Utah Constitutional Revision Commission

commission of the township planning district has been eliminated and all non-qualifying Township A's have been dissolved.

    Mr. Rees then explained to the commission that the Legislature is considering another township bill that may be introduced during a special session, tentatively scheduled for July 16, 1997. Whether or not this proposal will be considered at that time, he said, is a matter the Legislature will discuss at caucus, and there is no guarantee that a special session will even be held in July.

    Conceptually, he said, a "Township C" bill would likely change "township planning district" to simply "a township," reinstate Township B's dissolved under HB 363, and change the procedure for appointing the seventh member of the planning commission, if that member is a non-resident of the township (this member would still be required to own property in the township and live in the unincorporated area of the county).

3.     Special Districts

     Mr. Kenneth Minson, Chair, Utah Association of Special Districts, introduced the speakers and requested to change the order of presenters scheduled on the agenda.

     Mr. Richard Scott distributed and reviewed a memorandum concerning special service districts and other districts. He explained that needs of residents are not always contiguous with the boundaries of a county or city. Therefore, he said, special districts are created to provide the important services that cities and counties cannot or will not provide. Mr. Scott noted that no special constitutional provision is needed to authorize the legislature to create a particular type of district. The provisions of Article XIV Section 8 were merely adopted in response to unfavorable court decisions that cast a shadow on districts. To provide certainty and predictability for the issuance of bonds and other capital-formation functions of districts, the Legislature passed this constitutional provision as a "safe harbor," he said.

    Statutes authorizing service districts, he said, which are special districts, are established under the authority of Article XIV, Section 8. Other districts may be established by the Legislature under a broad grant of plenary powers reserved for the Legislature unless that power is expressly or impliedly limited by the federal or state constitutions. When examining special districts in Utah, he said, it is important to understand under what authority the district in question was created.

    Mr. Scott also noted that the special service section was not intended to be applied to all kinds of districts, agencies, and authorities, but rather, the provision is only intended to apply to special service districts. He stated that when all the provisions of the code were recodified in

Chapter 17A, special districts were coined as a term of art which has now become unclear. Only special service districts operate under authority of Section 8 and he cautioned the commission not to upset the delicate balance of the provision.

    Mr. Scott also told the commission that neither Article XIV, Section 8, nor the Special Service Act was intended to affect any provision of law with respect to other types of districts.

     Mr. Fred Finlinson said that each district usually has taxing authority, bonding authority, provides a specific and specialized service or services, has a defined area in which to provide the service, has a governing body distinct from a county or city, and has a limit on its bonding and taxing authority which is separate from the debt limit of the political subdivision which created the district. Although special districts have corporation authority, they are not an actual municipality, he said; but rather are considered quasi-municipal entities, fully constitutional and entitled to tax free bonds. Because special districts are considered a governmental entity and enjoy tax free status, they have become a viable and increasingly important mechanism to provide critical services, he said.

    Mr. Finlinson then reviewed the history of special districts in Utah by explaining the need and creation of Drainage Districts in 1913, Irrigation Districts in 1919, Water Districts in 1935 and Water Conservancy Districts in 1941. Each of these districts, he said, has provided an important contribution to the state and its residents.

    Mr. Finlinson said that water in general, and special districts designed to manage water specifically, have not been without challenge. He explained that the legislature created a method to keep water out of politics by having the judicial branch appoint members to water conservancy districts, rather than have the state, county, or legislature make these appointments. The irony, he said, is that the attempt to de-politicize these appointments was later found to violate the separation of powers clause of the state constitution; so the appointive power has since been delegated to the executive branch.

    The first time a special district was given authority to provide a variety of municipal type services, such as water, sewage, flood control, electric and gas systems, without all the other obligations of a city was in 1949, with the creation of improvement districts. Today, he said, improvement districts treat waste water and provide culinary water, a service so large it would nearly be impossible for cities or counties to provide on their own.

    Mr. Finlinson explained that County Service Districts were created in 1957 to provide services like fire protection, cemeteries, and mosquito abatement. In 1965, Community Development Districts were established, in 1969 Transit Districts, and so on until the present. Mr. Finlinson's discussion of the historical nature of special districts is on file at the Office of

Legislative Research and General Counsel.

    Mr. Finlinson also explained that special districts are some of the most accountable levels of government. All districts are subject to the Utah Open Meetings Law, all are governed by Truth in Taxation, all have limits on bonding, all are subject to the Utah Municipal Bond Act, and all are governed by either an appointed or elected board. Appointed board members, he said, are all appointed by elected officials and all districts are required to file certified audits with the State Auditor.

     Mr. Paul Ashton, Counsel to White City Water Improvement District, explained that small districts allow people in the community to vote to tax themselves for a service rather than become dependent on a city or county to provide those services. He referred to Article XIV, Section 8, explaining that the term special district in the language of the provision actually was intended to refer to special service districts as indicated by the title of the section.

    As evidence that the voters recognized that the provision was intended to apply to special service districts only, he referred to the ballot of the November, 1974 election where the title read "special service districts." He reviewed the intent of the Legislature and emphasized that we need to consider the understanding of the people who voted on the amendment. He recommended reading Article XIV, Section 8 in the context of the people's understanding, to realize there is no problem with the provision, and the commission need not be concerned with changing it.

