Special Assessment Districts (S.A.D.) and Special Assessment District Projects
Introduction
The Home Rule Charter of the City of Southfield under Chapter IX, Section 9.26 provides the City Council with the power to determine the necessity for public improvements and to defray the cost of these projects by means of Special Assessments upon the properties especially benefitted. The Charter further dictates that Council shall establish a general ordinance to outline Special Assessment procedures.
This procedure came into being as Chapter 6 of the Southfield City Code, and was later amended by Chapter 22 with regard to street lighting.
The following describes the procedures and requirements set forth by Chapters 6 and 22 in approximately the chronological order in which events take place through the creation of a Special Assessment District.
SPECIAL ASSESSMENT DISTRICTS (S.A.D.)
GENERAL PRINCIPLES
What does Special Assessment mean?
The term Special Assessment describes a method of financing public improvements by distributing the cost of a project over those property owners who will reap a direct benefit.
What type of projects are generally funded through Special Assessments?
The types of local public improvements that are most often paid for through Special Assessments include sanitary sewers, storm drains, water mains, road paving, dust control, sidewalk construction and street lighting.
Who can start a Special Assessment project?
Special Assessment Districts may be initiated (1) either through a resolution by City Council or (2) at the request of a property owner whose property would be included in the district to be assessed.
How does a property owner initiate a Special Assessment project?
A property owner who wishes to initiate a S.A.D. must do so by means of petition. Petition forms can be downloaded and printed or are available through the Engineering Department. The petition should affirmatively reflect the desire of not less than 60% of the real property owners in the district based upon (a) the number of parcels within the district or (b) the total front footage of the parcels, depending upon the nature of the project.
The information required on the petition includes:
1. How is the Special Assessment request processed?
2. A description of the proposed district.
3. A description of the proposed project.
4. Signatures of the real property owners, both husband and wife where applicable.
5. The respective lot numbers.
6. An affirmation that the signers are property owners in the district to be assessed provided by the City Clerk or his designate.
The petition should be addressed to City Council and delivered to the City Clerk.
PROCESSING PROCEDURES FOR S.A.D.'s
How is the Special Assessment request processed?
A petition submitted to the City Clerk is forwarded to the City Administrator for presentation to City Council.
All Special Assessment projects move toward completion in five basic steps, each of which is an action taken by City Council at an open meeting. Each of the steps is listed below, followed by an explanation of what occurs to effect the next step.
Step 1 - Standard Resolution I
City Council refers the proposed project to the City Administrator for a preliminary report.
The first resolution adopted by Council directs the Administrator to prepare a report which shall include the necessary preliminary plans and an estimate of the cost and the life of the project from the Engineering Department as well as a description of the Special Assessment District from the City Assessor. The report also includes an explanation of the necessity of the improvement and what part thereof should be paid by Special Assessment and what part, if any, should be paid by the City at large. The resolution further directs the Administrator to file the completed report and plans with the City Clerk for presentation the City Council.
Step 2 - Standard Resolution II
City Council reviews the material submitted and sets the date for a Public Hearing of Necessity.
After a review of the Administrator's report, City Council will adopt Standard Resolution II which accomplishes the following:
1. Adopts a description of the project.
2. Recognizes the estimated cost of the project and proposes what portion of the cost will be paid by the Special Assessment "district" and what portion will be paid by the City at large.
3. Specifically designates the limits of the Special Assessment District.
4. States the estimated cost to individual property owners.
5. Directs the City Clerk to place on file and make available to the public, all reports pertinent to the subject S.A.D. project.
6. Sets the date for a Public Hearing of Necessity on the matter.
7. Directs the City Clerk to publish notice of the Public Hearing in newspaper of general circulation and to notify in writing, at least 14 full days prior to the date of Public Hearing, by first class mail, all persons having an interest in properties to be assessed.
Informational Note: Frequently, on simple projects, steps 1 and 2 are accomplished at the same public meeting.
Step 3 - Standard Resolution III
After a Public Hearing, City Council declares the public improvement a necessity and directs the Engineering Department to prepare construction plans and the Assessor to produce the assessment roll.
Resolution III may be adopted after a Public Hearing is held at which any and all persons may express their opinions for or against the project. Assuming the project is favorably received, the preliminary plans and cost estimates are adopted and the S.A.D. is ratified.
After this action is taken the Engineering Department will prepare final project plans and specifications.
