Minutes - Council - 12/02/1986 - Special

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Those new options were presented to Council. Council directed that this special meeting be conducted to present those options to the property owners and receive their comments. At this meeting Council intends to designate a financial plan that will be used for sewer and water improvements so that property owners will have all the information they need to respond with their approval or disapproval. Mr. Hartley stated that the total project cost is 2.7 million and includes extension of water and sewer trunk to the Industrial area, financing the cost of a well and water tower, and improvements currently be constructed in Flintwood III. The cost to borrow the money is about $200,000. The city borrowed money for a tax increment project last year and $80,000 of that was not used. The city would be earning about $37,000 interest on the money borrowed while it is being held by the City during construction of the project. If the size of the bond is reduced by that $110,000+, the total amount borrowed would be $2,815,000. Mr. Hartley then proceeded to to review Tabl I of the package he prepared which shows debt service calculations for a $2,815,000 bond sale, existing and proposed tax increment debt, existing and projected tax increment revenues; in each year there is projected a substantial surplus of cash after all debt are paid; tax increment will be sufficient to pay for the project. Mr. Hartley proceeded to present his response to Council's direction to draft a plan that would provide incentive for property owners who can pay for the improvements on the earliest timetable to do so and not severely penalize those property owners choosing to defer their assessment for ten years, Option A. Mr. Hartley presented a table which showed that if a property owner defers a $10,000 special assessment for ten years with no interest being charged to him during that period, the net present value of that payment series would be $4,279 (40% of $10,000). Therefore, in order to give the same benefit to the property owner who does not defer, the City would pay 60% of the cost of the $10,000 special assessment leaving a balance of $4,000 for the property owner. The end result is a minimal 2.79% penalty to those property owners deferring until the tenth year. Bernie Vevea - Inquired if property owners can begin paying their assessment at any time within the 10 year time frame. Mr. Hartley replied that property owners can begin payment anytime within the 10 year time frame; Option A is calculated as a graduated plan that maintains similar net present value regardless of whether the property owner starts to pay his assessment in 1987 or 1997. The interest rate charged will be 1.5% over that at which the bonds were sold for. Councilmember Cox noted that the year chosen to pay the assessment doesn't mean the full assessment is due that year; it means the 10 year payment plan kicks in at that time. Mr. Hartley stated that one of the concerns with past proposals was that the construction cost index and going interest rate, at the time the assessment was accepted, were used. Option A's response to that is fixing the interest rate; whatever the assessment is figured at now, that will be the standard assessment used in that 10 year time period with the interest rate fixed at whatever the Sp Council/12-2-86 Page 2 of 13