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RELEVANT LINKS: <br />Minn. Stat. § 429.091, subd. <br />3. <br />Minn. Stat. § 475.58, subd. <br />1(3). <br />Minn. Stat. § 429.091, subd. <br />3. <br />Minn. Stat. § 429.091, subd. <br />3. <br />Minn. Stat. § 429.061, subd. <br />2. <br />Minn. Stat. § 475.55, subd. 3. <br />See Section II-G-3-a: Council <br />decides interest on special <br />assessment. <br />Although in most cases the special benefit test limits the percentage of the <br />cost of the improvement that can be assessed, an election is required for <br />bonds if less than 20 percent of the cost is to be assessed against the <br />benefitted property. Put another way, if the city itself is to pay 80 percent or <br />more of the cost through its general funds, the voters must approve the bond <br />issue on the improvement project. <br />If some funding for an improvement project comes from county or federal <br />sources, the application of the 20 percent is less clear. Consult the city <br />attorney and bond counsel for specific legal advice on this question. <br />In a resolution authorizing a bond issue, the council must decide the bond <br />maturity, denominations, interest rate, and form. The factors the council <br />should consider in fixing such terms include the marketability of the bonds, <br />the anticipated collection of the assessments, and the need for future bond <br />issues under the comprehensive city plan and the capital improvement <br />budget. <br />Before it can deliver the bonds or warrants to the purchaser, the council must <br />levy a general tax for the payment of that portion of the cost not covered by <br />the special assessment levies. <br />The council must make any tax levy for this purpose irrevocable for as long <br />as the bonds or warrants are outstanding. While the council cannot repeal the <br />levy until after all the principal and interest are paid, it may reduce the tax in <br />any year if a surplus occurs in the sinking fund from which the city pays the <br />improvement bonds. <br />A. Interest on improvement bonds <br />Bonds may carry any interest rate the council determines In effect, the <br />market determines the interest rate cities will pay on bonds. <br />B. Interest on special assessments <br />As noted previously special assessments may bear interest at any rate the <br />council determines, unless the charter sets interest limits on the rates for <br />assessments. In setting interest rates on assessments, the council should <br />make sure there is a reasonable relationship between the assessment interest <br />rate and the bond interest rate if the city issued bonds to finance the project. <br />If the city finances the project with funds on hand without using bonds, the <br />council will want to look at the interest rate the city would otherwise have <br />earned on the funds. <br />League of Minnesota Cities Information Memo: 9/22/2011 <br />Special Assessment Guide Page 33 <br />