Bill Text: AZ HB2317 | 2021 | Fifty-fifth Legislature 1st Regular | Chaptered
Bill Title: Community facilities districts
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2021-03-18 - Chapter 51 [HB2317 Detail]
Download: Arizona-2021-HB2317-Chaptered.html
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House Engrossed
community facilities districts |
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State of Arizona House of Representatives Fifty-fifth Legislature First Regular Session 2021
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CHAPTER 51
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HOUSE BILL 2317 |
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AN ACT
amending sections 48-701, 48-702, 48-703, 48-704, 48-705, 48-707, 48-708, 48-709, 48-711, 48-716, 48-719, 48-721, 48-722 and 48-723, Arizona Revised Statutes; amending Title 48, chapter 4, article 6, Arizona Revised Statutes, by adding section 48-729; relating to community FACILITIES districts.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 48-701, Arizona Revised Statutes, is amended to read:
48-701. Definitions
In this article, unless the context otherwise requires:
1. "Clerk" includes any person or official who performs the duties of clerk of the municipality or county or any person appointed by the district board to be the district clerk pursuant to section 48-711.
2. "County" means a county that forms a community facilities district pursuant to this article in an unincorporated area or in an incorporated area with the municipality's consent.
3. "Debt service" means the principal of, interest on and premium, if any, on the bonds, when due, whether at maturity or prior redemption and fees and costs of registrars, trustees, paying agents or other agents necessary to handle the bonds and the costs of credit enhancement or liquidity support.
4. "District" means a tax levying community facilities district formed pursuant to this article by a municipality or formed pursuant to this article by a county in an unincorporated area or in an incorporated area with the municipality's consent.
5. "District board" means the board of directors of the district.
6. "Enhanced municipal services" means public service provided by a county or municipality within the district at a higher level or to a greater degree than provided in the remainder of the county or municipality, including such services as public safety, fire protection, street or sidewalk cleaning or landscape maintenance in public areas.
7. "Entity" means any of the following:
(a) A corporation.
(b) A general partnership, including a general partnership that is registered as a limited liability partnership.
(c) A limited partnership, including a limited partnership that is registered as a limited liability partnership.
(d) A limited liability company, including a professional limited liability company.
(e) A business trust, statutory trust entity or similar trust.
(f) An unincorporated association.
(g) A cooperative.
(h) Any other person that has a separate legal existence or has the power to acquire an interest in real property in its own name other than any of the following:
(i) An individual.
(ii) A testamentary, inter vivos or charitable trust, with the exception of a business trust, statutory trust entity or similar trust.
(iii) A decedent's estate.
(iv) A government, a governmental or political subdivision, a governmental agency or entity or a municipal corporation.
8. "General obligation bond" means a bond that is issued pursuant to section 48-719 and that is secured by a pledge of ad valorem taxes levied by the district.
9. "General plan" means the general plan described in section 48-702, subsection D, as the plan may be amended.
10. "Governing body" means the body or board that by law is constituted as the legislative department of the municipality or county.
11. "Municipality" means an incorporated city or town.
12. "Net premium" means the difference between the par amount of the GENERAL obligation bond issue and the general obligation bond issue price that is determined pursuant to United States Department of the treasury regulations.
12. 13. "Owner" means the person or entity that, on the day the action, election or proceeding is begun or held, appears to be the owner of real property as shown on the property tax assessment roll.
13. 14. "Public infrastructure" means all improvements listed in this paragraph that will result in a beneficial use principally to land within the geographical limits of the district and may include a district's share of any improvements listed in this paragraph if the district board determines such share is proportionate to the beneficial use of such improvements to land within the geographical limits of the district, improvements within or outside the geographical limits of the district, necessary or incidental work, whether newly constructed, renovated or existing, and all necessary or desirable appurtenances. For the purposes of this paragraph, adoption by the district board of a resolution of intent pursuant to section 48-715 shall conclusively establish that the improvements or, if applicable, share of the improvements that are the subject of the resolution will result in a beneficial use principally to land within the geographical limits of the district. Public infrastructure improvements are:
(a) Sanitary sewage systems, including collection, transport, storage, treatment, dispersal, effluent use and discharge.
(b) Drainage and flood control systems, including collection, transport, diversion, storage, detention, retention, dispersal, use and discharge.
(c) Water systems for domestic, industrial, irrigation, municipal or fire protection purposes, including production, collection, storage, treatment, transport, delivery, connection and dispersal, but not including facilities for agricultural irrigation purposes unless for the repair or replacement of existing facilities when required by other improvements permitted allowed by this article.
(d) Highways, streets, roadways and parking facilities, including all areas for vehicular use for travel, ingress, egress and parking.
(e) Areas for pedestrian, equestrian, bicycle or other nonmotor vehicle use for travel, ingress, egress and parking.
(f) Pedestrian malls, parks, recreational facilities other than stadiums, and open space areas for the use of members of the public for entertainment, assembly and recreation.
(g) Landscaping, including earthworks, structures, lakes and other water features, plants, trees and related water delivery systems.
(h) Public buildings, public safety facilities and fire protection facilities.
(i) Lighting systems.
(j) Traffic control systems and devices, including signals, controls, markings and signage.
(k) Equipment, vehicles, furnishings and other personalty related to the items listed in this paragraph.
14. 15. "Public infrastructure purpose" means:
(a) Planning, design, engineering, construction, acquisition or installation of public infrastructure.
(b) Acquiring, converting, renovating or improving existing facilities for public infrastructure.
(c) Acquiring interests in real property for public infrastructure.
(d) Establishing, maintaining and replenishing reserves from any source described in section 48-717 or from any other source in order to secure payment of debt service on bonds.
(e) Notwithstanding section 48-589, funding and paying from bond proceeds interest accruing on bonds for a period of not to exceed three years from after their date of issuance.
