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Home My WebLink AboutTrans 2007-10-22 Item 3A - Discussion - 54th Avenue South/South 142nd Street Local Improvement District FormationTo: Mayor Mullet From: Public Works Director ll Date: October 16, 2007 INFORMATION MEMO Subject: Request for the Formation of a Local Improvement District for a New Road and Utilities in the Neighborhood of 54 Avenue South/South 142 Street ISSUE: Request for the formation of a Local Improvement District (LID) for a new road and utilities in the neighborhood of 54 Avenue South/South 142 Street. BACKGROUND: Local Improvement Districts (LID's) are a means of assisting benefiting properties in financing needed capital improvements through the formation of special assessment districts. LID's allow improvements to be financed and paid for over a period of time through assessments on the benefiting properties. The governing statute is RCW 35.43. The entire LID process is about financing capital improvements, not constructing them. LID processes lead, ultimately, to the sale of bonds to investors and the retirement of those bonds via annual payments by the property owners within a district. Goals of the LID process are twofold: to present a bond portfolio to investors that will entice them to invest at as low a rate of return as possible; and to assess property owners as fairly as possible in relation to the special benefit received. LID's cost money to administer. Interim financing incurs interest costs. Bond sales involve bond counsel, underwriters and other costs. All of these costs must be added to the share of project costs that the LID participants are expected to assume. LID's do not have to create hardships for low- income senior citizens or economically disadvantaged residents. RCW 35.43.250 provides for a deferral of up to four years for economically disadvantaged property owners, as defined when the formation ordinance is created. RCW 84.38 provides for assessments to be deferred indefinitely for qualified senior citizens. In both instances, the deferred assessment does not go away, but becomes a lien against the property. The statute requires that the assessments per parcel must not exceed the special benefit of the improvement to that parcel, which is defined as the difference between the fair market 1 value of the property before and after the local improvement project. In addition, the assessments must be proportionate to one another. The City Council must hold two public meeting: a formation hearing; and a final assessment roll hearing. The fmal assessment roll hearing is quasi-judicial where the City Council will act as a board of equalization, to consider evidence presented by both staff and individual property owners as to the correctness of the assessment for each parcel. DISCUSSION: The City received in March/April 2006 an informal inquiry from eighteen property owners in the neighborhood of 54 Avenue South/South 142 Street asking about the possibility of forming an LID for the construction of a new roadway, sanitary sewer main, storm drainage, sidewalks, street lighting, and water main. The neighborhood involved is shown on Exhibit A. The City asked KPG to do a preliminary project cost estimate for engineering design, environmental review, construction, and construction management for the proposed roadway and utilities. Exhibit B shows cost estimates to be $2,428,470. Each potential beneficiary was sent a letter on April 18, 2007 (Exhibit C) that described the LID formation process, assessment roll process, and provided the cost estimate. Each property owner was invited to a meeting on May 2, 2007 at the Community Center to discuss the project, its potential benefits, and to determine if a majority of the property owners would like to continue with forming an LID. The meeting was well attended. The LID process was discussed, including the different assessment methods, as well as the scope and estimated cost of the roadway. Not all property owners were in favor of forming the LID. As a result, a majority of the property owners requested time to discuss with the other property owners the possibility of a Latecomer's Agreement in lieu of an LID. Another result of the meeting was the determination that the configuration of the benefiting