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CR 09-022 Special Assessment Deferral Request - 502 Drillane Rd., City Project No. 06-10, 2007 Street and Utility Project. 4 fk* March 9, 2009 Council Report 2009 -022 Special Assessment Deferral Request 502 Drillane Road City Project No. 06 -10, 2007 Street and Utility Improvements Project Proposed Action. Staff recommends that the Council approve the following motion: Approve the Application for Deferral of Special Assessment for Ms. Crystal Olson of 502 Drillane Road for the 9 years remaining on her assessment. Overview. The assessment roll for City Project 06 -10 Street and Utility Improvements was adopted by the City Council on May 1, 2007. City Code Section 703.05 allows for deferment of special assessments upon request for any homestead property owned by a person 65 years of age or older, and if it is determined to be a hardship for said owners to make the payments. The hearing notices mailed to all affected property owners stated that deferment applications be submitted to the Assessment Clerk by April 27, 2007. While Ms. Olson was eligible at the time of the assessment, she did not apply for the deferment at that time. Ms. Olson has now applied for the deferment. Ms. Olson is a senior citizen on a fixed income and indicates it is a hardship to pay the special assessment. Ms. Olson's 2008 income falls below the income limit set in Section 703.05. Ms. Olson has also asked that the deferral be retroactive to last year and that the City repay what she has already paid on the special assessments in 2008. Primary Issues to Consider. • Should the City grant the deferment • If so, should the deferment be retroactive SupportinE Information. • Application for Deferral of Special Assessment • Memorandum dated March 5, 2009 from Jason Hutchison • Hopkins City Code Section 703 — Procedures for the Collection and Deferment of Special Assessments • MN Statutes 438.193 Hardship Assessment Deferral for Seniors, Disabled, or Military Persons • MN Statutes 435.195 Termination of Right to Deferred Payment Robin Robertson Special Assessment Clerk Council Report 2009 -022 Page two Analysis of the Issues Should the City grant the deferment? Although Ms. Olson missed the original deadline for applying for the deferment, staff feels that her situation warrants granting the deferment. Ms. Olson was eligible at the time of the assessment. The debt of $6,112.38 will be relatively secure by virtue of a lien against the property. This deferral terminates upon Ms. Olson's death, sale of the property, loss of homestead status, or her annual income exceeds the annual income limit. This deferral must be renewed annually during the term of the deferment not later than September 30 of each year. The City has never been asked for a deferment after certification. While this action may be setting a precedent, the City is unlikely to receive a significant number of future requests. Most individuals ask for the deferment at the time the project is assessed. If there are others who have missed this opportunity, deferments can only be granted to individuals who are either 65 years of age or older or retired by virtue of a permanent and total disability and who meet income guidelines. Should the deferment be retroactive? Staff cannot recommend that a deferment be granted retroactively. This would set an unfortunate precedent; allowing, for example, someone who is in the seventh, eighth, or ninth year of an assessment to seek reimbursement. The City Attorney office had the following to say about reimbursement: "I have not located any statute or ordinance that would allow the City to refund amounts already paid for special assessments. In general, I believe this would set an unfortunate and improper precedent and would suggest that the City not refund the already -paid special assessment amounts." Alternatives 1. Approve the special assessment deferment of $6,112.38 for Ms. Crystal Olson of 502 Drillane Road. 2. Do not approve the deferment. Staff recommends Alternative #1. ASSESSMENT HEARING APPEAL, FORM PROJECT NO. Address of Assessed Parcel 502 Drillane Road, Hopkins, MN 55305 What assessment does this concern 1) No. 06 -10 for $67.91.53; 2) Misc. assessment for tree removal for $1754.00. Both certified 10/07. Property Identification Number: 1 3 - 1 1 7 - 2 2 4 2 0 0 3 6 Do you wish to address the City Council at the hearing? (_) Yes (_) No Please complete this form if you intend.to appeal to the council to defer, revise or cancel your assessment. This form must be completed and filed with the City Clerk no later than the close of the City Council assessment hearing. Your request will become part of the public hearing record. I request that the City Council consider (check one): a .