(f) Providing for the timely payment of debt service on bonds or other indebtedness of the district.
(g) Refinancing any matured or unmatured bonds with new bonds.
(h) Incurring expenses of the district incident to and reasonably necessary to carry out the purposes specified in this paragraph.
15. 16. "Revenue bonds" means those bonds that are issued pursuant to section 48-720 and that are secured by a pledge of revenues of the district or revenues collected by the county or municipality and returned to the district.
16. 17. "Treasurer" includes any person or official who performs the duties of treasurer of the municipality or county or any person appointed by the district board as the district treasurer pursuant to section 48-711.
Sec. 2. Section 48-702, Arizona Revised Statutes, is amended to read:
48-702. Resolution declaring intention to form district
A. If the public convenience and necessity require, and on presentation of a petition signed by the owners of at least twenty-five percent of the land area proposed to be included in the district, the governing body may adopt a resolution declaring its intention to form a community facilities district that shall include contiguous or noncontiguous property that is wholly within the corporate boundaries of the municipality or county.
B. On presentation of a petition signed by the owners of at least twenty-five percent of the land area proposed to be included in the district and a completed application for formation of a district by an individual or entity, the governing body of a municipality or county within sixty days after submission of the completed application shall hold a public hearing to consider the application for formation of the district. Immediately after completion of the hearing, the governing body may adopt a resolution declaring its intention to form a community facilities district that shall include contiguous or noncontiguous property that is wholly within the corporate boundaries of the municipality or county. If the governing body does not adopt a resolution declaring its intention to form a district, the governing body shall provide a written basis for not adopting the resolution and shall identify the specific changes needed for the application to be approved. This subsection does not create a presumption of district formation.
C. The resolution adopted by the governing body shall state the following:
1. The area or areas to be included in the district.
2. The purposes for which the district is to be formed.
3. That a general plan for the district is on file with the clerk of the municipality or county, as applicable.
4. The date, time and place of the hearing to be held on the formation of the district.
5. The place where written objections to the formation of the district may be filed.
6. That formation of the district may result in the levy of taxes to pay the costs of improvements constructed by the district and for their operation and maintenance.
7. A reference to this article.
8. Whether the district will be governed by a district board that consists of the members of the governing body, ex officio, and if REQUESTED pursuant to this section, with two additional district board members who are initially designated by the owner who owns the largest amount of privately owned acreage in the proposed district and who are appointed by the governing body, or, at the option of the governing body, five directors appointed by the governing body. The applicant for formation of the district shall provide in the application whether two additional district board members are to be appointed and shall provide a process for the designation of the two additional district board members, if applicable, on completion of the development of all of the property in the district, as certified by the applicant or its successors, and may provide for the designation of additional DISTRICT board members on expiration of the term of additional district board members and for the designation of a an additional district board member if a vacancy occurs on the district board because of the death, resignation or inability to discharge the duties of director of an additional district board member.
D. A completed application also shall include at least the following information:
1. A petition signed by the owners of at least twenty-five percent of the land to be included in the district.
2. A description of the applicant, including the corporate and organizational structure of the entity or individual making the application, the names of all officers and corporate directors directly related to or associated with the proposed district, the name, address and telephone number of the primary contact for the applicant, the names of any legal representatives, engineers, architects, financial consultants or other consultants significantly involved in the application and a general description of the applicant's experience with similar types of developments.
3. A general plan setting out a general description of the public infrastructure for which the district is proposed to be formed, the general areas to be improved and the estimated costs of construction or acquisition of the public infrastructure to be financed, constructed or acquired by the district.
4. A preliminary financing plan that includes the sources and uses of monies for the public improvements.
E. In reviewing an application for formation of a district in a county, the governing body of the county may consider the district's proximity to a city or town, its inclusion in a metropolitan planning area or county growth area, the availability and capacity of utilities and public infrastructure, including the transportation network, law enforcement services, current levels of other public services and the terms of existing zoning, development agreements and capital improvement plans.
Sec. 3. Section 48-703, Arizona Revised Statutes, is amended to read:
48-703. Notice
A. The clerk of the municipality or county shall execute a notice which that shall read substantially as follows:
To whom it may concern:
The governing body of the (city) (town) (county) of __________, on (Date) , adopted the attached resolution declaring its intention to form a tax levying community facilities district. A hearing on formation will be held on (Date) , at (Time) at (Location) . All persons owning or claiming an interest in property in the proposed district who object to the inclusion of their land in the district, to the formation of the district or to the contents of the general plan must file a written objection with the undersigned at the following address before the time set for the hearing.
(Date)__________________________
________________________________
Clerk
________________________________
Address
(Name of municipality or county)
B. A copy of the resolution declaring the governing body's intention to form the district shall be attached to the notice and the clerk of the municipality or county shall cause a copy to be mailed to the owners of real property in the district as shown on the most recent property tax assessment roll and to all other persons claiming an interest in such property who have filed a written request for a copy of the notice within the six months preceding or at any time following the adoption of the resolution of intent to form the district. The clerk of the municipality or county shall also publish a copy of the notice and resolution at least once in the official newspaper of the municipality or county, if there is one, or, if there is no official newspaper of the municipality, in a newspaper of general circulation in the county in which the municipality is located. The mailing and publication shall be completed at least twenty days before the date set for hearing. The clerk of the municipality or county shall execute an affidavit of mailing stating the date of mailing and the names and addresses of the persons to whom the notices and copies of the resolutions were mailed. The clerk of the municipality or county shall obtain an affidavit from the newspaper in which the publication was made. The clerk of the municipality or county shall cause both affidavits to be placed in the official records of the municipality or county. The affidavits are conclusive evidence of the mailing and publishing of notice. Notice shall not be held invalid for failure of delivery to the addressee.
