A special assessment is a tax levied against specific properties that will benefit from a public improvement. Common examples are assessments for sidewalks, water service and sewers. Special assessments are based on the cost of the
improvement and apportioned on a pro rata basis among benefiting properties according to the value that each parcel will receive from the improvement.
For example, a dredging project is approved to deepen the canals for a canal-front subdivision. The project cost is $200,000. Although there are 100 properties in the subdivision, only the 50 that are directly on the canal stand to benefit. Therefore, assuming each canal-front lot receives equal benefit, the 50 properties are each assessed $4,000 as a special assessment tax. Note that once the work is completed and paid, the assessment is discontinued.
If a taxing entity initiates an assessment, the assessment creates an involuntary tax lien. If property owners initiate the assessment by requesting the local government to provide the improvement, the assessment creates a voluntary tax lien. Special assessment liens are secondary to property tax liens.
Special assessments are usually paid in installments over a number of years. However, taxpayers generally have the option of paying the tax in one lump sum or otherwise accelerating payment.