M E M O R A N D U M 03-58

TO: MAYOR AND HOMER CITY COUNCIL

FROM: MARY L. CALHOUN, CMC, CITY CLERK

DATE: APRIL 8, 2003

SUBJ: ORDINANCE 02-43, 17.04.095 AND 180

During the March 24, 2003 Regular Council Meeting, Councilmember Yourkowski voiced his desire for a staff interpretation of Ordinance 02-43, which amended HCC §17.04.095 and added HCC §17.04.180.

17.04.095 Terms of payment.

a. Procedures for handling initial assessment payments, annual payments on assessments financed by the City or other institution and setting of penalties and interest shall be set by Resolution of the City Council.

b. Except as provided in subsection (d), if a landowner subdivides a tract originally assessed as one entire parcel, a proportionate share of the total amount of the assessment may be allocated to each individual subdivided lot abutting or benefiting from the improvement; road, waterline and/or sewer line. As individual lots are sold, the purchasers may elect to assume and pay assessment for that lot in installments as set by Council Resolution under section 17.04.090. Full payment shall be made within the same period as the number of years remaining on the installment plan for the specific assessment district.

Staff comment: This states that if a landowner subdivides a tract a share of amount assessed may be allocated to each lot benefitting or abutting the improvement. Assessment districts with equal share assessments, such as Forest Glen are addressed under subsection d. and 17.04.180.

b. In the event a landowner subdivides a tract originally assessed as one entire parcel, a pro rata portion of the total amount of the assessment may be allocated to each individual lot abutting the improvement; road, waterline and/or sewer line. As individual lots are sold, the purchasers may elect to assume and pay assessment for that lot in installments as set by Council Resolution under section 17.04.090. Full payment shall be made within the same period as the number of years remaining on the installment plan for the specific assessment district.

Staff comment: The strike out shows how the code used to read with regard to the pro rata portion of the assessment. This is what Mr. Imhoff and Mr. Needham are referring to when they commented that the rules changed. Prior to Ordinance 02-48, if a land owner subdivided a tract originally assessed as one parcel the City would set up a pro rata share agreement with the subdivider so that each of the new parcels would pick up a share of the original assessment.

c. The seller and purchaser of a subdivided lot shall execute an agreement providing for the assignment of the installment plan by the original landowner and an assumption of the terms and conditions of the installment plan by the purchaser. This agreement shall be executed on the date of closing or within five days thereafter. This agreement shall take effect only upon approval thereof by the City and after payment of a transfer fee to the City in the amount of twenty-five dollars. Subsequent purchasers of lots may also elect to assume the balance of any installment plan in the same manner as set forth in this section above.

d. If a landowner subdivides a parcel of land (including without limitation lots and tracts of any size) originally assessed as one parcel in a local improvement district where assessments were set as a fixed and equal amount per parcel without regard to the characteristics of the parcel, i.e., without regard to the parcel size or dimensions, then section 17.04.180 shall govern and subsections 17.04.095(b) -- (c) shall not apply.

180 is a new section added by Ordinance 02-48.

17.04.180 Subdivided property connection fee.

a. If a landowner subdivides a parcel of land (including without limitation lots and tracts of any size) originally assessed as one parcel in a local improvement district where assessments were set as a fixed and equal amount per parcel without regard to the characteristics of the parcel, i.e., without regard to the parcel size or dimensions, then prior to connecting any new parcel, lot or tract created by such subdivision to the improvement, the property owner shall pay a subdivided property connection fee. However, the lot that contains the original connection to the improvement for which the original assessment was paid is exempt from the subdivided property connection fee

b. The amount of the connection fee for each new lot created by the subdivision shall equal the amount of the original per parcel assessment, adjusted up or down by a percentage equal to the change in the Consumer Price Index, All Urban Consumers (CPI-U) for Anchorage, Alaska from the end of the calendar year preceding the original assessment date to the end of the calendar year preceding the date the subdivided property is connected to the improvement.

Staff comment: Each new lot created by the subdivision will pay the full amount assessed in the final assessment roll, with the above noted adjustment CPI-U.

c. If the owner of such subdivided property refuses to pay the subdivided property connection fee, the subdivided property shall be denied the benefit of the improvement.

d. The City Manager is authorized to negotiate and execute a written payment plan with the property owner on payment terms that are substantially the same as those authorized for the local improvement district by the City Council resolution adopted pursuant to subsection 17.04.090, subject to the following

Staff comment: The resolution reference here is the one that certifies the final assessment roll with the final assessment amount and sets the payment date, penalty and interest amounts.

(i) The City Manager will refuse to enter into such a payment plan if the City Manager determines there is insufficient equity in the property to adequately collateralize payment of the amounts due.

(ii) The property owner must execute a written agreement and a recorded deed of trust or other instrument creating a lien on the property for the payment of all sums due or to become due.

(iii) The City Manager may adjust the interest rate on the payment plan up or down to reflect any change in interest rates from the date of the original assessment to the date of entering into the payment plan. The interest rate on the payment plan will be a fixed rate unless the interest rate on the original assessment set under section 17.04.090 was a variable interest rate.

e. The subdivided property connection fee paid pursuant to this section, shall, after collection by the City, be disbursed by the City to the owners of the property originally assessed and the City in proportion to the amounts paid by each toward the cost of the improvement. Such disbursements must be paid by the City to the current owner of record of the property at the time the disbursements are made without regard to the identity of the property owner or the payer at the time the original assessments were levied or paid.

Staff comment: This is after the assessment roll has been certified and payment date, penalty and interest set. The assessments or connection fee on the subdivided property is disbursed to the owner of record of those properties originally assessed.