C. If the clerk of the municipality or county is informed that the person listed on the assessment roll is no longer the owner and the name and address of the successor owner become known, the clerk of the municipality or county shall cause a copy of the notice and resolution to be mailed to the successor owner as soon as practicable after learning of the change of ownership.
Sec. 4. Section 48-704, Arizona Revised Statutes, is amended to read:
48-704. Hearing on objections
A. Within thirty days after adoption of the resolution of intent to form a district, any person claiming an interest in real property that the resolution discloses is situated in the district may file a written objection with the clerk of the municipality or county that adopted the RESOLUTION before 5:00 p.m. on the business day preceding the date and time set for the hearing on the question of formation of the district. The objection may raise one or more of the following:
1. That the objector's property would not be benefited from the improvements set forth in the general plan and that the property should be excluded from the district.
2. That the district should not be formed, stating the specific reasons.
3. That the general plan should be modified, stating the reasons for modification.
B. At the hearing, including any adjournments or continuances, the governing body shall hear and pass only on the written objections and the testimony and evidence presented in support of or opposition to the objections. The hearing shall be either transcribed by a court reporter or recorded by a tape recorder. The court reporter's transcript or a transcription of the tape recording certified to be true and correct by the clerk of the municipality or county shall be filed in the official records of the governing body.
C. In furtherance of the hearing, the clerk of the municipality or county, on written request or praecipe being presented, shall issue subpoenas or subpoenas duces tecum to compel the attendance and testimony of any person or the submission of any documents at the hearing. Compliance with the subpoena shall be enforced as if the subpoena were issued by a clerk of the superior court.
D. Testimony at the hearing need not be under oath, unless requested by any owner or required by the governing board body. Requests by owners that the testimony be under oath must be made in writing and be filed with, or served on, the clerk of the municipality or county before the hearing begins or the request is deemed waived.
E. The minutes or a copy of a written transcript or a tape recording of the proceedings of a hearing conducted pursuant to this section shall be open to public inspection three working days after the conclusion of a hearing. Any person may request to examine or be furnished copies, printouts, photographs, transcripts or recordings of a hearing during regular office hours of the governing body. The custodian of the records shall furnish the copies, printouts, photographs, transcripts or recordings and may charge a reasonable fee that does not exceed the actual cost of reproducing the item requested.
Sec. 5. Section 48-705, Arizona Revised Statutes, is amended to read:
48-705. Order forming district; election
A. After the hearing, the governing body may adopt a resolution ordering the formation of the district, deleting any property determined not to be benefited by the district or modifying the general plan and then ordering the formation of the district or determining that the district not be formed. A resolution ordering formation of the district shall state whether the district will be governed by a district board that consists of the members of the governing body, ex officio, and if requested pursuant to section 48-702, with two additional district board members who are initially designated by the owner who owns the largest amount of privately owned acreage in the district and who are appointed by the governing body, or, at the option of the governing body, five directors appointed by the governing body. The resolution shall contain the names of the five initial directors appointed district board members and the terms of office of each. IF THE DISTRICT WILL BE GOVERNED BY THE GOVERNING BODY, EX OFFICIO, WITH TWO ADDITIONAL DISTRICT BOARD MEMBERS WHO ARE initially designated by the owner who owns the largest amount of privately owned acreage in the district and who are APPOINTED BY THE GOVERNING BODY, after the governing body receives a landowner petition prescribed in SECTION 48-729, subsection A, paragraph 3, THE RESOLUTION ORDERING FORMATION OF THE DISTRICT MAY STATE that THE TWO ADDITIONAL appointed DISTRICT BOARD MEMBER POSITIONS SHALL PERMANENTLY BE ADVISORY NONVOTING MEMBERS OF THE DISTRICT BOARD.
B. If the governing body determines that the district should be formed, it shall submit the formation to an election of the owners of land in the district who are qualified electors of this state and other landowners, according to section 48-3043, unless a petition is presented to the governing body pursuant to section 48-707, subsection F. Each owner has the number of votes or portions of votes equal to the number of acres or portions of acres rounded upward to the nearest one-fifth of an acre owned by that owner in the submitted district. In addition to holding the landowner election required by this subsection or receipt of the landowner petition pursuant to section 48-707, subsection F, and subject to section 48-707, subsection G, the governing body shall submit the formation of the district to a vote of the qualified electors who reside within the boundaries of the proposed district.
Sec. 6. Section 48-707, Arizona Revised Statutes, is amended to read:
48-707. Notice and conduct of elections; waiver
A. Any election under this article shall be a nonpartisan election called by posting notices in three public places within the boundaries of the district not less than twenty days before the election. Notice shall also be published in a newspaper of general circulation in the municipality or county or if there is no newspaper so circulated in the municipality in a newspaper of general circulation in the county in which the municipality is located once a week for two consecutive weeks before the election. The notice shall state:
1. The place of holding the election.
2. The hours during the day, not less than six, in which the polls will be open.
3. If it is a formation election, the boundaries of the proposed district.
4. If it is a bond election, the amount of bonds to be authorized for the district, the maximum rate of interest to be borne on the bonds, the maximum term of the bonds, not exceeding twenty-five years, and the purposes for which the monies raised will be used.
5. If it is an ad valorem tax levy election pursuant to section 48-723, the maximum tax rate per one hundred dollars $100 of net assessed limited property valuation to be imposed, the purposes for which the monies raised will be used and the existing maximum tax rate, if any.
6. That a general plan is on file with either the clerk of the district or the clerk of the municipality or county that adopted the RESOLUTION ordering the formation of the district as prescribed by section 48-705.
