AGO 87-07.

• Case Date: May 21, 1978
• Court: North Dakota

North Dakota Attorney General Opinions 1978. AGO 87-07. OPINION 87-7Date Issued: May 21, 1978 (AGO 87-07) Requested by: Albert J. Hardy Belfield City Attorney- QUESTION PRESENTED - Whether the date of issuance of two separate refunding improvement bond issues creates a prior claim on behalf of the earlier issued bonds to money in a deficiency fund. Whether the governing body of a city is required to levy a tax upon all taxable property in the city to pay principal and interest due on special assessment warrants, when the special assessments levied and collected are insufficient to pay principal and interest then due.- ATTORNEY GENERAL'S OPINION - It is my opinion that the date of issuance of two separate refunding improvement bonds does not create a prior claim on behalf of the earlier issue bonds to money in a deficiency fund. It is my further opinion that the governing body of a city is required to levy a tax upon all taxable property in the city to pay principal and interest due on the special assessment warrants, when the special assessments levied and collected are insufficient to pay principal and interest then due. - ANALYSES - I. It appears from the assumptions contained in the questions presented there is uncertainty regarding the nature of the lien granted in N.D.C.C. section 40-24-01. The question assumes that the issuance of debt creates a lien under N.D.C.C. section 40-24-01, and that lien runs to the direct benefit of the holders of refunding improvement bonds. N.D.C.C. section 40-24-01 provides as follows:

40-24-01. LIEN OF SPECIAL ASSESSMENT - ATTACHES ON APPROVAL OF ASSESSMENT LIST - SUBJECT ONLY TO GENERAL TAX LIEN. A special assessment, together with all interest and penalties which accrue thereon, shall be and remain a lien upon the property upon which the assessment is levied from the time the assessment list is approved by the governing body until the assessment is paid fully. Such lien shall have precedence over all other liens except general tax liens and shall not be divested by any judicial sale. No mistake in the description of the property covered by the special assessment lien or in the name of the owner of such property shall defeat the lien if the assessed property can be identified by the description in the assessment list.

The lien created by a properly levied special assessment runs to the benefit of the city and is established at the time an assessment list "is approved by the governing body" under N.D.C.C section 40-24-01. It is intended as the enforcement mechanism for the city's collection of special assessments. It is not a lien which is created upon the issuance of refunding improvement bonds. Rather, the collected special assessments paid on properly issued warrants are...