Special Assessments for Infrastructure – HB 1770

I have gotten several inquiries about House Bill 1770  of the 2007 Regular Session (passed by the General Assembly and pending action by the Governor) which authorizes cities and counties to make assessments for infrastructure.

This started as a Senate Bill 2156, a local bill for Cabarrus County (not including any municipal authority)
The introduced version of Senate Bill 2156 was much more complicated. It was modeled after South Carolina’s County Public Works Improvement Act, passed in 1993.

The Senate Finance Committee adopted a committee substitute for the bill that made it apply to four counties, greatly simplified it, changed the purposes, and added municipalities in those four counties. 

The project then got transferred to House Bill 1770 for procedural reasons. It was made into a statewide bill, with the only substantive change being the addition of public transportation as an assessment purpose.

Here is the bill summary prepared by committee staff, edited to reflect final action:

SPECIAL ASSESSMENT AUTHORITY: A county or city may impose special assessments for water systems, sewage collection and disposal systems, beach erosion and watershed improvement, streets, and street lights. Article 9 of Chapter 153A provides the bases upon which counties’ may make an assessment and establishes the procedures for imposing them. Article 10 of Chapter 160A provides similar authority and guidance to cities.

When a county or city decides to finance all or part of a project by special assessments, it must first adopt a preliminary assessment resolution that describes the project, the proposed basis for making the assessment, and information concerning the cost of the work and the terms of payment of the assessment. If the basis for making the assessment is either the area of land benefited by the project or the valuation of land benefited by the project, then the resolution must contain a description of the boundaries of the area benefited. The county or city must hold a public hearing on the matter, prepare a preliminary assessment roll, and publish a confirmation of the assessment roll once it is adopted. An owner of property against which an assessment is made may file a notice of appeal to the General Court of Justice if the owner is dissatisfied with the amount of the assessment.

Assessments must be paid in full unless the county or city provides that they may be paid in annual installments, which may not be more than 10 years. The board or council may provide that annual installments be paid on the date property taxes are due or 60 days after the date the assessment roll is confirmed. Unpaid assessments bear interest at a rate fixed in the assessment resolution. A county or city may foreclose assessment liens under procedures provided by law for the foreclosure of property tax liens.

A county or city may issue revenue bonds for revenue bond projects. Article 5 of Chapter 159 defines ‘revenue bond projects’ and ‘revenues’ that may be used to pay revenue bonds. To issue revenue bonds, a county or city must first apply to the Local Government Commission (LGC) for approval of the revenue bond issue. The State and Local Government Revenue Bond Act sets forth the matters the LGC must consider before giving a county or city approval to issue revenue bonds. The LGC must determine that the proposed revenue bond issue is necessary, that the amount proposed is adequate and not excessive, that the proposed project is feasible, that the county’s or city’s debt management procedures and policies are good, and that the proposed revenue bonds can be marketed at reasonable interest costs.

The proposed Senate committee substitute for House Bill 1770 would give counties and cities an opportunity to use assessments as a financing tool for long-term capital projects related to water and sewer infrastructure, stormwater infrastructure, public transportation, schools, and roads. The bill accomplishes this goal by piggy-backing the current authority to levy assessments and to issue revenue bonds. The bill gives counties and the cities the authority to impose assessments for the following projects:

·        Providing sanitary sewer systems, including without limitation community sewerage facilities for the collection, treatment, and disposal of sewage or septic tank systems and other on site collection and disposal facilities or systems.

·        Providing storm sewers and flood control facilities, including without limitation levees, dikes, diversionary channels, drains, catch basins, and other facilities for storm water drainage.

·        Providing water systems, including without limitation facilities for the supply, storage, treatment, and distribution of water.

·        Providing public transportation facilities, including without limitation equipment for public transportation, buses, surface and below ground railways, ferries, and garage facilities.

·        Providing school facilities, including without limitation schoolhouses, buildings, plants and other facilities, physical and vocational educational buildings and facilities, including in connection therewith classrooms, laboratories, libraries, auditoriums, administrative offices, gymnasiums, athletic fields, lunchrooms, utility plants, garages, and school buses and other necessary vehicles.

·        Providing streets and sidewalks, including without limitation bridges, viaducts, causeways, overpasses, underpasses, and alleys; paving, grading, resurfacing, and widening streets; sidewalks, curbs and gutters, culverts, and drains; traffic controls, signals, and markers; lighting; and grade crossings and the elimination thereof and grade separations.

For both counties and cities, the governing body may not impose assessments under this Article unless it receives a petition for the project to be financed through assessments signed by at least a majority of the owners of property to be assessed.

The board of commissioners or city council must establish an assessment method that will most accurately assess property according to the benefits conferred upon it by the project for which the assessment is made. Unlike assessments imposed under Article 9, the costs of assessments imposed for these infrastructure projects may include any expenses allowed under the State and Local Government Revenue Bond Act. The primary expense allowed under the Revenue Bond Act that is not considered under the assessments law is interest on the bonds or notes issued in anticipation of the revenue bond issuance during construction and an establishment of debt service reserves.

Unlike assessments the county or city may currently impose, assessments issued for long-term infrastructure projects must be paid in annual installments, in which the number of years may not exceed 30. And the annual payments are due on the date when property taxes are due.

In addition to the other financing tools available for infrastructure projects, this bill provides that an infrastructure project for which an assessment may be imposed under the new Article created by this act may be considered a ‘revenue bond project’ for purposes of the State and Local Government Revenue Bond Act, and that the assessments imposed under this new Article may be considered ‘revenues’ for purposes of the Act. All of the provisions governing revenue bonds in Article 5 of Chapter 159 would apply.

EFFECTIVE DATE:  The bill is effective when it becomes law but the special assessment authority would expire July 1, 2013. The expiration would apply prospectively. It would not affect the validity of assessments imposed or bonds issued or authorized under the provisions of this act prior to the expiration.

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2 Responses to Special Assessments for Infrastructure – HB 1770

  1. John A. Shaw says:

    Can you explain the procedural reasons for using HB 1770?

  2. G. Marriott says:

    Revenue bonds were paid-off by Alberta Government under Premier Ralph Klein, some years ago, as an inefficient means of securing capital for public infrastructure projects.

    There is at least one far more productive and less costly process for securing capital for public/municipal water delivery infrastructure renewals and extensions. One of which encourages increased productivity, reduced costs and less external control of public water utilities.

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