Two Harbors property owners whose property has been assessed to pay a portion of the 2019 streets and alleys improvement project will receive a notice in the mail within a week informing them of the amount they owe, as well as an invitation to a public assessment hearing at Two Harbors City Hall on Nov. 25 at 6 p.m.

The Two Harbors City Council unanimously approved the total project costs for the project, determined how much the city will pay and the amount to be assessed, and called for the public assessment hearing.

The segments involved in this year's project include:

  • Eighth Avenue, from Ninth Street to its west end;
  • Ninth Avenue, from 15th Street to its east end;
  • Alley north of Second Avenue, Second to Fourth streets;
  • Alley north of Seventh Avenue, Eighth to Ninth streets;
  • Alley north of Eighth Avenue, Eighth to Ninth streets.

City engineer Joe Rhein of Bolton and Menk presented the councilors with assessment rates for each block of the project. Eighth Avenue was the highest at approximately $14,800 per property as it consisted of a total street reconstruction.

Ninth Avenue was a pavement replacement project with the lowest assessment rates of approximately $2,800 per property. The alleys included in the project ranged between $3,700-4,700, depending on the alley.

Assessments lowered due to high concrete costs

These assessment amounts are lower than the initial bid estimates due to a couple factors. Back in May when the bid for the project was accepted, the costs came in over the engineer's estimate by $89,000. The main difference came from the concrete prices, which were off by $61,000.

These concrete increases especially impacted the alley portions of the project due to the large amounts of concrete work. In fact, the prices were off by more than 25% of the engineer's estimate for three out of the four alleys included in the project.

For example, the engineer's estimate for the properties aligning the alley north of Second Avenue between Third and Fourth streets was $3,688. But after the bids were received, that amount increased to $5,387 due to concrete prices. This was an increase of 46%.

The city's special assessment policy states that homeowners are responsible for 50% of the paving costs for alleys. The League of Minnesota Cities guidelines for special assessments suggests that another public hearing should be held if the assessment costs are expected to be greater by 25% of what was presented at the original hearing.

However, the city chose to move forward and award the bid as holding another public meeting would have pushed back construction of the project by approximately six to eight weeks.

Three adjustments to the costs were made to ensure the assessments were within that 25% increase margin; the fiscal costs for the project were pro-rated, as were the construction administration costs and the concrete portions were capped at 125%. This means that the city will be responsible for more of the concrete costs and brings down the assessment costs.

To return to the alley north of Second Avenue example, the estimated assessment with the adjustment, due to the cap, is $4,692.

Options for assessed property owners

Now that the assessments have been released, property owners have several options for courses of action:

  • Pay the assessment in full within 30 days of the public hearing, which means they will accrue no interest.
  • Allow the assessment to be applied to their property taxes for up 15 years, with an interest rate of 4.1%. At any point in the 15-year assessment period, owners can pay off the remaining amount of the assessment.
  • File a written objection to their assessment, which must be filed by the end of the public hearing, then officially challenge the assessment by filing with the district court.
  • If the assessment poses a hardship to the property owner, they may apply for a deferral. To qualify, the owner of a homestead must either be a senior citizen (age 65 or older), permanently disabled or on active duty in the military. Most importantly, the owner must prove that it would be a hardship to make payments on the assessment. Owners can apply for a deferral at any time throughout the length of the assessment. However, the deferral is not a forgiveness and interest will continue to accrue and will need to be paid.