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Special Assessments: Is There a Better Way to Fund Large Projects?

By Staff | Jul 30, 2015

To the Editor:

Watching the “big dig”- technically known as the Lake Street Project- has brought the topic of special assessments back into focus. Hearing stories of the financial impact of such a concept was the impetus behind a CRG Task Force Study. We wondered why, when ALL of us use those streets being replaced and many benefit from the utility lines beneath them, wasn’t there a better way to plan and pay for these large infrastructure projects? Our task force developed four areas we wanted to pursue, the topics of the study are:

1. The history of special assessments in Emmetsburg.

2. How does our city fund large projects?

3. How do other cities fund their projects?

4. How can we as a community and our leaders use our study to start a serious dialogue about special assessments?

First and foremost it is important to understand that this study was done, not to affix blame or accuse past or present city councils, but rather to explore reasonable alternatives to what we believe has become a serious problem for many property owners in our town. If we have options, what are they, and how do other communities handle the costs of large infrastructure projects?

The initial use of special assessments occurred in the 1990’s and was agreed to as a stop gap measure in the middle of a crises. The city had no money set aside to pay for the complete breakdown of the sewer system in a large area. Sewers were backing up into basements and the problem had to be addressed. According to a member of the city council at that time, the bonding company recommended that the council not ask for a referendum for a GO Bond but rather pay for a chunk of the cost through a special assessment. In hindsight, some members of that city council feel that they made a mistake and wish that the special assessment funding had never been used! Special assessment funding has lived through the years despite its inherent regressive and punitive structure.

A few examples will help explain what is meant by regressive and punitive: Imagine an 80 year old widow just getting by on a fixed income. One day she receives a letter stating she owes $12,000 for a special assessment. Her home is paid for and has an assessed value of $50,000 her assessment is over 20% of her home value. Her neighbor has the same size lot and a home valued at $300,000. He is also assessed $12,000 which is 4% of his home value. A regressive tax hits the people the hardest that can least afford to pay. Another example: Consider the young couple who has saved enough money to buy their first home. They struggle to make the payments. One day they receive the same type of letter stating they owe $14,400 in special assessments on their property valued at $64,000 which is 22.5% of the total property value. How can we morally inflict this kind of financial hard ship on those who are struggling to make ends meet? Especially when our city has other means and resources to offset the cost of large infrastructure projects. People actually live in fear that theirs will be the next street, sewer and water main to be replaced.

Our final report will be completed by August 1, 2015. In order to gather current and accurate information on special assessments, the CRG Task Force surveyed 40 cities and towns across the State of Iowa. Our final report will be presented to the City Council and EMU Board and to any group interested

Respectfully submitted,

(signed) Pete Hamilton,

Chairperson, CRG

Emmetsburg, IA