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S.B. 18
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6 This act modifies the Local Districts and Special Districts Codes by repealing existing
7 procedures for withdrawals from special or local districts and creating a uniform procedure
8 for withdrawal. The act provides for definitions. The act establishes the requirements for
9 petitions for withdrawal from a local district. The act creates a streamlined process for
10 unopposed withdrawals. The act provides a process for the certification of petitions and for
11 notice and public hearings. The act provides a process for a local district and a municipality
12 to jointly adjust the boundaries of a local district. The act sets out the criteria for a local
13 district board to approve or reject a proposed withdrawal and outlines the procedures for
14 allocating assets and liabilities upon withdrawal. The act provides for the continuation of
15 tax levies in withdrawn areas and other protections for local district bonds. The act allows
16 for judicial review of the decision of the local district board. The act makes other technical
17 changes.
18 This act affects sections of Utah Code Annotated 1953 as follows:
19 AMENDS:
20 17A-2-101.3, as enacted by Chapter 90, Laws of Utah 2001
21 17A-2-301, as last amended by Chapter 90, Laws of Utah 2001
22 17A-2-405, as last amended by Chapter 90, Laws of Utah 2001
23 17A-2-418, as last amended by Chapter 63, Laws of Utah 2000
24 ENACTS:
25 17B-2-601, Utah Code Annotated 1953
26 17B-2-602, Utah Code Annotated 1953
27 17B-2-603, Utah Code Annotated 1953
28 17B-2-604, Utah Code Annotated 1953
29 17B-2-605, Utah Code Annotated 1953
30 17B-2-606, Utah Code Annotated 1953
31 17B-2-607, Utah Code Annotated 1953
32 17B-2-608, Utah Code Annotated 1953
33 17B-2-609, Utah Code Annotated 1953
34 17B-2-610, Utah Code Annotated 1953
35 17B-2-611, Utah Code Annotated 1953
36 REPEALS:
37 17A-2-334, as last amended by Chapter 361, Laws of Utah 1998
38 17A-2-335, as renumbered and amended by Chapter 186, Laws of Utah 1990
39 17A-2-336, as renumbered and amended by Chapter 186, Laws of Utah 1990
40 17A-2-337, as last amended by Chapter 227, Laws of Utah 1993
41 17A-2-338, as renumbered and amended by Chapter 186, Laws of Utah 1990
42 17A-2-340, as enacted by Chapter 361, Laws of Utah 1998
43 17A-2-740, as last amended by Chapter 254, Laws of Utah 2000
44 17A-2-741, as last amended by Chapter 90, Laws of Utah 2001
45 17A-2-742, as last amended by Chapter 254, Laws of Utah 2000
46 17A-2-743, as last amended by Chapter 254, Laws of Utah 2000
47 17A-2-744, as last amended by Chapter 254, Laws of Utah 2000
48 17A-2-842, as last amended by Chapter 90, Laws of Utah 2001
49 17A-2-1049, as last amended by Chapter 90, Laws of Utah 2001
50 17A-2-1438, as repealed and reenacted by Chapter 67 and renumbered and amended by
51 Chapter 186, Laws of Utah 1990
52 17A-2-1450, as enacted by Chapter 67, Laws of Utah 1990
53 17A-2-1451, as enacted by Chapter 67, Laws of Utah 1990
54 17A-2-1452, as enacted by Chapter 67, Laws of Utah 1990
55 17A-2-1453, as enacted by Chapter 67, Laws of Utah 1990
56 17A-2-1454, as last amended by Chapter 254, Laws of Utah 2000
57 17A-2-1809, as enacted by Chapter 216, Laws of Utah 1995
58 17A-2-1810, as enacted by Chapter 216, Laws of Utah 1995
59 17A-2-1811, as enacted by Chapter 216, Laws of Utah 1995
60 17A-2-1812, as enacted by Chapter 216, Laws of Utah 1995
61 17A-2-1813, as enacted by Chapter 216, Laws of Utah 1995
62 17A-2-1814, as enacted by Chapter 216, Laws of Utah 1995
63 Be it enacted by the Legislature of the state of Utah:
64 Section 1. Section 17A-2-101.3 is amended to read:
65 17A-2-101.3. Annexation, dissolution, and withdrawal provisions for certain
66 independent special districts.
