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Local Improvement Districts Procedural Outline


This webpage is an outline summary of selected local improvement district concepts and procedures in Washington State. It focuses primarily on concepts and procedures directly applicable to cities and towns. Most municipal governments (cities, counties, water and sewer districts, ports, fire protection districts, etc.) can use the basic LID processes in Chapters 35.43 RCW through 35.56 RCW (which directly address LIDs in cities). There are differences (some very subtle) in required or allowable processes among the several forms of municipal government. The enabling statutes for each type of government should be carefully reviewed.

For further information, see the page section How to Get More Information or visit the main Local Improvement Districts page.

What is a Local Improvement District?

Local Improvement Districts (LIDs) are a means of assisting benefiting properties in financing needed capital improvements through the formation of special assessment districts.

Special assessment districts permit improvements to be financed and paid for over a period of time through assessments on the benefiting properties.

A variation of the LID is the Utility Local Improvement District (ULID). The difference between ULIDs and LIDs is that utility revenues are pledged to the repayment of the ULID debt, in addition to the assessments on the benefiting properties. State statutes provide that an LID can be converted to a ULID after formation. The reverse is not possible.

Most municipal governments (cities, counties, water and sewer districts, ports, fire protection districts, etc.) can use the basic LID processes in Chapters 35.43 through 35.56 RCW. [Please note that these chapters directly address LIDs in cities.] There are differences (some very subtle) in required or allowable processes among the several forms of municipal government. The enabling statutes for each type of government should be carefully reviewed.

LIDs are Only Financing Tools

  • The most important point to realize about LIDs is that the entire LID process is about financing infrastructure improvements, not constructing them.
  • LID processes lead, ultimately, to the sale of bonds to investors and the retirement of those bonds via annual assessments on the property owners within a district.
  • Goals of the LID process are twofold:
    • To present a bond portfolio to investors that will entice them to invest at as low a rate of return as possible;
    • And to assess property owners as fairly as possible in relation to special benefits received.
  • Nowhere in the LID statutes will you find information on technical feasibility, design, cost estimates, construction management expertise and project closeout requirements. Good construction management skills are necessary, just as for any other project not financed by an LID.

LID Assessments are Subject to Strict Criteria

  • Statutes specify that the assessment per parcel must not exceed the special benefit of the improvement to that parcel, which is defined as the difference between the fair market value of the property before and after the local improvement project.
  • In addition, the assessments must be proportionate to one another.
  • A corollary to these principles is that property not benefited by the improvements may not be assessed.
  • No matter what assessment method is used - per parcel, front foot, area, zone termini, traffic volumes, special benefit appraisal, etc., - the courts will be concerned only with these criteria.

LID Assessment Methods

  • Statutes describe one or two specific methods of assessing benefited properties, but also allow the municipality to choose any other method which meets the basic criteria.
  • There are two main assessment methods:
    1. Mathematical - Relatively inexpensive, easier to explain to property owners
      • Front-foot (per lineal foot of property street frontage)
      • Area (per square foot of property)
      • Zone and termini - described in RCW 35.44.030 and .040
      • Unit (per lot or parcel)
      • It is possible to use several different types of mathematical assessment within one district.
    2. Special Benefit Analysis - Safest, but relatively expensive
      • Certified appraiser calculates the value of each parcel with and without the infrastructure improvement project.
      • The difference between those two values is the special benefit.
      • The portion of project costs assignable to the LID is then divided by the total of all special benefits.
      • This ratio is then applied to the special benefit of each parcel to determine the assessment for each parcel.
  • Even if a LID lends itself very well to a mathematical method of assessment (i.e..., uniform lots, similar zoning) or is not large enough to warrant a full-blown special benefit analysis, it is wise to check a few strategic parcels with a limited appraisal. This will prevent unpleasant surprises at the final assessment roll hearing.

LIDs Don't Have to Create Hardships

  • No councilperson wants to vote for a project that will put someone out of hisor her home. Two types of assessment deferrals are referenced in the statutes:
    1. Chapter 84.38 RCW provides for assessments to be deferred indefinitely for qualified senior citizens.
    2. RCW 35.43.250 and RCW 35.54.100 provide for a deferral of up to four years for economically disadvantaged property owners, as defined in the formation ordinance.
  • In both of these cases, the deferred assessment does not go away, but becomes a lien against the property.
  • Other options for property owner relief, including model mitigation and single-family development rights purchase agreements may be developed.
  • Deferrals and other options for relief should be publicized early in the LID process, with a concerted effort made to identify those who may need such relief.
  • Elected officials also need to know these options so that they can advise citizens who may contact them.

