Special assessment tax
Special assessment is the term used in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 to designate a unique charge that government units can assess against real estate
Real estate
In general use, esp. North American, 'real estate' is taken to mean "Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature; an interest vested in this; an item of real property; buildings or...

 parcels for certain public projects. This charge is levied in a specific geographic area known as a Special Assessment District (S.A.D.). A special assessment may only be levied against parcels of real estate which have been identified as having received a direct and unique "benefit" from the public project.


The most universally known special assessments, are charges levied against lands when drinking water
Drinking water
Drinking water or potable water is water pure enough to be consumed or used with low risk of immediate or long term harm. In most developed countries, the water supplied to households, commerce and industry is all of drinking water standard, even though only a very small proportion is actually...

 lines are installed; when sewer
Sewerage refers to the infrastructure that conveys sewage. It encompasses receiving drains, manholes, pumping stations, storm overflows, screening chambers, etc. of the sanitary sewer...

 lines are installed; or when street
A street is a paved public thoroughfare in a built environment. It is a public parcel of land adjoining buildings in an urban context, on which people may freely assemble, interact, and move about. A street can be as simple as a level patch of dirt, but is more often paved with a hard, durable...

s are paved with concrete
Concrete is a composite construction material, composed of cement and other cementitious materials such as fly ash and slag cement, aggregate , water and chemical admixtures.The word concrete comes from the Latin word...

 or some other impervious surface. However, special assessment tax levies can be made for other purposes including police
The police is a personification of the state designated to put in practice the enforced law, protect property and reduce civil disorder in civilian matters. Their powers include the legitimized use of force...

 or fire protection
Fire protection
Fire protection is the study and practice of mitigating the unwanted effects of fires. It involves the study of the behaviour, compartmentalisation, suppression and investigation of fire and its related emergencies, as well as the research and development, production, testing and application of...

, parking
Parking is the act of stopping a vehicle and leaving it unoccupied for more than a brief time. Parking on one or both sides of a road is commonly permitted, though often with restrictions...

 structures, street lighting and many of the other purposes permitted by state and local government statutes.

While variations of the concept of special assessments may exist in a number of the world’s nations, in the United States of America, a special assessment is more formally defined through court action as remuneration that a governmental unit may demand from property owners to fund a public project which creates a "benefit" in properties lying within a special geographic area known as a special assessment district.

Special assessment district

A Special Assessment District
Special-purpose district
Special-purpose districts or special district governments in the United States are independent governmental units that exist separately from, and with substantial administrative and fiscal independence from, general purpose local governments such as county, municipal, and township governments. As...

 (S.A.D.) is a geographic area in which the market value of real estate is enhanced due to the influence of a public improvement
Public works
Public works are a broad category of projects, financed and constructed by the government, for recreational, employment, and health and safety uses in the greater community...

 and in which a tax
To tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...

 is apportioned to recover the costs of the public improvement.

Individual special assessment levies may be made only in a Special Assessment District (S.A.D.), which is one of two kinds of geographic areas commonly associated with a special assessment levy.

The other kind of geographic area is the "service district". Circumstances vary according to laws of various states, but the essential distinguishing feature between these two types of districts is this: a service district is composed of all individual parcels of land that are somehow connected to the public improvement for which the special assessment is to be levied. The special assessment district consists of only those properties which are designated by the applicable law as having received a specific and unique "benefit" from the public improvement.

Examples of properties which may be connected in some way to a public improvement and are therefore included within a service district, but may be excluded from the special assessment district are properties associated with a dam
A dam is a barrier that impounds water or underground streams. Dams generally serve the primary purpose of retaining water, while other structures such as floodgates or levees are used to manage or prevent water flow into specific land regions. Hydropower and pumped-storage hydroelectricity are...

 and properties associated with a business parking
Parking lot
A parking lot , also known as car lot, is a cleared area that is intended for parking vehicles. Usually, the term refers to a dedicated area that has been provided with a durable or semi-durable surface....


In the case of a dam ... all properties located within a scientifically defined "watershed
Drainage basin
A drainage basin is an extent or an area of land where surface water from rain and melting snow or ice converges to a single point, usually the exit of the basin, where the waters join another waterbody, such as a river, lake, reservoir, estuary, wetland, sea, or ocean...