67 (1) Except as provided in Subsection (2), for each type of independent special district
68 listed in Subsection 17A-2-101 (1) and for a drainage district under Part 5, Drainage Districts, a fire
69 protection district under Part 6, Fire Protection Districts, and a regional service area under Part 18,
70 Regional Service Area Act[
71 (a) on or after June 1, 2001:
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73 by two or more of those types of independent special districts shall be governed by Title 17B,
74 Chapter 2, Part 5, Annexation, to the same extent as if the independent special district were a local
75 district under Title 17B, Chapter 2, Local Districts; and
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77 Dissolution, to the same extent as if the independent special district were a local district under Title
78 17B, Chapter 2, Local Districts[
79 (b) on or after June 1, 2002, withdrawal from a district shall be governed by Title 17B,
80 Chapter 2, Part 6, Withdrawal, to the same extent as if the independent special district were a local
81 district under Title 17B, Chapter 2, Local Districts.
82 (2) (a) An annexation, boundary adjustment, or dissolution proceeding begun before and
83 still pending on June 1, 2001 for a type of independent special district referred to in Subsection (1)
84 is not subject to Subsection (1)(a) [
85 statutory provisions in effect immediately before that date.
86 (b) A withdrawal proceeding begun before and still pending on June 1, 2002 for a type of
87 independent special district referred to in Subsection (1) is not subject to Subsection (1)(b) but
88 continues after that date to be governed by the statutory provisions in effect immediately before
89 that date.
90 Section 2. Section 17A-2-301 is amended to read:
91 17A-2-301. Improvement district authority -- Area of a district -- County legislative
92 body may act as board of certain districts.
93 (1) (a) An improvement district may acquire through construction, purchase, gift, or
94 condemnation, or any combination of these methods, and may operate all or any part of:
95 (i) a system for the supply, treatment, and distribution of water;
96 (ii) a system for the collection, treatment, and disposition of sewage;
97 (iii) a system for the collection, retention, and disposition of storm and flood waters;
98 (iv) a system for the generation, distribution, and sale of electricity; and
99 (v) a system for the transmission of natural or manufactured gas if the system is:
100 (A) connected to a gas plant, as defined in Section 54-2-1 , of a gas corporation, as defined
101 in Section 54-2-1 , regulated under Section 54-4-1 ; and
102 (B) to be used to facilitate gas utility service within the district if the gas utility service is
103 not available within the district prior to the acquisition or construction of the system.
104 (b) The new gas utility service under Subsection (1)(a)(v)(B) shall be provided by a gas
105 corporation regulated under Section 54-4-1 and not by the district.
106 (2) (a) (i) Subject to Subsection (2)(a)(ii), the area of a district under this part may include
107 all or part of any county or counties, including all or any part of any incorporated municipalities,
108 other incorporated areas, and unincorporated areas, as the needs of the inhabitants of the proposed
109 districts may appear.
110 (ii) Notwithstanding Subsection (2)(a)(i), the addition of any territory to a district under
111 this part shall, on and after June 1, 2001 and as provided in Subsection 17A-2-101.3 (1)(a)(i), be
112 governed by Title 17B, Chapter 2, Part 5, Annexation.
113 (b) The boundaries of a district authorized under this part do not need to be contiguous.
114 (3) If an improvement district authorized under this part was created solely for the purpose
115 of acquiring a system for the collection, retention, or disposition of storm and flood waters, the
116 county legislative body that created the district may, in its discretion and despite anything to the
117 contrary in Section 17A-2-305 , act as the board of trustees of the district for so long as it considers
118 desirable.
119 Section 3. Section 17A-2-405 is amended to read:
120 17A-2-405. Area in county service area -- Overlapping of areas.
