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S.F. No. 778 - Municipal Street Improvement Districts
Author: Senator Jim Carlson
Prepared By: Alexis C. Stangl, Senate Counsel (651/296-4397)
Date: March 3, 2015


S.F. No. 778 allows cities to create street improvement districts and impose street improvement fees to pay for street improvements in the district.

Section 1, subdivision 1 provides definitions for the section.  A “street improvement district” is defined as “a geographical area designated by a municipality and located within the municipality within which street improvements and maintenance may be undertaken and financed according to this section.”

Subdivision 2 authorizes a city to establish a municipal street improvement district by adopting an ordinance.  The city may defray the costs of municipal street improvements and maintenance by charging fees to all property located in the district.  A street improvement district must not include property already in another street improvement district. 

Subdivision 3 requires that the total costs of street improvements and maintenance must be uniformly apportioned to all developed parcels and tracts located in the district based on the classification of the property.  Apportionment must be made on the basis of estimated market value, tax capacity, front footage, land or building area, or a combination of these factors.  Rates must not be apportioned so that a class of property has to pay more than twice what it would if rates were apportioned uniformly to all classes.

Subdivision 4 provides the process for a city to adopt a street improvement district.  Before establishing a district or authorizing a street improvement fee, the city must propose and adopt a street improvement plan that identifies the location of the district and estimates the costs of the proposed improvements.  The fees may be collected for a period of 5 to 20 years.  Notice of a public hearing on the proposed plan must be mailed to all affected landowners at least 30 days before the hearing.  Notice must also be posted for at least 30 days before the hearing.  At the public hearing, the city council must present the plan and affected landowners must have the opportunity to comment before the council considers adopting the plan.

Subdivision 5 provides that revenue from street improvement fees must be placed in a separate account and be used only for projects located in the district and identified in the street improvement plan.

Subdivision 6 provides that the ordinance must provide for billing and payment of the fee on a specified basis.  The city may collect a street improvement fee for up to 20 years.  Unpaid fees may be certified to the county auditor for collection as a special assessment.

Subdivision 7 requires a municipality to impose a municipal improvement fee by ordinance. The ordinance must not be voted on or adopted until after public notice and a hearing.

Subdivision 8 provides that imposing a street improvement fee does not restrict the city from using other methods to pay costs of local street improvements or maintenance, except that a city must not impose special assessments for projects funded with street improvement fees.

Subdivision 9 prohibits a city from imposing a street improvement fee on an unimproved parcel until the later of three years after either (1) the date of substantial completion of paving the previously unimproved street; or (2) the date which a structure is built and first occupied.

Subdivision 10 prohibits a municipality from imposing street improvement on institutions of public charity as defined in the tax code.

This section is effective on July 1, 2015.


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