CDFA - Special Assessments Resource Center (2024)

A special assessment is an additional tax on a piece of property, generally in the form of real estate taxes. This additional assessment is collected by the local taxing authority and directed to a designated fund to finance projects, improvements or programming for the assessed district.

Special assessment districts are a common development financing tool. Every state provides some form of special assessment district financing. Most states offer more than one option. These tools are known by a variety of names and can be structured in a variety of ways, but there are two predominant methods.

The first method, Business and Neighborhood Districts, is the assembly of business and neighborhood groups into a district to generate funding for projects and programs. Business and Neighborhood Districts are typically run by property owners in the district. These owners impose self-assessed taxes on themselves in order to generate funds for physical improvements or other amenities.

The second approach, Government Districts, is a directly targeted assessment program organized by the local government. Government Districts come in many shapes and sizes. These districts often provide services that are similar in scope to those provided by Business and Neighborhood Districts. However, in these cases, government entities typically direct the work of these districts.

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-Understanding Special Assessments

Special Assessments are one of the most common tools local governments use to incentivize development in a district. Interested in learning more? This section contains resources on understanding the basics of special assessment financing.

The Rise of Innovation DistrictsMembers only Login

Innovation Districts are creative urban ecosystems in which city leaders, start-ups, established firms, institutions, skilled workers, and entrepreneurs converge to capitalize upon new ideas and technological breakthroughs.Innovation districts are designed to bridge gaps between fields and make unusual and creative collaboration more likely to happen.

An Overview of Special Purpose Taxing DistrictsMembers only Login

The National Association of Home Builders published this report focusing on Special Purpose Taxing Districts, a more efficient and effective way to fund public improvements in advance of growth, while at the same time ensuring that new growth pays for the improvements.

What is a Business Improvement District?Members only Login

This guide from SB Friedman defines tax increment financing and addresses the policies and procedures for creating a Business Improvement District or similar district.

Special Improvement District: Tool for Targeting InvestmentMembers only Login

Gregory Davis at Ohio State University briefly explains special improvement/assessment districts and how they work.

-Resources

CDFA // BNY Mellon Development Finance Webcast Series: Layering the Capital Stack

This webinar discussed how Bonds, Tax Increment Finance, Tax Credits as well as the litany of federal funding through recent legislation can work for your project and ultimately the community that is benefitting.

State Agency Involvement in Hawaii's Transit-Oriented DevelopmentMembers only Login

Economic Development | Infrastructure Finance | Public-Private Partnership (P3) Financing | Special Assessment Districts | Tax Increment Finance (TIF)

-Programs Map

Search the map below for Special Assessment District resources by state. This specialized search is part of CDFA's Online Resource Database. Click on a state to see a sample of Special Assessment resources by state. Login with a CDFA Member account at the top of the page to view full results.

-Case Studies

CDFA Food Systems Finance Best Practices Guidebook

Linking development finance and food systems can be a daunting undertaking for any community. Research on the current ecosystem of food systems finance has positioned CDFA to identify key strategies for the path ahead in this work. The Food Systems Finance Best Practices Guidebook defines how traditional development finance tools can be used to launch and expand food and agricultural-related businesses and projects, and create successful food systems finance programs at the local and regional levels.

This white paper is part of a series examining the potential creation of a food systems asset class which supports the market growth of local and regional food systems. This paper focuses specifically on targeted financing tools that can be used to geographically target local and regional food system developments.

A Framework for Assessing Feasibility of Transit-Oriented Development (TOD) Project SitesMembers only Login

This research from the Mountain-Plains Consortium explains what factors a transit agency uses to choose among alternative TOD locations in a transit network, and the relative importance of each factor. It aims to develop a decision support framework for transit agencies to use when choosing a TOD site by incorporating their unique factors and weights using a multiple criteria decision-making tool.

Opportunities to Use Assessment Districts to Finance Facilities and Services in CaliforniaMembers only Login

-Headlines

Charlotte, MI Approves Special Assessment District That Will Raise $828K a Year for Fire Services
Fox 47 News | Jun. 21, 2021 | Infrastructure Finance | Special Assessment Districts | Tax Increment Finance (TIF)

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-Publications

Tax Increment Finance Best Practices Reference Guide 2nd Edition

Tax Increment Finance | CDFA Original Research

The Tax Increment Finance Reference Guide addresses what TIF is, why it should be used and how best to apply the TIF tool. The reference guide also highlights both TIF and special assessment projects from across the country and discusses how they can be applied to address many common economic development issues.

Advance Tax Increment Finance Best Practices Reference Guide 2nd Edition

Tax Increment Finance | CDFA Original Research

The Advance Tax Increment Finance Reference Guide examines model policies, guidelines and procedures, and outlines the TIF process from A to Z. Throughout the book, clear guidance is offered for assessing project feasibility and monitoring the performance of active TIF districts. In addition, the guide outlines the critical elements of state TIF statutes that should be known in order to ensure project success and long term economic prosperity.

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-Upcoming Events

CDFA-Bricker Graydon Webinar Series: Pairing TIFs with Special Assessments to Spur Retail Revitalization
December 3, 2024
2:00 PM - 4:00 PM Eastern

Join this session to learn how municipalities and the development finance industry are supporting efforts to spur economic development through retail with TIF and creatively utilizing special assessments to back them up.

View more Upcoming Events

-Webcasts

CDFA // BNY Mellon Development Finance Webcast Series: Layering the Capital Stack

Value Capture Strategies: Tax Increment FinancingMembers only Login

This FHWA webinar discusses how Tax Increment Financing (TIF) can be utilized as a value capture strategy for transportation projects. The webinar is intended for professionals from States, cities, counties, Tribes, and metropolitan and rural transportation agencies looking for innovative funding and financial strategies to pay for transportation projects.

