Special Assessment Bond

Special assessment bond

A municipal bond with interest paid by the taxes of the community benefiting from the bond-funded project.

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Special Assessment Bond

A municipal bond whose proceeds sponsor a certain, defined project. Property taxes paying for the bond are levied only on those directly benefiting from the project. For example, if a special assessment bond is issued to pay for road repairs on a certain street, only the houses and other buildings on that street will pay higher property taxes. Generally speaking, special assessment bonds are not backed by the full faith and credit of the municipality and as such carry more risk than most general obligation bonds. Special assessment bonds that do have full faith and credit are called "general obligation special assessment bonds."

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special assessment bond

A municipal bond with debt service limited to revenues from assessments against those who directly benefit from the project the funds have been used to finance. This type of bond is more risky than a general obligation bond of the same issuer if it is not also secured by a full-faith-and-credit pledge.