7A - TH 371 Alternate Alignment Zoning

Home Browse Search

2. Both sides of the alternate alignment are zoned Commercial, with sewer/water utilities provided. 3. Both sides of the alternate alignment is zoned Commercial from a node at CSAH 11 south to the existing commercial zoning,with sewer/water utilities. 4. Both sides of the alternate alignment is zoned Commercial from a node at CSAH 11 north to a node at the intersection with the old highway, with sewer/water utilities. 5. Nodes of commercial development are created at the three intersections with the alternate alignment,with sewer/water utilities. 6. A node of commercial development is created at CSAH 11 and the alternate alignment,with sewer/water utilities. Each of these scenarios, except the first, requires the extension of sanitary sewer and municipal water systems. In documents presented to the TH 371 Study Group in 2007, the City Engineer estimated that the cost to provide sewer and water to the other side of the highway would be $1,526,000. This should be considered the "cost of entry" since this does not include extending utilities along the alignment to connect each property. This improvement would be paid for by the City—it could not be assessed. Now consider the following: • The commercial property tax rate for properties over $150,000 is 2.00. This is a value assigned by the State of Minnesota that is used to determine the Tax Capacity of the property. • The City's Tax Rate is 65%of Tax Capacity. • The new highway alignment is about 16,000 feet long, adding very roughly 6o acres of commercial land on the east side if the entire corridor is zoned commercial. • If each commercial lot were one acre,being very generous and not accounting for loss due to topography and other considerations, there would be 6o new commercial lots created. • If the City were to borrow the money for the "cost of entry" improvements at a rate of 4%over 20 years,the annual payment of the City would be $115,000. • The average payment per lot would be$115,000/ 6o or roughly$1,9oo per lot. • The average debt service for a small town is 16%of total revenue. We do not have numbers for Pequot Lakes. • At today's commercial tax rate, the city's tax rate and without raising the level of debt service, to generate $1,9oo/lot, each of the 6o new commercial properties along the corridor would need to be valued at$930,000. $1,900/0.02 Commercial Tax Rate/o.65 City Tax Rate/o.16 Debt Service Ratio = $930,000 Pequot Lakes Staff Report 7(a)-2 April 16,2009