CDFA // BNY Mellon Webcast Series: Special Assessment Techniques for Transformative Community ImprovementsMembers only Login

Community Development | Special Assessment Districts | Urban Development | Webcasts

This month’s CDFA // BNY Mellon Development Finance Webcast Series featuring Dr. Laura Wheeler from Georgia State University, Bryant Parker from White Goss, Austin Parker from Fisher, Patterson, Sayler & Smith, and Emily Metzler from MuniCap, Inc. includes a discussion on new and innovative uses for special assessments and how this tool is poised for greater use nationwide.

Georgia Webinar: Utilizing Community Improvement Districts in the Peach StateMembers only Login

Special Assessment Districts | State Finance Program | Webcasts

Expert panelists explored the prevalence of Community Improvement Districts projects in Georgia and how they are being used to finance revitalization in communities of all sizes during this webinar.

CDFA // BNY Mellon Webcast Series: What's Special About Special Assessment Financing?Members only Login

Community Development | Economic Development | Special Assessment Districts | Webcasts

During this CDFA // BNY Mellon Development Finance Webcast, the diverse nature of special assessment financing is showcased with examples from around the nation.

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CDFA - Special Assessments Resource Center (2024)

FAQs

Are special assessments the same as mello roos? ›

Special assessments or Mello Roos are just loans that were taken out by the builder, and then passed to the home owners. Most newer communities, and some of the older communities might have Mello Roos taxes.

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What is the California law for special assessment? ›

Special assessments may be levied by the board to cover unanticipated budget shortfalls or to raise funds needed for unforeseen repairs. The board may, without membership approval, levy a special assessment up to five percent (5%) of the current year's budgeted gross expenses, subject to certain requirements. (Civ.

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What states have special assessments? ›

Special assessments are authorized in all 50 States either under explicit enabling legislation or by State constitutional provisions. In addition, the establishment of special assessment districts requires some type of landowner or voter approval.

What is the special assessment tax in California? ›

Special assessments are a charge on a tax bill for a service or benefit provided directly to a property. They are collected at the same time and in the same manner property taxes are collected.

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Does Mello-Roos ever go away? ›

Mello-Roos special assessments typically last 20 to 25 years but are allowed by law to extend up to 40 years.

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Who pays special assessments at closing California? ›

In California, a special assessment is attached to the person who owns the home, not the home itself. This means that the seller is typically responsible for paying an HOA special assessment when the home is sold. However, the process for paying may change compared to previous obligations.

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Under what circ*mstances would a homeowner be required to pay a special assessment? ›

In rare cases, California law grants that a special assessment can be levied against an individual instead of the entire community. This is only permitted when that member has, on their own, caused substantial damage to a common area or other feature.

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What is an example of a special assessment? ›

Special assessments more typically are used for the extraordinary expense of a project that benefits the community. For example, a town might levy a special assessment tax to build a public recreation center or a park.

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What is the Davis Stirling Act in California law? ›

The Davis-Stirling Common Interest Development Act, also known as the Davis-Stirling Act, is a body of law that governs California condominium, cooperative, and planned development communities, known as common interest developments, regardless of when they were developed.

What is the meaning of special assessment? ›

special assessment. noun. : a specific tax levied on private property to meet the cost of public improvements that provide a special benefit enhancing the value of the property.

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Do public agencies pay property taxes in California? ›

California law exempts public agencies from paying taxes on the property they own, thus the lessee, who acquires the possessory interest, must pay property taxes on the possessory interest. The taxation of these interests is rooted in historical precedent.

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What is a unique characteristic of a special assessment? ›

What is a unique characteristic of a special assessment tax? It only applies to properties that will benefit from the public improvement. The equalization board discounts levies for properties not affected by the public improvement. More valuable properties that stand to benefit will pay proportionately more taxes.

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What is a special assessment fee in California? ›

Special assessments are non-ad valorem amounts levied on a per parcel basis which may encompass annual charges for a variety of items to include: charges for services, improvement district charges, 1915 Act special assessments, Mello-Roos community facilities district special taxes, other voter-approved special taxes, ...

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What is the maximum special assessment for HOA in California? ›

To prevent abuse of the special assessment system by allowing HOA leaders to fleece residents, California law states an HOA or governing body cannot levy a special assessment exceeding 5% of the year's gross fiscal budget. To be clear, this is 5% split equally across all HOA community members.

How do ad valorem taxes differ from special assessments in California? ›

Special assessments are a percentage of the fair market value of real property based on its most recent sale or improvement and are collected annually. Ad valorem taxes are levied against property owners to pay for local improvements, such as underground utilities, street repair, or water projects.

How do I know if I have Mello-Roos? ›

To locate and identify your Mello-Roos District, or Community Facilities District (CFD), you will search by your Secured Property Tax Parcel Number (Parcel Number). You will find your Parcel Number in the middle of your Property Tax Bill.

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What is the difference between assessment and special assessment? ›

As for the difference between regular vs special assessment, the former is the computed monthly dues homeowners pay for the year. As stated above, these monthly dues are budgeted by the HOA board. A special assessment, on the other hand, occurs sporadically, which means homeowners don't pay them on a monthly basis.

What is special assessment tax NYC? ›

What Is a Special Assessment Tax? A special assessment tax is a surtax levied on property owners to pay for specific local infrastructure projects such as the construction or maintenance of roads or sewer lines. The tax is charged only to the owners of property in the neighborhood that will benefit from the project.

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Can you write off Mello-Roos tax in California? ›

Because the Code limits deductible personal property taxes to ad valorem taxes, but does not so limit real property taxes, we conclude that Mello-Roos taxes and "special taxes" in California may be deductible, even though not based on the value of the property assessed.

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