In a special assessment district, property owners agree to pay an additional assessment to fund specific improvements or services within that district. The special assessment’s purpose must be determined prior to the district’s creation and the amount that each property owner pays must be directly proportional to the benefit the property will receive from the proposed improvement. Assessment districts are established by a vote of the property owners and require a simple majority (50% plus 1). California has dozens of statutes defining different special assessment district tools for distinct types of improvements and services, including everything from business improvement districts to lighting and landscaping, sewer, utility, parking, and community benefit districts. Although California law varies depending on the type of assessment district, most types of districts can issue tax-exempt bonds.
For example, a business improvement district (BID) or a property-based improvement district (PBID) assesses and provides benefits to either business owners or property owners, respectively, typically in a downtown or other defined commercial area. As with other special assessment districts, BIDs and PBIDs must be approved by a simple majority (50% plus 1) of affected businesses/property owners, and the amount that each business or property owner pays must be proportional to the benefit that they receive. Distribution of the money is managed by a board composed of affected businesses or property owners. BIDs and PBIDs can be used to pay for a wide range of activities, including parking facilities, street and streetscape improvements, lighting and landscaping, marketing and promotions, and business attraction and retention. Unlike other assessment districts, however, BIDs and PBIDs cannot issue bonds.