Edina adjusts policy on street assessment fees

  • Article by: MARY JANE SMETANKA , Star Tribune
  • Updated: August 7, 2012 - 11:28 PM

The city extended payment windows, lowered interest rates.

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Scott and K.K. Strand (pictured in this February file photo with their dog, Ike) bought a modest Edina rambler in November for $262,000. A month later, they got a city notice that they would have to pay $16,800 for street reconstruction.

Photo: Jeff Wheeler, Star Tribune

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In the face of increasing complaints, Edina has tweaked its controversial street assessment policy, which requires property owners to pay the entire cost of road reconstruction.

Starting with projects that got underway this year, homeowners will get 15 years instead of 10 to pay for projects in their property taxes. Interest rates charged by the city will be cut in half, and the payment formula will be standardized so homeowners pay the same principal amount each year.

Together, those changes approved Monday by the City Council would save someone with a $10,000 street assessment about $730. Annual payments would drop from $1,375 over 10 years to $868 over 15 years.

The city also will assume the costs of sidewalks, trails and lighting associated with projects, paying for those improvements with new franchise fees paid by utilities. Depending on the project, that could save residents money.

"It will be a noticeable impact," Edina City Manager Scott Neal said Tuesday about the overall changes.

"The purpose of the whole discussion ... was how do we make a special assessment system that creates as much additional investment in our infrastructure as we do now, but is a little kinder and gentler to the people who are being assessed."

Edina's policy of billing residents for the entire cost of street reconstruction is very unusual in the Twin Cities area. Hopkins bills homeowners for 70 percent of costs, but caps that amount to limit the effect. Minnetonka and St. Louis Park cover the cost, while homeowners in Bloomington and Golden Valley pay about 25 percent.

For Edina, the trade-off of having residents foot the reconstruction bill has been relatively modest property tax rates for an upscale suburb. But protests have been growing as, in some cases, homeowners had to pay as much as $22,900 apiece for new streets.

This year, residents of the relatively modest Richmond Hills neighborhood, populated by retirees, young homeowners and teachers, swarmed a City Council meeting after they received notice that they could each be assessed $16,800 for street work.

The new policy does not prohibit residents from paying off street projects all at once or early if they want.

At the council meeting, city officials said the policy could not be made retroactive because of conditions that were agreed to when the city bought bonds to cover project costs. Council members asked whether the drawn-out payments could endanger the city's AAA credit rating, but city officials said that was not a concern.

Neal said the city will establish utility franchise fees for natural gas and electric suppliers to pay for sidewalk, trail and lighting projects associated with street reconstruction.

When streets are being replaced, Edina inspects sanitary sewer pipes that run from houses to the city main. If they are deficient, homeowners must replace them, which can cost thousands of dollars. At council request, the city investigated the possibility of shifting that cost from homeowners to the city. But the cost was prohibitive and would have resulted in a 50 percent increase in utility rates, Neal said.

Mary Jane Smetanka • 612-673-7380 Twitter: @smetan

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