Formation
Of A Special Assessment District
What
Is An Assessment District?
An assessment district is a financing
tool available to most
existing legislative bodies (cities,
counties, special districts),
that allows that agency to construct
desired and authorized public
improvements, with the
costs and expenses being apportioned
and spread against the benefited
properties within the boundaries
of a designated area (assessment
district), with said costs and
expenses being directly proportioned
in accordance with the special
and direct benefits that each
parcel receives from the works
of improvement.
The assessment liens, then, are
financed through the issuance
of bonds payable
over a period of years, thus providing
the advantage to the property
owners of a loan or deferred funding
for the improvements.
What Improvements May
Be Financed By Tax-Exempt Financing?
California assessment law authorizes
financing of the following
public improvements:
- streets, curbs
and gutters
- water supply
and distribution
- gas, electric
and telephone
- sewers and
drainage
- Parking
- other public
improvements that afford a direct
benefit to the public.
What Interest Rates And
Terms Are Available If Tax-Exempt
Financing is Used?
Interest rates are generally
2% to 3% less than conventional
borrowing rates. Public improvement
costs may be spread over a 10
to 20 year period.
How Much Paper Work And
Red Tape Are Required To Use Tax-Exempt
Financing?
Assessment district financing
is a tried and true financing
method that has a streamlined
process. There is actually little
involved in the process that needs
to be completed by the
developer. Most work in the
process is completed by engineers,
attorneys and investment bankers.
Overall there is less paperwork
involved in tax-exempt financing
than in the planning approval
process for a development.
Why Should A City Or
County Form An Assessment District?
Most communities yearn for growth
and development yet do not have
the financial resources for capital
improvements. Communities also
realize that development leads
to more jobs in the community
and therefore more revenue. By
working with those individuals
and groups that wish to provide
new housing and assisting them
to gain access to tax-exempt
financing, cities are
performing a significant role
in the community development function.
Who Are The People Involved
In An Assessment District Project?
Generally there could be five
roles to be filled in one form
or another in order to have a
successful project.
- Design Engineer
- prepares the required plans
and specifications.
- Assessment
Engineer - responsible for apportioning
the costs
- Bond Counsel
- prepares the resolutions,
support documentation and issuing
At completion, the approving
legal opinion attesting to the
validity of the proceedings
and the enforceability of the
assessment lien.
- Financial Consultant
- person specialized in obtaining
proposals for bond sale.
- Underwriter
- person who purchases the bonds,
and provides capital.
What Incidental Expenses
Are Allowable To Be Included In
The Proceedings?
All costs pertaining directly
to the formation of the assessment
district.
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