Memorandum
REPORT TO:
City Commission
FROM:
Melissa Hodnett, Finance Director
SUBJECT:
Resolution Levying a Special Assessment Upon Benefitted Properties Within Special Improvement District No. 789 for the Riverside Wastewater Improvements
MEETING DATE:
October 6, 2026
AGENDA ITEM TYPE:
Resolution
RECOMMENDATION:
Adopt Commission Resolution Levying a Special Assessment Upon Benefitted Properties Within Special Improvement District No. 789 for the Riverside Wastewater Improvements.
STRATEGIC PLAN:
BACKGROUND:
On February 8, 2022 a petition of annexation was submitted by a majority of landowners in the Riverside Manor Subdivision, Riverside Green Subdivision, and Tract 1, Tract 2, and Tract 3 of Certificate of Survey No. 3030, requesting the City Commission extend the boundaries of the City of Bozeman. At its April 5, 2022 meeting the City Commission adopted Resolution 5355, for the purpose of annexing an area of land containing approximately 57.5 acres, located north of the East Gallatin River and on both side of Springhill Road, known as the Riverside Annexation.
At its November 19, 2024 meeting the City Commission adopted Resolution 5647, declaring it to be the intention of the City Commission to create Special Improvement District (SID) No. 789 (Riverside Neighborhood) for the purpose of financing the costs of the public wastewater infrastructure that connects Riverside's sewer collection system to the City's Water Reclamation Facility.
On December 17, 2024 the public hearing for creation was held providing an opportunity for the public to comment on the proposal and for the Commission to hear and decide upon all protests that were received prior to the end of the protect period. Within the protest period, the City received no protests from the owners of properties subject to assessment. At its December 17, 2024 meeting the City Commission adopted Resolution 5648 creating SID 789.
The City financed the project through the issuance of bonds under the State of Montana's revolving loan program, administered by the Department of Natural Resources and Conservation (DNRC) of the State of Montana. The total cost of the improvements was $2,510,368. At its June 2, 2026 meeting the Commission adopted Resolution No. 2026-48, authorizing the issuance of the Special Improvement District No. 789 bond in a principal amount not to exceed $1,692,000 and a subordinate revenue bond in a principal amount not to exceed $850,000 through the DNRC Revolving Loan Program. The subordinate revenue bond issued for $850,000 is eligible for loan forgiveness which the city expects to occur in fiscal year 2027 once the DNRC has completed final approval of the project. The SID 789 bond was issued for $1,660,368 at a fixed interest rate of 2.5%, payable in semiannual installments of principal and interest over a period not exceeding twenty (20) years.
This resolution is the final step in the process to levy the special assessment for properties within the SID 789. Adoption of the Resolution will levy the special assessment upon all benefitted properties located within the District in accordance with the assessment methodology established in Resolution No. 5647, the resolution of intent to create the District. MCA 7-12-4189 establishes a simple interest to be charged on all special assessments that is 1/2 of 1% above the interest rate payable on the outstanding bonds. Therefore, the special assessments shall bear interest at an annual rate of 3%, equal to the 2.5% bond rate paid to DNRC plus .50% simple interest. Notice of this hearing, at which objections to the adoption of this resolution will be heard, was published and mailed to the owners of property with the District in accordance with 7-12-4177, Montana Code Annotated.
Special Assessments are collected in the same manner and at the same time as assessments, and are payable in two installments, one-half on or before November 30 each year, and one-half on or before May 31 of the following year.
UNRESOLVED ISSUES:
None.
ALTERNATIVES:
As suggested by Commission.
FISCAL EFFECTS:
As described in the Resolution of Intention to Create the District, special assessments are used to pay back the debt obligations funding the costs of the improvements.