Special Assessments are a funding mechanism used by many Minnesota cities to fund a portion or all of their local surface improvement projects. The ability to levee special assessments is provided to cities by Minnesota State Statute 429[1]. This same statute also provides the regulations that govern the special assessment process and mandatory procedures that cities must follow. The fundamental concept behind the special assessments is that once an improvement project is completed, affected property market value increases as a result. Statute 429 limits the amount that a city can special assess a single property to the amount of increase in property market value resulting from the improvement.

Many different types of improvement projects may be specially assessed by cities or counties. In developed communities, roadway improvements and drainage improvements are the most common improvement project assessed. In developing cities it is not uncommon to also specially assess for the extension of municipal utilities (sewer and water), construction of an interchange, or installation of a traffic signal. State statute also allows for the assessment of street lighting, sidewalks, tree planting, and noise walls among other things.

The two most common ways that an improvement project with special assessments (or the 429 process) is initiated is either by petition or by council/board initiation. When over 35 percent of the affected frontage of a proposed project signs a valid petition and the council/board initiates an improvement project, the project is considered to be formally initiated by petition. In this instance, the number of votes required to order the project and adopt assessments is a standard majority (3:5 votes). When a project is initiated by a council/board the number of votes required to order the project and adopt assessments is a super majority (4:5 votes).

Once a project is initiated, MN statute chapter 429 provides a process that must be followed to specially assess property owners who are receiving benefit from the improvement project. The necessary steps in the process include:

  • Project is initiated
  • Feasibility report is ordered and received
  • An improvement hearing is held
  • Project is ordered
  • The project is competitively bid
  • An assessment hearing is held
  • Assessment roll is adopted
  • Assessments are certified with county

Although these steps are required in the special assessment process, they do not necessarily have to happen in the order listed. For example, different communities may hold the assessment hearing prior to awarding a construction contract, where others may after construction is complete. State statute allows for some flexibility in this process; it is a community preference. It is important for a city to work with their city attorney and city engineer to structure the necessary resolutions the community’s process. Draft resolutions for this process are also provided by the League of Minnesota Cities at: http://www.lmc.org/media/document/1/sagtext.pdf?inline=true