Minutes - Council Work Session - 09/03/2013

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Finance Director Lund stated that would be the option. City Administrator Ulrich stated if more than 50% petition against a special assessment, then the project is defeated. He stated that process has occurred with road projects in the past when the road could be petitioned against at 30% so there is history with that process. Mayor Strommen stated the special assessment process is also expensive. In addition, residents are presented with a large bill that may not have been anticipated and is difficult to budget for. That is why residents are resistant to the project. Councilmember Tossey agreed that the roads have been ignored for some time and a topic of discussion for years. He stated he is not a fan of franchise fees and supports Option C, Maximum General/EDA Levy at $7,816,.943, using Option A plus adding back $59,430 (Strategic Planning) and $275,000 for roads due to TIF District 4 expiring December 2014. Councilmember Tossey stated to bond, you have to assess 20% of the costs and he does not think there will be a lot of resistance to that amount of assessment. He stated with Option C, more will be levied. He asked where TIF is going. Finance Director Lund stated the municipal center debt doubled from $644,000 to $1.2 million and other expenditures (employee benefits and health insurance coverage) have also increased. Councilmember Tossey stated the City will then have to spend less and cut the budget to make up the shortfall. He objected to creating another revenue stream for the City's residents and supported funding the SMP by raising the tax levy and keeping a 20% assessment. Councilmember Tossey stated another benefit of that method is the tax deduction available to residents. Finance Director Lund noted that if the funding is raised through an increased tax levy, business and industrial properties will be hit harder because it is based on evaluation. Councilmember Tossey stated the City can expect its tax base to increase because the market is improving, property valuations are increasing, and there will be more development. He felt the revenue will be there to fund the SMP. City Administrator Ulrich stated there is an option to bond without assessments by using a Five - Year Capital Bond. However, it would impact the tax capacity rate. Councilmember Riley stated he appreciates that an assessment is not required but a Five -Year Bond for a 60 -year problem does not fix the need for a constant funding stream because the City would then have to bond every five years. City Administrator Ulrich explained the plan has to be for five years but the bond term is for 20 years. City Council Work Session / September 3, 2013 Page 5 of 12