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Taxation & Assessment

Special Assessments

Introduction

Special assessments are used to finance capital improvements that benefit specific property within a certain area. The benefit area or special assessment areas are organized through the creation of a "Special Assessment District," or a "Local Improvement District" (LID), of which there are hundreds in existence today in Alaska. Some examples of property benefits might include roads, streetlights, sewer or water, or gas lines. The idea behind this special arrangement is that it is easier for property owners to afford the benefits if they share the cost as a group rather than paying individually.

Narrative

Special assessments can begin with an action proposed by a governing body or by the public through a petition to the governing body (AS 29.46.010). Under state law (AS 29.46.020) municipalities may design their own laws for the creation of special assessment districts and levying the assessments. These special assessments can be paid for by the property owner in one lump sum, or the local municipality can bill the property owner over a set period of time (AS 29.46.080).

Special assessments are a way for property owners and the municipality to work together to finance capital improvements that directly benefit the property owners. Special assessments spread the cost of the improvement among all the properties that benefit from the improvement. Special assessments are best used when it would not be fair to spread the cost among all taxpayers because the benefit of the improvement affects a limited area.

In spite of the benefit to be gained, some people occasionally believe that forcing someone to participate is not fair. Special assessments can still be imposed on property owners that object after an opportunity has been provided for objections to be reviewed by the governing body. In order for most LIDs to work there needs to be participation from all properties that benefit from the improvement so all can share the cost equally.

Frequently Asked Questions

Do I have to participate in a special assessment if I voted against it and do not want the benefit?

Yes. All property within the boundaries will receive the benefit of the special assessment and be required to pay for those benefits (AS 29.46.080).

What happens if I don't pay (default) on my special assessment?

Special assessments become a lien on the property and may be enforced through foreclosure and sale in the same manner as for non-payment of property taxes.

If many of the property owners within the area do not want the benefit, will we be forced to participate in the special assessment district?

State law (AS 29.46.020(b)) provides that the governing body may not proceed with the improvement if protests are made by owners of property that will bear 50 percent or more of the cost of the improvement, unless three-fourths of the governing body votes otherwise.

How will property owners be affected by the costs of the improvements?

The governing body of the municipality will spread the costs equally to the property owners. The costs may be spread in a variety of ways, including assigning a share of the cost based upon size of the property or upon the length of the property line that fronts the improvement ("front foot method"), or on a per lot basis. There is no specific method in statute for the governing body to set the percentages of the cost.

Can the payment for the improvement be spread over a period of time?

The method and times of payment are set by the governing body. The governing body may allow the payments to be spread out over a period of time or to be paid all in one payment (AS 29.46.080).

Revised 7/1/13