Capital Improvement Plan Financing Policy
It has been and will continue to be the policy of the City Council that when public improvements are made, which are of special benefit to certain areas, special assessments will be levied for the benefits received. The procedures used by the city are those specified by Minnesota Statutes, Chapter 429, which provide that all, or a part of the cost of the improvements, may be assessed against benefiting properties in accordance with the benefits received. The statute, however, does not provide a guide as to how these benefits are measured or how the costs are to be apportioned. The purpose of this general policy is to establish a consistent standard for the apportionment of special assessments.
Types of Improvements
This policy shall relate to those public improvements allowable under Minnesota Statute 429. Generally, the improvements include: street and street lighting improvements; sanitary and water utility improvements; and stormsewer and drainage improvements.
This policy outlines how new construction, reconstruction, and major maintenance shall be financed under each type of project.
Project costs shall include: the construction costs; engineering; testing; permitting; legal; administrative; land or easement acquisition; fiscal; capitalized interest; data processing; and publication fees.
Special Assessment Methods
Benefiting properties generally are assessed by one or a combination of four (4) methods: adjusted front foot; area; unit; and benefit appraisal. Generally, the nature of any improvement lends itself to a particular method. The four (4) methods are described as follows:
1. Adjusted Front Foot Rate: Used for roadway and utility projects where there are varieties of land uses and lot sizes abutting or within the benefiting area. Frontage is measured at the building setback line.
2. Area Method: Used for roadway, drainage, and/or trunk utility improvements where there is a variety of land uses and parcel sizes within the benefiting area. Assessments are determined by multiplying the area change times the gross area less wetland areas.
3. Unit Method: Used when the abutting property or benefiting area is homogenous. Assessments are determined by multiplying the particular land use unit by the Council established assessment rates.
4. Benefit Appraisal: Used when property owners within the benefiting area indicate none of the above noted methods appear appropriate.
Corner lots are included in the benefiting area with the exception of single/two family dwellings. If the improvements are along the driveway access side of the single/two family dwelling, the parcel shall be included in the benefiting area. If the driveway access is along the side lot line of the single/two family dwelling, the parcel frontage will be based on the minimum lot widths determined by zoning. If the lot can be subdivided, it may have multiple assessments.
A. Roadway and Signal Improvements
1. Petitions for roadway and street lighting projects shall be filed and accepted by the Council prior to January 1 of the year of construction. The Council may authorize accepting a petition after January by special consent.
2. Projects are initiated by petition of 35% of the property owners measured in area and/or frontage or by a majority vote of the City Council for roadway improvements.
3. Projects initiated by a property owner shall require the property owner to allow assessment of all project costs or if City participation is appropriate, the City's share shall be outlined in a Developers Agreement.
4. Street light petitioned projects shall be accumulated and authorized as one (1) project. The costs shall be uniformly spread to the benefiting properties.
5. The method of assessment can be by any method described in "Special Assessment Methods" above.
1. Petitions for roadway projects shall be filed and accepted by the Council prior to January 1 of the year of construction. The Council may authorize accepting a petition after January 1 by special consent.
2. The scope of project shall be determined by traffic volumes, and reason for pavement deterioration.
3. Abutting property owners shall participate based on land use. The Council will annually set the appropriate rates per land use.
4. In any given year, the assessment rate within a land use category shall be equal throughout the community, independent of project scope.
5. The City will assess properties along County roadways as if they were City streets.
6. The City participation in projects will be the difference between the project cost and the amount to be assessed. The City's share includes: Municipal State Aids (MSA) on MSA routes, Grants, and Capital Improvement funds.
7. Street lights will be installed as part of a roadway reconstruction project unless there is overwhelming opposition from the affected neighborhood. The installation costs will be financed out of the Street Light Utility fund.
8. Signals will be installed if warrants are satisfied as outlined in the Minnesota Manual of Traffic Control Devices (MUTCD). The project would be financed by assessing 50% of the costs to the commercial properties within 600 feet of the intersection. The Street Light Utility fund will finance the remaining 50%.
9. Per Policy FR-010, assessment rates, as established by the City Council, are based on land use and are generally as follows - in 2023, rates will be single-family $77.00 per foot; multi-family $92.00 per foot; and commercial/industrial $112.00 per foot.
10. If less than 35% of the amount to be assessed is appealed to District Court, the City Council may order the project by 4/5 majority and award the contract.
11. If more than 35% of the amount to be assessed is appealed to District Court, the City Council may abandon the project and may consider issuing a "No Maintenance Decree". Maintenance on streets with such decrees shall be limited to snow removal and emergency repair of isolated water and sewer breaks. Patching, crack fillings, seal coating or overlaying can be authorized by a majority of the City Council.
12. Streets with "No Maintenance Decrees" can be reinitiated by petition five (5) years or more from the year the decree is issued.
