What is an Assessment District?

An Assessment District is a financing mechanism under The California Streets and Highways Code, Division 10 and 12 which enables cities, counties and special districts organized for the purpose of aiding in the development or improvement to, or within the district, to designate specific areas as Assessment Districts, with the approval of a majority of the landowners based on financial obligations, and allows these Districts to collect special assessments to finance the improvements constructed or acquired by the District. Assessment Districts help each property owner pay a fair share of the costs of such improvements over a period of years at reasonable interest rates and insures that the cost will be spread to all properties that receive direct and special benefit by the improvements constructed.

What can an Assessment District Finance?

Improvements that provide a direct and special benefit such as streets, sidewalks, curbs and gutters, water, sewer, gas electric, lighting, drainage or flood control facilities.

What may not be financed by an Assessment District?

Anything that provides general public benefit such as parks, schools, libraries, jails, childcare and administrative facilities.

What is an Assessment?

“Assessment” means any levy or charge by an agency upon real property that is based upon the special benefit conferred upon the real property by a public improvement or service, that is imposed to pay the capital cost of the public improvement, the maintenance and operation expenses of the public improvement, or the cost of the service being provided. “Assessment” includes, but is not limited to, “Special Assessment,” “Benefit Assessment,” and “Maintenance Assessment.”

How is an Assessment District created?

A Resolution of Intention is adopted stating that the agency intends to form an assessment district. The resolution states name of district, type of facilities to be financed, sets the time and place for the public hearing, and orders the preparation of an engineer’s report. Proposition 218 ballots are mailed to each property owner within the district. If the majority vote in favor for formation, and public hearing is concluded, the district is formed. There is may be an initial period where landowners may payoff the assessment in full. Financing is arranged for those who do not wish to payoff the assessments and the assessment district constructs or acquires the proposed improvements.

Is there an election for an Assessment District?

During the public hearing conducted by the legislative body, the modified Engineer’s Report is presented, testimony is received from property owners and ballots are tabulated. Ballots are weighted according to the proportional financial obligation of the affected property. If ballots submitted in opposition to the assessment exceed ballots submitted in favor, there is a majority protest. If a majority protest does not exist, the legislative body may adopt the resolution confirming the assessments and approving financing.

How are the Special Assessments charged?

A lien is placed against the property. This lien is amortized over the life of the assessment and is collected with the regular property taxes. The special assessment cannot, by law, be based on the value of the property. The assessment is set in the Engineer’s Report through determination of direct and special benefit.

Is the Assessment District deductible for income tax purposes?

The general consensus is that the assessment is not deductible. Consult with your tax preparer.