properties was different than originally indicated (Exhibit D). On August 23, 2007, the City received a petition (Exhibit E) with signatures from a majority of property owners requesting the City Council consider the formation of an LID to finance the construction of a new roadway and utilities to serve the neighborhood of 54 Avenue South/South 142 Street. Please note that there is a potential of 22 individual parcels that could be developed each with a minimum of 6,500 square feet. ANALYSIS: An original real estate appraisal with a comparison of value before and after the proposed improvement, indicated that the fair market value of the parcels would increase sufficiently to create a benefit. 2 The different possible assessment methods parcel area, parcel frontage, zone termini were reviewed and analyzed. Since each developable parcel was going to be the same size (6,500 square feet), it was determined that the fairest assessment method would be to assess each parcel at the same amount. The assessment to each property owner was estimated to be approximately $110,385.00 per developable lot, based upon November 2006 costs. This was determined by dividing the estimated project cost by the total number of benefiting property owners. Given that the cost of construction is rising at the rate of 12% per year, the real estate market appears to be cooling, and the possible assessment amount is a significant investment for each property owner, it is considered prudent to verify that a benefit actually exists for each property owner. RECOMMENDATION: Public Works update project costs. Public Works have another real estate evaluation performed. If the comparison of value before and after the proposed improvement indicates parcel owners will realize a benefit, forward to the COW for discussion. If the comparison of value indicates parcel owners will not realize a benefit, suspend discussions regarding the formation of a LID and notify the Transportation Committee and parcel owners. Attachments: Exhibit A Proposed LID Map Exhibit B KPG Preliminary Project Cost Estimate Exhibit C 4/18/07 Letter to Each Potential Beneficiary Exhibit D Identification of 22 Available Building Lots Exhibit E Local Improvement District Petition 2 Proposed LID htto:// mans. didraImaocentaLCOm /croduction /GtvGLSh 07r6 /indexA.hrnI EXHIBIT A Aerial Photo 4/25/200 CITY OF TUKWILA p DEPARTMENT OF PUBLIC WORKS lc. PROPOSED LID 54th Ave S S 142nd St Preliminary Project Cost Estimate 11/29/2006 (Revised to exclude Signal/ Elec Telecom/ Illumination) Construction Contract General Conditions $166,100 Roadway $360,000 Sidewalk $24,700 Retaining Walls $49,500 Storm Drainage $199,700 Sewer, Gas Water $647,000 Electric Telecom (aerial system by utilities) $0 Traffic Signal $0 Illumination System (by Seattle City Light) $0 Roadside Development $86,300 Construction Contract Total 1,533,300 Topo Basemap Survey 50,000 PS E (12% of Construction Contract) 184,000 SEPA (1% of Construction Contract) 15,400 Construction Mgmt (15% of Construction Contract) 230,000 Publications /Mailings 10,000 Hearings 10,000 Bond Printing /Fees 25,000 Easements LID Administration LID Prelim Cost Estimate-Revi.xls; Project Cost 50,000 100,000 Subtotal 2,207,700 Contingency (10 220,770 TOTAL ESTIMATED LID COST 2,428,470 EXHIBIT 5 April 18, 2007 Tukwila, WA 98168 Dear LID Beneficiary: City of Tukwila EXHIBIT Department of Public Works James F Morrow, P.E., Director Subject: Proposed Formation of a Local Improvement District (LID) for a New Road and Utilities in the Neighborhood of 54 Ave. South/South 142 Street Steven M. Mullet, M? The City received a Local Improvement District (LID) Petition signed by the owners of eighteen parcels in your neighborhood. The petitioners requested that the City form a Local Improvement District to construct a new roadway, sanitary sewer main, storm drainage, sidewalk, water main, street lighting, and traffic signal. Before the City goes any further, we wanted all beneficiaries to understand the LID process. A Local Improvement District (LID) is a great financing tool where numerous neighborhood property owners want the improvement because all properties serviced by the improvement, in this case we estimate 22 owners, share in the cost. If there is sufficient support demonstrated