Special Assessment and Improvement Policy

 

Special Assessment

Special Assessment is a levy on a property to defray the cost of public improvements. Special assessments are not the same as property taxes. There are a wide variety of infrastructure improvements that can be assessed, including but not limited to the construction and reconstruction of:

  • Street Pavement
  • Curb and Gutter
  • Driveway Pavement
  • Sidewalks
  • Retaining Walls
  • Street Grade and Gravel
  • Sanitary Sewer
  • Storm Sewer
  • Water Main
  • Utility Service Laterals

Purpose and Objectives

The primary purpose of the assessment is to have the properties that benefit from public improvements pay as much of the cost of the improvements as is reasonable, thereby reducing the City's reliance on general property taxes. Minnesota States Chapter 429 grants cities the authority to use special assessments as a mechanism to finance a broad range of public improvements. Not all improvements ar paid for in this manner, some projects are funded through the City's general revenue fund or general obligation bonds.

The objectives of a special assessment policy are to promote orderly development, to ensure fair and equitable treatment of benefitting properties and to assure that the City's financial resources are protected. The City of Owatonna's special assessment and improvement policy was adopted by City Council on September 1st, 1981 and was revised on April 2nd, 2012. 

SPECIAL ASSESSMENT AND IMPROVEMENT POLICY

Frequently Asked Questions

How does the City determine my special assessment?

City policy strives to create equity among all property owners. On average, approximately 25-35% of street project costs are paid through special assessments. On average, approximately 65-75% of street project costs are paid through federal funds, MSA funds, and property taxes.

Assessment rate is equal to the "assessable cost" of the project divided by the total number of assessable units benefitted by the improvement. The assessable unit to be used for all surface improvements is the "frontage" of the property.

Determination of property "frontage"

What sources of funds are available for street projects?

The City utilizes a variety of funding sources including Federal Funds, Municipal State Aid (MSA) Funds, and local funds. Federal and MSA funds can only be spent on minor arterial and collector streets. The City uses these funds to offset or reduce special assessments and/or property tax funds spend on street projects. MSA funds are also used as a local match (20%) for Federal appropriations (80%) for larger projects with citywide benefits. Local funds include City-wide property tax collections and special assessments to properties in the benefiting areas.

When are special assessment payments due?

The final assessment hearing is typically held after the project has been completed and all cost are known. Property owners will recieve a final assessment letter stating the final assessment hearing date and payment options. The first assessment payment is due with property taxes the year following the final assessment hearing. Partial or full payment can be made after the final assessment hearing.

Why does the City use special assessments for street projects?

Federal and MSA funding is insufficient, limited to certian streets, and/or requires a local match (20%). The City does not maintain a capital improvment fund sufficient to "pay cash" for street projects. A "cash" fund for streets projects would likely more than double property taxes. The City bonds money to pay for street projects and state statute requires that at lest 20% of the project cost be special assessed.

What are the consequences of not constructing street projects?

Continued street deterioation

  • Increased wear and tear on vehicles
  • Increased maintenance costs for the City (paid via property tax)
  • Unsafe traveling conditions
  • Damage to underground utilities
  • Unsafe pedestrian conditions
  • Decreased neighborhood aesthetics

High future special assessments

  • Increased repair expenses (rehabilitation)
  • Increased construction costs (due to inflation)

How long will a project take?

It depends on the project parameters but typically:

  • Mill & Overlay projects typically take 2 to 6 weeks
  • Rehabilitation projects (full pavement replacement, keeping existing curb and gutter) typically take 6 to 10 weeks
  • Rehabilitation projects (new pavement and curb/gutter construction on existing grade and gravel) typically takes 6 to 8 weeks
  • Full reconstruction projects (with curb and gutter) typically take 8 to 16 weeks