Summary of VIII. Funding, Collection, and Payment of Drainage System Costs Summary of VIII. Funding, Collection, and Payment of Drainage System Costs

Summary

The drainage authority is responsible for establishing a drainage system fund from which the payment of all costs and expenses in connection with a drainage system are made. Funding, collection, and payment for the construction of a public drainage project begins with the final order. A properly drafted final order is crucial as it not only concludes project findings, but defines and directs actions into the future after the project has been constructed.

A statement showing the total cost of the drainage project with the estimated cost of all items required to complete work must be issued by the auditor or watershed district secretary after the construction contract has been awarded. The cost is then prorated to each tract of property affected in direct proportion to the benefits awarded. The cost to each property is the amount of liability for the property for the drainage project. The auditor uses this information to create the tabular lien statement, the purpose of which is to reflect the cost of the drainage system that each tract will bear. (Section VIII, A.1) More information on drainage liens is provided in Section VIII, A.

In order to defray the cost of establishing and constructing a drainage system and to generate capital for disbursement from a drainage system fund until monies from liens and assessments are received, the county board may authorize the issuance of county bonds. There are four different kinds of bonds or debt instruments mentioned in Minn. Stat. 103E that may be issued by the county to pay for the cost of establishment and construction of a project: temporary drainage bonds, definitive drainage bonds, drainage funding bonds, and drainage bonds. Not all projects may require a bond as the drainage system may have enough funds to pay for a project, if not, the drainage system account may borrow funds. More information on drainage bonds is provided in Section VIII, B.

Accounting for each drainage system is the responsibility of the county auditor or watershed district secretary. Each drainage system is considered as a separate entity for accounting purposes, with a full set of financial accounts. Each drainage system has a drainage system repair fund (Section VIII, C.2) and has the means of investment for excess funds (Section VIII, C.3). The drainage system accounts may lend money with interest to other drainage system accounts and may borrow money at the cost of interest from other drainage system accounts. (Section VIII, C.4)

Watershed districts have no power to tax and all funds available to them are levied and collected by the respective county boards. The board of managers of a watershed district is required to maintain several separate funds for district proposes which are outlined in Section VIII, D.