1. Overlays on MSA routes shall be financed with MSA funds and not assessed.
2. Overlays to postpone the reconstruction of a roadway shall be assessed to the abutting property owners based on land use. The Council will annually set the appropriate rates per land use.
3. Overlays done to assure a roadway reaches its design life shall not require abutting property participation.
4. The City's share of project costs shall be determined by deducting the assessable costs from the project costs. The City's share shall be financed with MSA, Capital Improvement Funds, or Maintenance Funds.
5. Assessment rates as established by the Council (Standard Operating Policy FR-010) are based on land use and are generally as follows - in 2023, rates will be single-family $53.00 per foot, multi-family $68.00 per foot, and commercial/industrial $88.00 per foot. These rates shall increase by $1.00 per foot per year.
B. Roadway and Signal Improvements
1. Petitions for utility projects shall be filed and accepted by the Council prior to April 1 or the year of construction. The Council may authorize accepting a petition after April 1 by special consent.
2. Projects are initiated by petition of 35% of the property owners measured in area and/or frontage or by a majority vote of the City Council.
3. Projects initiated by a property owner shall require a Developers Agreement outlining the method of assessment and the amount of City participation authorized by the City Council.
4. The City's share shall be financed with Water/Sewer Access Charge (WAC/SAC) funds.
Reconstruction & Major Maintenance
1. The replacement of watermains, sanitary sewer mains and service lines within the right-of-way, shall be financed out of the Utility Reserve Fund.
2. The replacement of services on private property shall be paid for by the property owner.
3. Roadway reconstruction projects accelerated on account of utility replacement projects shall be financed through the Utility Reserve Fund in proportion to the remaining design life of the street. For example, if a roadway is designed to last 20 years and in year 15 needs to be reconstructed on account of the utilities, 25% (5/20) of the roadway costs would be financed out of the Utility Reserve Fund, the remaining roadway costs would be paid as defined under "Roadway Reconstruction Projects".
C. Storm Sewer Projects
1. Petitions for stormsewer projects shall be filed and accepted by the Council prior to April 1 of the year of construction. The Council may authorize accepting a petition after April 1 by special consent.
2. Projects are initiated by petition of thirty five percent (35%) of the property owners measured in area and/or frontage or by a majority vote of the City Council.
3. Projects initiated by property owners shall have their participation determined by land use, contributing area and rate of runoff.
Reconstruction & Major Maintenance
1. Shall be incorporated and considered as part of roadway reconstruction projects.
2. Shall be financed out of the Surface Water Management Fund.
D. Bike/Pedway/Sidewalk Improvements (per Standard Operating Policy FR-010):
1. The City will install bikeway/pedways and sidewalks according to the Comprehensive Bikeway/Pedway Plan for the community. The bikeway/pedways should be an eight (8) Feet wide asphalt surface separated from the roadway surface a minimum of four (4) feet. Sidewalks shall be five (5) feet wide concrete surface separated from the roadway surface a minimum of four (4) feet.
2. The City will consider omitting sidewalks when 80% or more of the abutting property owners oppose the sidewalk improvements.
- Bikeway pedways can be financed as part of a roadway reconstruction assessment; park dedication fees; Municipal States Aid funds or Capital Improvement funds.
- Sidewalks along Municipal State Aid streets shall be financed with Municipal State Aid Funds or Capital Improvements funds.
Assessment Periods Determined By Type of Project
1. New Construction projects can be assessed over a five (5) year period, with the exception of street lighting, which shall be limited to three (3) years.
2. Reconstruction projects can be assessed over a ten (10) year period.
3. Trunk water and sewer facilities can be assessed over a twenty (20) year period.
4. Overlay projects shall be assessed over a five (5) year period.
Hardship Deferrals For Special Assessments
The City Council will consider a deferment for the payment of special assessments on any homestead property, owned by a person 65 years of age or older or retired by virtue of a permanent and total disability for whom it would be a hardship to make the payments.
A hardship shall be deemed to exist when the annual principle installment of all assessments levied against the property exceeds 2% of the adjusted gross income of the applicant as evidenced by the applicant's most recent federal income tax return, and total assets (excluding the homesteaded property), do not exceed six times the adjusted gross income.
The City Council may also determine, on a case-by-case basis, the existence of a hardship on the basis of exceptional and unusual circumstances not covered by these standards and guidelines, if done in a non-discriminatory manner and without giving the applicant an unreasonable preference or advantage over other property owners.
All assessments will continue to bear interest on the unpaid principle balance at the rate established on the original special assessment.
The deferment shall terminate and all principle and interest become due and payable upon the occurrence of any of the following events:
1. The death of the owners when there is no spouse who is eligible for deferment.
2. The sale, transfer or subdivision of the property or any part thereof.
3. The City Council should determine that the hardship no longer exists. As such, a reminder of the deferral balance will be mailed to the owner(s) on an annual basis; and staff will also conduct an annual review of homeownership and homestead status.