LIDs as Economic Development Tool

  • LIDs can be a catalyst for economic growth, allowing private development firms and industries to obtain long-term financing for on-site public infrastructure at relatively lower interest rates.
  • LIDs, particularly those used to match grants from federal and state agencies, can be used to finance essential city or regional off-site improvements at relatively lower interest rates.
  • Provision of on and off-site infrastructure improvements through LIDs can play a key role in securing large industrial plant startups or relocations (i.e.: Intel at Dupont).

LIDs and Developer Mitigation

  • Off-site infrastructure improvements for private developments of any scale can be accomplished very readily through LIDs.
  • Developers appreciate the chance to spread their costs out over a longer term at a relatively lower rate of interest.
  • Developers also appreciate the opportunity to spread off-site improvement costs to adjoining property owners who are similarly benefited.
  • The flip side of this is that LID projects cost more to administer and require contracts to be designed and awarded by the city, with prevailing wages and other public works contract requirements to be met.

LIDs and Infrastructure Improvements


  • LIDs are very well-suited for filling in gaps in a city's existing infrastructure:
    • Older plats where the full complement of today's required improvements does not exist.
    • Sewer and water main extensions for health and sanitation purposes.
    • Paving gravel streets or alleys to reduce dust and maintenance costs
    • Undergrounding or relocating utilities.
    • Provide street lights.
  • LIDs provide a means for whole neighborhoods to improve their quality of life, with long-term financing and relatively lower interest rates.
  • Cities of Tacoma, Spokane, Everett and other cities allocate funds each year to match LID money for neighborhood projects.

How Are LIDs Formed?

  • There are two distinct methods of forming LIDs:
  • City is made aware that a capital improvement project is desired through its capital improvement program, letters, petitions, telephone conversations, public testimony, regulatory requirements, etc.
  • City evaluates the potential project, including need, estimated costs and possible additional funding sources (grants, loans, impact fees, etc.)

How Is an LID Formed by the Resolution of Intention Method?

  • Determine the extent of property owner support through a postcard survey, informal meetings or informal petition.
  • If sufficient support exists, hold more informal meetings to present the extent of the project, estimated costs, and estimated total assessments.
  • Prepare an environmental checklist.
  • Identify environmental, technical, political and financial fatal flaws.
  • Prepare preliminary assessment map and assessment roll.
  • Prepare a resolution declaring the intention of the legislative body to order the improvement, and setting a date for a formation hearing of the proposed LID.
  • Mail notice at least 15 days prior to the date fixed for the hearing to all benefited (or assessed) property owners. (three to four weeks is normally provided.)
  • Publish resolution for two consecutive weeks in the official newspaper, with the first publication at least 15 days prior to the hearing date.
  • Prepare an ordinance forming the LID for review by the city attorney and bond counsel.
  • Hold a public hearing:
    • Consider necessity, location, scope, design and cost of improvements.
    • Consider boundaries of the LID.
    • City's contribution to the cost of the improvements.
    • Amount to be assessed compared to total special benefits.
    • Testimony from affected property owners regarding the preceding items.
    • Arguments concerning assessments against individual properties, whether as to their validity or amount, can only be raised at the subsequent hearing on the assessment roll.
  • Pass ordinance creating LID.
  • Within 15 days after the legislative body has adopted the ordinance creating the LID, the LID administrator files with the city treasurer the title of the improvements, the LID number, a copy of the diagram or print showing the boundaries of the district (preliminary assessment roll map), preliminary assessment roll or abstract of same showing thereon the lots, tracts, or parcels of land to be assessed.
  • The treasurer then immediately posts the preliminary assessment roll on the index of local improvement assessments against the properties affected by the local improvement.
  • Calculate protest percentage, meaning percentage of assessment represented by those property owners who filed written protests within a 30-day protest period after an LID initiated by the resolution method is created by ordinance.
  • A 60% protest level divests the municipality of its power to proceed with the LID improvements.
  • The LID is officially formed after the 30-day protest period if the protest percentage is less than 60% and is politically acceptable.
  • Subsequently, there is a 30-day appeal period, during which any property owner who has filed a timely written protest before the formation hearing may appeal the formation of an LID to Superior Court. An appeal does not automatically stop the LID process. The issues raised in the appeal should be carefully reviewed with the city attorney and bond counsel, however.

How Is an LID Formed by the Petition Method?

  • The petition method permits property owners to initiate the formation of an LID. The steps are essentially the same, except that instead of a resolution of intention, a formal petition executed by a majority of the property owners in the proposed assessment district, is submitted to the legislative body.
  • The legislative body then establishes a date for a public hearing.
  • Subsequent procedures are the same as for the resolution process.

