FINAL BILL REPORT

SSB 5520

                                  C 340 L 87

BYSenate Committee on Governmental Operations (originally sponsored by Senators Halsan and McCaslin)

Limiting improvements financed by improvement districts to two hundred percent of the amount originally proposed at the time the district was created.

Senate Committee on Governmental Operations

House Committe on Local Government

SYNOPSIS AS ENACTED

BACKGROUND:

Several entities of local government are authorized to form local improvement districts (LIDs).  These districts are mechanisms used to finance all or part of the costs of public improvements that benefit, or increase the value of, real property located in the vicinity of the improvements.

Special assessments are imposed on real property within the LID.  The assessments may be paid in a lump sum, or in installments.  Those property owners who do not pay their special assessments in a lump sum pay installments to retire bonds issued to obtain the full funding required to finance the LID improvements.

Legislation was enacted in 1985 that allowed local governments to establish a reserve fund to secure a specific LID bond issue.  This reserve fund is in addition to a guaranty fund used to secure any LID bond issues of the local government.

SUMMARY:

If a reserve fund is created to secure payment of an LID bond issue, the local government must credit each property owner's proportionate share of money assessed to create the reserve fund, plus accrued interest, to reduce the property owner's nondelinquent assessment or installments.  The amount of bonds outstanding may not exceed the amount of assessments outstanding.  Each payment of a nondelinquent assessment or installment will be reduced by the amount of credit.  The balance of a reserve fund remaining after retirement of the bonds will then be transferred to the local government's guaranty fund.

Local governments that did not provide for the reimbursement of reserve fund money to property owners before the effective date of the act must divide and proportionately distribute the balance of the reserve fund to property owners after the bonds have been paid.  If a lien has been imposed on property for an unpaid assessment or installment, the owner of the property subject to the lien is not eligible to receive a share of the reserve fund balance.

VOTES ON FINAL PASSAGE:

      Senate    45     0

      House 97   1 (House amended)

      Senate    47     0 (Senate concurred)

EFFECTIVE:July 26, 1987