(_) *Deferral of assessment (retired by virtue of permanent disability) b. (x) *Senior Citizen deferment (over 65 years of age) c. (_) Cancellation of assessment d. (_) Revision of assessment Reason for the request: Please see attached. * You will need to fill out a special form for deferral of assessment and provide the city verification of your income or disability. Crystal Olson LL';E (print name) (si ature) (date) 502 Drillane Road ( 952 ) 922 -34 (address of property owner) HOPKINS, MN telephone _Zip 55305 CITY OF HOPKINS HENNEPIN COUNTY, MINNESOTA Application for Deferral of Special Assessment I hereby make application for deferral of special assessment this day of February 20 09 for the following assessment: Assessment 06-10 for street work for $6791 53 certified 10/17 Misc assessment for tree removal, for $1473.00, certified 10/07 I understand that this deferral can only be granted on homestead property if my annual income does not exceed the sum of $29,400.00 as of January 1, 2004 (subject to annual adjustment by the Consumer Price Index for the Twin City area), that I am 65 years of age or older, or that I am permanently or totally disabled (regardless of age). I also understand that I must supply verification of my income in the form of my latest Federal Income Tax form, or written income verification from the Social Security Agency, or a copy of my last Social Security check. In the case of disability, I must submit verification in the form of a physician's statement. In all cases, verification must be submitted at least before the closing of the assessment hearing. Furthermore, I understand that I must renew the deferment annually during the term of the deferment and all required supporting documents or information must be delivered to the City not later than September 30 of each year. Deferred assessments shall accrue simple interest during the deferment period at the rate established for payment of assessments at the time the assessment roll was adopted. Upon failure to renew the deferment certification or upon (a) the death of the owner, provided that the surviving or successor owner is otherwise not eligible for the deferment; (b) the sale, transfer or subdivision of the property or any part thereof; (c) if the property should for any reason lose its homestead status; or (d) if for any reason the City shall determine that there would be no hardship to require immediate or partial payment; the deferment shall terminate and the City Clerk shall promptly certify to the County Auditor the amount of the deferred assessment including interest to be inserted on the tax assessment or in full if the property was sold or the period of time for repayment of the original assessment has expired. Crystal Olson (Print name) 502 Drillane Road (Address of property owner) Hopkins, MN Zip 55305 Subscribed and sworn to before me thi day of 2001• Council Action: Deferral granted WNW,, 1110 952 922 -3 (Telephone) ' 4— L- Notary Public I Deferral denied Date: OIANEL "BRANOAeUR BBKANY I'tIL+LIC— taemEeAfA IR1Cp1Y681GNOB'IAES tai -Boa STEINER & CURTISS, P.A. ATTORNEYS AT LAW 400 WELLS FARGO BANK BUILDING 1011 FIRST STREET SOUTH HOPKINS, MN 55343 JEREMY S. STEINER* WYNN CURTISS JASON T. HUTCHISON *Real Property law Specialist, certified by the Minnesota State Bar Association MEMORANDUM Date: 5 March 2009 To: Robin Robertson, Special Assessment Cleark From: Jason T. Hutchison Re: Special Assessment Deferral Request: Crystal Olson, 502 Drillane Road Office: (952) 938 -7635 Fax: (952)938 -7670 Direct: (952) 253 -0070 jhutchison@steinercurtiss.com CONFIDENTIAL: ATTORNEY/ CLIENT PRIVILEGE This memo concerns a request by Crystal Olson, 502 Drillane Road, to have her pending special assessments deferred. Ms. Olson states that she is 70 years of age and claims financial hardship. Minnesota Statute § 435.193 allows the City to defer special assessments for those 65 years of age or older. To do so, the City must either apply its controlling resolution (Hopkins Ordinance 703.05) or make a "determination of hardship on the basis of exceptional and unusual circumstances not covered by the standards and guidelines where the determination is made in a nondiscriminatory manner and does not give the applicant an unreasonable preference or advantage over other applicants." Minnesota Statute § 435.195 states that the deferment of the special assessments terminates if any of the following occur: (a) the death of the owner; (b) the sale, transfer or subdivision of the property; (c) the property loses its homestead status; or (d) the taxing authority deferring the payments shall determine