5.2. SR 11-21-1994
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ITEM 5.2.
MEMORANDUM
TO:
MAYOR & CITY COUNCIL
FROM: PAT KLAERS, CITY ADMINI~~tT~
DATE: NOVEMBER 17, 1994 ~
SUBJECT: WESTERN AREA PROJECT
At the October 10, 1994, meeting, the City Council adopted a resolution
which approved an assessment roll for the Western Area Phase II
improvement project. The City Council "pulled" fifteen properties from the
originally proposed assessment roll with the understanding they would be
further reviewed at this 11/21/94 meeting. Additionally, the City Council
directed an appraisal to be completed on these 15 properties prior to this
11/21 meeting so that relevant information could be available regarding
benefit to these properties.
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Staff is recommending that the Jerry and Norma Gallati property (Parcel
#75-131-1210) and the Sandra Roy property (Parcel #75-131-1211) be deleted
from this improvement project and assessment roll. After additional
evaluation of the situation and discussion with the affected property owners,
staff has concluded that it is more appropriate that this property be included
in the Western Area Phase III project. As the Council may recall, similar
changes took place with the Western Area Phase I project, whereas, certain
properties were deleted from that assessment roll and these properties have
now been assessed as part of the Phase II project.
After consideration of the above adjustments, there are thirteen properties
remaining under consideration for assessments with this Western Area
Phase II project. These thirteen properties are collectively referred to as the
Naples Street/186th Avenue neighborhood and comprise 15.17 acres.
Assessment of these properties based on $3,800 per acre equal approximately
$57,646.00. These are the properties which staff directed the Panger and
Benson appraisal firm to evaluate.
Staff and two Councilmembers are anticipated to receive a verbal
presentation from Panger and Benson on whether or not the assessments can
be justified based on benefit to these properties. A verbal update on the
Panger and Benson presentation will be made to the Council by staff and the
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P.O. Box 490 · 13065 Orono Parkway · Elk River, MN 55330 · (612) 441-7420 · Fax: (612) 441-7425
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Attached for your review is the October 10 agenda memo from the City
Engineer on the Western Area Phase II improvements assessment hearing.
This memo is somewhat general in nature and the information is still
relevant for this 11/21 meeting. The City Engineer has also attached an
updated assessment roll that shows the properties proposed to be assessed
(13 properties), a map identifying the location of these properties and a
resolution adopting the assessment roll for these properties.
If the assessment roll is to be adopted as proposed, the City Council should
note that they still have to take action on the assessment appeals that were
received from Mr. Bickman (property #1435), Mr. Chicoine (property #1400),
and Mr. Gluck (property #1420). These assessment appeals were received at
the 10/10/94 City Council meeting.
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CONSULTING ENGINEERS
CIVIL ENGINEERING:
ENVIRONMENTAl
MUNICIPAL
PlANNING
e STRUCTURAL
SURVEYING
TRAFFIC
TRANSPORTATION
1326 Energy Park Drive
St. Paul, MN 55108
612.644-4389
Fax: 612.644-9446
e 9800 Shelard Parkway
Minneapolis, MN 55441
612.546.0432
Fax: 612-544-6398
October 5, 1994
File: 230-223-58
Honorable Mayor and City Council
City of Elk River
13065 Orono Parkway
P.O. Box 490
Elk River, MN 55330
RE: WESTERN AREA PHASE II IMPROVEMENTS
ASSESSMENT HEARING
Dear Council Members:
As you are aware, the assessment hearing for the proposed Western Area Phase II
Improvements is scheduled for Monday, October 10, 1994. This project consists of the
extension of trunk sanitary sewer and water westerly from the City Hall property to the
Sherburne County Government Center. There are two locations, one at the Government
Center, and one at the extension of Joplin where sewer and water will be extended northerly
on Trunk Highway 10. Attached to this letter is an exhibit which shows the areas proposed
to be assessed. With the exception of the Sherburne County property and the Tony
Emmerich (Country Crossing) area, all the remaining properties are proposed to be assessed
only for trunk sanitary sewer and water at a rate of $3,800 per acre. The Sherburne County
property and the Tony Emmerich property will also be assessed for lateral utility and street
assessments. As indicated on the exhibit and based on previous Council action, the entire
Sandpiper Estates area has been removed from the assessment process.
