Special Assessment Bonds

Cities may share in the cost of a project through a special assessment process allowed under Code of Iowa Sections 384.37-384.79. The city’s engineer and attorneys will need to coordinate with the city clerk to ensure that this prescribed process is executed correctly.

In this process, the city may levy part of the cost to abutting property owners who benefit from the infrastructure improvements. Private property that may be assessed includes property owned by the county, school and state (but not the federal government); and also includes churches and other tax exempt organizations. If main sewers, sewage pumping stations, disposal and treatment plants, waterworks, water mains, extensions, and drainage conduits are extending outside the city, the project may still be assessed if the city receives a petition from the affected property owners, is within three miles of the city boundary, and has approval from the Board of Supervisors and the City Development Board.

If the special assessment is initiated by a petition of the property owners requesting to be assessed and waiving notice and hearing requirements, the process time is greatly reduced. On the other hand if the city council initiates the project, a good deal of advanced planning is necessary. Below is a brief outline of the procedure. The city’s engineer and attorney are critical to the success of this process.

  1. Hire engineer for the project
  2. Council adopts “preliminary resolution”
  3. Preliminary plans are made available
  4. Estimated cost is prepared in accordance with Code Section 384.37(26) and may include “default fund” of up to 10 percent of assessed costs
  5. Plat preparation
  6. Schedule of assessments prepared by engineer
  7. Council adopts plat, schedule and estimate of cost
  8. Council considers resolution of necessity and calls for hearing
  9. Notice of public hearing must be published for two consecutive weeks, first publication not less than 10 nor more than 20 days before the hearing
  10. Notice to property owners concerning public hearing must be mailed not less than 15 days before hearing
  11. After hearing, council may adopt, amend or defer resolution of necessity (requires three/fourths vote unless a “remonstrance” is filed, then the vote must be unanimous)
  12. After adoption of resolution of necessity:
    • City clerk must certify resolution, plat and schedule to county treasurer(s)
    • Council orders preparation and filing of detailed plans and specifications by resolution
  13. Contract letting procedures must follow Chapter 26 requirements
  14. Engineer must file certificate within 15 days of final completion
  15. Within 15 days after engineer’s certificate is filed, council must accept or reject the work and within the next 10 days, council must determine amount to be assessed
  16. Within 30 days of determination of amount, engineer must file final assessment schedule
  17. Within 10 days after engineer’s filing, council must adopt schedule, levy assessment and provide notice to property owners
  18. Final schedule of assessments
    • Notice to be published for two weeks, first of which must not be more than 15 days after date schedule is filed with county treasurer
    • Mail copy of notice to each property owner on or before second publication
    • Assessments are payable without interest within 30 days after first publication notice.

The division of lots, the assessment in amounts not to exceed 25 percent of valuation, assessing deficiency amounts when further improvements are made (must be pro-rated), the interest calculation, and due dates of installments are all things that are contingent on the individual project and subject to legal interpretation.

The city can issue bonds after the final assessment schedule is certified. There are also very detailed procedures and guidelines for this process. For example, the total principal amount issued may not exceed the amount of unpaid special assessments, less the proportionate unpaid amount assessed for the default fund. Coordination with an engineer and attorney may be a challenge. However, with strapped resources, many cities are adopting cost sharing policies.​

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