that there would be no hardship to require immediate or partial payment. The controlling Ordinance, Ordinance 703.05, sets a threshold dollar amount of $24,900 (to be adjusted by the Consumer Price Index from 2004 dollars). I have attached copies of the relevant statutes and ordinance to this memo. In this case, Ms. Olson has requested that the City defer her special assessments due to her age and her claimed inability to pay. Specifically, she has asked that the City (1) refund the amounts she has already paid and defer the entire amount, or, (2) in the alternative, defer the balance that remains due. I have not located any statute or ordinance that would allow the City to refund amounts already paid for special assessments. In general, I believe this would set an unfortunate and improper precedent and would suggest that the City not refund the already -paid special assessment amounts. /1-lopkins.civil/Olson /Special assessment deferral.memo.doc That leaves the issue of deferral of the unpaid special assessment balance. You have asked, specifically, "Is it still possible to file for a deferment at this late date ?" and, "How should we proceed with this request ?" The answer to the first question is relatively straight - forward: If Ms. Olson qualifies, there is nothing in the law prohibiting the City from deferring the balance at present. So the answer to your first question is: "Yes, it is still possible to file for a deferment at this late date." However, nothing in the ordinance or statute would require the City to grant the request. Your second question is more difficult. Whether the City should grant or deny Ms. Olson's request is a policy question; not a question of law. Therefore, it is properly made by the City —not the City Attorney. However, I would ask that you consider the following: Ms. Olson was afforded ample opportunity to request deferment of the special assessment in 2007; she chose not to exercise that opportunity. On the other hand, her financial situation may have changed dramatically in the last two years —she may not have needed the deferment in 2007, but she may need it today. If the City agrees to grant her request, the debt will be relatively secure by virtue of a lien against the property; additionally, the deferral terminates on occurrence of Ms. Olson's death, sale of the property, loss of homestead status, or other determination that she is no longer suffering under a hardship. If the City decides to deny Ms. Olson's request, it may do so without much risk of an appeal. A City's denial of a request like this must be made on some rational basis; it may not be arbitrary and capricious. Here, the City could take the position that Ms. Olson had an opportunity to make this request two years ago, but failed to do so. It is reasonable for a City to set a time limit on such a request — without a time limit, people could make such a request at any time, frustrating the ability of the City to budget and meet its financial obligations in a timely manner. The only weakness to the City's position is that the Ordinance does not explicitly incorporate a deadline for such a request. However, I believe that the City has a strong argument that it is reasonable to imply such a requirement —at least in this case where almost two years have passed. However, the City may also properly grant Ms. Olson's request —but I would suggest requesting a copy of her income tax filings, as the City would need to make findings regarding income or other hardship. To summarize, Minnesota law allows the City to either grant or deny this request as it sees fit. I would suggest that the City contact me with its position and request that I draft a response letter to Ms. Olson's attorney. As always, please contact me with any questions or comments. JTH Enc. fflopkins.civil/Olson /Special assessment deferral.memo.doc Hopkins City Code Section 703 - Procedures for the Collection and Deferment of Special Assessments (Rev Sept., 2004) 703 703.01 Purpose Inasmuch as the City feels it necessary and proper to provide for prepayment of special assessments in whole or in part and to implement a procedure to allow deferment of special assessments in appropriate instances all as made and provided for in M.S. Section 429.061 and M.S. Section 435.193 through 435.195, the following provisions are hereby authorized. 