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Special Assessment & Improvement Policy
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:
- Curb & Gutter
- Driveway Pavement
- Retaining Walls
- Sanitary Sewer
- Sidewalks
- Storm Sewer
- Street Grade & Gravel
- Street Pavement
- Utility Service Laterals
- Water Main
Purpose & 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 are paid for in this manner, some projects are funded through the City's general revenue fund or general obligation bonds.
The objectives is to promote orderly development, to ensure fair and equitable treatment of benefiting 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 and January 8th, 2013.
- How does the City determine my special assessment?
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City policy strives to create equity among all property owners. On average, approximately 25 to 35% of street project costs are paid through special assessments. On average, approximately 65 to 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 benefited by the improvement. The assessable unit to be used for all surface improvements is the "frontage" of the property. Determination of property "frontage" (PDF).
- What sources of funds are available for street projects?
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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?
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The final assessment hearing is typically held after the project has been completed and all cost are known. Property owners will receive 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?
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Federal and MSA funding is insufficient, limited to certain streets, and/or requires a local match (20%). The City does not maintain a capital improvement 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?
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Continued Street Deterioration
- 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?
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It depends on the project parameters but typically:
- Mill and 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