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
- Sidewalks
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.
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.
SAD Process
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
Brian Coburn, Engineer
45175 W. Ten Mile Road
Novi, MI 48375
248-347-0454
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