121 (1) (a) The boundaries of a county service area may include:
122 (i) all or part of any unincorporated area of one county; and
123 (ii) territory located within a municipality.
124 (b) Notwithstanding Subsection (1)(a)(i), the addition of any territory to a county service
125 area under this part shall, on and after June 1, 2001 and as provided in Subsection
126 17A-2-101.3 (1)(a), be governed by Title 17B, Chapter 2, Part 5, Annexation.
127 (2) County service areas may overlap if the service area which overlaps is entirely within
128 the boundaries of the service area which it overlaps.
129 (3) (a) Except as provided in Subsection (3)(b), not more than two service areas may
130 occupy the same area in the county.
131 (b) Notwithstanding Subsection (3)(a), three service areas may occupy the same area in
132 the county if one of the overlapping service areas is countywide.
133 (4) No overlapping service areas may perform the same services.
134 (5) All parts of a county service area need not be contiguous.
135 Section 4. Section 17A-2-418 is amended to read:
136 17A-2-418. Annexation or incorporation of all or part of county service area into city
137 or town.
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139 or town[
140 be excluded from the county service area unless[
141 6, Withdrawal, have been met.
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243 Section 5. Section 17B-2-601 is enacted to read:
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245 17B-2-601. Withdrawal of area from local district -- Definitions.
246 (1) An area within the boundaries of a local district may be withdrawn from the local
247 district as provided in this part.
248 (2) In addition to those definitions in Section 17B-2-101 , as used in this part, "receiving
249 entity" means an entity that will, following a withdrawal, provide to the withdrawn area the service
250 previously provided by the local district.
251 Section 6. Section 17B-2-602 is enacted to read:
252 17B-2-602. Withdrawal or boundary adjustment with municipal approval.
253 (1) A municipality and a local district whose boundaries adjoin or overlap may adjust the
254 boundary of the local district to include more or less of the municipality in the local district by
255 following the same procedural requirements as set forth in Section 17B-2-516 for boundary
256 adjustments between adjoining local districts.
257 (2) After a boundary adjustment under Subsection (1) is complete, the local district shall
258 provide the same service to any area added to the local district as provided to other areas within
259 the local district and the municipality shall provide the same service that the local district
260 previously provided to any area withdrawn from the local district.
261 (3) No area within a municipality may be added to the area of a local district under this
262 section if the area is part of a local district that provides the same wholesale or retail service as the
263 first local district.
264 Section 7. Section 17B-2-603 is enacted to read:
265 17B-2-603. Initiation of withdrawal process -- Notice of petition.
266 (1) The process to withdraw an area from a local district may be initiated:
267 (a) for a local district funded predominantly by revenues from property taxes or service
268 charges other than those based upon acre-feet of water:
269 (i) by a petition signed by the owners of private real property that:
270 (A) is located within the area proposed to be withdrawn;
271 (B) covers at least 51% of the total private land within the area proposed to be withdrawn;
272 and
273 (C) is equal in taxable value to at least 51% of the taxable value of all private real property
274 within the area proposed to be withdrawn;
275 (ii) by a petition signed by registered voters residing within the area proposed to be
276 withdrawn equal in number to at least 67% of the number of votes cast in the same area for the
277 office of governor at the last regular general election before the filing of the petition;
278 (iii) by a resolution adopted by the board of trustees of the local district in which the area
279 proposed to be withdrawn is located, which:
280 (A) states the reasons for withdrawal; and
281 (B) is accompanied by a general description of the area proposed to be withdrawn; or
282 (iv) by a resolution to file a petition with the local district to withdraw from the local
283 district all or a specified portion of the area within a municipality or county, adopted by the
284 governing body of a municipality that has within its boundaries an area located within the
285 boundaries of a local district, or by the governing body of a county that has within its boundaries
286 an area located within the boundaries of a local district that is located in more than one county,
287 which petition of the governing body shall be filed with the board of trustees only if a written
288 request to petition the board of trustees to withdraw an area from the local district has been filed
289 with the governing body of the municipality, or county, and the request has been signed by
290 registered voters residing within the boundaries of the area proposed for withdrawal equal in
291 number to at least 51% of the number of votes cast in the same area for the office of governor at
292 the last regular general election before the filing of the petition;
293 (b) for a local district whose board of trustees is elected by electors based on the acre-feet
294 of water allotted to the land owned by the elector:
295 (i) in the same manner as provided in Subsection (1)(a)(iii) or Subsection (1)(a)(iv); or
296 (ii) by a petition signed by the owners of at least 67% of the acre-feet of water allotted to
297 the land proposed to be withdrawn; or
298 (c) for a local district funded predominantly by revenues other than property taxes, service
299 charges, or assessments based upon an allotment of acre-feet of water:
300 (i) in the same manner as provided in Subsection (1)(a)(iii) or Subsection (1)(a)(iv); or
301 (ii) by a petition signed by the registered voters residing within the entire area proposed
302 to be withdrawn, which area shall be comprised of an entire unincorporated area within the local
303 district or an entire municipality within a local district, or a combination thereof, equal in number
304 to at least 67% of the number of votes cast within the entire area proposed to be withdrawn for the
305 office of governor at the last regular general election before the filing of the petition.
