New formula sets identical assessments

By Seth Schmidt

A new formula for calculating City of Tracy infrastructure assessments will make its debut at a Monday, Nov. 13, 6:45 p.m., public hearing.
The public hearing will consider the proposed assessments on 80 real estate parcels affected by this year’s “Phase One” sanitary sewer, water main, and storm sewer improvements in northeast Tracy. Four public park parcels are among the 80 lots affected by the assessments.
Each of the 76 privately-owned properties has an identical $5,435 proposed assessment. Parcels are treated equally, regardless of square footage or street frontage. Vacant lots and houses both have the same $5,435 assessments.
Sebastian, Werner, and Central Park properties are treated differently, with combined assessments of $119,570.
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The proposed assessments are considerably less than the estimates that were given at a preliminary assessment hearing for the Phase One project. The proposed Phase One assessments would also be much less than the assessments certified for similar improvements on Morgan and Fourth streets in 2015. The old assessment formula was based on street footage for sewer, water, curb & gutter, and street improvements, and square footage for storm sewer improvements. Both front and side yard frontages were used in calculations, giving corner lots greater assessments.
The scrapping of the old formula is related to two court rulings in early 2017 regarding the Morgan and Fourth assessments in 2015. A Lyon County judge ruled in favor an assessment appeal involving 12 properties, and ordered the city’s assessments “quashed.” Because of the ruling, about $145,000 in special assessments were waived, with the appealed assessments reduced to zero. The judge agreed with the appellant’s contention that the original city assessments were contrary to state law, because the city had not demonstrated that the assessments had increased property values as much as the assessments. A similar assessment appeal heard in Redwood County also found that the city had failed to demonstrate that the improvements had increased property values. The Redwood ruling remanded the case back to the city for consideration of a lesser assessment.
The Tracy City Council decided not to appeal either case.
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The council has replaced the old assessment formula with what has been referred to as a “hook up fee.” The new hook-up fee is less than what assessments were under the old assessment formula. In having affected property owners pay less, the new formula has city property owners at large paying a larger percentage of infrastructure improvement expenses.
To help pay for storm sewer expenses, the council has instituted a $53,760 annual levy, to be divided equally among all city real estate parcels, to go into an Infrastructure Replacement Fund. The new infrastructure levy goes into effect next year.
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The $413,060 in proposed Phase One assessments to private property owners represents a small portion of Phase One’s $3.2 million construction expense. The remainder of the Phase One expenses, which includes the $119,570 in city park assessments, will be paid over a period of years through the city’s debt retirement levy.
The proposed assessments would go into affect for taxes payable in 2018. Property owners have a right to appeal proposed assessments at the Monday hearing.
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The Phase One improvement project got underway in April, and recently reached “substantial completion.” The project installed larger sewer pipe outlets leading to the city’s planned new sewage lagoons, and about 12-blocks of city streets where new sewer and water mains were installed. Curb and gutter and new streets were installed. A large sewer that ran diagonally private property, and in some cases underneath basements, was disconnected, with all infrastructure placed within right-of-way.
A $5.4 million construction contract with Reiner Contracting of Hutchinson was awarded by the contract in October, for the “Phase Two” project of building new sewage settlement ponds northeast of the city airport.