B. The district board or the governing body, as applicable, shall determine the date of the election and the polling places for the election and may consolidate county precincts. For other than a formation election pursuant to section 48-705, subsection B, and an election held pursuant to subsection G of this section, precinct registers shall be used. The county recorder shall submit precinct registers on the request of the clerk of the district or the clerk of the MUNICIPALITY or county, as applicable, and if the district includes land lying partly in and partly out of any county election precinct, the precinct registers may contain the names of all registered voters in the precinct and the election boards at those precincts shall require that a prospective elector execute an affidavit stating that the elector is also a qualified elector of the district. For formation elections and elections held pursuant to subsection G of this section, a prospective elector shall execute an affidavit stating that the elector is the owner of land in the proposed district and is a qualified elector of this state or otherwise qualified to vote pursuant to section 48-3043 and stating the area of land in acres owned by the elector. Election board members may administer oaths or take all affirmations for these purposes. A community facilities district election held pursuant to this article is not subject to title 16, chapter 2, article 3.
C. Except as otherwise provided by this article, the election shall comply with the general election laws of this state, except that the words to appear on the ballots shall be for a formation election "district, yes" and "district, no", for a bond election "bonds, yes" and "bonds, no", for a tax election if no tax is in place "tax, yes" and "tax, no" and for a tax election to change an existing maximum or eliminate an existing tax "tax change, yes" and "tax change, no". The returns of election shall be made to the governing body or, if after formation, to the district board.
D. Within fourteen days after an election, the governing body, or if after formation, the district board, shall meet and canvass the returns, and if a majority of the votes cast at the election is in favor of formation, issuing the bonds, imposing the tax or changing the tax, the governing body or the district board, as appropriate, shall enter that fact on its minutes. The canvass may be continued from time to time. Failure of a majority to vote in favor of the matter submitted does not prejudice the submission of the same or similar matters at a later election.
E. If a person listed on the assessment roll is no longer the owner of land in the district and the name of the successor owner becomes known and is verified by recorded deed or other similar evidence of transfer of ownership, the successor owner is deemed to be the owner for the purposes of this article.
F. Notwithstanding any other provision of this article, if a petition for formation is signed by owners of all of the land in the district described in the petition and is approved by the municipality or county, the municipality or county may waive any or all requirements of posting, publication, mailing, notice, hearing and landowner election. On receipt of such a petition, and after approval by an election of resident electors, if any, the municipality or county shall declare the district formed without being required to comply with the provisions of this article for posting, publication, mailing, notice, hearing or landowner election.
G. Notwithstanding any other provision of this article, if no person has registered to vote within the district within fifty days immediately preceding any scheduled election date, any election required to be held pursuant to this article shall be held with the vote by the owners of land within the district who are qualified electors of this state and other landowners according to section 48-3043. Each owner has the number of votes or portion of votes equal to the number of acres or portion of acres rounded upward to the nearest one-fifth of an acre owned in the district by that person.
H. For a district that is proposed to be formed by a county, a district may be formed only if a petition for formation is signed by the owners of all of the land in the district that is described in the petition and if it is approved by the county. If the district is proposed to be formed in a county island, as defined in section 11-251.12, that is in existence on the effective date of this amendment to this section September 21, 2006, the petition must be signed by the owners of all of the land in the district that is described in the petition and the district must be approved by the county and by the municipality or all municipalities that form the county island. If the petition is signed by the owners of all of the land in the district, the county may waive any or all requirements of posting, publication, mailing, notice, hearing and landowner election. On receipt of such a petition, and after approval by an election of one hundred per cent percent of the resident electors, if any, the county shall declare the district formed without being required to comply with the provisions of this article for posting.
Sec. 7. Section 48-708, Arizona Revised Statutes, is amended to read:
48-708. Formation; debt limitation; disclosure
A. If the formation of the district is approved by a majority of the votes cast at the election, the governing body shall order the formation, and if applicable, appoint the initial directors of the district board that who are not members of the governing body, ex officio, set the district boundaries and order that a map showing the district boundaries be drawn and a copy of the order forming the district be delivered to the county assessor and the board of supervisors of the county in which the district is located and to the department of revenue. A notice of the formation showing the number and date of the order and giving a description of the land included in the district shall be recorded with the county recorder.
B. On its formation, the district is a special purpose district for purposes of article IX, section 19, Constitution of Arizona, a tax levying public improvement district for the purposes of article XIII, section 7, Constitution of Arizona, and a municipal corporation for all purposes of title 35, chapter 3, articles 3, 3.1, 3.2, 4 and 5. A district that distributes or sells groundwater is a private water company only for purposes of title 45, chapters 2 and 3.1. Except as otherwise provided in this section, a district is considered to be a municipal corporation and political subdivision of this state, separate and apart from the municipality or county. Under no circumstances may the amount of indebtedness evidenced by general obligation bonds issued pursuant to section 48-719 and revenue bonds issued pursuant to section 48-720 exceed the estimated cost of the public infrastructure improvements plus all costs connected with the public infrastructure purposes and issuance and sale of bonds, including, without limitation, credit enhancement and liquidity support fees and costs. The total aggregate outstanding amount of bonds and any other indebtedness for which the full faith and credit of the district are pledged shall not exceed sixty percent of the aggregate of the estimated market value of the real property and improvements in the district after the public infrastructure of the district is completed plus the value of the public infrastructure owned or to be acquired by the district with the proceeds of the bonds.
C. On formation of the district, the district board shall make a good faith effort to implement the general plan for the public infrastructure of the district and any development agreement entered into pursuant to section 9-500.05 or 11-1101, as applicable, between the governing body and owners of land in the district. The district board shall be considered a party to that agreement.
D. For districts approved after August 9, 2017, the district board shall require that a seller of a property in the district who is otherwise required to obtain a subdivision public report as prescribed by section 32-2183 disclose to a prospective purchaser the existence of the district, the purpose for which the district was formed as set forth in the resolution adopted by the governing body, the estimated tax rate and the estimated annual tax amount that is based on applying that tax rate to a hypothetical residential property value.
