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A plan to finance the local share of the F-M Area Diversion Project will save thousands of dollars a year for some Fargo homeowners, compared to potential flood insurance rates.

The Cass County Joint Water Resource District (CCJWRD) is administering an assessment district throughout the area in North Dakota benefited by the Diversion Project. The intent is for property owners to not have to make assessed payments; a sales tax will do that.

The District’s Diversion Project Assessment Committee (DPAC); which includes representatives from Fargo, West Fargo, Cass County and the CCJWRD board; has been working for more than two years to establish the district. “We prefer to call it a ‘liability district’ for the homeowner, because I think if you call it an ‘assessment’, people expect to get a bill, and that’s not necessarily the case,” said Rocky Schneider, Diversion Project consultant.

The “liability district” is a special assessment process, but it is different from the special assessment process used by a city. The State allows a water district to use a process in which each property owner gets a vote. The weight of each property’s vote is based on the benefit assigned to the property, so the higher a property’s value and protection level, the more that property’s vote is weighted and is ultimately assessed. Properties which are not in as much risk of flooding will not be assessed as much under the liability district.

“Each property receiving an assessment will get a vote. This doesn’t necessarily mean it will show up on your tax bill as long as those mortgage payments continue to get paid every year through sales tax revenues, but it will still be a liability against your property,” said Schneider. “Most people are familiar with buying a home, and things are similar under the liability assessment. You’re being asked to co-sign a loan as a property owner so the Diversion Authority and Water District can get a better rate on their bond and better coverage requirements.”

Liability will Go Down Over Time and be Much Lower than Flood Insurance

The structure of the liability assessment also benefits property owners in the long term. “The mortgage payments that come every year would likely be paid before the property owner sees them,” continued Schneider. “We think it’s important to remember that the liability goes down over time. It will go down over the course of 30 years as payments are made.”

“A lower interest rate and lower coverage requirements are the attractive features of the assessment district borrowing,” said Mark Brodshaug, Cass County Joint Water Resource District Chairman. “Using special assessment-backed bonds is the most effective way to borrow money long term and to spread the financing over a long period to time. If you just back it with sales tax revenue, you need larger coverage, which means you can’t borrow as much money.”

Here are examples of “liability” for a home valued at $200,000 (average evaluation):

In South Fargo

  • $5,909 Total Initial Liability (equating to a $363 payment annually)

In West Fargo

  • $788 Total Initial Liability (equating to a $48 payment annually)

The liability will be reduced annually through sales tax payments and continued regional growth. The two voter-approved sales taxes in Cass County and Fargo are estimated to raise $700 million over the life of the tax.

Without the Diversion Project, a flood insurance policy for some homeowners in south Fargo could range between $2,000 and $4,000, annually. “Without the Diversion, depending on where you live, a lot of people in Fargo will be required to have flood insurance, and those flood insurance rates are expected to climb over time,” said Schneider. “However, once the Diversion Project is built, and after the liability assessment is set up, the cost of flood insurance will be much lower and eventually disappear.”

Next Steps

The CCJWRD will need to do several additional things before the liability assessment becomes a reality. It still needs to adopt a Preliminary Assessment List, select a public hearing date, produce and mail ballots, hold the hearing, and count the votes.