What’s the significance of a special assessment exceeding special benefits?
The significance of a special assessment exceeding the special benefits to a property is that it constitutes an unconstitutional “taking” of private property by the government.
A special assessment is a fee levied on a specific property to fund a public project that provides a direct and quantifiable benefit to that property, such as a newly paved road or sewer line. However, this power has constitutional limits.
When the cost of the assessment exceeds the benefit to the property, the distinction between a special assessment and a general tax breaks down, and the assessment becomes an uncompensated seizure of property in violation of the Takings Clause of the Fifth Amendment of the U.S. Constitution. The core difference lies in the purpose and application of the fee:
Tax vs. special assessment
| Feature |
|---|
| General Tax | Special Assessment | |
|---|---|---|
| Purpose | To fund a broad range of public services for the general community, like schools and emergency services. | To fund a specific local improvement project that benefits a select group of properties. |
| Calculation | Based on a property’s assessed value, calculated uniformly across a jurisdiction. | Based on the cost of the project and allocated among the benefited properties, often using factors like frontage or lot size. |
| Benefit | Benefits the public at large. | Must provide a special, private benefit to the assessed properties that is distinct from the public’s benefit. |
| Exceeding benefit | Is not subject to a direct comparison with the benefit to an individual taxpayer. | Is unconstitutional if the assessment substantially exceeds the special benefit received by the property. |
The legal implications
- Proof of benefit: The burden is on the government to prove that the special assessment is proportional to the special benefit the property receives. If a landowner challenges the assessment, they can use appraisal techniques to show that the assessment amount is higher than the actual increase in their property’s value.
- Invalidation of assessment: If a court agrees that the assessment exceeds the special benefit, it can nullify the assessment and order the taxing authority to reassess the property based on the proven benefit.
- Protection for property owners: This legal principle protects property owners from being forced to bear a disproportionate share of the cost for a public improvement. If a project primarily provides a broad public benefit, it must be funded through general taxation rather than through specific assessments on a few property owners.