Public Relations!

  • As an LID financed project tests an agency's public relations skills like no other, a public relations plan for each project is needed.
  • These plans will be more effective if drafted in relation to overall city public relations policies, including those for media relations, conduct of meetings, parliamentary procedure and customer service.
  • Public relations plans for an individual project need not be elaborate, but should recognize its unique scope and potential impacts. The plan should be detailed enough to include those steps necessary for notification of property owners, public hearings, review and approval by other city or local agencies as well as the mayor and council..
  • LID financed projects are unique in that property owners have the power to decide, collectively, whether they will pay assessments for improvements to be built in the project. If they are not convinced that the project is needed and cost effective in the early stages, they may vote against it.
  • An ideal LID financed project would be one in which specific property owner needs and overall city goals coincide precisely at minimal cost to both, with no adverse environmental impacts.
  • Ideal projects are rare. More common are projects where compromises are needed and in which a certain degree of disaffection exists or is generated between the city and property owners.
  • Agency Staff—those who know as much as can be known about what is being done, who understand the process for doing it and who control that process—tend to enter the relationship with the Public with a viewpoint based on fear of delay and change.
  • The Agency is meeting with the public—people who represent diverse interests, those who don't know what, when, why and who—and the public enters the relationship with staff with a negative attitude and anxiety focused on fear of change.
  • From opposite perspectives, both enter the relationship with fear of change.
  • If there is to be genuine cooperation with the public, the agency's attitude has to change from "we're being delayed and can't afford changes" to "our schedule has been established so as to include time to address public concerns; and the concerns of the public are not viewed as changes because substantive decisions have not yet been made."
  • If there are things about a project that cannot change, explain the reasons fully and with as much documentation as possible. If you are open, honest, believable and develop a track record for reliability, the public will trust you and accept what you can and cannot do.
  • Educating the public as to the what, how, when, why, etc., of a project is a never-ending challenge, as new people are always entering the process.
  • In addition, even those who have been previously involved will remember the project as it existed at that slice of time when they were last involved.
  • It is important, in preparation for any meeting or project discussion, to think about the participants in the meeting and where they are in relation to the current status of the project.
  • Spend at least a few minutes at the beginning of each meeting making sure that all participants are aware of the current project status and on the same wavelength as nearly as possible.

LID Administration

  • A Preliminary Design Report and Environmental Impact Statement should be completed prior to LID formation, unless the project is relatively simple and environmentally benign.
  • Costs estimates and estimates of non-LID funding should be as accurate as possible prior to LID formation also.
  • Following the protest and appeal periods, the following occur:
    • Design and permitting;
    • Bidding and award;
    • Construction contract(s) administration;
    • Construction contract closeout;
    • Interim financing, in the form of bond anticipation notes (BANs), interfund loans or warrants, as stated in the formation ordinance, must be arranged.
  • Interim financing costs must not be overlooked when computing estimated project costs.
  • During construction, informal meetings or mailings to each LID participant at least monthly will keep your public relations star shining bright. Be sure to include financial information, good or bad.

LID Closeout

  • The LID closeout process begins when construction is completed or almost so and total costs can be accurately estimated.
  • Final costs to be assessed to the properties should be based as nearly as possible on actual costs. Since the costs of closing the LID are included in the final assessment, it is necessary to make some estimates regarding the final financing costs, legal fees and administrative costs.
  • Grant funds and contributions from the city or other sources must be deducted from the total project costs to arrive at the amount to be assessed to property owners.
  • It may be possible to reduce financial, legal and administrative costs to individual LIDs by combining several different LIDs into a consolidated bond issue known as a CLID (consolidated local improvement district).
  • Once the final LID share of costs has been ascertained, this amount is distributed in a manner similar to the calculation of the estimated assessments on the preliminary assessment roll.
  • If a special benefit analysis method of distributing costs for the final assessment roll is used, this study will need to be completed well ahead of the time to prepare the final rolls since the special benefit analysis can be a lengthy and very detailed process.
  • The LID administrator should arrange several special meetings for the appraiser to meet with small groups of property owners to explain exactly how the special benefit process works.
  • These meetings should occur a month or more before the final assessment roll confirmation hearing toallow property owner concerns to be properly addressed.
  • Unlike the preliminary assessment roll where cities use the county assessor's records, the ownerships for the final assessment roll are determined from the county treasurer's records. In many counties, the assessor and treasurer share a common database, so that the information is identical. It is a good idea to request a letter to that effect from the assessor or treasurer for LID files.

