Special assessments are often one of the least understood tax levies. Special assessments are one of the ways that a local unit of government can collect money to pay for local improvements. A special assessment is a levy designed to recover the costs of public improvements that confer local and particular benefits upon real property within a defined area. Special assessments are based upon the theory that the value of property in the special assessment district (SAD for short) is enhanced by the improvement for which the assessment is made.
Fair and Representative
When a government unit, usually a city, is considering levying a special assessment to help pay for a public improvement project, it is a good idea to hire an appraisal firm that has experience with special assessment benefit analysis. The goal is to ensure that the levied amount is fair and is representative of the special benefit accrued to the assessed properties. Rarely, is 100% of the benefit special, or unique to only the assessed properties. There is almost always some public benefit to any improvement project.
Some examples of public improvements that can be paid for with special assessments can include:
- Streets and roads
- Storm and sanitary sewers
- Street lighting
- Waterworks
- Parks and open spaces
- Planting and maintenance of boulevard plantings
- Retaining walls
- Municipal gas and electric distribution facilities
- Nuisance abatement
- Flood control works
In Minnesota in order for a special assessment to be valid it must meet three criteria:
- The land must receive a special benefit from the improvement that is constructed
- The assessment must be uniform upon the same class of property (ie. residential single family, vs commercial office, vs industrial warehouse, etc.)
- The assessment must not exceed the special benefit which is measured by the increase in the market value of the land owing to the improvement.
The special benefit is measured by the difference between what a willing buyer would pay a willing seller for the property before and after the improvement, based on the highest and best use of the land. The value benefits, if any, of a street, utility, or other public improvement accrue to the land component of the value of a property, not the value of the buildings and improvements. Even properties that do not abut the improvement may benefit from the improvement and those properties may be assessed.
Lake State Realty has been providing and defending special benefits appraisals for municipalities and other government agencies for over 30 years. Julie Jeffrey Schwartz, an appraiser at Lake State Realty co-authored the Special Assessment Guide (2008) and the updated Special Assessment Toolkit (2020) for the League of Minnesota Cities.
We have extensive experience providing proposed assessment rolls for large-scale public improvement projects impacting hundreds of parcels per assessment roll and millions of dollars of special assessments. Some examples of experience include projects for new or upgrading major interstate interchanges, conversions on unsewered to sewered areas, street and utility projects, drainage/flood control, and successfully supporting the special benefit conclusions in court.
We also have experience challenging the special assessment imposed by local government units, helping property owners or property owner groups ensure their property has been appropriately classified and the special assessment does not exceed the special benefit to their property, often resulting in a reassessment to properties or favorable court outcome.
Special Assessment Benefit Valuation
Understanding the legalities of special assessments, and Minnesota Statutes Chapter 429, allows Lake State to be uniquely positioned to help both government units establish and defend special assessment rolls and assessments, and for property owners to successfully dispute and reduce a special assessment.
Past Experience
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Dayton Parkway Freeway Interchange Special Assessment Roll
Lake State Realty was hired by the City of Dayton to complete a special assessment roll for a new freeway interchange with 94 at Dayton Parkway. We completed the assessment roll and all assessments were accepted or administratively negotiated so that no appeals required court action. -
City of Hugo Downtown Improvements Project
In 2021 Lake State Realty was contracted by the City of Hugo to complete an assessment roll for the City of Hugos 2020 Downtown Improvements Project.
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City of Buffalo Pulaski Shores Special Assessment Roll (300+ Properties)
Lake State Realty was hired by the City of Buffalo to complete an assessment roll for over 300 properties to add water and sewer to Pulaski Shores.
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City of Lino Lakes Exit 123 and I-35E Special Assessment Roll
Lake State Realty was hired by the City of Lino Lakes to complete a special assessment roll for an upgraded interchange at Exit 123 and I-35E. The assessment roll stood up to legal challenge and after expert witness testimony the assessments were upheld by the court.
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City of Jordan Special Assessment Roll
City of Jordan hired Lake State Realty to complete an assessment roll for 35 Parcels for the purpose of a new road, streetscape improvements, water main, sanitary sewer, and storm sewer upgrades.
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Rush City Assessment Policy
Lake State Realty helped Rush City develop their assessment policy. (2008)
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City of Saint Joseph
Lake State Realty was hired by the City of Saint Joseph to complete a special assessment roll for 50 properties for the purposes of new roadways, underground utilities, and storm sewer.
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City of Long Lake 2008 Street Improvement Project
Lake State Realty was hired by the City of Long Lake to complete a special assessment roll for the 2008 Street Improvement Project. The assessment roll covered 38 single family properties.
