There are several different types of real property “assessments.” There can be the assessment for purposes of ad valorem taxation. As well as the assessment in an homeowners’ association for common expenses. And here there can be “a special assessment tax (i.e., a surtax) levied on property…to pay for specific local infrastructure projects such as the construction or maintenance of roads or sewer lines.”¹ Here we address the latter.

“Special Assessment Tax: is predicated upon the theory that…proposed improvements…will result in a benefit to those property owners included in the assessment. This is the very essence of and the only justification for (a) special assessment.”² 

The Special Benefit Requirement: “If a large subdivision is built in a previously undeveloped part of town, the municipality may designate that new neighborhood(, and only that neighborhood,) as a special assessment district.”¹ An assessment then “is a compulsory charge placed by the state upon real property within a pre-determined district, made under express legislative authority for defraying in whole or in part the expense of a permanent public improvement…In this regard a special assessment is ‘levied against real property particularly and directly benefited by a local improvement in order to pay the cost of that improvement.'”³ “A special assessment tax is predicated upon the theory that the proposed improvements of the assessment district will result in a benefit to those propert(ies)…included in the assessment. This is the very essence of and the only justification for (a) special assessment.”²

“Special assessment districts may be created because the regular property taxes (that are) collected are not sufficient to fully fund a municipality. For example, if the population of a small town has declined dramatically, a special assessment tax may be necessary to continue to operate schools, the police department, or a library…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.”¹ Or they may be created to pay for “infrastructure improvements such as new roads, street lights, or sewer, stormwater, and water connections to the municipal supply. This type of charge is not listed in the ad valorem taxes of the property.”⁴

With The Proviso The “General Enhancement of Property Value Does Not Constitute (a) Special Benefit:”⁵

The Requirement That Only Property in a Neighborhood Specially Benefited From an Improvement May be Assessed: Since special assessments are “charged only to…property in (a) neighborhood that will benefit from the project…special assessment tax(es) may not be levied against an entire municipality”¹ “to pay for special benefits for the few, and the few specially benefited should not be subsidized by the general public”⁶ as a whole. But if “everything is special, then nothing is special. That is, the presumption that every project undertaken by a (GID) is equally beneficial to all of the properties within the district would effectively nullify the requirement that an assessment valuation be fixed…in proportion to the benefits to be derived from the project.”⁷

The Requirement That The Properties Assessed Must be Assessed in Proportion to⁸ And No Greater Than⁹ The Special Benefit(s) Received: Because “no assessment shall be imposed on any parcel which exceeds the reasonable cost of the proportional special benefit conferred on that parcel,” government must present a “detailed analysis on how specific properties, blocks, school districts, or even cities would benefit from their proximity to”⁶ the public improvements (here recreation facilities) the subject of a proposed special assessment. Simply taking government’s “projected annual budget (divided)…by the number of properties on the tax rolls in the district” won’t suffice¹⁰. Therefore “an assessment calculation that works backward by starting with an amount taxpayers are likely to pay, and then determines an annual spending budget based thereon, does not comply with the law governing assessments.”¹⁰

Stated Differently, The Requirement That “The Assessment (Can)not Exceed The Benefit to The Property” Assessed¹¹:

The Requirement That The Properties Assessed Only Pay “The Cost of The improvement And Not The Cost to Fund an Agency’s Ongoing Budget:”¹⁰

How a Special Assessment Differs From a Tax: “A tax…is very different. Unlike a special assessment, a tax can be levied ‘without reference to peculiar benefits to particular individuals or property.’ Indeed, [n]othing is more familiar in taxation than the imposition of a tax upon a class or…individuals who enjoy no direct benefit from its expenditure, and who are not responsible for the condition to be remedied…Therefore, while a special assessment may, like a special tax, be viewed in a sense as having been levied for a specific purpose, a critical distinction between the two public financing mechanisms is that a special assessment must confer a special benefit upon the property assessed beyond that conferred generally.”³ Stated differently, “[a]lthough a special assessment is imposed through the same mechanism used to finance the cost of local government, in reality it is a compulsory charge to recoup the cost of a public improvement made for the special benefit of particular property.”¹² Thus “if we are not able to say that the owner for the specific charge imposed is compensated by the increased value of (his/her/its) property, then most manifestly we have a special tax upon a minority of the property owners, which tax is for the benefit of the public and which tax is special, unequal and ununiform…Absent a benefit to the property assessed…a special assessment…is illegal and void.”¹³ And because “[t]he exaction…of the cost of a public improvement…from the owner of private property…in substantial excess of the special benefits accruing to him is to the extent of such excess, a taking, under the guise of taxation, of private property for public use without compensation,”¹⁴ we in essence have a violation of the Fifth (5th) and Fourteenth (14th) Amendments to the United States Constitution and Article 1, sec. 8(2) of the Nevada Constitution¹⁵.

Conclusion: There are two requirements for special assessments which differentiate them from a tax. First, it is the “special benefit” to that real property which is assessed requirement. And second, it is that the assessment be charged only to property in the neighborhood that specially benefits from the project requirement. And now you know!

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1. See https://www.investopedia.com/terms/s/specialassessmenttax.asp,
2. See City of Reno v. Folsom, 86 Nev. 39, 41, 464 P.2d 454 (1970).
3. See Knox v. City of Orland, 4 Cal.4th 132, 141-143, 14 Cal.Rptr.2d 159 (1992).
4. Go to https://www.proplogix.com/blog/whats-so-special-about-special-assessments/.
5. See Ventura Group Ventures, Inc. v. Ventura Port Dist., 24 Cal. App. 4th 1089, 1105, 104 Cal.Rptr.2d 53 (2001); Silicon Valley Taxpayers Assn., Inc. v. Santa Clara County Open Space Dist., 44 Cal. App. 4th 431, 443, 79 Cal.Rptr.3d 312 (2008).
6. See Silicon Valley Taxpayers, supra, at 44 Cal. App. 4th 442.
7. See Ventura Group Ventures, supra, at 24 Cal. App. 4th 1107.
8. See Silicon Valley Taxpayers, supra, at 44 Cal. App. 4th 456.
9. See Ventura Group Ventures, supra, at 24 Cal. App. 4th 1106.
10. See Silicon Valley Taxpayers, supra, at 44 Cal. App. 4th 457.
11. See County of Fresno v. Malmstrom, 94 Cal. App. 3d 974, 984, 156 Cal.Rptr. 777 (1979); Ventura Group Ventures, supra, at 24 Cal. App. 4th 1106.
12. See Solvang Municipal Improvement Dist. v. Board of Supervisors, 112 Cal. App. 3d 545, 553, 169 Cal.Rptr. 391 (1980).
13. See City of Reno, supra, at 86 Nev. 42.
14. See Village of Norwood v. Baker, 172 U.S. 269, 279, 19 S.Ct. 187 (1898).
15. Both of which say that no one shall be “deprived of life, liberty or property without due process of law.”