Minnesota Cities Magazine

Two-Way Street: Does Your City Use Special Assessments to Fund Street Improvements?

Headshot of the community development director of KassonMICHAEL MARTIN
Community Development Director
City of Kasson

The City of Kasson uses special assessments almost every time we reconstruct a street. Special assessments place a portion of the burden on directly benefitted property while limiting the call for major street improvements.

What projects are assessed?
Reconstruction means “from the center of the earth out”— water, sewer, storm sewer, curb, gutter, and blacktop. Smaller improvements or repairs are not assessed.

Our enterprise funds (water, sewer, storm sewer, and electrical) are designed to absorb the full cost of their own replacement. These costs are not assessed. Curb, gutter, base, and blacktop are partially assessed to the property owners. The city picks up 70 percent, and 30 percent of the cost is assessed to the property owner. The city pays for sidewalks.

Getting resident buy-in
We start monthly meetings with the affected neighborhood the summer before construction starts. We have at least six monthly neighborhood meetings before any disruption occurs. That gives us time to work through many of the issues—or tire out the critics. Either is an advantage. We continue with weekly meetings during construction.

Our overall philosophy is what we try to use in everything we do: “Tell them the truth, and tell them early and often.” We are especially clear about three things: cost, sidewalks, and schedule. We always use the high estimates for cost and time. It is much easier to lower it later than to raise it.

The first drawing of every project includes sidewalks. If the neighborhood residents don’t want the sidewalks, it is then up to them to convince the Council to take them out. If they aren’t in the first drawing, they will never get in later.

Full disclosure
We provide a spreadsheet to the residents showing what their assessments will be, based on the latest estimates. The spreadsheet changes when estimates change. We give the full spreadsheet to each property owner, so they can compare their assessments to their neighbors. It is public information, and people are less angry when they see that everyone is being treated the same.

The process is time-consuming, but, at the last public hearing to set the final assessments, the homeowners brought us cookies. You can’t beat that.

Headshot of the city administrator of Elk RiverCALVIN PORTNER
City Administrator
City of Elk River

Last April, our City Council approved using franchise fees for electric and natural gas utilities to capture $1.4 million annually. The funds are dedicated to street maintenance, from seal coating to reconstruction. Previously we used property taxes and assessments along with Municipal State Aid funds.

Communication is important
The utilities pass these fees on to their customers. Residential customers pay $5 per month for electric and $4 per month for natural gas—$108 per year. There are three different fees for small, medium, and large commercial customers, who pay a total of $29 to $170 per month for gas and electric.

In anticipation of concerns over a “new tax,” we met with local business groups and service organizations, and mailed information to residents and businesses. We also maintained a blog with open dialog on the city website and worked with the local newspaper to publish informational articles.

We did get some calls from residents asking about the fees. Often, after learning that this money will go to street maintenance and that the alternative would be a $3,000 to $10,000 street assessment, the extra $9 a month was a little easier to swallow!

Equitable funding
We believe the city will see many benefits to this type of funding. For one thing, property tax increases are never popular, but would be necessary if we used taxes for street improvements.

Due to the building boom, we will have a lot of miles to improve at the same time, requiring tax increases. Dedicated franchise fees provide a more equitable funding plan than property taxes, as property value has correlation to street use.

Additional benefits
Another advantage is that we no longer need to bond for projects, saving fee and interest costs. In addition, we will no longer have delays for public hearings. This helps us get to market faster, and possibly get better bids.

With this funding, we can change project plans if needed. New construction will begin paying immediately for future improvements, so new residents won’t get slammed with a big assessment.

Read the November-December 2013 issue of Minnesota Cities magazine

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