An Assessment District is a financing mechanism under The California Streets and Highways Code, Division 10 and 12 which enables cities, counties and special districts organized for the purpose of aiding in the development or improvement to, or within the district, to designate specific areas as Assessment Districts, with the approval of a majority of the landowners based on financial obligations, and allows these Districts to issue bonds and collect special assessments to finance the improvements constructed or acquired by the District. Assessment Districts help each property owner pay a fair share of the costs of such improvements over a period of years at reasonable interest rates and insures that the cost will be spread to all properties that receive direct and special benefit by the improvements constructed.

Improvements that provide a direct and special benefit such as, streets, sidewalks, curbs and gutters, water, sewer, gas electric, lighting or drainage facilities.

Anything that provides general public benefit such as parks, schools, libraries, jails, childcare and administrative facilities.

Usually, tax exempt bonds are issued by the District. The principal and interest obligations on these bonds are repaid each year through the collection of special assessments on the property tax bill. Most of these bonds have a 20 to 30 year maturity.

"Assessment" means any levy or charge by an agency upon real property that is based upon the special benefit conferred upon the real property by a public improvement or service, that is imposed to pay the capital cost of the public improvement, the maintenance and operation expenses of the public improvement, or the cost of the service being provided. "Assessment" includes, but is not limited to, "Special Assessment," "Benefit Assessment," and "Maintenance Assessment."

A petition is signed by landowners within a specified area. The petition is given to the Agency that would be forming the district. If the petition is accepted, a Resolution of Intention is adopted stating that the agency intends to form an assessment district. The resolution states name of district, type of facilities to be financed, set the time and place for the public hearing, and orders the preparation of an engineer's report. Proposition 218 ballots are mailed to each property owner within the district. If the majority vote in favor for formation, and public hearing is concluded, the district is formed. There is a 30 day cash collection period where landowners more payoff the assessment. Bonds are sold for those who do not wish to payoff the assessments and the assessment district constructs or acquires the proposed improvements.

During the public hearing conducted by the legislative body, the modified Engineer's Report is presented, testimony is received from property owners and ballots are tabulated. Ballots are weighted according to the proportional financial obligation of the affected property. If ballots submitted in opposition to the assessment exceed ballots submitted in favor, there is a majority protest. If there is a majority protest, as determined by the ballots, the legislative body may adopt the resolution confirming the assessments and approving the bond sale.

A lien is placed against the property. This lien is amortized over the life of the bonds collected with the regular property taxes. The special assessment cannot, by law, be based on the value of the property. The special assessment is based on the annual amount of principle and interest due to the bondholders, together with any expenses of administering the district. The assessment is set in the Engineer's Report through determination of direct and special benefit.

The principal and interest obligations on these bonds are repaid each year through the collection of an assessment policy. These bonds are sold competitively or through negotiated sale and may have a fixed or variable rates.

The general consensus is that at least the interest portion of the assessment is deductible. The entire assessment may or may not be deductible. Consult with your tax preparer.

In order to prevent jeopardizing obligations to the bondholders, Section 8830 of the California Streets and Highways Code authorizes the District to pursue judicial foreclosure. The common five (5) year grace period with regular property taxes is not applicable.

If you have any questions about your Assessment Districts please contact the City of Indio's District Administrator at Willdan Financial Services 1-800-755-6864.