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Spurred by assessment rates that could be as high as $65 per foot for the city's proposed street improvement project in 2004, city officials are looking at the way they assess for streets.

The city's policy for paying for street improvements is to assess residents that benefit from the project for 50 percent of the cost of street and storm sewer improvements. Residents also pay assessments for water and sewer service to their homes or businesses.

For years, street and storm sewer assessments have been figured on a per-foot basis determined by the amount of frontage property touching the street project. (Half of the frontage is counted for side lots.)

With plans to eventually redo all the streets in Paynesville, this assessment policy was intended to have all residents and businesses help pay for the streets in town by assessing for the individual streets.

But the city ran into problems in figuring assessments for its project on Lake Avenue this summer. Since the state, not the city, paid for street improvements, the city could not assess for these costs. The law prohibited the city from assessing for costs it did not actual bear, so the city could not assess for street costs (though it did assess a small amount - $5 per foot - for stormwater improvements).

Now, in planning for improvements for 2004, the city has run into more problems in figuring assessments. Because of the way the city's ongoing street improvement program was organized, said city engineer Pete Carlson, residents on streets earmarked for improvement in 2004 - including Belmont Street, Hudson Street, Railroad Street, and Belmont Drive - could face assessments that are higher than for previous projects because of the amount of side footage bordering the project areas.

Estimated assessments for the 2004 project are $65 per foot. That compares with $37 per foot in 1995; $45 per foot in 1996; $35 per foot in 1998; and $37 per foot in 2000.

Carlson blamed the difference on poor organization, pointing out that the assessment rates for the 2006 project could be significantly lower than 2004 because of the low number of side lots. Last week at the city council meeting, he proposed reorganizing the 2006 and 2008 projects to make the assessment rates fairer.

Carlson also suggested that the assessment roles for the street improvement project in 2004 could be refigured using actual footage for side lots instead of just half to make the assessment rates for that project more palatable. This would mean that owners of side lots would pay higher rates or that they would use this to figure the rate but then assess side-lot owners on only half their frontage.

Assessments should not be higher than the increase in property values after an improvement is done, according to city attorney Bill Spooner, noting criteria established by the courts.

The city is also not allowed to assess an estimated cost or average cost, which was one idea that city officials raised in trying to determine a fair assessment rate for 2004. The assessment rate must be based on the actual project cost, said Spooner.

That means the city will have to consider other options for making the assessment rates fair in 2004.

Last week, the city also approved an engineering report for paving the service road that connects the city's BMX park with Highway 55. This project, too, is difficult to assess fairly because the half dozen businesses all get equal access to Highway 55 from this service road, but they all have different frontages on the road.

Also, this road only has businesses on one side. If the city follows its current assessment policy, assessment rates could be $69 per foot for the seven lots on the service road. One business owner on the street could face $39,000 in assessments if the service road includes curb and gutter.

Meanwhile, two other lots -Êwhich get the same accesss to Highway 55 - would face much lower assessements because they have only 55 and 51 feet of frontage. This discrepancy troubles city officials. Carlson made several suggestions last week as to how to make the assessment amounts for this service road project more fair.

One method Carlson suggested was to divide the cost of the project equally between the seven lots. Another was to assess property owners only for the side of the street where the business are located while the city absorbs the costs on the opposite side of the street.

A public hearing for the improvements to this service road, which would be done in 2004, is scheduled for Wednesday, Nov. 26, at 6:30 p.m. at city hall.