First Substitute H.B. 357

1

AMENDMENTS TO COUNTY IMPROVEMENT
2 DISTRICTS FOR WATER SERVICES
3 1997 GENERAL SESSION
4 STATE OF UTAH
5 Sponsor: Brian R. Allen
6 AN ACT RELATING TO SPECIAL DISTRICTS; ESTABLISHING A PROCEDURE FOR
7 WITHDRAWING TERRITORY WITHIN A MUNICIPALITY FROM A COUNTY
8 IMPROVEMENT DISTRICT FOR WATER SERVICES; MAKING TECHNICAL
9 CHANGES; AND PROVIDING AN EFFECTIVE DATE.
10 This act affects sections of Utah Code Annotated 1953 as follows:
11 AMENDS:
12 17A-2-301, as last amended by Chapters 173, 316 and 342, Laws of Utah 1995
13 17A-2-334, as renumbered and amended by Chapter 186, Laws of Utah 1990
14 ENACTS:
15 17A-2-339, Utah Code Annotated 1953
16 Be it enacted by the Legislature of the state of Utah:
17 Section 1. Section 17A-2-301 is amended to read:
18 17A-2-301. Establishment -- Authority -- Area.
19 (1) [Improvement districts] An improvement district may:
20 (a) be established in any county in this state as provided in this part for the purposes
21 [hereinafter] stated in this section; and [may]
22 (b) acquire, through construction, purchase, gift, or condemnation, or any combination of
23 these methods, and [may] operate all or any part of [the following]:
24 [(a)] (i) systems for the supply, treatment, and distribution of water;
25 [(b)] (ii) systems for the collection, treatment, and disposition of sewage;
26 [(c)] (iii) systems for the collection, retention, and disposition of storm and flood waters;
27 [(d)] (iv) systems for the generation, distribution, and sale of electricity; and

1 [(e)] (v) systems for the transmission of natural or manufactured gas that are:
2 [(i)] (A) connected to a gas plant, as defined in Section 54-2-1, of a gas corporation, as
3 defined in Section 54-2-1, regulated under Section 54-4-1; and
4 [(ii)] (B) to be used to facilitate gas utility service within the district if such gas utility
5 service is not available within the district prior to the acquisition or construction of such systems.
6 Such new gas utility service shall be provided by a gas corporation regulated under Section 54-4-1
7 and not by the district.
8 (2) (a) [The] Subject to Subsection (2)(d), the area of [any] a district created under this part
9 may include all or part of any county or counties, including all or any part of any incorporated
10 municipalities, other incorporated areas, and unincorporated areas, as the needs of the inhabitants
11 of the proposed districts may appear.
12 (b) The boundaries of a district created under this part do not need to be contiguous.
13 (c) [Where a] If an improvement district created under this part is operating any facility
14 or system mentioned in this part, no other district overlapping that district, in whole or in part, may
15 be created in a manner as to have authority to own or operate a facility or system of like kind.
16 (d) Notwithstanding Subsection (2)(a), an improvement district created under this part
17 after the effective date of this section for the supply, treatment, or distribution of water may not
18 include part of a municipality unless:
19 (i) the municipality's governing body adopts an ordinance or resolution consenting to the
20 inclusion; and
21 (ii) a majority of the real property owners in the area proposed to be included request in
22 writing that the improvement district and not the municipality provide the services proposed to be
23 provided by the improvement district.
24 (3) [Where any] If an improvement district is created under this part solely for the purpose
25 of acquiring a system for the collection, retention, or disposition of storm and flood waters, the
26 county legislative body creating the district may, in its discretion and despite anything to the
27 contrary in Section 17A-2-305, act as the board of trustees of the district for so long as it considers
28 desirable.
29 Section 2. Section 17A-2-334 is amended to read:
30 17A-2-334. Withdrawal from improvement district -- Petition by majority of
31 property owners -- Procedure.

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1 [Whenever a] (1) Except as provided in Section 17A-2-339, withdrawal of territory from
2 an improvement district shall be governed by Sections 17A-2-334, 17A-2-335, 17A-2-336,
3 17A-2-337, and 17A-2-338.
4 (2) A majority of the real property owners in a territory within the boundaries of [any] an
5 improvement district operating or created under authority of this part [shall file] may request to
6 withdraw the territory from the improvement district by filing a petition with the clerk of the
7 district court of the county in which the territory lies[, a petition]:
8 (a) requesting that the territory be withdrawn from the improvement district [and the
9 petition sets];
10 (b) setting forth the reasons why the territory should be withdrawn from the improvement
11 district [and is];
12 (c) accompanied [with] by a map or plat of the territory sought to be withdrawn; and
13 (d) designating no more than five persons [who are] empowered to act for the petitioners
14 in the proceedings[,].
15 (3) Upon receipt of a petition under Subsection (2), the court shall cause a notice of the
16 filing:
17 (a) to be served upon the board of trustees of the improvement district in the same manner
18 as a summons in a civil action; and [shall also cause notice]
19 (b) to be published for a period of ten days in a newspaper of general circulation in the
20 improvement district.
21 (4) The issues raised by the petition shall be joined and the cause tried as provided for by
22 the Utah Rules of Civil Procedure in the trial of civil causes.
23 (5) The proper authorities of the improvement district or any person interested in the
24 subject matter of the petition may appear and contest the granting of the petition.
25 Section 3. Section 17A-2-339 is enacted to read:
26 17A-2-339. Withdrawal of territory in a municipality from improvement districts for
27 the supply, treatment, or distribution of water.
28 (1) (a) Notwithstanding Section 17A-2-334 and subject to Subsection (1)(b), an area
29 within a municipality may be withdrawn from an improvement district for the supply, treatment,
30 or distribution of water as provided in this section.
31 (b) This section applies only if the municipality had already been operating within the