E. Fees and other charges assessed by a municipality or county in connection with the submission and consideration of an application to form a district shall not exceed fifteen thousand dollars $15,000. If an application is denied by the governing body, the municipality or county may not assess a fee or other charge in connection with the submission and consideration of a substantially similar application that is submitted within one year following the denial. Fees and other charges assessed by a municipality, county or district in connection with the administration of a district, including the issuance and sale of bonds, shall not exceed the actual expense incurred by the municipality, county or district for staff and consultant services and support facilities supplied by the municipality, county or district or the financial, legal and administrative costs of the district that are not reimbursed from proceeds of the bonds or other district revenue. Any fees or other charges paid by the applicant before formation of the district that exceed the actual costs of forming the district shall be used transferred by the municipality or county to the district and the district shall use the transferred monies solely to support the formation or administration of the district, including the issuance and sale of bonds.
Sec. 8. Section 48-709, Arizona Revised Statutes, is amended to read:
48-709. Powers of a community facilities district
A. In addition to the powers otherwise granted to a district pursuant to this article, a district may to further the general plan:
1. Enter into contracts and expend monies for any public infrastructure purpose with respect to the district.
2. Enter into intergovernmental agreements as prescribed in title 11, chapter 7, article 3 for the planning, design, inspection, ownership, control, maintenance, operation or repair of public infrastructure or the provision of enhanced municipal services by the municipality in the district.
3. 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.
4. Reimburse the municipality for providing enhanced municipal services in the district.
5. Operate, maintain and repair public infrastructure.
6. Establish, charge and collect user fees, rates or charges for the use of any public infrastructure or service.
7. Employ staff, counsel and consultants.
8. Reimburse the municipality or county for staff and consultant services and support facilities supplied by the municipality or county.
9. Accept gifts or grants and incur and repay loans for any public infrastructure purpose.
10. Enter into agreements with landowners and the municipality or county for the collection of fees and charges from landowners for public infrastructure purposes, the advance of monies by landowners for public infrastructure purposes or the granting of real property by the landowner for public infrastructure purposes.
11. By resolution, levy and assess the costs of any public infrastructure purpose on any land benefited in the district.
12. Pay the financial, legal and administrative costs of the district.
13. 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 and investment of proceeds of the bonds.
14. With the consent of the governing body of the municipality or county which that formed the district, enter into agreements with persons outside of the district to provide services to persons and property outside of the district.
15. Use public easements and rights-of-way in or across public property, roadways, highways, streets or other thoroughfares and other public easements and rights-of-way, whether in or out of the geographical limits of the district, the municipality or the county.
B. This article does not authorize:
1. A district to acquire, construct, operate or maintain an electric generation or distribution system or natural gas distribution system without the written consent of any affected public service corporation, electric cooperative, agricultural improvement or power district or other district described in article XIII, section 7, Constitution of Arizona, the service area of which encompasses all or part of the district, if that entity is providing or is capable of adequately providing electrical utility service or natural gas utility service in the district.
2. A district to provide service outside its boundaries without the written consent of any affected public service corporation, electric cooperative, agricultural improvement or power district or other district described in article XIII, section 7, Constitution of Arizona, with a service area that lies outside of the district, if that entity is providing or is capable of adequately providing electrical utility service or natural gas utility service in the area that the district proposes to serve.
C. If a district is granted written consent pursuant to this section, the district shall provide a copy to the governor, the president of the senate, the speaker of the house of representatives and each commissioner of the Arizona corporation commission no later than thirty days after consent is granted.
D. In connection with any power authorized by statute, the district may:
1. Contract.
2. Enter into intergovernmental agreements pursuant to title 11, chapter 7, article 3.
3. Adopt and change a seal.
4. Sue and be sued.
5. Enter into development agreements, as defined in section 9-500.05 or as prescribed by section 11-1101.
6. Exercise the same right and power of eminent domain as a public service corporation pursuant to title 12, chapter 8, articles 2 and 3 to acquire any property or right-of-way, except political subdivision, county, state or federal property, for any public infrastructure purpose.
E. A district which proposes to provide domestic water service in the certificated area of a public service corporation serving domestic water shall provide just compensation to the public service corporation pursuant to section 9-516.
F. Public infrastructure other than personalty may be located only in or on lands owned by the state, a county, a municipality or the district or dedicated or otherwise designated as public roadways, highways, streets, thoroughfares, easements or rights-of-way, whether in or out of the district or the municipality. Personalty may be used only for purposes authorized by the district board.
G. An agreement pursuant to subsection A, paragraph 10 of this section may include agreements to repay all or part of such advances, fees and charges from the proceeds of bonds if issued or from advances, fees and charges collected from other landowners or users or those having a right to use any public infrastructure. A person does not have authority to compel the issuance or sale of the bonds of the district or the exercise of any taxing power of the district to make repayment under any agreement.
H. A district shall not contract with a municipality for enhanced municipal services unless the area for which the services are to be provided is designated by the municipality as a slum or blighted area pursuant to title 36, chapter 12, or an urban core business district of the municipality determined by formal resolution of the municipality to be in need of enhanced municipal services to encourage or preserve commercial development in the area.
I. Notwithstanding title 34 or article 2 of this chapter, the district at the option of the district board may enter into contracts for the performance of district projects with landowners in the district after calling for bids but before publishing notice of the award of a contract if all of the following conditions are met:
1. The landowner or landowners own three-fourths or more of the total land area of the district.
2. The landowner or landowners contract to perform the work at a cost which that does not exceed the cost specified in the bid of the bidder who would have been awarded that bid.
3. The work for which the contract was let is to be financed pursuant to this article.
4. All contracts and work executed pursuant to this section are subject to those rules as the district board may prescribe.
