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RELEVANT LINKS: <br />Minn. Stat. § 429.091, subds. <br />3, 4. <br />Minn. Stat. § 429.091, subd. <br />1. <br />Improvement warrants are the second kind of debt instrument. These differ <br />from improvement bonds in that they are not backed by the taxation power <br />of the city. Improvement warrants are payable only from the assessments <br />against the affected property owners. Because improvement bonds are more <br />readily marketable at a lower rate of interest than improvement warrants, <br />very few cities issue improvement warrants. <br />The council may also issue and sell temporary bonds at any time before <br />completion of a public improvement project. These obligations must mature <br />within three years, and are payable from the proceeds of the regular <br />improvement bonds the city must issue by the maturity of the temporary <br />bonds. Temporary bonds are subject to redemption and repayment of any <br />interest due on 30 days mailed notice to registered holders. <br />Unlike improvement warrants, some cities frequently issue temporary <br />improvement bonds. By issuing these bonds, cities can postpone the <br />issuance of the regular special assessment bonds. There are two other <br />advantages: <br />• The city may consolidate several improvement projects into a single <br />bond issue. <br />• The city reduces the chance of excessive borrowing by delaying the <br />long-term bond issue until it knows all the costs of a project. <br />Frequently, cities will purchase their own temporary improvement bonds <br />with surplus cash available in other funds, such as a liquor or utilities fund. <br />This results in savings of interest and other investment expenses. <br />The city may issue regular improvement bonds or warrants after ordering <br />one or more improvements. Generally, cities issue them before the work is <br />complete and before determining the final cost. If the city uses this <br />procedure and the cost estimate turns out to be higher than actual costs the <br />city may use the surplus funds to finance any other improvements it started <br />under Chapter 429, or it may transfer the surplus to the fund used for the <br />repayment of the bonds themselves. If the cost estimate is too low, the city <br />may sell additional bonds. <br />If the city is involved with several public improvements at the same time <br />under Chapter 429, it may be advisable to consolidate all necessary <br />financing into a single issue of improvement bonds or warrants, even if the <br />city did not consolidate the assessment proceedings. Such a substantial block <br />of bonds is often more readily marketable than several smaller issues. <br />League of Minnesota Cities Information Memo: 9/22/2011 <br />Special Assessment Guide Page 32 <br />