With construction costs rising faster than income from sewer and drainage fees, our local sewer and waste treatment company faced serious financial problems in the 1980s. Traditionally, expanded sewer lines were funded by the issuance of municipal bonds to be repaid through fees. The company was reaching the limit of how much debt it could take on; another way had to be found.

The policy the sewer district implemented in 1985 was to have customers share a portion of the cost of new sewer lines in their neighborhoods. Property owners had the option of financing the cost, called an assessment, or paying it off in cash. Customers were protected from having to take on a ridiculously large debt by means of a Guaranteed Maximum Assessment, or GMA.

The GMA is an apportionment of cost based on the size and front footage of the property. To derive the GMA, first property sizes and front footage measurements are used to classify properties into categories called sub areas. Then the assessable amount of the project's cost is divided among the properties based on their sub area classification. Properties in higher sub area categories pay incrementally higher assessments. Note that the cost is not proportional to property size. (In fact, I'm not 100% sure what criteria besides size are used to classify properties. I'll keep researching and report back!) But it is true that huge tracts only pay incrementally more than small tracts. Most residential properties tend to fall into the lowest sub area.

Inspired by jessicapierce's wisdom.

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