Sec. 9. Section 48-711, Arizona Revised Statutes, is amended to read:
48-711. Records; district board; terms; vacancies; open meetings
A. The district shall keep the following records that shall be open to public inspection:
1. Minutes of all meetings of the district board.
2. All resolutions.
3. Accounts showing all monies received and disbursed.
4. The annual budget.
5. All other records required to be maintained by law.
B. If the resolution ordering formation of the district provides that the district will be governed by a district board that consists of five directors who are appointed by the governing body, all of the following apply:
1. Each appointed director shall serve for a term of six years, except that two directors initially appointed by the governing body in the resolution shall serve for a term of four years.
2. The resolution shall state which directors shall serve four-year terms and which shall serve six-year terms.
3. On the expiration of the term of an appointed director, the governing body shall appoint a person to fill the position.
4. If a vacancy occurs on the district board because of death, resignation or inability of the director to discharge the duties of director, the vacancy shall be filled by appointment made by the governing body.
C. If the resolution ordering formation of the district provides that the district will be governed by a district board that consists of the members of the governing body, ex officio, with two additional members who are initially designated by the owner who owns the largest amount of privately owned acreage in the district and who are appointed by the governing body, all of the following apply:
1. Each of the additional appointed directors district board members shall serve for a term of six years.
2. On the expiration of the term of an additional appointed director district board member, the governing body shall appoint a person according to the process for designating a director district board member for a term of office as prescribed in the application for formation of the district submitted pursuant to section 48-702, or if no process is prescribed in the application for formation, the owner who owns the largest amount of privately owned acreage in the district at the time the term expires shall designate a person to fill the position and the governing body shall appoint that person to fill the position.
3. If a vacancy occurs on a district board because of death, resignation or inability of either of the additional appointed members to discharge the duties of director an additional district board member, the governing body shall appoint a person according to the process for designating a person to fill a vacancy on the district board as prescribed in the application for formation of the district submitted pursuant to section 48-702, or if no process for filling a vacancy is prescribed in the application for formation, the vacancy shall be filled by a person who is designated by the owner who owns the largest amount of privately owned acreage in the district at the time of the vacancy and who is appointed by the governing body to fill the vacancy.
D. A director district board member appointed by the governing body to fill a vacancy on the district board shall hold office for the remainder of the unexpired term until that director's district board member's successor is appointed.
E. An appointed director district board member shall not be a landowner owning more than forty acres in the district, an elected official of the municipality or county or an employee or agent of the landowner or municipality or county but may be a director district board member of more than one district.
F. The members of the governing body of the municipality or county are not eligible to receive compensation for their services as members of the district board.
G. The district board of directors shall comply with title 38, chapter 3, article 3.1 as a separate political subdivision, and the members of the district board of directors are deemed public officers for the purposes of and shall comply with title 38, chapter 3, article 8.
H. The district manager, clerk and treasurer shall be the manager, clerk and treasurer of the municipality or county, respectively, unless the district board appoints a district manager, clerk and treasurer.
Sec. 10. Section 48-716, Arizona Revised Statutes, is amended to read:
48-716. Budget
On or before July 15 each year, the district treasurer shall prepare a proposed budget for the ensuing fiscal year to be submitted to the district board for approval. The district board shall indicate its approval of the budget by resolution, which shall provide for a hearing on the budget as approved. Notice of the hearing on the budget shall be provided in the manner prescribed by section 48-715. The municipality or county may review the proposed annual budget and may submit written comments to the district board for its assistance and information in adopting its annual budget. At the conclusion of the budget hearing, the district board, by resolution, shall adopt the budget as finally approved by the district board. The budget shall be adopted before October 1 each year.
Sec. 11. Section 48-719, Arizona Revised Statutes, is amended to read:
48-719. General obligation bonds; tax levy; security
A. At any time after the hearing on formation of the district, the district board, or, if before formation, the governing body, may from time to time order and call a general obligation bond election to submit to the qualified electors of the district or to those persons who are qualified to vote pursuant to section 48-707, subsection G the question of authorizing the district board to issue general obligation bonds of the district to provide monies for any public infrastructure purposes consistent with the general plan. The election may be held in conjunction with the formation election.
B. If general obligation bonds are approved at an election, the district board may issue and sell general obligation bonds of the district.
C. The district may issue and sell refunding bonds to refund any general obligation bonds of the district. If general obligation bonds are issued to refund any general obligation bonds of the district, an election on the issuance of such refunding bonds is not required.
D. After the bonds are issued, the district board shall enter in its minutes a record of the bonds sold and their numbers and dates and shall annually levy and cause an ad valorem tax to be collected, at the same time and in the same manner as other taxes are levied and collected on all taxable property in the district, sufficient, together with any monies from the sources described in section 48-717, to pay debt service on the bonds when due. The annual levy shall not exceed the net amount necessary to meet annual payments of principal and interest, projected payments of principal and interest on new debt planned for the ensuing year, a reasonable delinquency factor, including an amount necessary to correct prior year errors or shortages in the levy, if applicable, and any expenses and fees required in conjunction with the authorization pursuant to section 35-512. The levy shall be the net of all cash in excess of ten percent of the annual payments of principal and interest in the current fiscal year from the previous year remaining in the fund or funds prescribed by subsection E of this section.
E. Monies derived from the levy of the tax provided in this section when collected constitute funds to pay the debt service on the bonds and shall be kept separately from other funds of the district. Amounts levied for debt service on bonds payable from the secondary tax are and shall be considered special revenues of the district, shall be kept in a special, segregated fund, are not and shall not be general property taxes and may not be used for any other purpose of the district.
