HomeMy WebLinkAboutA010 - Council Action Form dated May 22, 2001 i
Item # 310
Date: May 22, 2001
COUNCIL ACTION FORM
SUBJECT: REQUEST TO USE SPECIAL ASSESSMENTS FOR THE PUBLIC
IMPROVEMENTS FOR GRAND ASPEN SUBDIVISION
BACKGROUND:
The required public improvements for the subdivision include paving of the outside lane
on South 16th Street, construction of a Cy-Ride bus stop pad, and construction of a
bikepath. All of the improvements are adjacent to Lot 1 of the subdivision. The
estimated cost of the above work is $36,000. The subdivision regulations stipulate that
the Developer must either complete the public improvements prior to filing the Final Plat
or provide financial security that the work will be done within two years. The financial
security may take the form of a bond, a letter of credit, cash, or other approved method.
The Developers of Grand Aspen have requested that the City install the public
improvements through the use of special assessments. This process would mean that
the City becomes the financing mechanism for the public improvements. Although there
is no formal policy, the use of special assessments for development requirements is
unusual, although not unheard of. In the special assessment process, the City designs
the project, lets the contract, and pays the contractor for the work. Following the
completion of the construction, the costs are assessed against the property and
payments (principal and interest) may be made over the next 12 years.
The upfront money to pay .the contractor would come from the sale of General
Obligation Bonds, which are the financing mechanism used for many city improvement
projects. The amount of General Obligation bonds that can be sold by a city is limited
by the State. Any use of this bonding capacity to finance improvements created by
development would reduce the City's ability to sell bonds for community projects.
In the recent past, special assessments were used to pay for the improvements to Billy
Sunday Road in conjunction with the South Duff Community Park Subdivision. In that
instance the City benefited because the Developer paid for the cost of the
improvements adjacent to City owned property in exchange for the use of special
assessments. In this case with Grand Aspen Subdivision, the City does not have any
involvement and would not receive any direct benefits. Of course, there is benefit with
the development.
The amount of the assessments for Grand Aspen Subdivision is relatively small,
however the policy of using special .assessments for development expenses has
the potential to be huge. The assumption would be that, if this request were to be
granted, most, if not all, developers would be looking to use the special
assessment financing since they would not have to cover the initial cost of the
public improvement projects and payments could be made over time. This use of
special assessments would severely limit the City's ability to address other community
CAF — Request Special Assessment
May 22, 2001
Page 2
wide needs for improvements because of the limitations on bonding capacity
established by the State.
Based on the probable impact to the City's bonding capacity through the use of special
assessments for private development costs, staff recommends that the request to use
special assessments for the public improvements in conjunction with Grand Aspen
Subdivision be denied. In order to continue with the Final Platting process, the plat can
be approved contingent upon filing of an acceptable form of financial security in the
amount of$36,000.
ALTERNATIVES:
1. Reject the request to use special assessments for the required public
improvements for Grand Aspen Subdivision.
2. Establish a policy to allow special assessments to be used for private
development costs and thus approve the request for Grand Aspen Subdivision to use
CCal assessments provided the appropriate waiver forms are executed.
3. Do not establish a general policy, but approve the request to use special
a ssments for the public improvements in Grand Aspen Subdivision provided all
appropriate waivers are completed.
MANAGER'S RECOMMENDED ACTION:
It is the recommendation of the City Manager that the City Council adopt alternative
number one above and reject the request to use special assessments for the required
public improvements for Grand Aspen Subdivision.
COUNCIL ACTION:
CAF APPROVAL
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