CITY COUNCIL AGENDA ITEM
Meeting Date: May 9, 2006
Subject/Title: Direct the City Engineer to proceed with Alternate A to
provide Assessment District financing for funding the construction of sewer
utilities to service the Randy Way neighborhood and include potential legal
expenses as a part of the Assessment District funding.
Prepared by: Engineering: D. Galey
Submitted by: Engineering: B. Grewal
Direct the City Engineer to proceed with Alternate A to provide Assessment
District financing for funding the construction of sewer utilities to
service the Randy Way neighborhood and include potential legal expenses as a
part of the Assessment District funding.
On October 10, 2005, City staff held a neighborhood meeting with the Randy
Way residents to receive and answer questions related to sewer and water
services to Randy Way and the adjacent courts
There are currently residents in the Randy Way neighborhood with septic
systems in need of repair/upgrade and/or the desire to expand their
residence over their current septic system capacity. Over the last few
months these residents have met with City staff regarding their interest in
water and sewer utility main line construction to serve their neighborhood.
Since these utilities are not master planned and would serve only their
neighborhood, the residents were informed that the associated construction
would be their financial obligation. Through their representative, the
majority of the neighborhood has decided they would like to move forward
with the construction and would like City assistance with the
project/construction coordination with future adjacent development and
Assessment District financing to fund sewer main line construction at this
time. Further extension of these sewer laterals on their private properties
will be the individual property owners’ responsibility upon completion of
main line construction.
Assessment District financing has been a common practice in the City for
many years, with developers and the City working together to fund
infrastructure. Each of these prior districts has been at the request, and
with 100% consent, of the developers/property owners. Though the majority of
the Randy Way neighborhood has expressed their interest in the assessment
district financing, we cannot guarantee 100% consent. Lack of 100% consent
would affect the way in which a district would be formed, and ultimately,
the potential for increased City time and expense. Additional staff and
legal counsel time and expense would be necessary in the event a property
owner chooses to protest the AD should a majority property owner vote
prevail and liens be assessed. Staff has outlined two options to make
financing available for the properties in need of sewer construction,
including the advantages and disadvantages associated with each option.
Alternate A: Proceed with forming the Assessment District and include legal
expenses as a part of the district funding. With this option, sewer service
will be available to every parcel, and the property owners have the ability
to amortize the cost over a 30 year bond term, by payback on their annual
property tax bill, rather than incurring the cost at one time. All expenses
that are required to form the district, including City expenses, are
included as a part of the district formation, including any legal costs that
may be necessary. When forming an infrastructure assessment district, state
law requires all property owners of parcels benefiting from the proposed
improvements are to be balloted, and should a majority vote prevail, all
parcels are assessed and begin to pay whether or not they take advantage of
the improvements immediately or in the future.
Alternate B: Proceed with forming the Assessment District and notify the
neighborhood that 100% property owner approval and consent to the lien and
proceedings will be required to form the district, including waiving their
rights to file a lawsuit challenging the assessment. This option will also
make sewer service available to every resident, but only in the event of a
complete consensus of the property owners, and the City would not have the
potential for time and legal expense to defend a protest. Though in the
absence of a consensus, the district would not be formed and the property
owners would be required to find an alternate financing mechanism.
Of the listed options, staff recommends Alternate A, it makes the necessary
sewer service available to all properties in need and includes the means by
which the City can recover time and potential expense that may be incurred
in assisting these residents. Alternate B will make sewer service available
as well, but only with complete consensus of the neighborhood, and leaves
the neighborhood to find other financing should this not occur.
If chosen, Alternate A will not have any fiscal impact to the City. All
costs incurred for district formation will be included as a part of the
Assessment District financing to be paid by the benefiting properties.