Special Assessments Part 2: Funding Sources for Projects

There are a number of ways that a project can be funded. The City of West Fargo most often uses Special Assessments, however, there are other methods that can be used.

Sales tax is one way that funds projects. West Fargo has a 2% sales tax, with 75% of that (or 1.5%) going towards capital improvement projects. The remainder is used for Economic Development. This was voted on and passed by West Fargo Residents. In 2020, there is a projection of roughly $10.8 million in revenue to West Fargo in sales tax. That means about $8.1 million would go towards capital improvement projects.

A TIF District is an area of properties that are in a project to be improved. Before the project is complete, the assessed taxes are going to their respective agencies (City, Schools, Parks, County, etc). Once the project is complete, there is an increase in value, thus an increase in taxes. The difference in these taxes would then roll into the City (or other entity that is taxing the property). If there was $1,000 in taxes prior, then the assessed value would have the property pay $2,000 in taxes, that extra $1,000 goes into the fund. This fund then goes to pay for the project. A TIF District has timing associated with it. If it goes beyond 5 years, the County and School Board would need to approve it, as they wouldn't be receiving any part of that extra money generated in taxes. One big project where a TIF District is being proposed is the Convention Center that is currently being studied by the FM Convention & Visitor's Bureau and the City of West Fargo.

Property Taxes is one that can be utilized, however, the City of West Fargo doesn't utilize this as much as they could. Ultimately, property taxes would be raised, and the funds would go into the general fund, and then allocated out to projects as the City sees fit.

Utility Fees are another way that the City can pay for projects. Over the last couple of years a number of new water towers have been built. These have all been built with excess funds that have come from water service payments. When a utility fee is added to the monthly bill to Residents, the amount that is billed is utilized for that. So, for water/storm/sewer, the money there cannot be used for repaving of a street, for example.

Grants are a source, although are infrequent. There is currently a project in development (North Sheyenne Street Urban Reconstruction) that is utilizing a state grant. The grant offsets some or all of the costs of the project, with any remainder left to be paid for by the City utilizing other mechanisms.

Prairie Dog Funds is a source that will become available in the summer of 2021. This source of money comes from Oil taxes and is provided by the state. West Fargo will receive around $12.5M every two years from the State for new infrastructure projects.

As you can see, there are a lot of ways that projects can be funded, and there are more than what I shared. There are positives and negatives to all sources.

My next post will be about what can be done with Specials. If you have any questions, or want to reach out, please feel free to use the Contact Me Form or email me at anderson4wf@gmail.com!

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