ARIZONA STATE SENATE
Forty-ninth Legislature, Second Regular Session
FACT SHEET FOR H.B. 2003
technical correction; nonprofit corporations
(NOW: revitalization districts)
†††††††††† Authorizes the establishment of a Revitalization District for the purposes of infrastructure development in one or more cities or tribal entities.
Special taxing districts, often referred to as special districts, are usually created to fill a need and to enable the provision of services in an area that might otherwise be limited from receiving those services for various reasons, including size, location, financial limitations or unavailability of other government support.† The formation of a special taxing district creates a funding stream to pay for the desired or needed services by placing the responsibility on those who benefit from that service.
Arizona statute currently allows and specifies the process for the formation of more than 30 special taxing districts, such as fire districts, irrigation districts, hospital districts, pest abatement districts and power districts.† Although the specific process depends on the type of district to be created, in many cases formation requires the submission of petitions to the county board of supervisors, followed by a public hearing.† Sometimes, an election may be required for final approval of district formation. The procedures for the establishment of certain types of districts, such as stadium districts, differ greatly. Unless otherwise specified by statute, the county board of supervisors has the absolute authority to deny the formation of a special district in that county if sufficient grounds exist for the denial, but any denial may be subject to judicial review.†
Statute also prescribes mechanisms for the dissolution of districts and methods for changing district boundaries.
There is no anticipated impact to the state General Fund.
Establishment of District
1. Allows the governing body of one or more municipalities or Indian tribes to adopt a resolution of intention to form a Revitalization District (district) if:
a) the public health and necessity require, and
b) the property owners of at least 51 percent of the net assessed value of the affected property present a petition.
2. Requires a General Plan to be filed with the appropriate city clerk that outlines the general description of the proposed area and improvements for which the district is formed.
3. Governs by a district board and outlines the membership of the board, depending on the number of municipalities or Indian tribes participating in the district.
4. Outlines the terms of office for the initial and subsequent board of directors.
5. Contains requirements for the contents of the resolution of intention.
6. Requires the city clerk mail a notice of the date and time of the public hearing and a copy of the resolution of intention to the owners of real property in the district.†
7. Requires the city clerk to publish a copy of the notice and resolution of intention in a newspaper at least 20 days before the hearing.
Hearing on Objections
8. Allows any person claiming an interest in real property located in the district to file a written objection with the city clerk before 5:00 p.m. on the business day preceding the hearing.†
9. Stipulates that the objection may raise one or more of the following:
a) that the property will not benefit from the improvements and should be excluded from the district;
b) that the district should not be formed, including the specific reasons; and
c) that the General Plan should be modified, including the reasons for modification.
10. Requires the governing body to hear and pass only on the written objections and the testimony and evidence presented in support of or opposition to the objections.
11. States that testimony need not be given under oath, unless requested by any owner or as required by the governing board.
12. Directs all minutes, copies of transcripts, tape recordings or proceedings to be made available to the public three working days after the hearing concludes. A charge not to exceed the actual cost of reproducing the items is allowed.
Resolution Forming the District
13. Allows the governing body of each entity to adopt a resolution after the hearing that does one of the following:
a) forms the district, deleting any property determined not to benefit from the district;
b) modifies the General Plan and then forms the district; or
c) determines not to form the district.
14. Requires a resolution that forms the district to state the names of the initial directors and their terms of office.
15. Establishes a process for judicial review where the affected owner or interested person who went through the process of presenting evidence at the hearing and providing testimony may petition for special action with the court of appeals.
16. Outlines the process, procedures and timeframes.
Formation of the District
17. Requires the governing body of each entity, upon formation of the district, to:
a) appoint the initial board of directors;
b) set the district boundaries;
c) order that a map of the districtís boundaries be drawn; and
d) cause a copy of the order forming the district be delivered to the county assessor, the board of supervisors, and the Department of Revenue.
18. Requires a notice of the formation of the district to be recorded with the county recorder.
19. Requires a resolution to be approved by each participating municipality or Indian tribe before the district may be deemed formed.
20. Deems the new district a special purpose district, a special tax-levying district and a municipal corporation.† The district is considered a municipal corporation and political subdivision of Arizona, separate from the municipality.