Based upon the Engineer's cost estimate the Assessor will produce a Special Assessment Roll in accordance with Council's determination. The Assessor is required to present the revised roll to City Council as soon as it is completed.
Step 4 - Standard Resolution IV
By adopting this resolution Council approves the construction plans and sets the date of Public Hearing to confirm the revised assessment roll.
The final plans and specifications and the Special Assessment Roll based on the Engineer's estimate are presented to Council for their approval. If all is in order, Council will direct the City Clerk to place the material on file for public examination.
Council directs the Engineering Department to receive bids and set the date of Public Hearing for confirmation of the Special Assessment Roll.
The City Clerk is directed to publish notice of the hearing in local newspapers and to notify all persons with property to be assessed by first class mail at least 14 days prior to the hearing.
Step 5 - Standard Resolution V
Final confirmation of the Special Assessment Roll by City Council and authorization to proceed with the project.
This action by Council is the final step in establishing a Special Assessment District. Through this resolution the Treasurer is directed to levy the various sums agreed upon.
HOW TO STOP A PROPOSED S.A.D PROJECT
Suppose that a project is proposed by my neighbors or City Council and I am not in favor, what can I do to stop the improvement?
If you are a property owner in the proposed assessment district, you can circulate a "counter" petition among the other people to be assessed. If 60% of the property owners (joint ownership of property requires signatures of all parties, usually husband and wife) sign the "counter" petition as opposed to the improvements and turn the signed petition over to the City Clerk, the improvement must be abandoned by City Council. An exception to this rule may occur where water or sanitary sewer improvements are certified as necessary by the Oakland County Health Department. In this case, Council can override the "counter" petition by a 2/3 vote.
No formal form work is necessary for the "counter" petition, so long as the intent is clear and the signatures can be verified by the City Clerk.
Petitions should be submitted to the City Clerk at the first hearing on the matter prior to adoption of Resolution Number III.
FINANCIAL QUESTIONS
What costs are included for distribution to residents in a Special Assessment District?
S.A.D costs include the cost of services, plans, condemnation, spreading of rolls, notices, advertising, financing, construction and legal fees, as well as all other costs incidental to the making of the proposed improvement.
How are these costs spread over the district?
There are two basic methods for distributing the project costs.
1. The Unit Cost Method
In this option each property is assessed an equal share of the project cost. An example of this type of distribution might be a sanitary sewer project in a subdivision with erratically shaped lots. In this case each property owner derives the benefit of sanitary waste disposal and pays an equal share toward the total project.
2. The Front Foot Method:
This option requires that any specific property owner's share of the project be based on the number of feet of front or side yard exposure to the right-of-way. An example of this cost distribution method might be a sidewalk project where an owner of a large parcel will pay a proportionally larger share of the project cost than the owner of a small lot.
It is the City Assessor's responsibility to determine the most equitable method of cost distribution for any given project.
How are project payments handled?
On all Special Assessments involving "one-time" capital expenditures the first payment is due within 60 days of the date of confirmation of the roll by City Council. The second installment shall be due on July 1st of the following calendar year and the remaining installments shall be due July 1st of each succeeding year. Interest will be charged on all deferred installments at a rate not in excess of that authorized by law.
Property owners have until 60 days after the due date of any given installment to remit payment without penalty.
Property owners will be notified through the City Treasurer, by mail, of the amount of the assessment and the terms of payment.
Special Assessments for street lighting differ from the norm in that they involve both construction and ongoing costs for a service provided. Street light SAD's continue, with increases in energy costs being passed on to property owners, until such time as the service is removed. Street light payments are handled through the water and/or sewer billing procedure, where such service is provided by the City.
How long does it take to retire a Capital Construction Special Assessment debt?
Depending upon the circumstances, project cost and ability to pay, Council may provide for annual installments not to exceed 20 in number.
What happens if the actual cost of the project differs from the original estimates?
After the completion of each Special Assessment project for a local improvement, the City Administrator compiles the actual cost and certifies this to Council.
When the Special Assessment levy proves insufficient to meet the cost of the improvement for which it was made, the Council may make an additional pro rata assessment; provided that it does not exceed 15% of the original assessment. If the amount of the Special Assessment roll proves larger than the actual cost by more than 5% of the amount of the Special Assessment roll as confirmed, the Council shall make a pro-rated refund of the entire amount of the excess as listed in the original assessment. If the difference is less than 5%, then the Council shall transfer that amount to the general funds of the City.