306 (2) Prior to soliciting any signatures on a petition under Subsection (1), the sponsors of
307 the petition shall:
308 (a) notify the local district board with which the petition is intended to be filed that the
309 sponsors will be soliciting signatures for a petition; and
310 (b) mail a copy of the petition to the local district board.
311 Section 8. Section 17B-2-604 is enacted to read:
312 17B-2-604. Withdrawal petition requirements.
313 (1) Each petition under Section 17B-2-603 shall:
314 (a) indicate the typed or printed name and current address of each owner of acre-feet of
315 water, property owner, registered voter, or authorized representative of the governing body signing
316 the petition;
317 (b) separately group signatures by municipality and, in the case of unincorporated areas,
318 by county;
319 (c) if it is a petition signed by the owners of land, the assessment of which is based on
320 acre-feet of water, indicate the address of the property and the property tax identification parcel
321 number of the property as to which the owner is signing the request;
322 (d) designate up to three signers of the petition as sponsors, or in the case of a petition filed
323 under Subsection 17B-2-603 (1)(a)(iv), designate a governmental representative as a sponsor, and
324 in each case, designate one sponsor as the contact sponsor with the mailing address and telephone
325 number of each;
326 (e) state the reasons for withdrawal; and
327 (f) when the petition is filed with the local district board of trustees, be accompanied by
328 a map generally depicting the boundaries of the area proposed to be withdrawn and a legal
329 description of the area proposed to be withdrawn.
330 (2) (a) The local district may prepare an itemized list of expenses, other than attorney
331 expenses, that will necessarily be incurred by the local district in the withdrawal proceeding. The
332 itemized list of expenses may be submitted to the contact sponsor. If the list of expenses is
333 submitted to the contact sponsor within 21 days after receipt of the petition, the contact sponsor
334 on behalf of the petitioners shall be required to pay the expenses to the local district within 90 days
335 of receipt. Until funds to cover the expenses are delivered to the local district, the district will
336 have no obligation to proceed with the withdrawal and the time limits on the district stated in this
337 part will be tolled. If the expenses are not paid within the 90 days, or within 90 days from the
338 conclusion of any arbitration under Subsection (2)(b), the petition requesting the withdrawal shall
339 be considered to have been withdrawn.
340 (b) If there is no agreement between the board of trustees of the local district and the
341 contact sponsor on the amount of expenses that will necessarily be incurred by the local district
342 in the withdrawal proceeding, either the board of trustees or the contact sponsor may submit the
343 matter to binding arbitration in accordance with Title 78, Chapter 31b, Alternative Dispute
344 Resolution Act; provided that, if the parties cannot agree upon an arbitrator and the rules and
345 procedures that will control the arbitration, either party may pursue arbitration under Title 78,
346 Chapter 31a, Utah Arbitration Act.
347 (3) A signer of a petition may withdraw or, once withdrawn, reinstate the signer's signature
348 at any time before the public hearing under Section 17B-2-606 by submitting a written withdrawal
349 or reinstatement with the board of trustees of the local district in which the area proposed to be
350 withdrawn is located.
