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municipalities assessed residents 20-25% of the construction cost, resulting in <br />assessments that averaged $1500 — $2000 per 100' lot. The interviewed cities' share of <br />reconstruction costs were generated from MSA funds, debt bonds, general tax revenue, <br />and special accounts that may include revenue from storm water management funds <br />and/or special interest bearing accounts. <br />1. Bonding. Most cities in the survey paid for reconstruction by a mix of <br />both assessments and bonds. It was noted in order for cities to issue <br />debt bonds the city must assess at least 20% through special <br />assessments. The disadvantage of bonding is interest expense and cost <br />of initiating a bond typically adds 3-5% to its overall cost. <br />2. General taxes. Cities may pay for road reconstruction projects <br />through general taxes. One disadvantage is that general tax increases <br />are restricted by levy limits, which would restrict the city's ability to <br />finance projects. <br />3. Special Accounts. The cities of Arden Hills and White Bear Lake are <br />in the unique position of not needing to bond for road reconstruction <br />projects. In anticipation of future reconstruction costs, they created <br />interest-bearing accounts, in which the principal is never used and the <br />interest is earmarked solely for road reconstruction. <br />Incentives and barriers: <br />Creating interest-bearing accounts will take time to accumulate enough funds to <br />generate an appreciable interest. White Bear Lake used a five-year plan of adding <br />annually to the account, in addition to depositing any windfalls to the city. Mounds View <br />could designate that any proceeds from city -owned properties be reinvested into the <br />community's road infrastructure. Although, this list is not complete, Mounds View owns <br />property on Highway 10 and on Old 8, which profits from these properties could be used <br />as account seed money. <br />Recommendation 7: <br />Reduce the property owners' assessment from 50% to 20-25% of the reconstruction <br />project. <br />Discussion: <br />Minnesota State Statue 429 mandates that special assessments can not exceed the <br />benefit it brings to the property. Minnesota Supreme Court interprets that benefit to be <br />the difference in market value before and after the improvement. Mounds View's 50% <br />assessment policy yields assessments that exceed the limits set by Statute 429. For <br />example, the proposed Spring Park Road/County Road I project projected assessments of <br />at least $4000 per 100' lot. Many older homes situated on larger lots were seeing <br />projected assessments of $5,000 and $6,000, although their appraised market value is <br />$90,000. It would be difficult to support the claim that an older home would be valued at <br />