21. Stipulates that the district does not have the power of eminent domain or the power to enact zoning ordinances.
22. Authorizes the district board to reasonably implement and administer the General Plan.
Powers of the District
23. Grants the following powers to a district, in addition to other powers and authority granted to districts:
a) enter into contracts and spend monies for infrastructure;
b) Enter into intergovernmental agreements (IGAs), including IGAs with an Indian tribe, for the planning, design, inspection, ownership, control, maintenance, operation or repair of infrastructure or for the enhancement of municipal services by the municipality in the district;
c) sell, lease or otherwise dispose of district property if the sale, lease or conveyance is not a violation of the terms of any contract or bond resolution of the district;
d) reimburse a municipality for providing enhanced municipal services in the district;
e) operate, maintain and repair infrastructure;
f) establish, charge and collect user fees, rates or charges for the use of any infrastructure or service;
g) employ staff, counsel and consultants;
h) reimburse a municipality for staff and consultant services and support facilities supplied by the municipality;
i) accept gifts or grants and incur/repay loans for any infrastructure purpose;
j) enter into agreements with landowners and the municipality for the collection of fees and charges from landowners for infrastructure purposes, the advance of monies by landowners for infrastructure purposes or the granting of real property by the landowner for infrastructure purposes;
k) with the approval of the voters, levy and assess for the costs of any infrastructure on any benefitted land in the district;
l) pay the financial, legal and administrative costs of the district;
m) enter into contracts, agreements and trust indentures to obtain credit enhancement or liquidity support for its bonds and process the issuance, registration, transfer and payment of its bonds and the disbursement/investment of the proceeds of the bonds;
n) with the proper consent, enter into agreements with persons outside of the district to provide services to persons and property outside of the district; and
o) use public easements and rights-of-way as outlined.
24. Allows the district to contract, enter into IGAs, adopt/change a seal, sue and be sued, and enter into development agreements.
25. Mandates that public infrastructure may only be located in or on state, county, municipality or district lands or lands otherwise designated as public roadways, highways, streets, thoroughfares or rights-of-way.
26. States that the district has perpetual succession, except that the district may be dissolved as provided by law.
27. Dissolves the district 10 years after the date of formation unless the governing bodies of the participating municipalities by resolution,† extend the district an additional 10 years.
District Records and Meetings
28. Requires minutes, resolutions, accounts receivable and payable, annual budgets and all other required records to be open public records.
29. Outlines requirements for the board members, including terms of office and filling vacancies.
30. Appoints the district clerk and district treasurer as those serving the relevant city or county, unless otherwise stipulated by the district board.
31. Requires the district to follow public meetings and proceedings laws as prescribed by law.
32. Allows the governing body of a municipality, by resolution, to order the participation of the municipality in the costs of any infrastructure purposes, including the payment of bond debt service.
Finances and Budget
33. Allows General Plan projects to be financed from the following sources of revenue:
a) proceeds from the sale of district bonds,
b) municipality or tribal monies contributed to the district,
c) annual tax levies,
d) special assessments,
e) state or federal grants or contributions,
f) private contributions,
g) user, landowner and other fees and charges,
h) proceeds of loans or advances, and
i) any other monies available to the district by law.
34. Requires the district treasurer to prepare a proposed budget by July 15 of each year.
35. Requires the district board to approve the budget, by resolution, by October 1 of each year.
36. Permits participating entities to submit written comments for the budget hearing process.
37. Allows the district board to hold a hearing on the question of the authorization to issue revenue bonds to provide monies for infrastructure purposes.
38. Authorizes the district board to issue and sell revenue bonds if approved by resolution.
39. Requires bonds sold at a public offering to receive one of the four highest investment grade ratings by a nationally recognized bond rating agency.
40. Allows the district board to pledge any district revenues to the payment of its revenue bonds.
41. Requires the district to prescribe fees and charges to generate sufficient revenues for payment of principal and interest.
42. Prohibits any bond holder from compelling any district or municipality to exercise taxing power to pay the bonds or their interest.
43. States that the revenue bonds are not a debt of the district or municipality, nor is the payment of revenue bonds enforceable out of monies other than the pledged payment of the bonds.
44. Authorizes the district to issue and sell refunding bonds in order to refund any revenue bonds.
Special Assessment Bonds
45. Permits the district board, after approval at an election and according to the process and procedures of current law, to levy an assessment of the costs, maintenance and operation of any infrastructure purpose, or any enhanced municipal services on land in the district based on the benefit determined by the district board.†
46. Allows the district to enter into a written agreement with a landowner regarding the manner in which the assessment is to be allocated if the land is to be divided into more than one parcel.
