Benefit Assessment Districts

Benefit Assessment Districts

Unlike special districts, benefit assessment districts do not need a separate government body or structure to exist because they are only a funding mechanism versus an implementation authority. Otherwise they are quite similar to special districts.

Counties, special districts, and school districts and most California cities can levy benefit assessments. The taxes levied through the district are assessed only to those properties directly benefiting from the financed services or improvements more so than the general benefits conferred on real property or to the public at large. In most cases, benefit assessment districts are approved through voter initiative and community approval. If approved, the increased assessment appears on property tax bills. California law prohibits benefit assessments from being based on property value. Instead, each assessment district includes a benefit formula, and each parcel in the service area is assessed according to the specific benefit it receives. The Board of Supervisors, or an appointed and/or elected independent board, manages the implementation of services funded through the benefit assessment tax.

In 2001, voters approved a benefit assessment tax for the Santa Clara County Open Space Authority. A lawsuit was immediately filed to overturn the assessment. Similarly, in 1994, voters approved a benefit assessment tax for the Open Space Authority that was also challenged in court. Collection of the assessment tax began, but funds were not spent until the case was settled in favor of the Open Space Authority. The mailed ballot placed a $20 tax on single-family homes annually.

While awaiting the California Supreme Court decision, after favorable rulings from the County Superior and Appellate courts, the Open Space Authority has collected roughly $26 million. The funds will be available if the Supreme Court finds in favor of the Open Space Authority, otherwise the funds will be returned.

In both case, taxpayer association filed suit citing that the benefit assessment did not follow Proposition 218. Approved in 1996, the proposition restricts local government’s ability to collect funds from fees, taxes, and assessments. According to the California Legislative Analyst’s Office, the intent of the proposition is to ensure all taxes and most charges on property owners are subject to voter approval.

Case Study: San Miguel County Utility Round-Up

All electricity users in San Miguel County, Colorado have an opportunity to contribute to their community’s character of wide open, natural areas, family ranches, compact towns and uninterrupted beauty in the high country. This community figured out how to involve all of its citizens in the process. On every month’s utility bill, a box ready for a check mark authorizes the utility district to round the bill up to the nearest dollar. All overage money goes to the Open Space Commission for land preservation and conservation purposes. This unique tactic allows concerned residents to easily contribute to the improvement of their lands and surroundings. In addition, this type of program provides methods for transient residents and second homeowners to contribute to the preservation of the lands that brought them there. When the county or local land trust applies for grant funding, the utility round-up expresses the community-wide support for the program as well as providing matching funds to the grant application. San Miguel County has not amassed large sums of money from the program, but the visibility within the community is invaluable to the promotion of the Open Space Commission’s goals.