Background: Local governmental functions are generally performed by counties, cities, and towns. However, there are a number of smaller governmental entities known as special purpose districts, authorized by Article VII, Section 9 of the State Constitution. Special purpose districts may provide a wide range of highly specialized functions and services not ordinarily provided by the larger units of local government. The creation, authority, duties, and dissolution of special purpose districts are controlled by statutory procedures. The governing authority of a special purpose district consists of the commission, council, or other body which directs the affairs of a special purpose district.

Most special purpose districts perform a single function, although some serve a broader range of purposes. Special purpose districts include water-sewer districts, fire protection districts, port districts, public utility districts, county park and recreation service areas, flood control zone districts, diking districts, drainage improvement districts, and solid waste collection districts.

Most functions of special purpose districts are paid for with assessments or fees raised within the district. Benefit charges may also be imposed by a special purpose district and are imposed upon a property owner based upon the measurable benefits to be received. Benefit charges are not based on the value of real property, but are linked to other factors such as insurance savings, water sources or the distance from fire service facilities.

Summary of Bill (Proposed Substitute): Community Facilities Districts (CFD) are designed to provide financing for community facilities and local, subregional, and regional infrastructure. A CFD is created by a petition approved by a county, city, or town in which the district is located. The petition must:

describe the boundaries;
be executed by 100 percent of all landowners, with the landowners having requested that their property be subject to assessments, fees, and charges;
include certification from the landowners;
include a general explanation of the object and plan of the district;
be accompanied by an obligation to pay the costs of formation; and
include a list of potential members of the board of supervisors.

The county, city, or town in which the CFD is located must hold a public hearing on the petition and must act on the petition within 30 days of the hearing.

A CFD is independently governed by a board of supervisors (Board). A majority vote of the legislative authority of the CFD is required to approve appointments and a majority of the supervisors must be members of the legislative authority or authorities within the boundaries of the district.

A CFD may acquire, purchase, hold, lease, finance, and sell real and personal property, either inside or outside the boundaries of the district. Additionally, a CFD may enter into contracts and levy assessments, fees, and charges. A CFD may finance the cost of the purchase, lease, construction, improvement, or rehabilitation of any facility with an estimated life of five years or longer. A CFD may finance:

planning and design work;
sewage systems;
drainage and flood control systems;
water systems;
highways, roads, streets, and parking facilities;
areas for pedestrian, equestrian, or bicycle use for travel;
pedestrian malls, parks, recreational facilities, and open-space facilities;
landscaping;
public buildings, public safety facilities, and community facilities;
natural gas transmission and distribution facilities;
lighting systems;
traffic control systems and devices;
railway, tramway, and bus systems or other means of mass transportation facilities;
library, education, or cultural facilities; and
other facilities of a similar nature.

Special assessments may be imposed by the CFD on privately owned real property within the district to finance the activities of the district. The Board of a CFD may by resolution, for CFD purposes, impose a benefit charge to be paid by the owners of personal property, real property, and improvements to real property which are located within the district and which have or will receive benefits provided by the CFD. The treasurer of the jurisdiction in which the greatest area of a CFD is located is the treasurer of the district.