E. F. All bonds, heretofore and hereafter issued, are secured by a lien on all revenues received pursuant to the tax levy. The lien arises automatically without the need for any action or authorization by the district or the district board. The lien is valid and binding from the time of the issuance of the bonds. The revenues received pursuant to the levy of the tax are immediately subject to the lien. The lien attaches immediately to the revenues and is effective, binding and enforceable against the district, the district's successors, transferees and creditors and all other parties asserting rights in the revenues, irrespective of whether the parties have notice of the lien, without the need for any physical delivery, recordation, filing or further act.
Sec. 12. Section 48-721, Arizona Revised Statutes, is amended to read:
48-721. Special assessments; special assessment bonds
A. The district board, by resolution and pursuant to the procedures prescribed by sections 48-576 through 48-589, as nearly as practicable, or such other procedures as the district board provides, may levy an assessment of the costs of any public infrastructure purpose, any operation and maintenance of public infrastructure or any enhanced municipal services on any land in the district based on the benefit determined by the district board to be received by the land. Prior to Before the issuance of special assessment bonds the district may enter into a written agreement with a landowner as to the manner in which the assessment is to be allocated if the land is to be divided into more than one parcel. If an issue of special assessment lien bonds finances more than one purpose or service, the benefit received by the land, in the discretion of the district, may be determined by reference to the purposes and services as a whole or individually. The assessment may be based on estimated costs and amended to reflect actual costs, and the preparation of plans and specifications and the awarding of the contract are not a prerequisite to the levying of the assessment. An owner of land on which an assessment has been levied may seek judicial review of whether the land is benefited by the proposed infrastructure, on the merits, by special action filed with the court of appeals pursuant to the procedures of section 48-706, within thirty days after the effective date of the resolution.
B. After adoption by the district board of a resolution levying a special assessment on property in the district pursuant to section 48-709, subsection A, paragraph 11 the district board may issue and sell special assessment lien bonds payable from amounts collected from the special assessments, from amounts available from time to time in any reserve fund established for those special assessment bonds and from any other amounts available for those purposes as prescribed by section 48-717. The district and the county treasurer for the county in which the district is located may enter into an agreement for the county treasurer to collect the district's special assessments in the manner and by the officers provided by law for the collection and enforcement of general taxes. The district and the county treasurer may provide by agreement for the payment of the county treasurer's collection expenses directly related to the levy of the special assessment and, if so provided, the levy of the special assessment may include an amount for compensation of the county treasurer directly related to the collection of the special assessment. The compensation received by the county treasurer pursuant to the agreement shall be governed by section 11-496. The district board may also issue and sell bond anticipation notes pursuant to the procedures prescribed in section 48-2081 or with procedures as similar to those as is practicable. The assessment shall be a first lien on the property assessed subject only to general property taxes and prior special assessments. In the event of nonpayment of an assessment and except as otherwise provided in an agreement between the district and the county treasurer pursuant to this section, the procedures for collection of delinquent assessments, sale of delinquent property and issuance and effect of the superintendent's deed prescribed by sections 48-601 through 48-607 apply, as nearly as practicable, except that in no event is the district or the municipality required to purchase the delinquent land at the sale if there is no other purchaser. If the landowner owns more than one parcel in the district, the district board may provide procedures for the collection and enforcement of assessments as the board deems appropriate by contract with a landowner to permit allow the sale of any or all of the landowner's parcels in the district if the landowner becomes delinquent as to any parcel that the landowner owns in the district.
C. On adoption of the resolution, but before issuance of the special assessment lien bonds, the district may direct the treasurer to make demand on the owners of the property so assessed, as shown on the property tax roll, for advance payment of the amount assessed. The demand shall state a date not less than twenty days after the date of adoption of the ordinance after which the treasurer may refuse to accept advance payments of the assessment. The treasurer shall certify to the clerk on or after the date specified in the demand the amount collected and the assessments remaining unpaid against each parcel of land assessed. Special assessment lien bonds may not be issued in an amount in excess of the amount assessed in the ordinance or, if advance payments are demanded, the amount certified to the clerk. The district may adopt procedures for prepayment and provisions for payment and reallocation of assessments.
D. The district, by resolution and pursuant to the procedures prescribed by article 4 of this chapter, as nearly as practicable, may issue and sell refunding bonds to refund any special assessment bonds of the district.
Sec. 13. Section 48-722, Arizona Revised Statutes, is amended to read:
48-722. Terms of bonds
A. Notwithstanding article 2 of this chapter, with respect to any bonds the district board shall prescribe the denominations of the bonds, the size of each issue and the form of the bonds and shall establish the maturities, interest payment dates and interest rates, whether fixed or variable, not exceeding the maximum rate stated in the notice of the election or the resolution of the district board. The bonds may be sold by competitive bid or negotiated sale for public or private offering at, below or above par. If the bonds are sold below par, the aggregate amount of discount and interest to be paid on the bonds shall not exceed the amount of interest which that would have been payable on those bonds pursuant to the maturity schedule prescribed by the district board at the maximum rate set out in the bond resolution.
B. If general obligation bonds of the district are sold above par, the amount of net PREMIUM associated with a general obligation bond issue may be used only for the following purposes:
1. To pay any or all costs incurred in issuing the general obligation BONDS.
2. As a DEPOSIT in a debt service fund and used only to pay interest on the issue of general obligation bonds.
C. If used For any purpose other than as PRESCRIBED in subsection B of this section, and if the district has general obligation bond voter authorization and AVAILABLE capacity under its debt limitations prescribed by section 48-708, subsection B, the amount of net PREMIUM used for that purpose shall reduce in an equal amount both the available aggregate indebtedness capacity of the district prescribed in section 48-708, subsection B and the PRINCIPAL amount AUTHORIZED at the general OBLIGATION bond election for the district from WHICH the issue of general obligation bonds is being sold. Any net premium that is used as prescribed in this subsection shall be AMORTIZED for all debt limitation purposes on a pro rata basis each year by MULTIPLYING the net PREMIUM used by a percentage equal to the percentage of the total PRINCIPAL AMOUNT of the general obligation bond issue that matures in that year.