by the property owners and the City Council approves the LID formation, the City will design the project, hire a contractor for the construction, sell LID bonds to initially finance the project, and assess the properties that are being benefited by the improvement. The funds collected through assessments are used to retire the bonds. The assessments are usually paid in yearly installments (1 /10 of the principal plus interest on the unpaid balance) over a ten -year period, or the property owner can decide to pay the assessment in full with one payment. The fmancial market determines the interest rate at the time the LID bonds are sold to the public. The first step in the LID process is for Tukwila's City Council to set a hearing date to discuss the actual formation of the LID. At this hearing, the City Council will want to hear from the neighborhood because the Council is making a fundamental and basic decision whether to proceed with this project. After hearing testimony from the public, the City Council will decide whether to pass an ordinance that actually creates the LID and orders the Public Works Department to carry out the improvement. Upon completion of the improvements, a second public hearing is held to establish the final list of property owners that benefit from the improvements and each property owner's fair share of the project's costs. During this second hearing, the City Council would consider any objections from individual property owners as to their individual proposed assessment amounts. 6300 Southcenter Boulevard. Suite #100 Tukwila, Washington 98188 Phone: 206 433 -0179 Fax: 206 431 -J6565 Ms. Susan Best Page 2 April 18, 2007 Before the City takes the first step a public hearing to form the LID we want to let each property owner know just how much the proposed improvement project is estimated to cost and how much each property owner could be assessed. It must be emphasized that this is only a preliminary estimate and we will not know the final costs until the project has been designed and built. Enclosed are three documents: 1. A map that shows the 22 properties the City feels would benefit from this project. 2. A breakdown of the preliminary construction cost, estimated to be $1,533,300. Also shown are the estimated design costs, construction management costs, and administrative fees for an estimated total project cost of $2,428,470. 3. A comparison of the per parcel costs for different assessment methods. The City would like to have a meeting with the neighborhood property owners to discuss the project, its benefits, and determine if the majority of the property owners would like to continue with forming the LID. Since a number of the neighborhood property owners would like to develop their property, we will present options for you to consider should it be decided to not continue with the LID. A meeting on Wednesday, May 2, 2007, has been scheduled at the Tukwila Community Center (12424 42" Ave. South) at 7:00 p.m. We hope you can attend. If you have any questions, please contact me at (206) 433 -0179. Sincerely, d czmk.z... Cf 1 James F. Morrow, P.E. Public Works Director enclosures (P:alice154 L.I.D. 04I7071LID Meeting hr) 7 KPG PROPOSED LID 54th Avenue South and South 142ND STREET Map OCTOBER 20063 CITY OF TUKWILA DEPARTMENT T jr PUBLIC IPA 1AIORKS UCr 1 IYIGY 1 Vr rNDL1t,r vYVN��7 PROPOSED LID 54th Ave S S 142nd St Preliminary Project Cost Estimate (Revised to exclude Signal/ Elec Telecom! Illumination) Construction Contract 1 Iil_Profim (:net FatimataRevl Xis' Proiect Cost General Conditions $166,100 Roadway $360,000 Sidewalk $24,700 Retaining Walls $49,500 Storm Drainage $199,700 Sewer, Gas Water $647,000 Electric Telecom (aerial system by utilities) $0 Traffic Signal $0 Illumination System (by Seattle City Light) $0 Roadside Development $86,300 Construction Contract Total Topo Survey PS E (12% of Construction Contract) SEPA (1% of Construction Contract) Construction Mgmt (15 of Construction Contract) Publications /Mailings Hearings. Bond Printing /Fees Easements LID Administration 14E. PQ 11/29/2008 1,533,300 50,000 184,000 15,400 230,000 10,000 10,000 25,000 50,000 100,000 Subtotal 2,207,700 Contingency (10 220,770 TOTAL ESTIMATED LID COST 2,428,470 9 City of Tukwila PROPOSED LID 54TH AVE S S 142ND