A special assessment is an additional tax on a piece of property, generally in the form of real estate taxes. This additional assessment is collected by the local taxing authority and directed to a designated fund to finance projects, improvements or programming for the assessed district.

Special assessment districts are a common development financing tool. Every state provides some form of special assessment district financing. Most states offer more than one option. These tools are known by a variety of names and can be structured in a variety of ways, but there are two predominant methods.

The first method, Business and Neighborhood Districts, is the assembly of business and neighborhood groups into a district to generate funding for projects and programs. Business and Neighborhood Districts are typically run by property owners in the district. These owners impose self-assessed taxes on themselves in order to generate funds for physical improvements or other amenities.

The second approach, Government Districts, is a directly targeted assessment program organized by the local government. Government Districts come in many shapes and sizes. These districts often provide services that are similar in scope to those provided by Business and Neighborhood Districts. However, in these cases, government entities typically direct the work of these districts.