moorhead city council 

Nancy Edmonds Hanson

The now-completed railroad underpass beneath Southeast Main Avenue and 20th and 21st Streets – the most expensive infrastructure project ever undertaken in Moorhead – may be offering smooth sailing to drivers dodging long trains blocking the streets, but the discussion was anything but smooth when special assessments to finance one part of its cost came up at Monday’s meeting of the Moorhead City Council.

Four frustrated citizens spoke up at the public hearing, adding their voices to 131 phone calls, seven emails and four visits inquiring about or objecting to the issues discussed at the public hearing. Their point of contention: the means of financing the last piece of the financial puzzle, the $76.5 million gap between available funding and bids that came in over budget.

Though about 90% of the $76.5 million project was covered by state appropriations, municipal state aid, the BNSF Railroad and federal and state grants, the city council in 2018 was faced with the need to fill the gap locally. Made up of mostly different ward representatives than those serving today, that board decided to employ a combination of a general property tax debt levy to pay for 80%, or $6 million, of the shortfall, and assign the last 20%, $1.5 million, as special assessments.

After impassioned discussion about fairness, the council did approve the assessments. About 3,400 property owners will be assessed to cover that portion of the city’s bond. The assessment district roughly extends from Eighth Avenue North to 12th Avenue South, and from the river to 28th Street North and Rensvold Boulevard.

Back in 2018 as the project was slated to begin, explained assistant city engineer Tom Trowbridge, the future assessments were projected to be $775 on properties of one acre or less, $1,162.50 on those between 1 and 5 acres, and $1,550 on larger parcels. After cost-cutting measures were implemented, the levels were cut substantially to what the council ultimately approved: $439.60 for the smaller lots, and $659.40 and $863.77 for the larger areas.

Trowbridge explained the assessments may be paid in full at the time they’re received or spread out in declining amounts over 20 years, with an interest rate of 5.5%. The first year’s payment would be $46.16, declining gradually to less than $25 in the final year.

Why use special assessments at all? According to the engineer, the 2018 decision was made because the alternative, a general obligation bond paid by the entire city, would have required a citywide vote. Because the delay would have imperiled other sources of funding, a decision had to be reached more quickly; the vote would have taken the better part of at least a year. Meanwhile, the project’s cost would have continued to rise. The council, he said, chose to move forward despite concerns over unfairly burdening property owners in the surrounding assessment district, but “directed us to make the assessment district as large as we possibly could,” he added.

Council members Deb White, Heather Nesemeier and Shelly Dahlquist objected strongly to the decision made by their counterparts four years before. “Special assessments are the most regressive tax we have,” White said, pointing out that only property size is taken into account, not income or other factors.

Trowbridge and Mayor Shelly Carlson stressed that no special assessments will be used to fund the city’s second major railroad underpass project on 11th Street, expected to begin in 2024 or 2025.

State law permits some property owners to delay, though not eliminate, payment due to age, disability or military duty. Trowbridge said those who may qualify should contact the city finance department.

One question remained. Will this happen all over again as the 11th Street triple underpass moves forward? According to Trowbridge, the city and the Minnesota Department of Transportation are working to fully fund the project without the use of area-wide special assessments. Moorhead has already allocated more than $6,325,000 in federal grants and MSA funds toward its share of the project cost and, he said, is pursuing other possible resources to reduce its share of the cost and avoid the unpopular assessment option.