Every Minnesota home purchase includes a section on special assessments. It asks who pays the levied ones, who pays the pending ones, and how much gets held in escrow at closing. In most Lake Minnetonka towns, a freshly rebuilt street out front is one of the most likely things to show up there. Deephaven spent this summer rebuilding about five miles of road, and the way the city paid for it means that section of the paperwork works differently here.
The cost of those streets was not billed to the homes along them. It is being paid out of city property tax revenue, through tax abatement bonds and the capital levy. For anyone buying here, comparing Deephaven with a neighbor, or getting ready to sell, that decision changes where to look for the cost of a road.
A Bill That Was Never Mailed
The City of Deephaven's 2026 Street Improvement Project covers roughly five roadway miles in four phases, and construction began June 8, 2026. The city is using full-depth reclamation, which grinds the existing pavement and base in place to make a stronger subgrade before adding a new surface. Some drainage, curb and gutter work is added where needed. Phase 1 rebuilt the storm sewer around Thorpe Park and repaved its parking lot. Phase 2 added a stormwater infiltration basin in Calvary Lutheran Church's lower parking lot and new storm sewer on Montgomerie Avenue. Both are meant to filter runoff before it reaches Lake Louise and Robinson's Bay.
The money comes from two sources. The first is a bond issue. Deephaven's preliminary official statement dated April 23, 2026 describes $4,255,000 in General Obligation Tax Abatement Bonds, Series 2026A, issued to finance the Thorpe Park/Heathcote area base project and the Minnetonka Boulevard alternate project. The statement says the city expects to pay the debt by abating its own portion of taxes from specific parcels, up to a total equal to the bonds' principal, and by levying ad valorem property taxes to cover the interest. If those revenues fall short, the city has pledged to levy additional taxes on all taxable property in Deephaven. The statement does not describe special assessments against benefiting properties anywhere in that structure. The figures are labeled preliminary and subject to change.
The second source is the annual levy. As the Sun Sailor reported, the City Council approved a $4.68 million property tax levy for 2026. That is nearly $424,000, or 9.95%, above the 2025 levy, and it includes $1 million for the Capital Improvement Fund, $100,000 more than the year before. That fund helps pay for the street program, a warming house at Village Hall Park and a new Public Works front-end loader. According to the agenda packet, the main reason for the operating increase was employee compensation and insurance, so the street work accounts for only part of the jump.
The approach has a long history. In its spring 2017 newsletter, the city said it could not overlay every one of its worst streets each year, in part because it does not "have a policy of charging special assessments to our residents for street improvements." The city's April 15, 2026 letter to residents covers phasing, driveway access, irrigation repair and yard restoration. It does not mention an assessment.
Who Pays When No One Is Assessed
Every dollar in that structure is property tax revenue: the abated city taxes, the interest levy and the capital fund levy. The bond statement does not list which parcels are part of the abatement, so it does not show exactly how the cost is divided among homes. What it does show is who makes up Deephaven's tax base, and that base is almost entirely homes. Here is how the bond statement breaks down the city's 2025/26 net tax capacity:
| Property class, 2025/26 | Share of Deephaven's net tax capacity |
|---|---|
| Residential homestead | 87.26% |
| Commercial and residential seasonal/rec. | 9.44% |
| Commercial/industrial | 2.30% |
| Non-homestead residential | 0.59% |
| Personal property, utility and other | 0.41% |
Commercial and industrial property makes up just over 2% of the base, so a city that pays for roads out of property taxes is, in practice, collecting nearly all of that money from residential property. The ten largest taxpaying parcels in the 2025/26 roll are mostly residential lakeshore and seasonal residential properties, each carrying roughly half a percent to two-thirds of a percent of the city's total tax capacity. For the part of the cost carried by the levy, a home's share depends on its tax capacity and not on whether its own street was rebuilt. A home on a fully rebuilt street gets no separate charge for the work.
The base has also grown quickly. Deephaven's assessor's estimated market value went from about $1.52 billion in 2021/22 to about $2.32 billion in 2025/26, and the 2025/26 roll alone rose 7.56%. The Minnesota Department of Revenue calculated that 2024/25 assessed values in Deephaven were about 91.22% of actual selling prices. These are assessor figures, not current sale prices. They do show that a 9.95% levy increase was spread over a tax base that grew 7.56% the same year. How that plays out on any one home depends on how its value moved compared with the rest of the city.