" and all properties lying within the floodplain
A floodplain, or flood plain, is a flat or nearly flat land adjacent a stream or river that stretches from the banks of its channel to the base of the enclosing valley walls and experiences flooding during periods of high discharge...

 of the dam are connected by how water drains from an entire watershed into a lake and how water within the lake may flood specific areas downstream. Since the area of a watershed and the area of a floodplain are often very, very large when compared to the area of a lake, it is possible for some portions of the watershed and floodplain to be physically located in some government unit other than the lake. It is also possible that the government unit authorizing a special assessment levy does not have jurisdiction to include all land within the watershed and floodplain. In this example, the service district would be large enough to include all properties connected to the lake by how water flows. The Special Assessment District would be a smaller area within which the government unit proposing the special assessment has the power to levy a special assessment tax.

In the case of an economic development project (e.g. a parking structure for a business district) circumstances which would cause the service district and Special Assessment District to have differing geographic boundaries relates to the existing and permitted use of property rather than political subdivisions. That is, economic forces within the market would be the key to including or excluding a specific property.

The service district for a parking facility is generally limited to the geographic area from which pedestrians would walk between businesses and the parking structure. An example might be that users of a parking structure will traverse an area defined as being within six blocks or less of a parking structure. In this example, the service district would consist of all properties lying within six blocks of the parking structure.

However, there may be more than just retail business
Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be...

 structures within the six block area. All classes of properties lying within the distance shoppers can reasonably be expected to walk to and from retail outlets could include a block of homes or an industrial
Industry refers to the production of an economic good or service within an economy.-Industrial sectors:There are four key industrial economic sectors: the primary sector, largely raw material extraction industries such as mining and farming; the secondary sector, involving refining, construction,...

 facility. The commercial properties would be assessed because surveys would illustrate that retail sales depend upon adequate parking for customers. It could also be demonstrated that residential properties (homes), would be excluded because users of those properties might not reasonably be expected to "benefit" from the parking structure. Depending upon various scenario
A scenario is a synoptical collage of an event or series of actions and events. In the Commedia dell'arte it was an outline of entrances, exits, and action describing the plot of a play that was literally pinned to the back of the scenery...

s, industrial properties might similarly, not "benefit", from a parking structure.


There are variations between state governments as to what constitutes a “benefit” under special assessment laws.

In general, the "benefit" must result directly, uniquely and specifically from the public project. For example, when water and sewer lines are installed by government units, nearby land often increases in value. Both the presence of safe drinking water and of sewer lines means that expensive well
Water well
A water well is an excavation or structure created in the ground by digging, driving, boring or drilling to access groundwater in underground aquifers. The well water is drawn by an electric submersible pump, a trash pump, a vertical turbine pump, a handpump or a mechanical pump...

s and septic systems do not have to be installed by affected property owners. It also means the potential for contamination of ground water and surface areas from improperly treated sewage
Sewage is water-carried waste, in solution or suspension, that is intended to be removed from a community. Also known as wastewater, it is more than 99% water and is characterized by volume or rate of flow, physical condition, chemical constituents and the bacteriological organisms that it contains...

 will be eliminated. Land that might have been “unbuildable” before may become "buildable" once government provided water and sewer services become available. Providing water and sewer service are situations which may adapt formerly unusable land for residential or commercial use. A storm sewer or a dam or dike may mitigate flooding and therefore the sewer, dike or dam relieves a burden, flooding.

The term benefit most frequently means an increase in the market value of the benefited property. However, some states historically have defined the term benefit to mean more than an increase in market value. For example, benefit may mean a special adaptability of the land or a relief from some burden.

Tax limited to real property

Only certain property can be specially assessed. The "property" to be assessed must be real estate as opposed to "personalty". Personalty is a taxation term which means personal property
Personal property
Personal property, roughly speaking, is private property that is moveable, as opposed to real property or real estate. In the common law systems personal property may also be called chattels or personalty. In the civil law systems personal property is often called movable property or movables - any...


Summary of special assessment components

In summary, when a government unit funds a public project that directly, uniquely and specifically "benefits" (increases) the value of certain parcels of real estate it may levy a charge against each specifically benefitted property as compensation for the benefit. Properties designated to be specially assessed are assembled into a geographic area with clearly defined boundaries. This geographic area is termed a Special Assessment District.

Unique Aspect

In some states, sometimes one government unit can levy a special assessment against another. This is true in cases where the public's health, safety and welfare are being promoted by the project (e.g. repairs to a dam). Refer to specific state statutes for details.