At the assessment hearing on Monday evening, I will be prepared to give a brief presentation
of the project scope, the determination and spreading of assessments, and be available to
answer any questions the public or City Council may have.
At this time, the City has not received any formal written assessment appeals from property
owners. Individuals may appeal this project assessment by presenting a signed, written
objection to the Mayor at the hearing. An individual simply standing up at a public
hearing indicating their objection to this project does not constitute an assessment
appeal. Following the submission of a signed, written objection, the property owner also
has to serve a notice of appeal upon the Mayor or City Administrator within 30 days after
the adoption of the assessment roll, and must file this notice with the District Court within
10 days after serving the Mayor or City Administrator.
230/223-0502.00
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Honorable Mayo!,,~d City Council
October 5, 1994
Page Two
At the close of the assessment hearing, it would be appropriate for the City Council to
consider the attached resolution adopting the final assessment roll. This can be adopted with
any modifications the City Council deems appropriate.
If you have any questions, I will be in attendance at Monday evening's meeting.
Sincerely,
MSA, CONSULTING ENGINEERS
TEf;t~~
TJM:tw
Attachments
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230/223-0502.00
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RESOLUTION 94 -
A RESOLUTION FOR THE CITY OF ELK RIVER
A RESOLUTION ADOPTING FINAL ASSESSMENT ROLL
WHEREAS, upon due notice property made as required by law, the Elk River City Council has
met and heard and passed upon all objections to the proposed assessment for the
Western Area Phase II improvement and has determined the amount to be assessed
against each individual property as the Council deems just;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk River,
Minnesota:
1. Final assessment roll, a copy of which is attached hereto and incorporated herein by this
reference, is hereby accepted and adopted and shall constitute the special assessment
against the lands therein named. Each such tract of land in the assessment roll is hereby
found to be benefitted by the improvement in an amount not less than the amount of the
assessment levied against it.
2.
Such assessment shall be payable in equal annual installments, including both principal and
interest, amortized in such amount annually as is required to pay the principal with interest
as 7.5 % % over a period of 5 to 15 years.
3. The owner of any property so assessed, may, at any time prior to certification to the
County Auditor of the assessment or the first installment thereof, pay to the City Treasurer
the whole of the assessment on such property, with interest accrued to the date of payment;
except that no interest shall be charged if the entire assessment is paid within 30 days after
the adoption of this Resolution. Prepayment may also be made after the certification of
the assessment or first installment thereof by paying to the City Treasurer 1 Auditor the
entire amount of the assessment remaining unpaid with interest. In the case of a payment
made before November 15, interest will be calculated through December 31 of the next
succeeding year.
4. The City Administrator shall transmit to the County Auditor a certified duplicate of the
attached assessment roll to be extended on the property tax lists of the County. Such
assessment shall be collected and paid over in the same manner as other municipal taxes.
Passed and adopted this 21st day of November, 1994.
ATTEST:
Henry A. Duitsman, Mayor
Sandra A. Thackeray, City Clerk
230/223-0502.00
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MARCEllA E. AN) 1ERESA
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PANGER/BENSON
APPRAISAL PROFES SIONALS
Kenneth J. Panger, I F A S
John C. Benson. I FA S
Alice R. Lenzmeier. Assoc.
Suite 1 · 2233 Roosevelt Road · St. Cloud. MN 56301 . (612] 259-5544. FAX: (612] 259-4426
November 21, 1994
Mr. Patrick Klaers
City Administrator
City of Elk River
13065 Orono Parkway
Elk River, MN 5330
Re: Consultation work for 13 single family parcels affected by
proposed trunk sewer and water line
Dear Mr. Klaers:
The following is a synopsis of an oral to be presented at 4:00
p.m. on Monday, November 21, 1994.
The subject 13 parcels are varying sizes ranging from .4 acres
to 3.08 acres. The issue is whether or not a trunk line
assessment of $3,800 per acre will be offset by an increase in
market value of at least $3,800 per acre.