47. Outlines specific requirements if special assessment lien bonds finance more than one purpose or service.†
48. Authorizes a land owner to seek judicial review of whether land is benefitted by the proposed infrastructure.
49. After the adoption of a resolution by the district board to levy a special assessment of property in the district, outlines proper issuance, sales, permissive funds, including reserve funds, and collections through agreement with the county treasurer.
50. Stipulates that the assessment shall be a first lien on the property assessed, subject only to general property taxes and prior special assessments. Outlines procedures in the event of any nonpayment of an assessment.
51. States that on adoption of the resolution, but before issuing the Special Assessment Lien Bonds, the district may direct the county treasurer to require the owners of the assessed property to make advance payment.† Outlines specific requirements.
52. Authorizes the district to issue and sell refunding bonds in order to refund any special assessment bonds.
Terms of Bonds
53. Authorizes the district board to determine the denominations of the bonds, the size of each issue and the form of the bonds.
54. Allows the district board to establish the maturities, interest payment dates and interest rates, whether fixed or variable, but not to exceed the maximum rate stated in the notice of the election or resolution.
55. Allows the bonds to be sold by competitive bid or negotiated sale for public or private offering at, below or above par.
56. Allows the bonds to contain such terms, conditions, covenants and agreements as the district board deems proper.
57. States that bonds may be payable from any combination of taxes, revenues or special assessments of the types of allowed by law if all applicable requirements are met.
58. Allows the district board or governing body to call an election on the authorization to levy an ad valorem tax on the assessed value of all real and personal property in the district at a rate not to exceed the maximum rate specified in the ballot.
59. Stipulates that all taxes for district maintenance and operations must not exceed $0.30 per $100 of assessed valuation for all real and personal property in the district, unless a higher rate is approved by the voters in an election at least three years after the district is formed.
60. Outlines the procedures for changing the tax rate, either by petition or an election.
61. Prohibits the district from levying at a rate in excess of the maximum rate then in effect, except for the payment of debt service on bonds.
62. Requires the district board to make annual statements and estimates of maintenance and operation expenses of the district, cost of capital improvements and the amount of all other expenditures for public infrastructure and enhanced municipal services proposed to be paid from the tax levy as well as the amount raised to pay bonds of the district.† The district board must file the annual statements and estimates with the clerk.†††
63. Requires notice of an election to be posted in three public places within the district not less than 20 days before the election.† Also requires notice to be published in a newspaper of general circulation.
64. Contains requirements on the contents of the notice.
65. Stipulates that only owners of real property in the district are eligible to vote in an election regarding an assessment levied against real property or in an election for the board of directors.
66. Allows corporations, partnerships and other business entities to vote as property owners, but only one vote may be cast for each one-seventh of an acre of real property in the district.
67. Stipulates that the election follows the General Election laws of the state of Arizona.
68. Requires the district board to meet and canvass the returns within 14 days after an election
Dissolution of the District
69. Allows the district board to dissolve the district by resolution if all property is conveyed to the municipality and either the district has no obligations or the municipality has assumed them.
70. Requires the district board to dissolve the district if both a) the governing body consents and voters approve the dissolution or the district has been inactive for at least five years and b) the district board adopts a resolution dissolving the district.
71. Allows the district board to call an election for dissolution and requires that an election be called if at least 10 percent of the qualified electors of the district submit a petition to that effect.
72. Requires the election to be called and held in the same manner as a bond or tax levy election.
73. Stipulates all pertinent property in the District remains subject to the lien for the payment of general obligation bonds, and any property subject to a special assessment lien remains subject to the lien.† The District may not be dissolved if any revenue bonds are outstanding unless sufficient money is available to make all payments due.† Permits the District to operate after its dissolution only as needed to collect money and make payments as necessary.
74. Contains definitions.
75. Becomes effective on the general effective date.
COM†††††††††††††† 2/17/10††††††††††† DPA/SE††††††††† ††† 8-0-0-0
3rd Read†††††††††† 3/23/10††††††††††††††††††††††††††††††††††† 42-12-6-0
Prepared by Senate Research
April 5, 2010