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Assuming that a jurisdiction is authorized to levy a property tax and special assessments; if that jurisdiction creates or improves public infrastructure and thereby creates specific and defined benefits for individual properties (in addition to benefits that might be created for all properties), then the individual benefiting properties could be assessed a fee to help fund the infrastructure project up to, but not exceeding, the value of the benefit that they receive.
These fees are collected through a jurisdiction’s existing property tax collection process. This simplifies administration. The special assessment fee revenues are not deposited into a jurisdiction’s general fund. Instead, they are deposited into separate accounts and used only for the projects for which the fees are collected.
In order to levy a special assessment, a jurisdiction typically determines:
Special benefits from infrastructure improvements, as measured by increases in land value, might begin before the infrastructure project has been completed and, in some cases, even before construction begins. If a particular infrastructure improvement is strongly needed or desired, serious discussions about planning or budgeting for such a project may be sufficient to induce an increase in land prices. Thus, value capture mechanisms have the greatest potential to be effective if they are in place before infrastructure projects start.
Unlike many taxes and fees, infrastructure access fees based upon land value encourage development where land values are high—close to the infrastructure. This creates more compact and efficient land use patterns that allow more people and businesses to be served by infrastructure at lower costs (both absolute and per capita) than when development is more disbursed and infrastructure is extended at great cost over wider areas with fewer taxpayers.
Successful implementation of special assessments complies with the substantive and procedural requirements of State authorizing legislation, including uniformity and due process.
