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Committee reviews assessment policy for Main Avenue project

The Shell Lodge, a small Masonic fraternal organization that raises funds for student reading programs, would probably fold if it has to pay special assessments for the downtown revitalization project. (Sarah Smith / Enterprise)

A volunteer committee will recommend to the Park Rapids City Council next week that Main Avenue merchants and homeowners pay 100 percent of the assessments on water mains, water service and sanitary sewer improvements to replace the city's aging infrastructure.

Work on the $4.5 million revitalization project is slated to begin in 2010. Hopes for outside funding have dwindled, said John Olson, leaving the project to be funded by "city funds and specials."

Olson works for Ulteig engineering, which functions as the city's consulting engineers.

The two groups, homeowners and merchants, will foot half the bill for sidewalks and 60 percent of the street costs, the committee recommended. The city, meanwhile, will pick up the $944,000 tab for beautification items called the streetscapes. Downtown businesses will not incur a separate parking assessment.

Yet to be determined is who will pay for the storm sewer improvements.

Residential properties that qualify can apply for a hardship waiver or deferment of the special assessments.

The meeting became contentious at times as members grappled with whether to deviate from the city's special assessment policy - or whether to change the policy altogether.

"It becomes fairly subjective," said resident-at-large member Nels Peterson. "I've always thought the assessment process was very foul. Is it a do-able thing to redo the whole system?"

Peterson questioned whether the council should consider citywide assessments because the community as a whole will benefit from the downtown project.

Although beautification is assessable under the city's policy, it has never been done and committee members were unanimous in their sentiment that it should not occur at this time.

Other committee decisions on the assessments weren't unanimous; the committee's recommendations are advisory only.

Committee members were unanimous on one other aspect of the project - it will cause pain for both businesses and homeowners.

Olson said special assessments are "a very common, very traditional method of paying for those improvements."

City Administrator Bill Smith said it would be difficult to defend the city's position if it altered existing policy to relieve the downtown of the project's financial burdens.

Other areas of the city have had to bear the expenses of special assessments, he said.

Drafting a new special assessment policy could not occur before the downtown project begins, he said, due to the lengthy legal scrutiny any new policy would have to undergo.

"Precedent is the only fair thing for the town to do," said Ed Ranson, director of the Hubbard County Developmental Achievement Center. The DAC operates two retail stores on Main Avenue as fundraising entities.

David Collins, Hubbard County Regional Economic Development director, argued the special assessments could cripple downtown merchants struggling already in a difficult economy.

"You're seeing real estate transactions slowing down on Main street as people wait to see what happens," he said.

Because the city absorbed 40 percent of the water main and sanitary improvements for the Highway 34 project and 40 percent of the sanitary sewer improvements for part of the Highway 71 project, Collins maintained the city had already departed from its own policies. Why should the Main Avenue project be treated differently, he asked.

Olson pointed out that the two highway projects entailed extraordinary costs that business owners along those corridors could not have financed.

Former council member Ted Godfrey sat on the committee, representing a small Masonic lodge on Main that raises funds for school reading programs and gives bikes away to student reading achievers.

"We survive on flipping pancakes and paying dues," Godfrey said of the Shell Lodge. "We meet two times a month and are paying taxes you wouldn't believe. We've raised dues so much we're losing members."

Godfrey said the lodge would likely fold if it had to pay the assessments.

"We can't participate in what you're doing on Main street," he told the committee.

Godfrey recalled the tearful comments of a homeowner at one of the council meetings last winter, saying she would be assessed out of the home she'd occupied for 37 years.

"That's why I resigned," he said. "It's really tough."

The storm sewer assessments could become problematic when the recommendations get to the council.

Years ago, due to chronic water backup in the southwest quadrant of the city, an effort was begun to develop a stormwater utility fund. Due to changes in city administration, the efforts bogged down and have just recently been revived.

"When Main Avenue started picking up steam, in the initial public hearing the assumption used was that the storm utility would be up (financially) and the city would not assess the Main Avenue parcels for the stormwater part, that we would take it out of utility funds," Smith said after the meeting. "Well, there are no utility funds and there's not going to be for quite some time," leaving a question of who will pick up those costs.

The city's "general fund is strapped," he said.

Dee Smith, a downtown business owner affiliated with two corner businesses that will be assessed on both Main Avenue and the side streets, said her assessments would be astronomical. Under city policy, work along Main Avenue would be assessed at 100 percent; the side street work at 50 percent.

"Our aim is to keep our businesses," she said.

"And attract more," Peterson added.

But the city itself will share in the pain of the assessments. It owns Pioneer Park on Main Avenue, so it will be assessed per linear foot of property along with the merchants and homeowners.