As many cities in western North Dakota experience rapid growth, there may be occasions when a city needs to consider a Special Improvement District to finance growing infrastructure needs. The simple definition of a Special Improvement District, also known as Special Assessment District, is a tax on private property to meet the cost of a public improvement that benefits the property.
If a municipality is considering an upcoming improvement to be paid for by special assessments, the first two things that must be done are to retain an engineer and an attorney. They can help guide a city through the myriad of procedures that need to be completed. The Special Improvement District can be initiated by the governing body, or by acceptance of the governing body of the written petitions of the owners of a majority of the area of property within a proposed district. In North Dakota, North Dakota Century Code (state law) Chapter 40-22, Improvements by Special Assessment Method, authorizes municipalities to defray the expenses of the following by special assessments:
- Water and sewer improvements, including the construction of wells, intakes, pumping stations, settling basins, filtration plants, standpipes, water towers, reservoirs, water mains, sanitary and storm sewer mains and outlets, and facilities for the treatment and disposal of sewage.
- Street improvements including the acquisition, opening, widening, grading, graveling, paving, repaving or surfacing with tar, asphalt, bituminous, or other appropriate material. Street resurfacing and resealing, as well as the repair of any highway, avenue, alley, or public place within the municipality. Construction and reconstruction of overhead pedestrian bridges, pedestrian tunnels, storm sewers, curbs and gutters, sidewalks, and service connections for water and other utilities, as well as the installation, operation, and maintenance of streetlights are also included.
- Boulevard improvements including planting trees, construction of grass plots, and sowing grass seed therein, as well as the maintenance and preservation of such improvements by watering, cutting, or trimming.
- Flood protection including the necessary land and easements, and the construction of the necessary works within and without the municipality.
- Parking lots, ramps, garages, and other facilities for motor vehicles, including acquiring or leasing the necessary property and easements.
There are approximately 15 steps to follow for the creation and implementation of a special improvement district in North Dakota, and another eleven steps for the creation and implementation of the Special Assessment Commission, who determine the benefits to be assessed to each parcel of property. The following steps give a basic overview of the process:
1. RESOLUTION CREATING DISTRICT
- NDCC 40-22-08, 09 & 40-05-01 (60)
- Identify by number and type of improvement.
- District boundaries must be drawn so as to include all properties that will be benefitted by the construction of the improvement.
- District may contain two or more separate property areas.
- District can be enlarged after it is created upon petition signed by the owners of 3/4 of the area to be added.
2. RESOLUTION DIRECTING PREPARATION OF ENGINEER’S REPORT AND COST ESTIMATE
- NDCC 40-22-10
- Report to contain the general nature, purpose and feasibility of the improvement.
- Report to contain an estimate of the probable cost of work.
- Report must contain separate statement of the estimated costs not bid, but assessed, such as administrative, legal, and engineering.
3. PRELIMINARY ENGINEER’S REPORT
- NDCC 40-22-10
- After receiving preliminary Engineer’s Report, the governing body may direct the engineer to prepare detailed plans and specs.
- Detailed plans and specs are usually not ordered by the governing body until a protest hearing is held.
4. RESOLUTION APPROVING ENGINEER’S REPORT
- NDCC 40-22-10
5. RESOLUTION DIRECTING PREPARATION OF DETAILED PLANS
- NDCC 40-22-11
6. RESOLUTION APPROVING ENGINEER’S PLANS, SPECIFICATIONS & ESTIMATES
- NDCC 40-22-11
7. RESOLUTION OF NECESSITY
- NDCC 40-22-15
- Approved by governing body after preliminary report is approved.
- The resolution must refer to the Engineer’s Report and must include a map of the city or county showing the proposed improvement district.
- Resolution must be published once each week for two consecutive weeks in city or county’s official newspaper.
- Contains notice that owners of the property in the district have the opportunity to protest against the improvement.
- Not required if a written petition for the improvement has been received that is signed by the owners of a majority of the area of property within the district.
- Must give property owners 30 days after first publication to file written protests with the city or county auditor.
- Protests must include the owner’s name and a description of the property.
8. AFFIDAVIT OF PUBLICATION FOR RESOLUTION OF NECESSITY
- Supplied by official newspaper.
9. RESOLUTION DETERMINING INSUFFICIENCY OF PROTESTS
- NDCC 40-22-17 & 18
- At the first meeting following the expiration of the protest period, the governing body holds a hearing to determine the sufficiency of the protests.
- If the protests represent the majority of the area of the property within the district on a square footage basis, the project is barred.
- If the protests are found to be insufficient or invalid, the project may proceed.
10. RESOLUTION DIRECTING ADVERTISEMENT OF BIDS
- NDCC 40-22-19, NDCC Chp. 48-01.1 & NDCC Chp 48-02
- Advertisement for bids must be published once each week for two consecutive weeks in the city or county’s official newspaper.
- The first publication must be at least 14 days before bid opening.
11. AFFIDAVIT OF PUBLICATION FOR ADVERTISEMENT OF BIDS
- Supplied by official newspaper.
12. RESOLUTION AWARDING CONTRACT
- NDCC 48.01.1-02, 07; NDCC 40-22-35, 36, 37; NDCC 40-22-09
- Bids to be opened publicly and read aloud.
- A contract may be awarded to the lowest and best bidder (lowest responsible bidder).
- Contract may not be awarded if the cost of the work exceeds the engineer’s preliminary estimate by 40% or more.
13. RESOLUTION APPROVING CONTRACTOR’S BOND
- NDCC 48-02-06.2
- Governing body must approve contractor’s bond prior to permitting any work to be done.
14. FINANCING RESOLUTION (DEFINITIVE IMPROVEMENT WARRANT)
- NDCC 40-24-18, 19, 20, 22
- Drawn up by bond counsel.
15. INITIAL RESOLUTION FOR REFUNDING (REFUNDING IMPROVEMENT BONDS)
- NDCC Chp. 40-27
- Prepared by bond counsel.
Setting up a special improvement district can be one of the most intensive procedural methods used by a city or county governing board to finance infrastructure improvements. State statutes regarding special improvements can vary greatly from state to state, county to county, and city to city. For more information on special improvement districts in Minnesota, Montana, and South Dakota, please contact your city attorney or click on the links listed below.
The information contained in this article does not constitute legal advice, and AE2S Nexus is not acting as your attorney. The law changes very rapidly and, accordingly, we cannot guarantee that all information is up to date. Additionally, the law differs from jurisdiction to jurisdiction, and is subject to interpretation of courts located in each state and county. Legal advice must be tailored to the specific circumstances of each case, and the tools and information provided here may not be an appropriate fit for your municipality’s situation. Nothing that you read or is provided on this website should be used as a substitute for legal counsel.