Memorandum 15-084 Setting a New Date for Natural Gas Special Assessment District Assessments

Memorandum ID: 
15-084
Memorandum Status: 
Backup

Details

Memorandum 15-084

TO:                       Mayor Wythe and Homer City Council

FROM:                 Katie Koester, City Manager

DATE:                  June 10, 2015

SUBJECT:         Resolution 15-047: Setting a New Due Date for Natural Gas HSAD Assessments

On March 23, 2015 Council passed Resolution 15-017 confirming the Natural Gas HSAD Assessment Roll and setting a due date of July 1, 2015 for assessments. Resolution 15-047 before you today sets a new due date of September 1, 2015 for assessments. There are two reasons for this change:

City code requires that statements for special assessment districts are issued 60 days prior to the due date.  The Finance Department has encountered numerous problems with the accounting software that has made it impossible to print the statements in a timely manner. Parcel owners were sent a notice of the due date, assessment amount, and payment amount if lot owners choose the payment plan, on April 22, 2015 (see sample notice attached).
City code requires that all members of a special assessment district be notified of the fines and penalties associated with non-payment on the statement. The fines and penalties are very steep for special assessment districts: non-payment or late payment incurs a 10% fine on entire balance, the balance becomes due and the interest rate increases to 15%. The fines and penalties will be prominently displayed on the statement itself and explained in a cover letter accompanying the statement (see cover letter attached).

Statements will be mailed out June 18, 2015. This will give parcel owners over 60 days before their statement is due. In the meantime, the Finance Department will be accepting payments. Many people have already come in to pay their assessment. As of June 9, 2015, 65 customers paid in full and about 85 customers have chosen the 10-year optional payment plan and made the first installment. The total receipts are about $250,000.

Aside from changing the date the assessment is due, the Resolution before you makes two additional changes from the original Resolution 15-017.

Resolution 15-047 defers the due date for assessment payments for condominium units.
Resolution 15-0xx makes the fine and penalty structure consistent for non-payment and late payment. Staff found inconsistencies in the fines and penalty structure in the original resolution that Resolution 15-047 fixes. Under the original resolution, if a parcel owner chose to not make any payment towards the assessment, they would incur a 10% fine, however their interest rate would be lowered to 3%. This is less than the City is being charged for the loan from the Borough (4%). Council’s intent was to discourage non-payment of the assessment, which is why the fine and penalty structure for late payments in the original resolution was so steep. Resolution 15-0xx makes the fine and penalty structure consistent for non-payment and late payment. The City wants to encourage even partial payment of the assessment – not make it cheaper to ignore paying the assessment all together. Why the oversight? The original resolution included stock language the City uses for other special assessment districts where the terms and conditions are different: we own the infrastructure and we are either financing ourselves or receiving a very discounted government loan where a 3% interest rate would be an increase.

 

Thank you for your patience and assistance as we wade through the final steps of the Natural Gas HSAD.

Enc:

Sample April 22, 2015 Natural Gas HSAD Notice

Natural Gas HSAD Statement Cover Letter