Agenda Packets - 1986/11/03 - Laserfiche WebLink

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RS-2. Special Assessment Financing (A) Special assessments financed by bonds In 1982, the Legislature changed the law governing the statutory interest ceiling for municipal bonds. The revised law, which provides for s floating monthly maximum interest rate, creates a problem affecting the interest rate which a municipality may charge on special assessments. The interest rate which may be charged is determined according to the maximum rate allowed to be paid on municipal bonds "for the month in which the resolution authorizing the special assessment is adnpted." If a city sells the nssessmenc bonds in a later month, the interest rate payable an the bonds may be greater than that allowed extra costs.charged for the special assessment. The city is left having absorb costs. The League recommends that the law be rhanged to ensure that a city may charge an interest rate on special assessments at least one percentage point higher than the rate payable on the bonds which finance the assessment. Special assessments financed internally by a city Currently, M.S. 429.061, aubd. 2 limits the rate of interest on assessments financed out of the general fund to eight percent. Efforts by the 1986 Legislature to change this law have resulted in confusion. 8enefitted property should not receive a windfall from the general land nor should it subsidize the general fund through its assessments. For these reasons, the League supports legislation authorizing general -fund -financed improvements to be assessed with an interest rate at least one percent greater than the maximum interest rate allowable on local obligations as determined monthly by the finance commissioner. Special assessments against state property Current law, M.S. 435.19, provides for the collection of assessments against other governmental jurisdictions. The law basically allows the governmental unit which owns the property to determine the amount to be paid, as well as when it will be paid. This is impractical since it results in interim financing by the local unit of government; the governmentally owned property should be assessed similarly to privately owned property and any law authorizing the state or other governmental units to refuse to pay the assessed amount, or determine the time and amount of the payment, should be repealed. -60-