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Special Assessment Bond is a municipal bond backed by assessments from the property that benefits from the improvements.
If a municipality needs to do a costly improvement to a reservoir, it may issue bonds to pay to the project. If the reservoir serves five towns the residence of the five towns will be assessed a special tax to pay for the improvements. The bonds that were issued to pay for the improvements will be supported by the taxes received from the special assessment. Once the bonds are paid off the tax will no longer be assessed.