11-18-13 Council Packet - Laserfiche WebLink

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SUMMARY OF FINANCIAL TOOLS FOR FINANCING PUBIC IMPROVEMENTS IN THE CITY OF LINO LAKES Stephen J. Bubul Kennedy & Graven I. SPECIAL ASSESSMENTS UNDER CHAPTER 429 A. Constitutional and Statutory Basis. Article X, Section 1 of the Minnesota Constitution provides, in part: "The legislature may authorize municipal corporations to levy and collect assessments for local improvements upon property benefited thereby without regard to cash valuation." Chapter 429 of Minnesota Statutes is the authorizing statute for cities. Except where a city charter provides otherwise, this statute governs the undertaking of all "improvements" as defined in the statute, if they are financed in whole or in part with special assessments. The term "improvements includes streets (whether new or reconstruction), sidewalks, sewer, water, street lights, parks and certain other kinds of public improvements. B. General Principals for Levying Special Assessments. 1. Assessments must benefit the property. Benefit is measured by an increase in market value. 2. Assessments must also be fairly allocated among properties, so that the amount assessed approximates the benefit to each parcel, and all parcels are treated equitably. In practice, assessments are spread based on a formula such as front foot, parcel area, residential unit, or similar criteria. The allocations can be different for different type of property (e.g., commercial versus residential) as long as the distinctions have a rational basis.) 3. The property owner may either pay the assessment all at once, or may pay in installments over time —in effect, an assessment is a loan to property owners. The number of years, amount of annual payment and interest rates are all set by the City Council. 4. When payments are made in installments, they are paid along with property taxes (in May and October). (However, unlike property taxes, assessments are not deductible from the owner's federal income taxes).