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Chapter 6. Special Assessment Legal and Regulatory Issues

As mentioned above, all 50 States have the authority to levy property taxes and special assessments.⁶¹

6.1 Ensuring Appropriate Legislation

A State only needs legislation to implement a particular special assessment in a particular time and place related to a specific infrastructure improvement under its administrative jurisdiction.

Subordinate jurisdictions, however, cannot implement a special assessment unless they first obtain a delegation of power from their State to levy a special assessment. This is referred to as “authorizing” or “enabling” legislation. If enabling legislation is enacted, the subordinate jurisdiction could then enact an “implementing” ordinance to create a particular special assessment pursuant to the criteria and conditions specified in the enabling legislation.

California, for example, has several State statutes that authorize special assessments for different types of public infrastructure facilities and services. In addition, there are several statutes that establish procedural requirements for the creation of special assessments. Proposition 218 (California Constitution articles XIII C and D) can supersede inconsistent provisions in these procedural statutes. Therefore, in California, special assessment implementation legislation references the appropriate authorizing legislation and conforms to the procedural statutes, including the requirements of Proposition 218.⁶²

6.2 Treating Property Owners and Users Equitably

Most States, either by constitutional provision or by statute, have a requirement of “uniformity” that all taxpayers in the same circumstances be treated alike. In the case of property taxation, it requires that all property of the same type and condition be treated alike.⁶³

“Uniformity in taxation implies equality in the burden of taxation, which cannot exist without uniformity in the mode of assessment, as well as in the rate of taxation. Further, the uniformity must be coextensive with the territory to which it applies. And it must be extended to all property subject to taxation, so that all property may be taxed alike and equally.”—Exchange Bank v. Hines, 3 Ohio St. 15. And see Edye v. Bobertson, 112 U. S. 580, 5 Sup. Ct. 247, 28 L Ed. 798. Adams v. Mississippi State Bank, 75 Miss. 701, 23 South. 395; People v. Auditor General, 7 Mich. 90.⁶⁴

Because a special assessment is applied to some properties but not others, it involves showing that properties subject to the special assessment receive a special (specific and direct) benefit from a particular public facility or service, apart from any general benefit that might accrue to all properties generally.

Once it is shown that identified properties receive a special benefit, they can be subjected to a special assessment provided that the special assessment is proportionate to the special benefits received or to the costs of providing them. Under no circumstances can the special assessment exceed the special benefits received, regardless of whether the assessment is based on benefits or costs.⁶⁵

6.3 Avoiding and Surviving Legal Challenges

Avoiding and surviving legal challenges is best accomplished by strictly adhering to authorizing legislation and procedural requirements. Documentation of findings is also critical. The following process for establishing a special assessment is generally applicable:

1. (a) Initiation as specified in State authorizing legislation. Typically, proceedings may be initiated by a petition signed by the persons proposed to be assessed or by the action of an authorized legislative body.
2. (b) Preparation of Assessment Engineer’s Report. An assessment engineer prepares a report for presentation to the legislative body that generally contains the following:
   1. (i) A description of the improvements to be financed, including plans and specifications (which may be general in nature);
   2. (ii) A cost estimate for the acquisition or construction of the improvements as well as the incidental and financing costs;
   3. (iii) Identification of the benefits resulting from the improvements, separating the general benefits from the special benefits;
   4. (iv) An assessment diagram depicting the boundaries of the assessment district based upon the geographic extent of properties receiving special benefits, any zones, and the parcels within the assessment district;
   5. (iv) A description of the method of spreading the assessments throughout the assessment district;
   6. (v) An assessment roll, which is a list of all the parcels proposed to be assessed and the proposed assessment against the parcels; and
   7. (vi) The proposed maximum annual assessment per parcel.⁶⁶

Footnotes

⁶¹ Special assessments are authorized in all 50 States either under explicit enabling legislation or by State constitutional provisions. See “Special Assessments: An Introduction,” Federal Highway Administration, https://www.fhwa.dot.gov/ipd/fact_sheets/value_cap_special_assessments.aspx

⁶² Lough, J.P. “Basics of Special Assessments.” https://www.cacities.org/Resources-Documents/Member-Engagement/Professional-Departments/City-Attorneys/Library/2002/2-2001-Cont-Ed;-Lough-Basics-of-Special-Benefit-As

⁶³ Black’s Law Dictionary. Abridged Fifth Edition, (West Publishing) 1983. See “Uniform” at p. 796.

⁶⁴ Black’s Law Dictionary Online. https://thelawdictionary.org/uniformity/#:~:text=Uniformity%20In%20taxation%20implies%20equality%20in%20the%20burden,coextensive%20with%20the%20territory%20to%20which%20it%20applies

⁶⁵ See Miller Nash Graham & Dunn, “The Seattle Waterfront Local Improvement District (LID)” (October 2013), http://www.millernash.com/the-seattle-waterfront-local-improvement-district-lid-10-30-2013

⁶⁶ Lough, J. P. “Basics of Special Assessments.” https://www.cacities.org/Resources-Documents/Member-Engagement/Professional-Departments/City-Attorneys/Library/2002/2-2001-Cont-Ed;-Lough-Basics-of-Special-Benefit-As

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