STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 5059

April 21, 1978

MUNICIPALITIES:

Special assessments

TAX ASSESSMENTS:

Imposition of special assessments in anticipation of issuance of municipal bonds

A municipality may, in accordance with law, levy special assessments for a local improvement prior to the sale and delivery of bonds secured by such special assessments.

Honorable Gary G. Corbin

State Senator

25th District

The Capitol

Lansing, Michigan

You have asked for my opinion as to 'whether a local unit of government can bill its taxpayers for a sewer project when the bonds are not yet sold.' Your question was posed in connection with certain action of the Fenton City Council regarding the financing of a sewer project by the issuance of special assessment bonds.

It appears that the City of Fenton has now issued special assessment bonds, the purchase of which will be used to finance the cost of constructing the sewer project in question. In addition to the special assessments, the city has pledged its full faith and credit should the assessments prove to be insufficient to pay principal and interest on the bonds when due. The Municipal Finance Commission approved the application to issue bonds on May 25, 1976, and the bonds were sold at public sale on June 14, 1976.

As background to answering your question, special assessments are special charges imposed by law on land to defray the expense, in whole or in part, of a local improvement made by a municipal corporation on the theory that the owner of the property has received benefits from the improvement in excess of the benefits accruing to the general public. Fluckey v City of Plymouth, 358 Mich 447; 100 NW2d 486 (1960). Thus, special assessments have been distinguished from general taxes in that they are made on the assumption that a district or part of a community is specially benefited by a public expenditure. Knott v City of Flint, 363 Mich 483; 109 NW2d 908 (1961).

The general rule is that the time when an assessment must be made rests in the discretion of the assessing authority unless the question of time is specifically or impliedly dealt with by statute.

In Michigan, it has been held that the making of estimates of the costs of local improvements is jurisdictional to the power to make the special assessment for payment of the cost of the improvement and that the failure to give the opportunity to object to the improvement is fatal to the validity of the assessment. Smith v Garden City, 372 Mich 189; 125 NW2d 269 (1963).

The question of imposing special assessments for local improvements is, however, independent of the question of the issuance of municipal bonds in anticipation of such assessments. In fact, the decision of whether to issue bonds to finance an improvement and impose special assessments is discretionary with the municipality, 15 McQuillin, Municipal Corporations (3d ed), Sec. 43.23, p 511.

A municipality may decide not to issue bonds to pay for an improvement; it may issue bonds in anticipation of the receipt of only some of the special assessments; or it may issue bonds in anticipation of the receipt of all of the assessments. When bonds are payable from special assessments, it is the duty of the municipality to levy and collect, in the manner prescribed by law, a sum sufficient for the purpose. 15 McQuillin, Municipal Corporations (3d ed), Sec. 43.136, p 719.

It is my opinion, therefore, that in the absence of a statutory provision to the contrary, a municipality may make a special assessment for payment for the cost of a local improvement prior to the completion of the project.

Frank J. Kelley