under this option, that payment will need to be budgeted each year until the principal balance is reduced by a connection to the sTstem by one or more of the properties opting out of the assessment at this time (could be a few ye~s or could be 30). A third option is to provide a funding source to pay off the entire deficit in one!payment (or a few payments). As noted above you currently have the ability to provide for option t~ree within your 1997 levy. Of the three options, the second seems most reasonable. The rationale is that that option provides the opportunity to r0eact to connections to the system without already having collected from the general taxpayer (in~ some fashion) under the assumption that connection may never occur. As we have with projects luch as the public works garage, this would be set up as a debt service payment with revenues coming from whatever source Council chooses. My recommendation for this