New Special Assessment Authority for Local Governments

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Kara Millonzi

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UPDATE August 2013: For more detailed information about special assessment authority in North Carolina, click here. Note also that the General Assembly extended the sunset on the new special assessment authority to July 1, 2015. It also made a few modifications to that authority. See S.L. 2013-371.

For years, North Carolina counties and municipalities have been authorized to impose special assessments on real property to fund certain public improvements that benefit the real property being assessed. During the 2008 and 2009 legislative sessions, the General Assembly bestowed new special assessment authority on local governments—entitled special assessments for critical infrastructure needs—providing units another avenue to fund certain capital projects. (S.L. 2008-165 (HB 1770); S.L. 2009-525 (SB 97)).

The new special assessment authority became effective on August 3, 2008, and currently expires on July 1, 2013. For a detailed description of the contours of the new authority, including the procedures for imposing the assessments, click here. For a brief summary of the differences between the traditional and new special assessment authorities, read on….

The new special assessment authority does not alter the existing authority to make special assessments under Article 9 of Chapter 153A and Article 10 of Chapter 160A of the General Statutes (traditional special assessment method). Instead, it provides supplemental authority for counties and municipalities to use assessments as a financing tool for certain capital projects. The supplemental authority, found in Article 9A of Chapter 153A and Article 10A of Chapter 160A of the General Statutes, overlaps the existing authority with respect to some of the procedural requirements and allowable purposes for which special assessments may be made. It adds new purposes, however, and alters a few of the procedural requirements for approving and making the assessments. It also allows counties and municipalities to issue certain types of debt to front the costs of the projects for which assessments are imposed.

For those familiar with the traditional special assessment authority, the new special assessment authority differs in several respects. Specifically, the new special assessment authority:

  • authorizes counties and municipalities to impose special assessments to finance a different, although somewhat overlapping, set of purposes than the traditional special assessment method. Under the new method, a local government may make special assessments against benefitted properties to finance the capital costs of projects for which proejct development financing debt instruments may be issued under G.S. 159-103 or to finance the installation of distributed generation renewable energy sources or energy efficiency improvements that are premanently fixed to residential, commercial, industrial, or other real property.

  • requires that counties and municipalities receive a petition for any of the authorized projects to be financed by assessments signed by at least a majority of the owners of real property to be assessed and who represent at least 66 percent of the assessed value of all real property to be assessed.

  • authorizes counties and municipalities that impose special assessments to borrow money to front the costs of projects for which assessments may be imposed according to one or more of the following methods: revenue bonds, project development financing debt instruments and general obligation bonds.

  • authorizes counties and municipalities to pledge the special assessment revenue as security for revenue bonds used to fund the projects for which the assessments are imposed.

  • allows counties and municipalities to impose the special assessments before the projects being financed are complete. The assessments are based on estimated costs.

  • does not expressly limit the bases upon which the assessments may be made. Instead, it leaves the determination of the bases of the assessments to the discretion of the governing board, subject only to the requirement that the assessments bear some relationship to the amount of benefit that accrues to the assessed properties.

  • allows a governing board to authorize assessments to be paid in up to 30 annual installments, with interest.

  • expressly authorizes counties and municipalities to contract with private agencies to implement a project financed by the imposition of special assessments. And, if no more than 25 percent of the estimated cost of a project is to be funded from the proceeds of general obligation bonds or general revenues, it authorizes the local government to exempt a private agency from the provisions of Article 8 of Chapter 143 of the General Statutes, with certain restrictions.

  • expires on July 1, 2013. (The expiration date will not affect the validity of assessments or bonds issued or authorized before the effective date of the expiration.)







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