As we’ve elsewhere observed, courts have oftentimes been asked to define the characteristics of a “fee” and how they differ from other kinds of monetary exactions (such as “taxes” and “special assessments”). The distinction is not one that is always observed with nicety in the judicial decisions¹ which are asked to determine the same. Given we’ve elsewhere explained the characteristics of each of these monetary exactions, here we attempt to summarize the differences. So with that said,

Fees are allocated directly to defray the costs of providing access to a facility or service where each party receives and gives up essentially equal², or by consent less than equal³, values⁴. They apply to the direct beneficiary of a particular facility or service, are allocated directly to defraying the costs of providing access to that facility or service and no more, their cost is limited to an amount which is reasonably proportionate to the benefit received⁵, and but for very limited and special circumstances⁶, the party paying the fee retains the right to not access the facility nor utilize the service for which assessment is made, and thereby avoid the charge⁷. Only if the above criteria fit the charge, is the exaction a fee⁸. Otherwise, it “is a tax.”⁹

Examples of fees would include the cost of: a round of golf at one of the District’s golf courses, a lift ticket at Diamond Peak, an hour’s worth of time on a court at the District’s Tennis/Pickleball Center, a day’s membership at the District’s Recreation Center, a golf or tennis/pickleball lesson or equipment rentals such as for skis/snowboards or golf clubs.

“Special Assessments…may only be levied against parcels which…receive…a direct benefit¹⁰ from (a) public project (the subject of assessment). The cost of the…project…is apportioned…among (all) properties…benefit(ed, and)…no assessment (is allowed to)…exceed the reasonable market value of…the…benefit” received¹¹. This differs from a fee because by definition,

A GID Board’s power to “fix, and from time to time increase or decrease (various)…rates, tolls or charges” expressly does not extend to special assessments¹².

“[A]lthough a special assessment is imposed through the same mechanism used to finance the cost of local government (i.e., taxes), in reality, it is a compulsory charge¹³ to recoup the cost of a public improvement made for the special benefit of particular propert(ies).”¹⁴ Thus “if we are not able to say

That the owner (of a property) for (which) the specific charge imposed is compensated by the increased value of (his/her/its) property¹⁵, then most manifestly we have a special tax upon a minority of…property owners, which…is for the benefit of the (general) public¹⁶…which…is special, unequal… ununiform…illegal…void“¹⁷ and therefore, invalid¹⁸.

Similarly, 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,”¹⁹ where this occurs 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 Constitution²⁰. Again, illegal, void and invalid.

And when it comes to GIDs in particular, special assessments are limited to the costs of

“Any public improvement (to implement any one, all or any combination of basic powers stated in NRS 318.116 and granted to any district in proceedings for its organization or in any proceedings for its reorganization or as may be otherwise provided by law)…upon lands and premises abutting upon that part of (a) street or alley so improved or proposed so to be (improved), or the lands abutting upon the improvement, and…other lands as in the opinion of the board may be specially benefited by the improvement…as the board determines by an affirmative vote of at least two-thirds of its members.”²¹ 

Examples of special assessments would include public improvement projects such as streets, sidewalks, curbs and gutters, streetlights, sewer and water facilities.

Taxes are very different than special assessments²² and fees. They represent “enforced¹³…contributions²³…levied by the state…or its municipal subdivisions…by virtue of (their) sovereignty…for the (financial) support of government…where (no direct benefit is furnished because any such)…benefit…derived from their performance is merged in(to) the general benefit” for all of society. In other words, the proceeds from nonexchange transactions² which result from assessments imposed on nongovernmental entities, including individuals, (that are) other than assessments on exchange transactions.”²⁴

“[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(se) two public financing mechanisms is that a special assessment must confer a special benefit upon the property assessed beyond that conferred generally.”²⁵

Examples of taxes would include property taxes²⁶ and fines.

Thus considering all of the above,

1. Without the payor’s consent, a monetary exaction cannot be a fee. But it can be a tax or special assessment;

2. Without some special benefit furnished to those whose real properties are assessed, a monetary exaction cannot be a fee nor a special assessment. But it can be a tax;

3. Without the affirmative vote of at least two-thirds of a GID Board’s members, a monetary exaction cannot be a special assessment. But it can be a fee or a tax; and,

4. By definition¹², both special assessments and taxes cannot be fees.

And now you know!

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1. See Dickson, Sheriff v. Jeff. Co. Bd. of Education, 311 Ky. 781, 786, 225 S.W.2d 672 (1949).
2. Also known as the product of exchange transactions (see GASB Statement No. 33).
3. Also known as the product of exchange-like transactions (see footnote 1 at GASB Statement No. 33).
4. In both instances, something of value must be exchanged.
5. See State of Hawaii v. Medeiros, 89 Haw. 361, 973 P.2d 736, 741-42 (1999).
6. See our Limited Circumstances Under Which The “Paid by Choice” Factor Can be Disregarded discussion.
7. See Vanceburg v. Federal Energy Regulatory Comm’n, 571 F.2d 630, 644 n.48 (D.C. Cir. 1977), cert. denied, 439 U.S. 818, 99 S.Ct. 79 (1978).
8. See Medeiros, supra, at 973 P.2d 745.
9. See Medeiros, supra, at 973 P.2d 742.
10. That is a “special benefit.”
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; https://www.clarkcountynv.gov/government/elected_officials/county_treasurer/understanding-sids and https://www.washoecounty.gov/treas/SpecialAssessments.php.
12. See NRS 318.197(1).
13. In other words, the assessee has no choice insofar as whether to pay.
14. See Solvang Municipal Improvement Dist. v. Board of Supervisors, 112 Cal. App. 3d 545, 553, 169 Cal.Rptr. 391 (1980).
15. Note that in California the “general enhancement of property value expressly does not constitute (a) special benefit” [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.4th 431, 443, 79 Cal.Rptr.3d 312 (2008).
16. See Spring Street Co., supra, at 170 Cal. 30.
17. See City of Reno, supra, at 86 Nev. 42.
18. See Knox, supra, at 4 Cal.4th 1138.
19. See Village of Norwood v. Baker, 172 U.S. 269, 279, 19 S.Ct. 187 (1898).
20. Both of which say that no one shall be “deprived of life, liberty or property without due process of law.”
21. See NRS 318.350(1).
22. Silicon Valley Taxpayers Assn., supra, at 44 Cal.4th 442.
23. See United States v. La Franca, 282 U.S. 568, 572, 51 S.Ct. 278 (1931) and City of Gary, Ind. v. Indiana Bell Tel., 732 N.E.2d 149, 156 (Ind. 2000).
24. See Class 2 to GASB Statement No. 33.
25. See City of Reno v. Folsom, 86 Nev. 39, 464 P.2d 454, 456 (1970); Silicon Valley Taxpayers Assn., Id.
26. Note that GID Boards have the “power and authority to levy and collect general (ad valorem) taxes on and against all taxable property within the district” (see NRS 318.225).