Our research was concentrated in platted subdivisions near the
subject though our research extended to rural areas where there
would no influence of city services. We found that our
comparable sales could be grouped into three different
categories.
CATEGORY 1. trunk line available. no services
The first category is most similar to the subject today. These
24 comparable land sales were found in the Sandpiper Estates
subdivisions, I and II. This subdivision was developed
knowing that at some point in the future, city services would
be available to the SUbdivision. It was developed into 1 acre
minimum lots. After examining 24 lot sales that occurred in
the last 3 years, we found that the average sale per acre was
$16,580.
CATEGORY 2. fullv serviced
The second category of comparable land sales are sales that
occurred in fully serviced subdivisions. These sales occurred
primarily in the Heritage Landing SUbdivision and most recently
in a new development, Country Crossing. These subdivisions
have an minimum lot size of 12,000 with a minimum of 80 front
feet per lot. Here we found 42 sales that occurred in the last
three years. The average sales price per building lot is
$24,541. The lots vary in size from 12,000 square feet to
18,000 square feet with the majority of the lots being from
Commercial · Industrial · Apartments · Residential · Farm . Consultations
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12,000 to 15,000 square feet. This category illustrates the
potential of the subject if services are made available.
CATEGORY 3, no imminent potential for services
The third category consists of rural
near the subject that are larger,
further analysis we abandoned any
because they were not similar enough
a reliable comparison.
lot sales that we found
2.5 minimum acres. After
reliance on these sales
to the subject to provide
After completing the initial research we know that:
One acre lots, with future potential for city services,
sell for $16,500 per acre.
Fully developed 12,000 sq. ft. minimum building lots sell
for $24,500.
DEVELOPMENT COST APPROACH
The next phase of our analysis examines the thirteen subject
parcels as if they were one parcel of approximately 15. This
aspect of our analysis is important because it will tell us
what the raw land is worth toa developer today assuming that
it is developed to its highest and best use potential as fully
serviced 12,000 square foot lots.
This part of the analysis is conceptual in nature but uses
todays actual costs of development to determine raw land value.
Assumptions are made, based on actual costs and current market
information, and the cash flows from the project are discounted
to a present value. Developers use this method to determine
the feasibility of a potential project. This feasibility
study is examined in detail in our oral presentation. The
result of this approach to value is that today one could afford
to pay $38,517 per acre, or $12,719 per building lot at three
to an acre, and pay for all services including trunk line.
CONCLUSIONS, relative to each sub;ect parcel
Finally, we looked at each of the individual subject parcels
to determine their value, assuming that trunk line assessments
were paid at a rate of $3,800 per acre, with the potential to
become fully serviced properties in the future.
Using parcel number 75-131-1450, a.4 acre parcel belonging to
Larsen (Olson), as an example we find:
The cost to acquire this parcel today, based on the raw land
value determined in the development cost approach, is $12,719.
The trunk line assessment to this site will be $1,520. The
final cost for this site the~ is $12,719 plus $1,520 or
$14,239.
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Because the trunk line gives the site the potential to become
fully serviced, the potential value of the site is $24,500; 1
lot with a minimum of 12,000 square feet. The difference in
the finished value of $24,500 minus the cost _of $14,239
represents a future value of $10,261. (The $16,261 is a
future value because the development cost approach assumed a
five year sellout time.) The present value of $10,261
discounted at a rate of 12.0% is $5,822.
This example is the smallest parcel with the least potential
for future development. It is also a river lot which may sell
for a price greater than $24,500 based on other river lot
sales.
We found that each subject parcel has the potential to have a
positive present value after the trunk line assessment. We
remind the reader that the subject properties have not been
surveyed and that we do not guarantee that our analysis is
without flaw as to measurements and location of existing
improvements. Certain assumptions have been made and cannot be
validated without the assistance of a survey. Our assumptions
have been made using known facts whenever possible and we
believe represent a realistic and true analysis to the extent
possible without having surveying and engineering studies done.
Th~nk you for the opportunity to
Alice Lenzmeier
serve you. ~
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