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Local Improvement Districts (LIDs)

This page provides basic guidance for local governments in Washington State regarding local, utility, and road improvement districts, including relevant statutes, court decisions, and local examples.

What is a Local Improvement District?

Local Improvement Districts (LIDs) are a means of financing capital improvements that will primarily benefit the property owners within a specific area. LIDs are formed by a city, town, county, or other local government with the approval of the property owners, and they are not self-governing special purpose districts. The capital improvements are then financed and paid for over a period of time through special assessments on the benefiting properties. LIDs must be approved both by the local government and the benefited property owners.

Many 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 address LIDs in cities. The LID processes for other types of local governments are largely based on the process for cities and towns, although there may be some procedural variations. Agencies should carefully review their enabling statutes (see the Statutes section below).

Utility Local Improvement Districts (ULIDs)

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. See RCW 35.43.042-.043.

Road Improvement Districts (RIDs)

Counties can use LIDs for water, sewer and storm sewer system improvements under chapter 36.94 RCW. Procedures under that statute are very similar to LID procedures in cities and towns under chapters 35.43-.56 RCW.

However, assessment districts for county road improvement projects must follow the Road Improvement District (RID) procedures under chapter 36.88 RCW.

While we generally refer to all of these as Local Improvement Districts (“LIDs”), where appropriate we will point out the differences. Each entity should carefully review its specific enabling statutes.

Benefits of LIDs

The 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.

The 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.

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 also play a key role in securing large industrial plant startups or relocations.

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 are very well-suited for filling in gaps in a city's existing infrastructure, including:

  • 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.
  • Providing street lights.

LIDs provide a means for whole neighborhoods to improve their quality of life, with long-term financing and relatively lower interest rates. The cities of Tacoma, Spokane, Everett and other cities allocate funds each year to match LID money for neighborhood projects.

LID and RID Statutes

Cities and Towns


  • Ch. 36.88 RCW - County road improvement districts
  • Ch. 36.94 RCW - Sewerage, water, and drainage systems
  • RCW 36.83.050 - LIDs and ULIDs for road and bridge service districts; refers generally to city/town LID procedures

Special Purpose Districts

Pre-Formation Activities

The request for an LID may originate with an inquiry from a citizen or property owner asking for improvements, or it could be considered by a local government agency as a potential source of funding for a project in the agency's capital improvement program. It could also be looked to as a method to mitigate the impacts of a proposed development and distribute costs equitably to other landowners benefiting from the improvements in the development.

Whatever the reason for the LID, the local government should review the proposed project to determine if LID financing is feasible and select a staff member to serve as LID administrator. Staff should consult with civil engineers as well as experts in finance, law, and land appraisal.

If the LID is found to be a feasible financing method, the LID administrator should engage with local property owners to explain the project and potential LID financing, gauge their support or opposition, and respond to any questions or concerns they may have.

Detailed cost estimates should be prepared, and cost tracking should begin as soon as the project seems to be feasible, because costs incurred before the formation of the LID may be reimbursed by the LID. If environmental reviews are required, it is preferable to complete the environmental reviews before forming a LID, and the environmental review must be completed before awarding the construction contract for the project.

LID Formation Methods

For cities and towns, LID formation can be initiated by the legislative body by submitting a resolution of intent, or by the area property owners through a petition.

Resolution of Intent Method

Under the Resolution of Intention method (outlined in RCW 35.43.140-.150), the legislative body initiates the LID formation process with the adoption of a resolution declaring its intention to order the improvement and setting forth the territorial extent of the improvement, and setting a date for a public hearing. The resolution must be published in at least two consecutive issues of the city or town’s official newspaper, and the first publication at least fifteen days before the public hearing.

Petition Method

Local property owners may also initiate the formation of an LID by petition according to the process outlined in RCW 35.43.110-.125. Instead of the legislative body adopting a resolution of intent, the property owners submit a petition to the legislative body which must be signed by the property owners aggregating a majority of the area within the proposed district.

The petition must briefly describe:

  • The nature of the proposed improvement
  • The territorial extent of the proposed improvement
  • What proportion of the area within the proposed district is owned by the petitioners as shown by the records in the county auditor's office, and
  • The fact that actual assessments may vary from assessment estimates, so long as they do not exceed a figure equal to the increased true and fair value that the improvement or street lighting adds to the property.

The legislative body then establishes a date for a public hearing, and the subsequent LID procedures are the same as for the resolution of intent process.

Public Hearing

The public hearing can be held before the city or town council or a committee of the council. At the conclusion of the hearing, the city or town council adopts an ordinance creating the LID and ordering the improvement.

Assessment Methods and 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.

The state statutes describe one or two specific methods of assessing benefited properties, but also allow municipalities to choose any other method which meets the basic criteria.

There are two main assessment methods:

  • 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-.040
    • Unit (per lot or parcel)
    • It is possible to use several different types of mathematical assessment within one district.
  • 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 an LID lends itself very well to a mathematical method of assessment (e.g., has uniform lots or 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.

LID Administration & Preliminary Assessment Roll

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), and the 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.

Written Protests (Resolution of Intent Method)

Under the resolution of intent method, property owners have a 30-day protest period after the legislative body adopts the formation ordinance. If the legislative body receives written protests from property owners who would pay at least 60% of the total cost of the improvement (including federally owned or other nonassessable property as shown and determined by the preliminary estimates and assessment roll), the LID will be dissolved. (There are limited exceptions in the case of sanitary sewers, water mains, or fire hydrants that have been determined necessary for public health and safety.) See RCW 35.43.180.