Final Assessment Roll and Hearing

  • The final assessment roll is filed with the city clerk.
  • A final assessment roll hearing notice, is to be mailed to property owners whose names appear on the final roll at least 15 days prior to the date set for the assessment roll hearing.
  • This notice must state that objections must be made in writing and filed with the clerk on or before the hearing date and that the legislative body will consider the objections and correct or revise the roll as needed and vote on an ordinance confirming the roll.
  • This notice to be published at least once a week for two consecutive weeks in the official newspaper. The last publication must be at least 15 days before the date fixed for the hearing.
  • The assessment roll confirmation hearing should be recorded by a court reporter or continuous video in addition to a tape recording.
  • The final assessment roll hearing should be conducted with possible litigation in mind.
  • In the final assessment roll hearing, the city council acts as a judge, or - more correctly - a board of equalization, to consider evidence presented by both staff and property owner as to the correctness of the assessment for each parcel.
  • Formal rules of quasi-judicial procedure should be formulated and distributed to the council and LID participants well in advance of the hearings The hearing must be fair, open, impartial and structured.
  • At the assessment roll confirmation hearing, the LID administrator reports the total final cost, any public participation money paid, or to be paid by the municipality or from grant funds, and that all the proceedings were proper and in conformance with LID statutes, particularly that proper notice has been given.
  • Testimony protesting the assessment roll should be permitted only if a property owner has filed a written protest prior to the scheduled hearing time.
  • A property owner's appropriate protest is to question the amount of benefit that the property will receive from the improvement. Such testimony, must be countered by an expert opinion from the city's appraiser substantiating the benefits of the improvement to that property.
  • The legislative body has authority to revise or amend the final roll as it sees fit. However, if any assessment is raised or if there is a need to include an omitted property not previously on the roll, such property owner(s) are entitled to new notice and a new hearing just as if no hearing on the final roll ever occurred. Those parties originally on the final roll and whose assessments were not raised will have no opportunity to object at a later hearing.
  • Downward adjustment to any of the property assessments will require additional money from another source to make up for the reduced assessment. The difference could be made up from public funds; or the difference could be made up by re-assessing the remaining property owners in the district which then requires a new hearing and additional interest and notification costs.
  • The entire legislative body makes the final determination without taking additional testimony. Variations of the confirmation hearing process such as a hearing examiner or legislative committee should only be done with competent legal advice. The assessment roll is approved by the majority of the legislative body (by ordinance) confirming the assessment roll. As with the formation ordinance, the assessment roll ordinance should be prepared or approved by bond counsel.

Post Assessment Roll Hearing Actions and Appeals

  • After the final assessment roll is confirmed by ordinance, the roll is transmitted to the city treasurer forcollection. On the effective date of the confirmation ordinance, a 10-day appeal period begins. During this period, only those parties who have filed timely written objections to the final roll may appeal to superior court.
  • When the appeal period is over, the treasurer will publish and mail notice that the assessment roll is filed for collection. The notice states that the property owners have an opportunity to pay all or part of their assessments without interest within a 30-day prepay period.
  • Long-term LID bonds are sold after the prepay period.
  • An underwriter purchases the bonds from the municipality. In a negotiated sale, the underwriter commonly structures the issue, prepares the official statement, arranges for the closing and delivery of the issue. In a non-negotiated sale, those services are performed by a financial advisor. It is possible for an investment banker to be the underwriter or to be a financial advisor for the municipality, but not both.

How to Get More Information

LID Manual: Sixth Edition

This manual is intended to provide an overall perspective of detailed LID and RID procedures, to show the chronological order of responsibilities, to describe routine processes from initiation to the conclusion of financing, to reduce employee training time, and to identify potential problems and issues. This Sixth Edition incorporates legislative changes and case law through September 2009.

MRSC Library

The MRSC Library has many ordinances, resolutions, public relations brochures, reports, etc., from several Washington cities covering every phase of the LID process. Please call the Library or any MRSC consultant to see if we have something that can help.

LID Resource Team

AWC, Washington State Chapter APWA and MRSC have also collaborated in establishing an LID Resource Team. Experts in various aspects of the LID process, including all contributors to the LID Manual, are available for advice and brief consultations to all municipal governments as they work through their LID processes.


Resource team members are available also for workshop presentations, either individually or as a group. Workshops can be tailored for differing lengths of time, level of expertise, focus, and type of participant (staff, elected official, etc.).

For more information on any of these resources or to discuss a potential workshop presentation, please contact:

Judy Isaac
MRSC Public Works Consultant
1200 Fifth Avenue, Suite 1300
Seattle, WA 98101-1159
Phone: (206) 625-1300
Fax: (206) 625-1220

Last Modified: October 25, 2019