A proposed policy for four water main replacement projects in Jamestown would change the property owners’ share from 80% to 30%.
The Jamestown Public Works Committee heard a presentation from City Engineer Travis Dillman Thursday, Jan. 27, on how to change the responsibilities of the special assessments on four water main replacement projects for districts 17-61, 19-61, 20-61 and 21-61.
The committee unanimously recommended approval to change the responsibility of remaining special assessments due on the districts.
The current share on special assessments is 20% city and 80% property owner. Under current city special assessment general policies and guidelines on past water main replacement projects, the city’s share would be 70% with property owners’ share being 30%.
Mayor Dwaine Heinrich said some individual single-family residences were facing special assessments in excess of $30,000 for the replacement of a water main.
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“It became obvious to us that some changes needed to be made,” he said. “We realize that there isn’t a perfect plan and there isn’t anything we can do at this point that we feel everyone would be happy about or probably feel as proper, but we had to try to do something because seeing the cost, we simply didn’t want to see people having to sell their homes or perhaps even lose their homes because of these special assessments.”
Councilman David Steele said the city of Jamestown cannot continue to have special assessments that put 80% of the share on property owners.
“If we could, it would be nice to get to the goal where we wouldn't have to have special assessments, period,” he said.
Under the current policy, a property owner who has a special assessment of close to $30,000 would have an assessment of about $11,000 under the proposed policy and a residence with a special assessment of about $17,150 would be about $6,300.
“What we do is take that collective linear foot of everybody in the district and their effective footage of their property is how you get that percentage for each individual in that district,” Dillman said.
The original loan amount on the four water main replacement projects is about $7.2 million, and the current outstanding principal balance is more than $6.9 million as of Dec. 31. Dillman said the projects were funded by the State Revolving Fund Program with 20-year loans with 2% interest through the state of North Dakota.
Dillman said payments have been made on the original loan amount. If payments are made on the loans with 2% interest for 20 years, the total amount of the current principal and interest balance is over $8.4 million.
Under the current policy, the city’s share is over $1.7 million on the four water main replacement projects. Under the proposed policy, the city’s share would increase to just under $5 million.
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“The current loan right now where it is sitting today means that the current principal and interest annual payment is about $113,700 to the city,”Dillman said. “If we go back with this new policy, the new amount for principal and interest payment on an annual basis would go up to $275,300.”
The proposed principal and interest annual payment with a buydown would change from $275,300 to $175,000 per year.
“What that means is we are looking at going from $5 million proposed total share, trying to bring it down to $3 million,” Dillman said. “The question is where does that $2 million come from to get it from $5 million to $3 million.”
The proposed buydown would consist of using $1 million from municipal infrastructure funds, $500,000 from the American Rescue Plan Act and $500,000 from the city’s water utility fund – city user fees. The American Rescue Plan Act funds would only be used for the 21-61 water district.
“That would buy that down from $5 million to $3 million,” Dillman said.
He said conversations were held with City Administrator Sarah Hellekson to see if the city can afford to take $175,000 from the water utility fund, which is $61,300 increase per year from the $113,700 that is currently being paid from the city's share.
For future utility projects, a payment plan would take $1 million from municipal infrastructure funds and $600,000 from the water utility fund every biennium. Dillman said if rates are increased on monthly city water utility bills, it would raise $300,000 per year or $600,000 per biennium.
“This is something that would have to be looked at,” he said. “We are not suggesting this today. We are just saying this is an avenue we can look at.”
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He said if the city has about $1.6 million per biennium from the combined municipal infrastructure funds and the water utility fund, a water main replacement project might not happen every year.
“We might start having to split that to every other year, so we have this funding mechanism in place,” he said. “Another thing as we look at going forward, very likely we might want to look at this for sanitary sewer projects as well as stormwater replacement projects.”
Heinrich said if the City Council approves the proposed policy on special assessments for the four water main replacement projects, changes in tax statements would be reflected on the 2022 tax statement because statements have already been sent for 2021.
“They will get credit for the payments they already paid if they paid that under the old policy and if this policy goes forward,” Dillman said. “Under the new scenario, that will be taken into account, so that they almost prepaid so that will be taken into account to reduce that overall.”
The City Council will take action on the proposal at its Monday, Feb. 7, meeting.
