Questions and Answers
Garrison Kathio West Mille Lacs Lake Sanitary District
1 Question: What is a special assessment?
A special assessment is a fee levied on a property that has received some sort of special benefit. When the District was first constructed, a special assessment was levied on properties in the District that were within 500 feet of a sanitary sewer line. All properties on the line were assessed a fee of $5.00 per ‘front foot’ of the property.
Properties with dwellings on them were also assessed $6,000 per house or equivalent dwelling unit (EDU). These special assessments pay a small portion of the cost to construct the sanitary sewer line. Residents were given an option to pay these special assessments on their taxes over a period of 15 years.
2. Question: What is a tax levy?
A tax levy is a tax placed on property within a unit of government, i.e., school, city, township, state. The actual amount that each property pays is based solely on the value of the property. It is not based on the need or use of a particular property.
School districts have tax levies. You do not pay the school district levy on the basis of how many children live at your house. Two houses of equal value will pay the same amount, even if one has 10 children attending the schools, and the other house has no children in the school.
3. Question: Why did my tax levy for the Sanitary District go up?
The Sanitary District is required by law to balance its books, and to pay its bonds. The line was built with a combination of revenue from grants, low interest loans, and bonds. The bonds are General Obligation (GO) bonds that are backed by the full taxing power of the District. During the process of building, not all of the bonds were being paid. Now that the District is fully constructed, all of our loans and bonds are in a repayment status. The District first uses the ongoing revenue from special assessments (see number 1 above), to make the bond payments. The special assessments are dedicated to debt repayment, and may not be used for anything else.
However, our bond payments are also paid out of other sources of revenue. For the Sanitary District this is the monthly user fee and the tax levy. A portion of each of these goes to pay our debt service.
4. Question: Aren’t tax levies limited by the amount that they benefit the property?
As discussed above, a levy is based solely on the value of a property. “ The board may levy taxes for any district purpose on all property taxable within the district…” Minn. Stat. § 115.33 Subd. 1 Tax Levies.
5. Question: But I read somewhere that special assessments are limited by the amount that they benefit the property. How does this compare with the answer to Question 4 above?
Special assessments are limited to the amount that they benefit the property. However, a levy is not measured that way. A levy is solely based upon the value of the property.
6. Question: I read in Minnesota Statute §275.065 that you have to have a public hearing after November 24, and not before 6:00 in the evening, and that a notice of this hearing must accompany the statement of my proposed property tax for the coming year. Why haven’t you done this?
If you look at Minn. Stat. § 275.065, Subd. 3 (c), you will see that this requirement for a separate hearing only applies to some units of government. This requirement does not apply to sanitary districts. Instead the process for a sanitary district is to propose and publish a budget, and then hold a public hearing on it. That hearing has already taken place.
7. Question: When I review the District’s budget, I see that treatment costs are higher than last year, but you didn’t increase the monthly service charge. How come? Is the levy being used to pay treatment charges?
The short answer is no, not at this time. Not all of the monthly charges go to pay treatment costs. In the budget for 2013, a higher portion of the monthly service charge is going to pay treatment costs.