If lots or parcels of land belonging to the United States, to this state, or to a county, city, public agency, mandatory of the government, school board, educational, penal or reform institution, or facility for housing of persons with developmental or intellectual disabilities or mental health disorders are in use in the performance of a public function and are included within the assessment district, the city council may, in the resolution of intention, declare that the lots or parcels of land, or any of them, shall be omitted from the assessment thereafter to be made to cover the costs and expenses of the improvement. If the lots or parcels of land, or any of them, are omitted from the assessment by the resolution, the total cost and expense of all work done shall be assessed on the remaining lots lying
within the limits of the assessment district, without regard to the omitted lots or parcels of land. If the city declares in the resolution of intention that the lots or parcels of land, or any of them, shall be included in the assessment, or if no declaration is made respecting the lots or parcels of land, or any of them, the city shall be liable for the sums thereafter assessed against the lots or parcels of land, and the sums shall be payable by the city out of the general fund unless the city council, in its resolution of intention, designates another fund. However, sums that may be assessed against those lots or parcels of land shall not be payable by the city when those sums are paid by the owner of or the governing body controlling the lots or parcels of land.