If the legislative body does not receive written protests from property owners who would pay at least 60% of the total costs, the LID is officially formed.


No lawsuit may be maintained challenging the authority of the legislative body to create an LID or challenge its validity unless the lawsuit is served and filed no more than 30 days after the passage of the ordinance ordering the improvement (for the petition method) or 30 days after the expiration of the 30-day written protest period (for the resolution of intention method). See RCW 35.43.100.

Assessment Deferrals

State law provides for assessment deferrals for property owners who may be experiencing certain financial hardships, in which case the assessment does not go away but instead becomes a lien against the property:

  • Chapter 84.38 RCW provides for assessments to be deferred indefinitely for qualified senior citizens and people with disabilities.
  • 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.

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.

For additional information and examples, see:

Design, Construction, and Interim Financing

Following the protest and appeal periods, the local government staff and engineers must finalize the design of the project, obtain the necessary permits, acquire any necessary rights-of-way, and bid the project.

If at some point during the process it appears that the project costs and property assessments will significantly increase, all affected property owners should be notified of the increase.

Once the contractor has been selected and the contract documents executed, interim financing is usually required by interfund loan or formal borrowing. Sometimes it may be necessary to obtain interim financing earlier, such as when consulting engineers are used to perform preliminary design or facilitate informational meetings. It may also be necessary to obtain interim financing for a special benefit study or right-of-way acquisitions. For these reasons, many local governments will begin the interim financing process once the protest/appeal period has expired.

Recommendations for financing alternatives are usually made by the finance department, often with the assistance of an investment banker and/or bond counsel.

LID Closeout

Estimating Total Costs

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 to allow 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.

The notice must 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 accurately, 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 for collection. 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.

Examples of City LID Programs

Examples of County RID-LID Programs

Examples of LID Procedures

Procedural Checklists and Outlines

Significant Court Decisions

Below is a list of significant court decisions related to LIDs. Some of these cases have been selected from P. Stephen DiJulio's (Firm Co-Chair and Principal of Foster Garvey) presentation, Local Improvement Districts—a Baker’s dozen of cases to read and understand, presented at the Washington State Municipal Attorneys Spring Conference in 2008.

  • Hamilton Corner I, LLC v. City of Napavine, 200 Wash. App. 258, 402 P.3d 368 (2017), as amended (Sept. 12, 2017) - The fact that a well that was connected to water mains with funds raised through the LID assessment did not produce potable drinking water did not materially alter the special benefits provided by the LID.
  • Tiffany Family Trust Corp. v. City of Kent, 155 Wn.2d 225, 119 P.3d 325 (2005) - Procedure to challenge assessment must comply with statute. Collateral attacks are not allowed.
  • Little Deli Marts, Inc. v. City of Kent, 108 Wash. App. 1, 8, 32 P.3d 286, 289 (2001), as modified (July 16, 2001) - Cities may assess such costs before completion of the improvement.
  • Kusky v. City of Goldendale, 85 Wn. App. 493, 933 P.2d 430 (1997) - Special benefit is generally calculated based on the difference between the fair market value of the property immediately before and immediately after the improvement.
  • Bellevue Plaza, Inc. v. City of Bellevue, 121 Wn.2d 397, 851 P.2d 662 (1993) - Assessment methodology. Burden of proof on appeal.
  • City of Seattle v. Rogers Clothing for Men, Inc., 114 Wn.2d 213, 787 P.2d 39 (1990) - Not an LID case – issue was formation of a Business Improvement Area. Court held that “special benefits” could be aesthetic.
  • Doolittle v. City of Everett, 114 Wn.2d 88, 786 P.2d 253 (1990) - Assessment of contiguous parcels must account for use of each of the parcels. Discussion of “larger parcel” vs. “unitary use.”
  • Bellevue Associates v. Bellevue, 108 Wn.2d 671, 741 P.2d 993 (1987) - Assessment may be proportional to the benefit provided.
  • Patchell v. City of Puyallup, 37 Wn. App. 434, 682 P.2d 913 (1984), review denied, 102 Wn.2d 1015 (1984) - Due Process/Appeal Procedure. Substantial compliance with appeal procedures is required.
  • In re Indian Trail Trunk Sewer Sys., 35 Wn. App. 840, 670 P.2d 675 (1983), review denied, 100 Wn.2d 1037 (1984) - Burden of proof.
  • Esping v. Pesicka, 92 Wn.2d 515, 598 P.2d 1363 (1979) - When city by contract does not make otherwise-assessable property pay the assessment, the value of those contract rights also must be excluded from total cost of improvement. Also, formation protests.
  • Abbenhaus v. City of Yakima, 89 Wn.2d 855, 576 P.2d 888 (1978) - Assessment is presumed valid.
  • Berglund v. Tacoma, 70 Wn.2d 475, 433 P.2d 922 (1967) - Assessments are not taxes, LID guaranty fund required.
  • Kasper v. Edmonds, 69 Wn.2d 799, 420 P.2d 346 (1966) - Contribution of city to project is excluded from total cost of improvement.
  • Sterling Realty Co. v. City of Bellevue, 68 Wn.2d 760, 415 P.2d 627 (1966) - Good general discussion about assessments.
  • Heavens v. King County Rural Library Dist., 66 Wn.2d 558, 404 P.2d 453 (1965) - General and special benefits.

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Last Modified: November 13, 2023