A special assessment is not an ad valorem property tax

The property tax most citizens are aware of is known as an ad valorem tax. This tax is used to fund general or day-to-day government operations. An ad valorem tax is commonly levied on both real and personal property. A property tax is based upon a property's market value. The ad valorem tax levy is based upon a "millage rate" which never varies from parcel to parcel. The foundation principles for ad valorem taxes are that each property is valued according to its market value (equity
Equity theory
Equity theory is a theory that attempts to explain relational satisfaction in terms of perceptions of fair/unfair distributions of resources within interpersonal relationships...

) and that each property is taxed based upon a single millage rate that applies to everyone (uniformity).

Special assessment levies are not ad valorem property taxes even though they may be collected on a property tax bill. A special assessment is based strictly upon the concepts of "need" and "benefit." Special assessments require a finding that the public improvement is "needed" for a reason consistent with the law which permits the special assessment and that each property specially assessed receives a unique, measurable and direct benefit from the public improvement that was needed. The basic idea is, if government funds make a property more valuable, the government has the right to get money back from a property owner. This contrasts significantly with the ad valorem tax which is extracted to fund government operations that are designed to benefit all citizens.

An ad valorem tax is based upon the legal principles of equity and uniformity. That is, everyone must be treated fairly and equally. In special assessments, proportionality is a key element. A special assessment is premised upon the necessity for the public improvement and the fiscal burden imposed must be reasonably proportional to the benefit created. Unlike ad valorem taxes,special assessments are not expected to be uniformly levied (the same millage rate for each parcel). The fiscal burden
Government spending
Government spending includes all government consumption, investment but excludes transfer payments made by a state. Government acquisition of goods and services for current use to directly satisfy individual or collective needs of the members of the community is classed as government final...

 is spread among only those properties within the special assessment district and it is apportioned to each property based upon the unique, specific and direct benefit the property received from the public improvement. Thus, a vacant lot might be assessed the same fee as an adjacent lot which has a million dollar home on it.


Among the unique characteristics of the special assessment is one that makes a special assessment particularly onerous for ordinary citizens. A special assessment levy enjoys a legal benefit known as a "presumption of validity." This means that it is much harder and usually, much more difficult to appeal than the ad valorem property tax most citizens are familiar with. This happens because it is difficult for the ordinary citizen to recognize that an error in the special assessment procedure or methodology has occurred and the resources a taxpayer must use to fight a special assessment levy are more expansive and costly than resources to fight an improper ad valorem tax on their real estate.

For example, most property taxpayers intuitively
Intuition (philosophy)
Intuition is a priori knowledge or experiential belief characterized by its immediacy. Beyond this, the nature of intuition is debated. Roughly speaking, there are two main views. They are:...

 understand market forces associated with the value of their homes or other property. Consequently, if the tax assessment seems out of line, they usually can recognize it quickly. In the case of special assessments, it is difficult for even professionals to grasp the complex nuances associated with the concepts of necessity and benefit which are the foundations of a special assessment levy.

Once a taxpayer has recognized a problem exists, the difference in procedures to appeal a property tax and a special assessment levy makes a special assessment appeal much more difficult. Whereas, ad valorem tax appeals can often be made at a local level without any professional help, special assessment appeals often require the assistance of attorneys
A lawyer, according to Black's Law Dictionary, is "a person learned in the law; as an attorney, counsel or solicitor; a person who is practicing law." Law is the system of rules of conduct established by the sovereign government of a society to correct wrongs, maintain the stability of political...

, engineer
An engineer is a professional practitioner of engineering, concerned with applying scientific knowledge, mathematics and ingenuity to develop solutions for technical problems. Engineers design materials, structures, machines and systems while considering the limitations imposed by practicality,...

s and other consultants. Furthermore, a taxpayer often has the opportunity to protest a property tax assessment annually. In the case of most special assessments, there is usually a very short window of opportunity to appeal and if the window is missed, there can be little recourse available.

Of most importance to any property owner who feels aggrieved by a special assessment levy is a legal concept known as a "presumption of validity". This means courts regard the actions of local government units with deference and the courts presume the government unit did everything correctly. At a minimum, any challenge to the special assessment must show the government did not act lawfully. That challenge is significant.

For all these reasons, it is critical for any person facing a special assessment levy to participate in public hearings and monitor the special assessment process from its earliest stages.
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