ST Comparison of Per Parcel Costs for Different Assessment Methods KPG Based on Total LID Cost of $2,428,470 Assessment oer Assessment per Assessment per Parcel Parcel Parcel based on based on based on PARCEL AREA FRONT LENGTH ZONE TERMINI 1 $357,840 I $179,954 $222,816 2 I $88,860 I $148,480 $119,632 3 $88,860 I $238,457 $132,473 4 $89,127 I $89,977 $92,450 5 $88,993 $89,977 $94,604 6 $89,260 $89,977 $92,510 7 $89,660 $89,977 $92,652 8 $80,132 $80,302 $81,796 9 $189,653 $189,629 $196,456 10 $90,062 $89,977 $92,670 11 $89,927 $89,977 $92,670 12 $89,793 $89,977 $92,670 13 $89,660 I $89,977 $92,668 14 $89,526. I $89,977 $92,679 15 $89,393 I $89,977 $92,679 16 $89,260 $89,977 $92,666 17 $89,127 $89,977 I $92,677 18 $88,993 $89,977 $92,675 19 $88,860 $89,977 I $92,675 20 $82,244 $139,090 I $115,167 21 $102,045 $172,795 $142,935 22 $187,195 $20,084 I $118,248 10 BEST SUSAN OCCUPANT NGUYEN QUOC VAN 14115 55TH AVE S 14118 53RD AVE S 14128 53RD AVE S TI `LA WA 98168 TUKWILA WA 98168 TUKWILA WA 98168 PRASHER VIJAY K 14210 53RD AVE S TUKWILA WA 98168 SCHROEDER ROBERT A 14235 55TH AVE S TUKWILA WA 98168 SINGH NAVINDER 16340 NE 83 ST #A 106 REDMOND WA 98052 SINGH KAMALJIT 4716 S 172ND ST SEATAC WA 98188 HOANG HUNG T VUI K TRAN 14218 53RD AVE S TUKWILA WA 98168 SIDHU HOMES INC 14641 46TH AVE S TUKWILA WA 98168 PRASHER VIJAY K SUREETA 22343 NE 101 PI REDMOND WA 98053 ERSKINE JERRY 5316 S 144TH ST TUKWILA WA 98168 PHAM TRANG T 14234 53RD AVE S TUKWILA WA 98168 SINGH GURDIP SUKHBIR K GREWAL 14641 46TH AVE S TUKWILA WA 98168 LONIGRO FRANCA 4522 50TH AVE S SEATTLE WA 98118 11 CITY OF TUKWILA PROPOSED LID 54TH AVE S S 142ND STREET EXISTING HOME SERVED FROM 53RD AVE S EXISTING HOMES SERVED FROM 53RD AVE S /A S 142ND STREET /i/ EXISTING HOME 14 -154 SERVED FROM r 53RD AVE S N Lo v !VI %/'s nc' 3 j 4 7 ii _i.e.. .Z S 144TH STREET EXISTING HOME SERVED FROM S 144TH ST *FOUR (4) EXISTING PARCELS SUBDIVIDABLE INTO FIVE (5) BUILDING LOTS AT MINIMUM AREA OF 6500 SF PER LOT. 22 AVAILABLE BUILDING LOTS THROUGH FORMATION OF LID MAY 2007 EXHIBIT D EXISTING HOME SERVED FROM 55TH AVE S KPG 12 To: Mail or Bring to: St rainage Sideway Other (please specify): 11670400185 10761000090 1 0761000048 0761000050 0761000080 0761000085 0761000030 1 0761000049 0761000130 0761000105 10761000106 10761000107 10761000108 0761000135 0761000140 0761000145 +0761000150 0761000125 1 0761000047 Form Apporved 03.2006 ERSKINE, Jerry 2c1� Z`i3- t511 HOANG, Hung T and VUI, K Tran 92- s- 76i -383j HOANG, Hung T and VUI, K Tran LONIGR 0, Franca LONIGRO, Franca PHAM, Trang T PRASHER, Vijay K and SUREETA SCHROEDER, Robert A 2.6A -424z_ a7.4 SIDHU Homes, Inc. I SIDHU Homes, Inc. I SIDHU Homes, Inc. ISIDHU Homes, Inc. I SIDHU Homes, Inc. I SIDHU Homes, Inc. I SIDHU Homes, Inc. ISIDHU Homes, Inc. I S1NGH, Kamaljit and SINGH, Gurdio SINGH, Navinder LOCAL IMPROVEMENT DISTRICT PETITION CITY OF TUKWILA Public Works Department 206=433 =0179 The Honorable Mayor and City Council of the City of Tukwila City of Tukwila Public Works Department 6300 Southcenter Blvd. Suite 100 Tukwila WA 98188 We the undersigned, owners of property lying between 53 Ave. S. and 55 Ave. S. at 142 Street (see attached map), do hereby petition for a resolution to create a Local Improvement District for: (circle all that apply) Roadway) (Sanitary Sewer Main treet Lightig) Traffic Sig Parcel Property Owner Name(s) Property Owner Signature(s) PRINT BEST, Susan (Water Maw 2 v 4 s EXHIBIT AUG 2 3 2007 T UKV{VILA. USLiC WORKS Date ��nn 1 i ion Note: Signing this petition does not commit you to an LID and LID assessments. Signing simply means that you have an interest in the installation of the specified improvement and that you will consider paying for the improvements through the formation of an LID. Actual commitment will be at a later date through a public hearing process. However, to initiate the process, the property owners must demonstrate sufficient interest in the project. If this happens, the City will prepare and submit to the property owners additional information for the project including cost data and LID procedures before scheduling a public hearing. The actual assessment may vary from assessment estimates but will be based on the true and fair value the improvement adds to the property. 13 Street 142nd Street Right-of-way