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Types of Assessment
A non-ad valorem assessment is levied to provide funding for localized improvement or service that yields a special benefit to property in a specific geographic area. Most commonly, non-ad valorem assessments are levied for improvements such as street lighting, solid waste collection and disposal, lake management (restoration and aquatic weed control), road paving and stormwater control systems, and the extension of water or sewer lines. There are two types of non-ad valorem assessment associated with the Seminole County MSBU Program – fixed term assessment and variable rate assessment.
Fixed Term Assessment
A “fixed term” assessment represents a one-time levy of a specific amount (cost share) assigned for a specific improvement project. A fixed term assessment includes financing arrangements that enable repayment of the assessment over a fixed period of time. Fixed term assessments are generally related to construction projects, as such projects often require extended repayment terms to enhance affordability.
The details or terms of an assessment are identified early in the MSBU application process and are communicated to property owners during the Petition for Improvement phase of MSBU creation. An estimated assessment (based on estimated project cost) is levied when an MSBU for a construction project is established. A lien (in the amount of the estimated assessment) is documented at that time. Repayment of the project cost (collection of the assessment) is initiated after project completion. Property owners are noticed of project status and cost factors throughout the project. When the project has been completed, the assessment and lien records are updated to reflect a final levy based on actual project cost. After the final assessment amount is confirmed, property owners have the right to pay their property assessment in full at any time.
Beginning with the first available tax roll following project completion, annual installment payments are collected via the property tax bill until the assessment is paid in full. The balance on a term assessment may be paid in full at any time. Following receipt of full payment of a fixed term assessment, a document confirming the lien satisfaction will be processed by the MSBU Program and mailed to the property owner.
A payment schedule is provided on-line for each fixed term MSBU for estimating a lien payoff or identifying the remaining number or years of installment payments. A current assessment balance, pay-off amount (which will be inclusive of accrued interest), payment instructions, or additional information regarding fixed term assessment is available by email or calling the MSBU Program at (407) 665-7178.
Variable Rate Assessment
A “variable rate” assessment represents the cost share assigned to a property on an annual basis for services or improvements that are provided by the County on an ongoing basis and/or for an indefinite period of time. The variable rate assessment format is used for funding solid waste management, street lighting, aquatic weed control, and other similar services and improvements, The service scope and cost expectations for an MSBU proposed with a variable rate assessment are identified early in the MSBU application process and are communicated to property owners during the Petition for Improvement phase of MSBU creation; and/or via public notice when the creation of a variable rate MSBU is scheduled for consideration by the Board of County Commissioners.
The initial assessment for a variable rate MSBU is levied via the first available tax roll following the creation of the MSBU. The assessment amount for subsequent years will be determined annually per the budgeted cost for providing the authorized services/improvements. The annual rate proposed by the MSBU Program is subject to approval by the Board of County Commissioners.
Variable rate assessments are typically levied in advance of the costs being incurred. Provided the assessment is paid within the payment deadline, no lien action is enforced. Satisfaction of lien documentation is not processed for variable rate assessment activity.
Assessment Notification
Property owners have the right to be mailed notice of proposed and adopted non-ad valorem assessments. A Notice of Proposed Non-Ad Valorem Assessment is mailed annually (typically in July) to the owners of property included in the assessed boundary of any MSBU. The Notice provides information regarding the proposed and/or adopted assessments, property owner rights, and related public hearing activities. The annual Notice includes all levied assessments – both variable rate and the installment payments to be collected via the property tax bill for that tax year.
Payment Responsibility
Non-ad valorem assessments are assigned to property, not individuals. Therefore, for both types of assessments, at any given point in time, the current owner of the assessed property is accountable for paying assessments that are due. Since the non-ad valorem assessments are property specific, when a property sale takes place, the MSBU Program does not distinguish between former owner and new owner. The Program simply views the amount as being due from the current owner.
As a general rule, the County does not require payment of outstanding assessments prior to the sale of property. In most sale situations, payment of outstanding assessments is a negotiated settlement factor between the buyer and the seller. However, an exception to this rule is related to assessments that are delinquent through non-payment of property taxes. When property taxes or assessments are not paid by the statutory due date, a tax certification may be issued by the Tax Collector and a tax lien may be placed on the property for the delinquent amount. In these cases, the debt must be satisfied at the time of property sale.
Although Seminole County Government may not require payment of the assessment balance at the time of property sale, some mortgage companies may require lien satisfaction in order to finance or refinance the property. These assessment payment decisions are determined by property owners. The decision to make early payoff, as well as the decision regarding who will pay the assessment balance is between the buyer and the seller. If an assessment balance is to be paid, the MSBU Program must be notified so that a payoff amount can be confirmed. Following receipt of the final payment, a Satisfaction of Lien document will be provided.
Satisfaction of Lien
An MSBU assessment lien is satisfied by full payment. When a fixed term assessment is paid in full, a "Satisfaction of Lien" document is prepared and processed by the County and recorded in Land Records by the County Clerk of the Courts. Once the processing is completed, the recorded Satisfaction of Lien document is mailed to the property owner on record at the time of payoff.
When early payoff of a fixed term assessment is desired, a payoff balance can be obtained by emailing or calling the MSBU Program.
Variable rate assessments are satisfied when annual property taxes are paid. Satisfaction of lien documentation is not distributed for variable rate assessment.
Property Tax Year? Fiscal Year? Assessment year?
When the closing costs associated with a property sales are being calculated, questions often arise as to who (buyer or seller) should be financial responsible for various costs. Property taxes and assessments are often included in closing costs and settlement negotiations. Given the terminology differences in regards to property taxes (ad valorem taxes) and assessments (non-ad valorem assessments), and the differences as to how the two are levied and applied to operating budgets, the concepts can be a bit confusing. To challenge the situation further, there are different types of non-ad valorem assessments (fixed term and variable rate) that yield different implications in regards to the amount posted to the property tax bill. The following clarification is offered to assist property owners and prospective owners in making closing cost decisions:
- A fiscal year is different than the property tax year.
- The fiscal year (budgetary/financial operations) for Seminole County spans from October to September.
- A property tax year spans from January to December of any given year with taxes collected in arrears.
- Property tax bills are mailed in November of the current tax year and are due in March of following year.
- The assessment period for a variable rate assessment is not the same as the property tax year.
- Variable rate assessments are collected in advance while the property taxes are collected in arrears.
- Fixed term assessments are collected via annual installment payments
- The assessment period for fixed term assessment is not the same as the property tax year.
- The assessment period for variable rate assessments can be for fiscal year (budget year) or calendar depending on the specific assessment.
- A variable rate assessment is an ongoing assessment (year to year) for which the rate may change annually based on budgeted costs.
- Non-ad valorem assessments are due when property taxes are due & paid.
Example of Property Tax Year:
- The property taxes collected via the 2011 Property tax year are for tax year 2011 [Jan 2011 – Dec 2011] and are due March 2012.
Examples of Variable Rate Assessment & Service Year:
- A solid waste management assessment levied via the 2011 Property tax bill is for services/activities to be provided during calendar 2012.
- A street lighting assessment levied via the 2011 Property tax bill is for the operation of street lighting equipment to be provided during fiscal year October 2011 - September 2012.
- An aquatic weed control assessment levied via the 2011 Property tax bill is for services to be provided during fiscal year October 2011 - September 2012.
Examples of Fixed Term Assessment:
- A fixed term assessment include on the 2011 Property Tax bill represents an installment payment that is due relative to a prior debt for a improvement provided via a fund advance issued by the County.
Additional Information
For more information regarding how assessments and property sales impact each other, please email or call the MSBU Program at (407) 665-7178.
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