351 (4) If it reasonably appears that, if the withdrawal which is the subject of a petition filed
352 under Subsection 17B-2-603 (1)(a)(i) or (ii) is granted, it will be necessary for a municipality to
353 provide to the withdrawn area the service previously supplied by the local district, the board of
354 trustees of the local district may, within 21 days after receiving the petition, notify the contact
355 sponsor in writing that, before it will be considered by the board of trustees, the petition must be
356 presented to and approved by the governing body of the municipality as provided in Subsection
357 17B-2-603 (1)(a)(iv) before it will be considered by the local district board of trustees. If the notice
358 is timely given to the contact sponsor, the petition shall be considered to have been withdrawn
359 until the municipality files a petition with the local district under Subsection 17B-2-603 (1)(a)(iv).
360 (5) (a) After receiving the notice required by Subsection 17B-2-603 (2), unless specifically
361 allowed by law, a public entity may not make expenditures from public funds to support or oppose
362 the gathering of signatures on a petition for withdrawal.
363 (b) Nothing in this section prohibits a public entity from providing factual information and
364 analysis regarding a withdrawal petition to the public, so long as the information grants equal
365 access to both the opponents and proponents of the petition for withdrawal.
366 (c) Nothing in this section prohibits a public official from speaking, campaigning,
367 contributing personal monies, or otherwise exercising the public official's constitutional rights.
368 Section 9. Section 17B-2-605 is enacted to read:
369 17B-2-605. Withdrawal petition certification -- Amended petition.
370 (1) Within 30 days after the filing of a petition under Sections 17B-2-603 and 17B-2-604 ,
371 the board of trustees of the local district in which the area proposed to be withdrawn is located
372 shall:
373 (a) with the assistance of officers of the county in which the area proposed to be withdrawn
374 is located, determine whether the petition meets the requirements of Sections 17B-2-603 and
375 17B-2-604 ; and
376 (b) (i) if the petition complies with the requirements set forth in Sections 17B-2-603 and
377 17B-2-604 , certify the petition and mail or deliver written notification of the certification to the
378 contact sponsor; or
379 (ii) if the petition fails to comply with any of the requirements set forth in Sections
380 17B-2-603 and 17B-2-604 , reject the petition as insufficient and mail or deliver written notification
381 of the rejection and the reasons for the rejection to the contact sponsor.
382 (2) (a) If the board rejects the petition under Subsection (1)(b)(ii), the petition may be
383 amended to correct the deficiencies for which it was rejected and then refiled within 60 days after
384 notice of the rejection.
385 (b) A valid signature on a petition that was rejected under Subsection (1)(b)(ii) may be
386 used toward fulfilling the applicable signature requirement for an amended petition refiled under
387 Subsection (2)(a).
388 (3) The board of trustees shall process an amended petition refiled under Subsection (2)(a)
389 in the same manner as an original petition under Subsection (1). If an amended petition is rejected
390 for failure to comply with the requirements of Sections 17B-2-603 and 17B-2-604 , the board of
391 trustees shall issue a final rejection of the petition for insufficiency and mail or deliver written
392 notice of the final rejection to the contact sponsor.
393 (4) (a) A signer of a petition for which there has been a final rejection under Subsection
394 (3) for insufficiency may seek judicial review of the board of trustees' final decision to reject the
395 petition as insufficient.
396 (b) Judicial review under Subsection (4)(a) shall be initiated by filing an action in state
397 district court in the county in which a majority of the area proposed to be withdrawn is located.
398 (c) The court in which an action is filed under this Subsection (4) may not overturn the
399 board of trustees' decision to reject the petition unless the court finds that:
400 (i) the board of trustees' decision was arbitrary or capricious; or
401 (ii) the petition materially complies with the requirements set forth in Sections 17B-2-603
402 and 17B-2-604 .
