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2/90 <br />3.5 FINANCING <br />Paying for storm water management projects has become more <br />complex in recent years. In the past, special assessments <br />against benefited properties financed most of the necessary <br />improvements. However, with recent legislation, the financial <br />options have broadened considerably. <br />The major categories of funding sources are Ad Valorem Taxes, <br />Special Taxes, Special Assessments, User charges, and Grants. <br />Following is a description and financing principles used with <br />each of these financing mechanisms. Table 3.4 identifies the <br />advantages and disadvantages of each method. <br />Ad Valorem <br />A. General Taxes <br />This is the most common method of generating revenues to <br />finance general government services including minor <br />maintenance measures for drainage and water quality <br />facilities. Using property tax has the effect of spreading <br />the cost over the entire tax base of a community. <br />H. Special Tax District (M.S. 473.875 to 473.883) <br />This is similar to administrative structure under general <br />taxation except that all or part of the community may be <br />placed in the tax district. The principle is to better <br />correlate improvement costs to benefited or contributing <br />properties. <br />Special Assessment (M.S. 42^) <br />The City is familiar with the use of special assessments to <br />finance special services from maintenance of sidewalks to <br />construction of capital improvements. The assessments are levied <br />against properties benefiting from the special services. The <br />philosophy of this method is that the benefited properties pay in <br />relation to benefits received (increase in the market value of <br />the property). <br />3.5 - 1 <br />