Special Assessment District Update
In February 2003, the Novi City Council adopted “Review the SAD Process” as one of its goals. The new procedure detailed here is the result of ordinance review and comparison studies of similar communities. It is believed that this new SAD Ordinance, adopted October 6, 2003, will reduce the process by four months.
What is a Special Assessment?
A Special Assessment can be made for any public improvement within Novi, which is of such a nature as to directly benefit any property within a defined area.
What types of improvements are financed by Special Assessment?
The most common types of improvements that are financed through the SAD process include:
- Road improvements
- Sanitary sewers
- Water mains
- Storm sewers
- Street lighting
How does the process begin?
The SAD process is initiated by either a resident Request for Information Petition or Resolution by the City Council.
If the process is begun through the new Request for Information Petition, it must be signed by 30 percent of the total units of benefit in the district. Then, a public informational meeting is held regarding the SAD process, preliminary design and cost estimates for the project, and timeframe for the process. The City of Novi’s Engineering Division does preliminary engineering for the public informational meeting.
Special Assessment Request for Information Petition (Informal Petition)
Residents then have 60 days following the public information meeting in which to submit a formal Petition to Start a Special Assessment District, which must be signed by 51 percent of the total units of benefit (per tap unit, front foot, etc. ) in the proposed district. District boundaries may change between the public information meeting and the submission of the Petition to Start a Special Assessment District. This petition initiates the formal SAD process.
What is a unit of benefit?
A unit of benefit is determined by the City of Novi on a basis appropriate to the improvement.
Who oversees the bid process?
The City of Novi’s Engineering Division facilitates the bid process and oversees construction of projects.
Once the process is started, can it be stopped?
City Council views this process as a partnership between the City and the residents. The ordinance does state that property owners can request to stop the process at any time until the City Council adopts Resolution #5; however, since the City incurs significant planning and
design expenses at the onset of the process, the City Council has the right to approve or deny such request.
How many years can the SAD payments be spread over and what is the payment schedule?
The amount of years varies by type of project, however the term is normally less than the life expectancy of the improvement (not to exceed 15 years for roads and 20 years for all other utilities.
The first installment is due upon confirmation of the SAD roll before construction begins, OR on such date as the City Council may determine. Subsequent installments are billed with the summer property tax bill.
What is the interest rate?
The interest rate reflects current market conditions and is not to exceed eight percent. The rate is established by the City Council. Interest is calculated on the unpaid balance. If the assessment is prepaid prior to the commencement of interest date, there is no interest charge.
If I move or sell my property, am I still responsible for the loan?
Once the SAD roll is confirmed the City places a lien on the properties and assumes the position of first lien holder. The City does not require that the assessment be paid off during a real estate transfer; however, individuals should consult with a title company to verify requirements.
Is there a procedure that would provide relief for property owners with a demonstrated financial hardship?
With the approval of the City Council and the City Assessor, a Special Assessment may be deferred by the reason of poverty per “Federal guidelines” for a specific property. The lien is placed on the property and all payments are deferred until the property is transferred. However, interest accrues on the unpaid balance.
Resolution # 1
City Council makes three tentative determinations: the necessity of the improvement; the conclusion on whether to proceed with the improvement; and, the establishment of a proposed district of properties that will be specially benefited by the improvement (the proposed "special assessment district"). Once such determinations are made, the Council directs the City Manager to have plans and a cost estimate prepared for the improvement.
Resolution # 2
City Council confirms the tentative necessity of the improvement, sets a public hearing date on the issues to be considered for Resolution # 3, and directs the City Clerk to provide notice of the public hearing as provided in the City Code.
First Public Hearing is held to allow the Council to hear comments and objections on the proposed improvement and on the proposed special assessment district.
Resolution # 3
Following the public hearing, City Council again determines whether to proceed with the improvement, and, if so, this resolution approves the preliminary plans and cost estimate, designates the special assessment district, and directs the City Assessor to prepare a proposed special assessment roll, reflecting the total cost of designing, financing and constructing the improvement and the amount each property in the special assessment district will have to pay.
Resolution # 4
City Council receives the proposed special assessment roll prepared by the City Assessor, sets a date for a public hearing on the proposed assessment roll, and directs the City Clerk to provide notice of the public hearing as provided in the City Code.
Second Public Hearing is held to allow the Council to hear comments and objections on the proposed special assessment roll.
Resolution # 5
Following the public hearing, City Council makes the final determination on proceeding with the improvement, and confirms the special assessment roll, either as presented or as modified based upon comments and objections received at the public hearing.
The approved improvement is then pursued, and properties are assessed in accordance with Resolution # 5.
For more information
Ben Croy, Water & Sewer Senior Manager 248-735-5661 Email