403 (d) The court may award costs and expenses of an action under this section, including
404 reasonable attorney's fees, to the prevailing party.
405 Section 10. Section 17B-2-606 is enacted to read:
406 17B-2-606. Public hearing -- Quorum of board required to be present.
407 (1) A public hearing on the proposed withdrawal shall be held by the board of trustees of
408 a local district that:
409 (a) certifies a petition under Subsection 17B-2-605 (1)(b)(i) unless the petition was signed
410 by all of the owners of private land within the area proposed to be withdrawn or all of the
411 registered voters residing within the area proposed to be withdrawn; or
412 (b) adopts a resolution under Subsection 17B-2-603 (1)(a)(iii).
413 (2) The public hearing required by Subsection (1) for a petition certified by the board of
414 trustees of a local district under Subsection 17B-2-605 (1)(b)(i), other than a petition filed in
415 accordance with Subsection 17B-2-603 (1)(a)(iv), may be held as an agenda item of a meeting of
416 the board of trustees of the local district without complying with the requirements of Subsection
417 (3)(b), (3)(c), or Section 17B-2-607 .
418 (3) Except as provided in Subsection (2), the public hearing required by Subsection (1)
419 shall be held:
420 (a) no later than 90 days after:
421 (i) certification of the petition under Subsection 17B-2-605 (1)(b)(i); or
422 (ii) adoption of a resolution under Subsection 17B-2-603 (1)(a)(iii);
423 (b) (i) for a local district located entirely within a single county:
424 (A) within or as close as practicable to the area proposed to be withdrawn; or
425 (B) at the local district office; or
426 (ii) for a local district located in more than one county:
427 (A) (I) within the county in which the area proposed to be withdrawn is located; and
428 (II) within or as close as practicable to the area proposed to be withdrawn; or
429 (B) if the local district office is reasonably accessible to all residents within the area
430 proposed to be annexed, at the local district office;
431 (c) on a weekday evening other than a holiday beginning no earlier than 6:00 p.m.; and
432 (d) for the purpose of allowing:
433 (i) the public to ask questions and obtain further information about the proposed
434 withdrawal and issues raised by it; and
435 (ii) any interested person to address the board of trustees concerning the proposed
436 withdrawal.
437 (4) A quorum of the board of trustees of the local district shall be present throughout the
438 public hearing provided for under this section.
439 (5) A public hearing under this section may be postponed or continued to a new time, date,
440 and place without further notice by a resolution of the board of trustees adopted at the public
441 hearing held at the time, date, and place specified in the published notice; provided, however, that
442 the public hearing may not be postponed or continued to a date later than 15 days after the 90-day
443 period under Subsection (3).
444 Section 11. Section 17B-2-607 is enacted to read:
445 17B-2-607. Notice of hearing and withdrawal.
446 (1) Unless it is held as an agenda item of a meeting of the board of trustees of a local
447 district as allowed by Subsection 17B-2-606 (2), before holding a public hearing under Section
448 17B-2-606 , the board of trustees of the local district shall:
449 (a) mail notice of the public hearing and of the proposed withdrawal to:
450 (i) if the local district is funded predominantly by revenues from a property tax, each
451 owner of private real property located within the area proposed to be withdrawn, as shown upon
452 the county assessment roll last equalized as of the previous December 31;
453 (ii) if the local district is funded by fees based upon an allotment of acre-feet of water, each
454 owner of private real property with an allotment of water located within the area proposed to be
455 withdrawn, as shown upon the district's records; or
456 (iii) if the local district is not funded predominantly by revenues from a property tax or
457 fees based upon an allotment of acre-feet of water, each registered voter residing within the area
458 proposed to be withdrawn, as determined by the voter registration list maintained by the county
459 clerk as of a date selected by the board of trustees that is at least 20 but not more than 60 days
460 before the public hearing; and
461 (b) post notice of the public hearing and of the proposed withdrawal in at least four
462 conspicuous places within the area proposed to be withdrawn, no less than five nor more than 30
463 days before the public hearing.
