What is a special assessment district?
A special assessment process is one way a township can assist taxpayers to fund the costs for certain types of public improvements under Michigan Public Act 188 of 1954 as amended. This act allows for certain improvements to be paid by the levying of taxes (or special assessments), assessed against the property benefited by it.
Public improvements authorized by Public Act 188 of 1954, as amended (MCL 41.721). include:
• The construction, improvement, and maintenance of storm or sanitary systems, water systems, public roads, public parks, or private roads, sidewalk. bicycle paths, lighting systems.
• The collection and disposal of garbage and rubbish
• The eradication or control of aquatic weeds and plants
• The construction, improvement, and maintenance of a lake, pond, river, stream, lagoon, or other body of water or of an improvement to the body of water. This includes, but is not limited to, dredging.
Special Assessment District (SAD)
A SAD is a defined group of properties especially benefited by an improvement. A SAD is initiated by petition of the property owners in a designated area who wish to make an authorized improvement. Petitions must represent 51% of the area (see assessor for details) and have the signatures of all parties listed as owners for each parcel to count toward the 51%. If there are some large parcels, it's pretty easy to get 51%. The township can then establish a SAD through a process of 3 public hearings. These are scheduled to coincide with the regular monthly meetings to reduce costs to the taxpayers and to meet the legal notice requirements to the public by publishing in the local newspaper.
1st hearing (June) - to hear the request and/or objections for the SAD district, review petitions meeting the 51% threshold, review the general proposed plan and budget. If there is enough support to continue, the board can adopt a resolution tentatively setting up the district. Those requesting the SAD need to provide cost estimates and detailed plans for the improvement, no later than one week before the next hearing for the boards review.
2nd hearing (July)- to establish the district, including a map to show which parcels are included; to instruct the assessor to calculate the tax roll with the dollar amounts for each parcel (based upon the provided cost estimates). Objections can be made at this hearing as well.
Objections can be made in writing (they should received by the clerk at least 24 hours in advance of a hearing to ensure distribution to board members and time for board members to consider them). Better yet - attend the meeting in person! Note: if a property owner wishes to challenge the petitions/improvement or SAD, they must have made "an official protest at the appropriate public hearing" outlined above or their challenge won't hold up on appeal.
3rd hearing (August) - to approve the roll as presented by the assessor.
All costs incurred by the township from the time of initial application through the duration of the special assessment and/or for as long as there remain any outstanding issues on the the improvement, these are included in the final cost. Related costs include: administration (time and materials), engineering (design and inspection), construction (material and labor), consultation (financial, accounting and legal services). The hearings should be complete in August, so the tax roll can go to the county as scheduled in September for placement on the December Tax roll. (A SAD can not go on the summer tax bill.)
How your share is calculated
There are several different methods commonly used to spread the costs for the improvement against properties within the SAD, including: front footage, land area, per site/lot, lot depth, lot value or a combination. The method varies according to the nature of the improvement and properties types/characteristics within the SAD. While front footage may be the simplest method, it may not be the most appropriate.
Paying your Special Assessment and annual review
You can pay your special assessment in full without interest at the time it is first levied or you can pay in annual installments for a specified number of years. SAD payments are only on the winter ad valor em property taxes, issued on December 1st. Each year, a new special assessment roll is prepared & reviewed by the township board for approval at a public hearing. Often the assessment amount remains about the same each year because of the careful planning at the beginning of the SAD and scrutinizing bills/needs during the assessment year. Because the special assessment can only go the winter tax bill, the above meetings and paperwork need to be completed by September 1st to go to the county.
Assessments Can be Revised
If project costs exceed estimates, the law permits the township board to reassess additional expenses. Any increase 9% or less can be approved by the board if the costs are substantiated by documentation. If the increase amount will exceed 9%, there must be public notices and a public hearing.
At the end of the SAD, if there is less than 5% surplus, the township may retain the surplus. If there is more than a 5 percent surplus (after all project costs are paid), property owners will be given a refund!
Billing and Payments For ongoing SAD projects, such as weed districts, lake associations often take the lead in finding the services they want for their lake. The lake association may sign a contract directly with the service provider and then pay them directly; later seeking reimbursement from the SAD; or the lake association may negotiate a contract with a service provider then bring the contract to the township board for approval and signature and the next regular monthly meeting (items are submitted one week prior to the meeting).
In both cases, payments follow the township board meeting schedule and documentation of all transactions and treatments is required. The lake association does not have the authority to sign a contract for the township. The lake association provides recommendations, but only the township board can approve contracts and payment of services. Payment requests need to comply with the following: the service is listed in the existing 5 year plan, the service must occur during the time frame of the existing SAD, request must be received at the township accounts payable office by 12n one week prior to the regular monthly meeting. The lake association is responsible for submitting a proposed budget annually as requested, but this does not supersede the services laid out in the 5 year plan. 5 year plans are crucial for long term lake treatment success and careful accountable use of tax payer money.
Property exempt from taxation is frequently not exempt from special assessments. For example, property used for a charitable purpose may be tax-exempt, but property owners may still have to pay special assessments.
GOVERNMENT LAKE BOARD
SAD's can formed for many purposes: roads, lights, etc. But lakes are alive and so only lakes can have a Government Lake Board. Government Lake Boards (NR-EPA Public Act 451) are great! They offer a lake association member (riparian landowner) a seat a the table and a vote; expertise from local water management professionals (ie: drain commissioner) and a board dedicated solely to the health and treatment of your lake!
The lake board can retain their own attorney and every meeting is about your lake, it's needs and services. GLB members can be paid to attend meetings, but often their interest and concern for the lake is enough for them. Lake boards do not replace the need or role of the lake association, in replaces the township board with members with more expertise, allowing better discussion with the sole focus of every meeting on the health of the lake!
For a summary of Weed District/SAD process, click here