Council members rethink assessment rates

Rising fuel prices, other factors causing spike in road construction projects

Property owners along roadways scheduled to be renovated or reconstructed this year might pay 10 percent more in assessments than property owners did last year, but that's about 9 percent less than the city's initial recommendation.

Hurricane Katrina, rising fuel prices and other factors significantly bumped up the cost of construction during the last year, requiring the city to hike its assessment rates. The city tries to pay for 25 percent of its street renovation and construction costs with assessment money from property owners adjacent to affected roads. Taxpayer dollars and state aid cover the remaining 75 percent.

To meet the 25 percent goal in 2007, city staff initially recommended a 19 percent jump in assessment rates for nonresidential properties and an 18.4 percent increase for residential properties over last year.

&#8220It would have been a radical difference,” said City Council Member Sandra Colvin Roy, (12th Ward).

Colvin Roy is chairwoman of the Transportation and Public Works Committee, which reevaluated the assessment rates after the City Council decided the increases would have created too much of a burden on property owners. The committee is now recommending a 10 percent increase over last year's rates. The full City Council planned to vote on the new rates, which are not expected to garner 25 percent of construction costs, at its Feb. 23 meeting.

Heidi Hamilton, deputy director of Public Works, said 2006 assessment rates were established early and the city underestimated the increase in construction costs for 2007.

Taxpayers and state aid will cover the construction costs the city doesn't recover from property owners in assessed areas this year, Hamilton said. The department is evaluating the assessment process, looking into how it can plan further ahead and stabilize rate increases in coming years.

Though a natural disaster contributed to this year's assessment spike, large future increases are not out of the question.

&#8220I certainly think it's possible,” said Council Member Elizabeth Glidden (8th Ward), who serves on the Council's Transportation and Public Works Committee. &#8220All of these costs for fossil fuels continue to rise.”

Assessment rates are set each year and are uniform across the city. The only variables are whether a property is residential or nonresidential, whether a project is city-funded or paid for using other sources, and whether it involves construction or renovation. Mixed-use properties are assessed using a combination of residential and non-residential rates.

Rates are set per square foot and property owners pay according to how many square feet of their property is within the &#8220influence zone,” an area extending from the abutting corners of each block along a constructed or renovated road.

Nonresidential properties - which can range from businesses to churches and schools - in construction areas pay the most. The city's initial recommendation would have required them to pay $1.61 per square foot this year, up from $1.36 last year. The Transportation and Public Works Committee's recommendation calls for a $1.50-per-square-foot rate.

For a business like Bryant-Lake Bowl, which has just over 4,871 square-feet in the influence zone, that's a payment of about $7,306. Owner Kim Bartmann said the assessment itself is a &#8220drop in the bucket,” but it would be harder to pay when combined with increased property taxes and slow business anticipated during this year's West Lake Street construction. &#8220It comes at absolutely the worst time,” Bartmann said.

City Assessor Patrick Todd said business owners are hurt the most during road construction for the reasons Bartmann outlined. Todd said a slow in the real estate market should offer some property tax relief this year. Also, street assessments are payable over 20 years for property owners in construction areas and 10 years for those in renovation areas.

Joyce Wisdom, president of the Lake Street Council, said she was shocked by the city's initial assessment recommendation and had been advocating for a reduction. &#8220These costs really weren't anticipated,” Wisdom said. &#8220I think the committee did a good job of knocking them down.”

A street assessment hearing for West Lake Street is set for March 20 at 9:30 a.m. in Council Chambers, room 317, City Hall, 350 S. 5th St.

Reach Jake Weyer at 436-4367 and jweyer@mnpubs.com.