SENATE BILL REPORT

SB 5520

BYSenators 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

Senate Hearing Date(s):February 19, 1987; March 5, 1987

Majority Report:  That Substitute Senate Bill No. 5520 be substituted therefor, and the substitute bill do pass.

      Signed by Senators Halsan, Chairman; DeJarnatt, McCaslin, Pullen, Zimmerman.

Minority Report:  Do not pass.

      Signed by Senator Talmadge.

Senate Staff:Sam Thompson (786-7754); Eugene Green (786-7405)

                  March 9, 1987

AS REPORTED BY COMMITTEE ON GOVERNMENTAL OPERATIONS, MARCH 5, 1987

BACKGROUND:

Several entities of local government are authorized to form local improvement districts (LIDs) or utility local improvement districts (ULIDs).  These districts include lands benefitted by particular improvements.  Property owners within the districts are assessed to pay the cost of the improvements.

In the LID or ULID formation process, a public hearing must be held.  The notice of the hearing must include the estimated total cost of the improvements that will be financed by district assessments.  If the LID or ULID is formed, there is currently no provision in statute that limits the assessment eventually levied, even if it greatly exceeds the original estimated cost of the improvements.

Assessments for LIDs or ULIDs may include costs for the issuance of bonds.  A reserve fund for the payment of principal and interest on a bond issue by an LID may be created.

SUMMARY:

The total cost of improvements financed by LIDs or ULIDs is limited.  Costs may not exceed 200 percent of the original estimated cost published in notices for the public hearing on the proposed district.  A higher cost may be authorized for an LID or ULID by reinitiating the formation of the district.

If a reserve fund or other source of security for payment of bond principal and interest is created by an LID or ULID, after its use as security it must be used to defray all or a portion of the last property assessments.  Money not used in that manner must be returned to the property owners.

EFFECT OF PROPOSED SUBSTITUTE:

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 payment of principal on the bonds.  Each payment of an 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 on a prorated basis to the property owner, unless less than $20,000 remains, in which case the fund will be transferred to the local government.

The total dollar amount of the final assessment roll of an LID or ULID may not exceed 200 percent of the actual or bid cost of construction or acquisition of right of way, property or easements.  A higher total cost may be authorized for an LID or ULID by reinitiating the formation of the district.

Fiscal Note:      none requested

Senate Committee - Testified: Mark Triplett, Washington Home Builders Association; Lee Voorhees, Roberts & Shefelman; Joe Daniels, Washington Association of Water and Wastewater Districts; Celia Strong, City of Everett; Stan Finklestein, Association of Washington Cities