Next Door, the Same Road Comes With a Per-House Charge
Excelsior, a short drive away, has a written assessment policy that sets residential street reconstruction, reclamation and mill-and-overlay assessments at 15% of project costs, divided per dwelling unit for single-family homes, duplexes and townhouses. When bonds finance a project, Excelsior's policy sets the assessment interest rate at 1.5 percentage points above the average bond rate, and the term cannot run longer than the bonds. The version available was last amended in October 2015, and we could not confirm whether it has changed since. Excelsior's own way of handling lake access is a separate topic we covered in what "lake access" means in Excelsior.
Under a per-unit policy, much of a road's cost attaches to the parcels on that street. It shows up as a line item with an amount, a term and an interest rate, and buyers and sellers bargain over it. Under Deephaven's approach for this project, the cost is carried by city property tax revenue through the abatement, the interest levy and the capital fund. It does not turn up in an assessment search on a single address.
About Half the Plan Is Still Ahead
The April 15 letter calls this project "the first phase of a larger Capital Improvement Plan to repair at least 10-miles of roadway that are currently in poor or failing condition." The current project page puts the figure at at least 9 miles. Either way, about five miles have been completed or are underway, and several more are still planned.
The bond statement also says the city "has no current plans for additional financing in the next 12 months" as of April 2026. Including the new bonds, Deephaven's total general obligation debt comes to $4,925,000. No public document we reviewed says how the remaining miles will be paid for or when. The 2026 approach is a sign of how the city works, but it does not commit future councils to anything. Mayor Ken Carlson and council incumbents Tony Jewett and John Studer are on the November 3 ballot. According to the city's elections page, direct balloting opens October 16.
How It Plays Out at Closing
Minnesota's assessment law, Minn. Stat. § 429.061, requires mailed notice and a hearing before a city adopts an assessment. The notice must give the parcel's proposed amount, prepayment terms and interest rate. The statute allows installments of up to 30 years, charges no interest if the full amount is paid within 30 days after adoption, and generally allows prepayment before November 15 of a given year. A 2019 explainer from Dahle Law describes how the Minnesota Realtors purchase agreement handled assessments at the time:
- Certified assessments due in the year of closing are assigned to buyer or seller by a choice in the contract.
- Unpaid installments from prior years are paid by the seller.
- Pending assessments, meaning improvements that have been approved but not yet levied, can be assumed by the buyer or paid by the seller. An older standard Minnesota purchase agreement form handles seller payment through an escrow of 1.5 times the estimated amount.
- Levied balances can usually be checked through the county's property tax website.
For a home on Heathcote Road or Montgomerie Avenue, that means the 2026 street work is not expected to appear in items 1 through 3. Deephaven's documents describe the project as funded by bonds and the levy, and the 2026 resident letter makes no mention of assessments. The record we reviewed does not include a current written policy that rules out assessments, so the county records and the city's assessment search are still the final word on any particular parcel. Sellers can expect buyers to ask about it, and our seller resources cover how disclosure fits into a listing.
Questions Deephaven Owners Are Asking This Fall
When does Heathcote Road wrap up?
As of early October, Phases 1, 2 and 4 are listed as functionally complete, and Phase 3 is active. The latest update scheduled Heathcote Road subgrade corrections for October 2 and storm sewer work for October 5 and 6, and it directs residents to the posted closure maps and exit routes. The city's letter estimated that each phase would take six weeks or less from pavement removal to restoration.
Is the city replacing my whole driveway?
The contractor may replace a small section of driveway inside the right of way. Owners who want the full driveway redone have to contract with Astech directly at (320) 363-8500.
Are the Midco and CenterPoint crews part of the city project?
No. CenterPoint Energy is running two gas main replacement projects in Deephaven. Midco is installing fiber citywide, with a goal of making service available to every resident by the end of 2026, and homeowners arrange their own service connections.
If you own along one of this summer's rebuilt streets and want to know how buyers will treat the new pavement, or if you are comparing a Deephaven address with one in Excelsior or Minnetonka and want both tax pictures side by side, Randy Kellogg will go through the city records with you for that specific property. Start with a home valuation or explore the Deephaven neighborhood page. Get 100% Randy on your side.
This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.