703.03 Pre - payment At any time prior to certification of the assessment by the City to the County Auditor, an owner may pre - pay not less than 25% of the assessment with interest accrued to the payment date, except that no interest shall be charged if such partial payment is made within 30 days from the adoption of the assessment. The balance remaining shall be paid in accordance with the schedule adopted by the City Council or as provided in Minnesota Statute Section 429.061, Subd. 3. (Amended Ord. No. 93 -724) 703.05. Deferment of PgMents. The City Council may in its discretion defer payment of special assessments upon request for any homestead property owned by a person 65 years of age or older or retired by virtue of a permanent and total disability in either instance of which the City Council determines it would be a hardship for said owners to make the payments. Such deferment shall be based on the property owner demonstrating he or she meets the following standards: 1. The annual income of owners requesting a deferment is found not to exceed the sum of $29,400.00 as of January 1, 2004. This amount shall subsequently be adjusted annually by the Consumer Price Index for the Twin City area; 2. Property owners who have not attained age 65, but are retired as a result of a permanent and total disability must establish such disability by evidence satisfactory to City Council; Deferred assessments shall accrue simple interest during the deferment period at the rate established for payment of assessments at the time the assessment roll was adopted. The certification of deferment shall be renewed annually by the owner during the term of the deferment and all required supporting documents or information delivered to the City not later than September 30 of each year. Upon failure to renew the deferment certification or upon: (a) the death of the owner, provided that the surviving or successor owner is otherwise not eligible for the deferment; (b) the sale, transfer or subdivision of the property or any part thereof, (c) if the property should for any reason lose its homestead status; or (d) if for any reason the City shall determine that there would be no hardship to require immediate or partial payment; the deferment shall terminate and the City Clerk shall promptly certify to the County Auditor the amount of the deferred assessment including interest to be inserted on the tax rolls and collected in the period of time remaining in the original assessment or in full if the property was sold or the period of time for repayment of the original assessment has expired. (Amended Ord 2004- 931) (This Section added through Ord. No. 90 -683) Section 703 Page 1 MINNESOTA STATUTES 2008 435.193 435.193 HARDSHIP ASSESSMENT DEFERRAL FOR SENIORS, DISABLED, OR MILITARY PERSONS. (a) Notwithstanding the provisions of any law to the contrary, any county, statutory or home rule charter city, or town, making a special assessment may, at its discretion, defer the payment of that assessment for any homestead property: (1) owned by a person 65 years of age or older or retired by virtue of a permanent and total disability for whom it would be a hardship to make the payments; or (2) owned by a person who is a member of the Minnesota National Guard or other military reserves who is ordered into active military service, as defined in section 190.05, subdivision 5b or 5c, as stated in the person's military orders, for whom it would be a hardship to make the payments. (b) Any county, statutory or home rule charter city, or town electing to defer special assessments shall adopt an ordinance or resolution establishing standards and guidelines for determining the existence of a hardship and for determining the existence of a disability, but nothing herein shall be construed to prohibit the determination of hardship on the basis of exceptional and unusual circumstances not covered by the standards and guidelines where the determination is made in a nondiscriminatory manner and does not give the applicant an unreasonable preference or advantage over other applicants. History: 1974 c 206 s 7; 1976 c 195 s 3; 1981 c 80 s 1; 2008 c 154 art 2 s 28 Copyright © 2008 by the Revisor of Statutes, State of Minnesota. All Rights Reserved. MINNESOTA STATUTES 2008 435.195 435.195 TERMINATION OF RIGHT TO DEFERRED PAYMENT. The option to defer the payment of special assessments shall terminate and all amounts accumulated plus applicable interest, shall become due upon the occurrence of any of the following events: (a) the death of the owner, provided that the spouse is otherwise not eligible for the benefits hereunder; (b) the sale, transfer or subdivision of the property or, any part thereof; (c) if the property should for any reason lose its homestead status; or (d) if for any reason the taxing authority deferring the payments shall determine that there would be no hardship to require immediate or partial payment. History: 1974 c 206 s 9 Copyright 0 2008 by the Revisor of Statutes, State of Minnesota. All Rights Reserved.