D. The proceeds of the sales shall be deposited with the treasurer, or with a trustee or agent designated by the district board, to the credit of the district to be withdrawn for the purposes provided by this article. Pending that use, the proceeds may be invested as determined by the district. The bonds may contain such terms, conditions, covenants and agreements as the district board deems proper. The bonds may be payable from any combination of taxes, revenues or special assessments of the types described in sections 48-719, 48-720 and 48-721 and as specified in the bonds provided that all applicable requirements of those sections are met.
Sec. 14. Section 48-723, Arizona Revised Statutes, is amended to read:
48-723. District taxes; annual financial estimate and budget
A. Except as provided in subsection D of this section and at any time after the hearing on formation of the district, the district board, or, if before formation, the governing body, may call an election to submit to the qualified electors of the district or to the persons qualified to vote pursuant to section 48-707, subsection G the question of authorizing the district board to levy an ad valorem tax on the net assessed limited property value of all the real and personal property in the district at a rate or rates which that do not exceed the maximum rate or rates specified in the ballot. All taxes attributable to the operation and maintenance expenses of the district, excluding expenses for an area described in section 48-709, subsection G H, shall not exceed an amount equal to thirty cents $.30 per one hundred dollars $100 of net assessed limited property valuation for all real and personal property in the district, unless a higher rate is approved by a vote of the electors of the district, or by the persons who are qualified to vote as provided in section 48-707, subsection G, voting at an election not less than three years after the date of the formation of the district. The election may be held in conjunction with the formation election. Once approved at an election, the maximum rate remains in effect until increased or decreased at a subsequent election. If a maximum rate is in effect, the district board, on petition of twenty-five per cent percent of the qualified electors of the district, or by those persons owning twenty-five per cent percent of the land area who are qualified to vote pursuant to section 48-707, subsection G, shall call an election to reduce the maximum tax rate but not below the lesser of that rate determined by the district board to be necessary to maintain the district's facilities and improvements or the actual rate then in effect. On the presentation to the district board of a petition signed by the owners of a majority of the property in the district, the district board shall adopt a resolution to reduce or eliminate the portion of the tax, beginning the next fiscal year, required for one or more enhanced municipal services specified in the petition. Signatures on a petition to reduce or eliminate a tax are valid for a period of sixty days.
B. The district may not levy, other than for the payment of debt service on general obligation bonds, at a rate or rates in excess of the maximum rate then in effect.
C. When levying an ad valorem tax, the district board shall make annual statements and estimates of the operation and maintenance expenses of the district, the costs of capital improvements to be financed by the tax levy or levies and the amount of all other expenditures for public infrastructure and enhanced municipal services proposed to be paid from the tax levy or levies and of the amount to be raised to pay general obligation bonds of the district, all of which shall be provided for by the levy and collection of ad valorem taxes on the net assessed limited property value of all the real and personal property in the district. The district board shall file the annual statements and estimates with the clerk of the district. The district board shall publish a notice of the filing of the estimate, shall hold hearings on the portions of the estimate not relating to debt service on general obligation bonds and shall adopt a budget. The district board, on or before the date set by law for certifying the annual budget of the county or municipality, shall fix, levy and assess the amounts to be raised by ad valorem taxes of the district and shall cause certified copies of the order to be delivered to the board of supervisors and to the department of revenue. All statutes relating to the levy and collection of general county taxes, including the collection of delinquent taxes and sale of property for nonpayment of taxes, apply to the district taxes provided for by this section.
Sec. 15. Title 48, chapter 4, article 6, Arizona Revised Statutes, is amended by adding section 48-729, to read:
48-729. District board composition reconciliation; petition
A. For districts that are formed after August 9, 2017 and for which the district board consists of the governing BODY of the municipality or county, ex officio, with two additional district board members who were initially designated by an owner who owned the largest amount of privately owned acreage in the district at formation and who were appointed by the governing body, all of the following apply:
1. At any time after receipt of a petition signed by the owners of a MAJORITY of the privately owned real property within the boundaries of the district as measured by square footage or acreage, the district board may adopt a resolution to RECONCILE the district BOARD composition by permanently removing from the district board the two ADDITIONAL appointed district board members and their positions on the district board.
2. On removal of the two ADDITIONAL district board members and their positions as PRESCRIBED in paragraph 1 of this section, the district shall be GOVERNED by a district board that consists of the governing body of the municipality or county, ex officio.
3. At any time after receipt of a petition signed by the owners of a majority of the privately owned real property within the boundaries of the district as measured by square footage or acreage, the district board may adopt a resolution that provides that the two additional appointed district board member positions shall permanently be advisory nonvoting members of the district board following adoption of the resolution. conversion of the two additional appointed district board member positions to advisory nonvoting district board member positions does not preclude any subsequent district board reconciliation as prescribed in paragraphs 1 and 2 of this subsection. The petition prescribed in this paragraph may be presented to the governing body of the municipality or county before formation of the district, and if so presented, the resolution ordering formation of the district adopted by the governing body may state that the two additional appointed district board member positions shall permanently be advisory nonvoting members of the district board.
B. The conversion of the two additional appointed district board member positions to permanently be advisory nonvoting district board member positions as prescribed by subsection A, paragraph 3 of this section or the reconciliation to permanently remove the two additional appointed district board members as prescribed by subsection A, paragraphs 1 and 2 of this section does not affect the validity of the formation of the district or the validity of district board actions before the conversion or reconciliation of the district board.
Sec. 16. Emergency
This act is an emergency measure that is necessary to preserve the public peace, health or safety and is operative immediately as provided by law.
APPROVED BY THE GOVERNOR MARCH 18, 2021.
FILED IN THE OFFICE OF THE SECRETARY OF STATE MARCH 18, 2021.
