BAXTER -- The Baxter City Council Wednesday was presented with options to appease Parkwood project residents upset over high assessments.
Based on written objections from Parkwood residents, Baxter City Administrator Larry Kruse recommended two options: Set the bond interest rate at 7 percent over 10 years rather than 8 percent over 12 years, or set the interest rate at 7.75 percent over 10 years and set the maximum lot size that can be assessed at 200 feet.
The Parkwood project cost $2,322,506. Of this, $872,984 in roadway cost and $361,840 in sanitary sewer cost is to be assessed against the property owners. There are also other fees residents must pay for. The project included turning Knollwood Drive into a state-aid road, bike trails, storm and sanitary sewers and water services.
The biggest concern for most residents is the bonds used to pay for the project. Originally secured at 5 percent interest over 10 years, the interest on the bonds charged to residents was raised to 8 percent over 12 years, something that has upset many residents.
Historically, Baxter has raised interest rates two points over the rate the bond was issued at, but on this bond issue the city raised the interest rate three points at the recommendation of the city's bond counsel, to lower the city's debt.
"I'm concerned that the city is not trying to make money off this project," said council member Craig MacDonald. "I know this assessment needs work, it can be more fair, but if it's going to raise interest (on other projects) after the fact, I have a problem with that."
The bond was secured not just for the Parkwood project, but for several projects including the Dogwood, Glory and Isle Road projects, meaning taxpayers may end up picking up some of the shortfall from the lowered interest rates. The question of fairness also was raised.
"How do we explain this to the other projects who paid 8 percent?" asked council member Mary Marana. "We need to look at the ramifications. If there isn't money in (the debt service fund) to cover all of this, who will pick up the tab? If we change interest rates, we need to be fair across the board."
The council took no action on the options, but set a workshop for 5:30 p.m. Nov. 16. Some questions the council wants answers for include the impact of all assessments, in all projects funded by the bond issue, at 7 percent interest; what would be a feasible, across-the-board interest rate; and possible credits.
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