Agenda - Council Work Session - 11/18/2014

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RELEVANT LINKS: • Special assessments are generally a dependable source of revenue. • Special assessments are a means of raising money outside city debt and general property taxes. (Special assessment bonds do not count toward statutory debt limitations). • Special assessments provide a means of levying charges for public services against property otherwise exempt from taxation. • Special assessments lower the cost to the community of bringing undeveloped land into urban use. • Charging the property owner for the benefit received prevents or minimizes the possibility that a property owner will reap a financial profit from the improvement at the expense of the general taxpayer. Disadvantages of special assessment financing include: • The difficulty and expense in establishing the special benefit to the property. • The difficulties in special assessment administration. The administrative procedures require careful execution in order to avoid litigation. • Cities have at times used special assessments to pay for premature public improvements. Because the city generally bears some of the cost of every public improvement, land speculators sometimes urge councils to do unjustifiable special assessment programs. • The availability of special assessment financing often tempts city officials to underwrite the cost of governmental programs that should be an obligation of the entire city. • Unless special assessments conform to a city's long-term financial and capital improvement plans, they can subject a city to two serious financial dangers. First, if a city frequently undertakes special assessment bond issues backed by the full faith and credit of a city in an unplanned manner, city credit might be overextended. This leads to higher interest charges on all city and school district borrowing and increases the possibility of default. Second, placing too heavy a burden on individual property owners (with special assessments and regular property taxes) runs the risk of increasing tax delinquencies and potentially jeopardizes a city's credit and borrowing position. • From the council's point of view, the public's reaction to a proposed special assessment might be the most important determinative factor. While taxpayer resistance is usually minimal, this is not true in every instance. Special assessment programs receive much greater public support if the council adequately informs people of its intentions to make the improvement, the benefit the improvements will provide, and the necessary financial demands. League of Minnesota Cities Information Memo: 9/22/2011 Special Assessment Guide Page 6