    Mr. Ashton explained that if the title of the provision is to be ignored, then the proper amendment would be to insert the word service between special and district so the provision reads identically to the title, which was the intent of the Legislature and the people when the provision was voted upon.

    He emphasized that special districts provide an essential service to the people of Utah. For example, he asked what city is interested in getting into the business sewage treatment. The capital expenses are enormous, and the cities have traditionally turned down the opportunity. Likewise, because mosquitos do not respect city or county boundaries, it is best that a district be created to overlap city and county lines to fight mosquitos. It simply makes sense, he said, that many of the districts be created to provide services that neither the city or county can or will provide.

     Mr. Jan T. Furner, Executive Director, Utah Association of Special Districts, stated that districts are created because the county and municipal fathers discovered that they were unable to provide needed services due to financial constraints, or the service needed to be in a defined area that did not correspond to their jurisdictional authority. He stated the Association is trying to gather accurate information regarding how many districts exist in Utah and how many have

appointed and elected boards. Currently, he said, there is a record 168 elected districts in the state out of approximately 330 districts. Mr. Furner noted that some districts have such a small budget that an election would cost more than their annual budget, so an appointed process is appropriate. He stated that districts are accountable forms of government, noting that each files an audit with the State Auditor. He also explained that Article XIV, Section 8 only applies to districts created under Title 17A, part 13.

    The commission discussed the problems caused when the term "special service district" is used to cover a variety of different entities.
    
    Mr. Scott emphasized that the constitution is not intended to govern districts, but to govern the Legislature's authority in creating districts.
    
    Mr. Ashton noted that in the 1960's, the Supreme Court deemed the legislation unconstitutional. The county service area was struck down because it was authorizing too many activities, that it crossed the line, and became an alter-ego of the county (generalized special district), allowing it to avoid the debt limitations. It was in response to these cases that Article XIV, Section 8 was established in the first place, he said.
    
     Justice Durham explained that Article XIV, Section 8 authorizes the legislature to do something that it already has the power to do. The provisions may have been an over reaction to the court in an effort to make it absolutely clear how far the constitution intended these districts to go.
    
    Mark Anderson, Counsel for the Utah Association of Special Service Districts and also representing several special districts, stated that the Legislature has the authority to establish special districts to be governed by the county, city, or town and authorize those entities to levy taxes. If a county is near its debt limit, it couldn't bond for these services. Article XIV, Section 8 authorizes the alter-ego concept so cities and counties can have total control, to create a district if its debt limit prevents it from providing needed services.

    Mr. Anderson stated he thought that paragraph 2 of section 8, which refers to special districts and not special service districts was a mistake by staff. He stated that special service districts are really another department of a city or county, which is not true of any other type of district, only special service districts. He further explained that special service districts are limited because they are directly under the governing authority of the political subdivision which created them.

    Furthermore, he said, section 8 does not just allow general purpose districts, but it does allow a true alter-ego that it absolutely controls. He expressed concern that trying to apply this

provision to other special districts would destroy them.
    
     Dr. White asked if the statute specifies a limit on bonding, and does the Legislature have complete control of a debt limit if imposed?
    
    Mr. Finlinson responded that most districts have a debt limit, and referred her to schedule B of his handout. He added that the Legislature can set the debt limit.
    
    Mr. Scott stated that many districts issue bonds based on revenues. He added that occasionally general obligation bonds, which are subject to voter approval, are issued, but there are not many in the state.
    
    Mrs. White asked about pressure irrigation districts that are organized under the water conservancy act.
    
    Mr. Scott stated he would be very surprised if pressure irrigation districts can issue general obligations bonds without voter approval.
    
     Sen. Hillyard stated that bonding entities are contracted to raise the rates of a revenue bond if they threaten to default.
    
5.    Proposed legislation
    
*     Resolution Amending Qualifications of Voters, 1998FL-0015/004

    Not Discussed.

6.     Other business

    Ms. Watts Baskin thanked members of the subcommittee who met and helped with the interview process for the vacancy on the commission. She announced the name of Kevin Worthen as the recommendation of the committee.

    Justice Durham expressed how remarkably well Professor Worthen's background dove- tailed with the needs of the commission. She stated that all those interviewed would have done a great job, but that Mr. Worthen was exceptionally well qualified.

MOTION:    Sen. Hillyard moved to appoint Kevin Worthen as a member of the Constitutional Revision Commission to replace Sen. Hillyard. Professor Worthen's term would commence July 1, 1997. The motion passed unanimously.

    Ms. Baskin explained that the commission notes on resolutions went to the legislative management committee. She stated that concern was expressed by Sen. Hillyard regarding the commission not having the ability to obtain commission notes. She stated that the legislative management committee chose to go with the rule for the sake of uniformity; therefore, commission resolutions will not receive notes.

    Ms. Baskin discussed the meeting to be held on July 11-12, 1997 meeting in Logan, Utah. She reviewed agenda items and encouraged members to study their packets.

MOTION:        Sen. Hillyard stated that the Legislature is being inundated with the question of intangibles. He made a motion to include a briefing of that issue at the next meeting. The motion passed unanimously.
    
    Sen. Hillyard suggested that Jerry's and Lisa's presentations be part of the agenda at the July meeting, since there was not time today.

    Mr. Linton suggested discussing the big picture of special districts, analyzing the question of how special districts ought best to fit into government as a whole.

MOTION:    Chair McKeachnie adjourned the meeting at 11:40 p.m.