Special Maintenance Fee vs Special Assessments

In South Dakota, while both special assessments and maintenance fees fund local improvements, they are distinct legal mechanisms with separate procedural requirements within the municipal code (SDCL 9-43).

Special Assessments

A special assessment is used by a city to finance the construction of new, permanent local improvements (e.g., a new street, curb, or sewer line). The procedure is rigorous and designed to ensure due process and proportionality to the benefit received.

Procedure for a Municipality to Impose a Special Assessment:

1. Investigation of Benefit: The governing body conducts an investigation to determine the amount of “special benefit” that the construction will confer on each specific property. The assessment cannot exceed this benefit.
2. Filing of Plans: Detailed plans and specifications for the project are filed with the municipal finance officer.
3. Drafting of Resolution of Necessity: The governing body drafts a proposed resolution outlining the project’s nature, estimated cost, and the proposed method of assessment (e.g., per front foot).
4. Public Hearing Notice (Publication): Notice of a public hearing on the resolution must be published in the official newspaper between 10 and 20 days prior to the hearing.
5. Public Hearing Notice (Mailing): Personal notice and a copy of the proposed resolution are mailed to all affected property owners, also between 10 and 20 days before the hearing.
6. Public Hearing & Protest Period: Landowners may formally object at the hearing. A significant protest (over 55% of property value) can force the governing body to require a supermajority vote to proceed.
7. Adoption of Resolution & Project Execution: After the hearing and protest period, the municipality can adopt the final resolution and proceed with construction.
8. Assessment Roll Hearing: A separate public hearing is held after the project’s completion to confirm the final assessment amounts for each property, with a new round of public notice and mailing requirements. 

Special Maintenance Fee (SDCL 9-43-138)

The special maintenance fee is an annual charge intended for the routine maintenance or repair of existing improvements (e.g., street resurfacing, patching, snow removal). The procedure is administrative and significantly less formal than for assessments.

Procedure for a Municipality to Impose a Special Maintenance Fee:

1. Resolution of Intent: The governing body passes a resolution designating the lots to be charged and the amount of the fee. This does not have the same rigorous “public hearing on necessity” requirements as an assessment.
2. Determination of Abutment: The fee must be levied on properties that are “fronting and abutting” the improvements that are being maintained.
3. Certification to Auditor: The municipality’s governing body certifies the total fee amount to the county auditor to be added to the property owner’s general tax bill and collected like other municipal taxes.
4. Review and Equalization: The fee is subject to review and equalization processes similar to general tax assessments, allowing property owners to challenge the amount through the standard county equalization board process. 

Key Distinction: The lack of an explicit, state-mandated public hearing within the text of SDCL 9-43-138 itself, combined with its treatment as an administrative certification, makes the fee much easier to impose than a special assessment, which requires extensive public input and proof of special benefit