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1 municipality a system for the supply, treatment, or distribution of water at the time of the creation
2 of the improvement district for the supply, treatment, or distribution of water whose boundaries
3 include all or part of the municipality.
4 (2) (a) A municipality's governing body may file a petition requesting withdrawal of an
5 area within the municipality from an improvement district if:
6 (i) the municipality's governing body first adopts a resolution or ordinance:
7 (A) approving the withdrawal; and
8 (B) agreeing to provide the water services provided by the improvement district if
9 withdrawal occurs; and
10 (ii) after the governing body's adoption of a resolution or ordinance under Subsection
11 (2)(a)(i), the registered voters residing within the area proposed to be withdrawn approve the
12 withdrawal at a special or general election where the issue of withdrawal is presented.
13 (b) In an election under Subsection (2)(a)(ii), the municipality's governing body may treat
14 the area proposed to be withdrawn as a single voting precinct or may divide the area into multiple
15 precincts.
16 (3) (a) A petition under Subsection (2) shall:
17 (i) be filed with the clerk of the district court of the county in which the municipality is
18 located;
19 (ii) be accompanied by:
20 (A) a copy of the resolution or ordinance adopted under Subsection (2)(a)(i);
21 (B) the results of the election under Subsection (2)(a)(ii), certified by the municipality's
22 governing body; and
23 (C) a plat or map of the area proposed to be withdrawn; and
24 (iii) contain a description of waters, water rights, waterworks facilities, and lands the
25 municipality intends to purchase or acquire by eminent domain under Section 10-7-4.
26 (b) The municipality's governing body shall serve a copy of the petition on the
27 improvement district in the same manner as a summons is served in a civil action.
28 (4) (a) The court shall order the area withdrawn from the improvement district if the court
29 finds that:
30 (i) the municipality's governing body has adopted a resolution or ordinance approving the
31 withdrawal; and

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1 (ii) the withdrawal has received voter approval as provided in Subsection (2)(a)(ii).
2 (b) If the court orders withdrawal of the area from the improvement district, it shall include
3 in its order a determination of the fair market value of waters, water rights, waterworks facilities,
4 and lands that the municipality will acquire from the improvement district to provide to the area
5 the services previously provided by the improvement district.
6 (5) After entry of an order under Subsection (4), the municipality's governing body shall
7 connect the lands in the withdrawn area to the municipal water system as soon as reasonably
8 possible.
9 (6) (a) (i) Except as provided in Subsection (6)(c), the improvement district from which
10 the area was withdrawn shall continue to levy and collect property tax on the real property in the
11 withdrawn area as though still part of the improvement district to the extent necessary to pay the
12 property's proportionate share of the improvement district's general obligation bonds outstanding
13 at the time of the withdrawal.
14 (ii) The withdrawn area's proportionate share of proceeds from the improvement district's
15 general obligation bonds remaining unspent at the time of withdrawal shall be offset against the
16 amount the improvement district is allowed to levy and collect under Subsection (6)(a)(i).
17 (iii) For purposes of Subsections (6)(a)(i) and (ii), the withdrawn area's proportionate share
18 shall be determined by dividing the fair market value of taxable property within the withdrawn
19 area immediately before withdrawal by the fair market value of all taxable property within the
20 improvement district immediately before withdrawal.
21 (b) (i) Except as provided in Subsections (6)(a) and (b)(ii), the withdrawn area shall be
22 relieved of all other improvement district taxes and charges, including taxes and charges for
23 payment of revenue bonds and for maintenance and operation costs.
24 (ii) Notwithstanding Subsection (6)(b)(i), the improvement district may continue to levy
25 and collect taxes under Section 17A-2-312 on property within the withdrawn area, but only to the
26 extent and for each year necessary to collect the withdrawn area's proportionate share of the total
27 amount needed to prevent a default in the payment of principal and interest on improvement
28 district revenue bonds outstanding at the time of withdrawal.
29 (iii) The withdrawn area's proportionate share of proceeds from the improvement district's
30 revenue bonds remaining unspent at the time of withdrawal shall be offset against the amount the
31 improvement district is allowed to levy and collect under Subsection (6)(b)(ii).

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1 (iv) For purposes of Subsections (6)(b)(ii) and (iii), the withdrawn area's proportionate
2 share shall be determined by dividing the number of water connections on property within the
3 withdrawn area immediately before withdrawal by the number of water connections on all property
4 within the improvement district immediately before withdrawal.
5 (c) (i) Notwithstanding Subsection (6)(a) and as an alternative to it, the municipality's
6 governing body, at its option, may make one or more payments to the improvement district in an
7 amount equal to the present value of what the improvement district would have received under
8 Subsection (6)(a).
9 (ii) For purposes of Subsection (6)(c)(i), present value means the lesser of:
10 (A) the investment yield then available; or
11 (B) the yield of each bond.
12 (iii) If a municipality makes payment as provided in Subsection (6)(c)(i), the amount the
13 municipality is required to pay to the improvement district for the waters, water rights, waterworks
14 facilities, and lands it acquires from the improvement district, whether by eminent domain or
15 otherwise, shall be reduced by the amount the municipality pays under Subsection (6)(c)(i), to the
16 extent that proceeds from the improvement district's general obligation bonds referred to in
17 Subsection (6)(a)(i) were used to purchase or construct the waters, water rights, waterworks
18 facilities, or lands acquired by the municipality.
19 Section 4. Effective date.
20 If approved by two-thirds of all the members elected to each house, this act takes effect
21 upon approval by the governor, or the day following the constitutional time limit of Utah
22 Constitution Article VII, Section 8, without the governor's signature, or in the case of a veto, the
23 date of veto override.

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