464 (2) Each notice required under Subsection (1) shall:
465 (a) describe the area proposed to be withdrawn;
466 (b) identify the local district in which the area proposed to be withdrawn is located;
467 (c) state the date, time, and location of the public hearing;
468 (d) state that the petition or resolution may be examined during specified times and at a
469 specified place in the local district; and
470 (e) state that any person interested in presenting comments or other information for or
471 against the petition or resolution may:
472 (i) prior to the hearing, submit relevant comments and other information in writing to the
473 board of trustees at a specified address in the local district; or
474 (ii) at the hearing, present relevant comments and other information in writing and may
475 also present comments and information orally.
476 Section 12. Section 17B-2-608 is enacted to read:
477 17B-2-608. Resolution approving or rejecting withdrawal -- Criteria for approval or
478 rejection -- Terms and conditions.
479 (1) (a) On or before the date of the board meeting next following the public hearing under
480 Section 17B-2-606 , but in no case later than 90 days after the public hearing or, if no hearing is
481 held, within 90 days after the filing of a petition under Section 17B-2-603 , the board of trustees
482 of the local district in which the area proposed to be withdrawn is located shall adopt a resolution:
483 (i) approving the withdrawal of some or all of the area from the local district; or
484 (ii) rejecting the withdrawal.
485 (b) Each resolution approving a withdrawal shall:
486 (i) include a legal description of the area proposed to be withdrawn;
487 (ii) state the effective date of the withdrawal; and
488 (iii) set forth the terms and conditions under Subsection (5), if any, of the withdrawal.
489 (c) Each resolution rejecting a withdrawal shall include a detailed explanation of the board
490 of trustees' reasons for the rejection.
491 (2) Unless denial of the petition is required under Subsection (3), the board of trustees
492 shall adopt a resolution approving the withdrawal of some or all of the area from the local district
493 if the board of trustees determines that:
494 (a) the area to be withdrawn does not and will not require the service that the local district
495 provides;
496 (b) the local district will not be able to provide service to the area to be withdrawn for the
497 reasonably foreseeable future; or
498 (c) the area to be withdrawn has obtained the same service that is provided by the local
499 district or a commitment to provide the same service that is provided by the local district from
500 another source.
501 (3) The board of trustees shall adopt a resolution denying the withdrawal if it determines
502 that the proposed withdrawal would:
503 (a) result in a breach or default by the local district under:
504 (i) any of its notes, bonds, or other debt or revenue obligations;
505 (ii) any of its agreements with entities which have insured, guaranteed, or otherwise
506 credit-enhanced any debt or revenue obligations of the local district; or
507 (iii) any of its agreements with the United States or any agency of the United States;
508 provided, however, that, if the local district has entered into an agreement with the United States
509 that requires the consent of the United States for a withdrawal of territory from the district, a
510 withdrawal under this part may occur if the written consent of the United States is obtained and
511 filed with the board of trustees;
512 (b) adversely affect the ability of the local district to make any payments or perform any
513 other material obligations under:
514 (i) any of its agreements with the United States or any agency of the United States;
515 (ii) any of its notes, bonds, or other debt or revenue obligations; or
516 (iii) any of its agreements with entities which have insured, guaranteed, or otherwise
517 credit-enhanced any debt or revenue obligations of the local district;
518 (c) result in the reduction or withdrawal of any rating on an outstanding note, bond, or
519 other debt or revenue obligation of the local district;
520 (d) create an island or peninsula of nondistrict territory within the local district or of
521 district territory within nondistrict territory that has a material adverse affect on the local district's
522 ability to provide service or materially increases the cost of providing service to the remainder of
523 the local district;
524 (e) materially impair the operations of the remaining local district; or
525 (f) require the local district to materially increase the fees it charges or property taxes or
526 other taxes it levies in order to provide to the remainder of the district the same level and quality
527 of service that was provided before the withdrawal.
528 (4) In determining whether the withdrawal would have any of the results described in
529 Subsection (3), the board of trustees may consider the cumulative impact that multiple withdrawals
530 over a specified period of time would have on the local district.
531 (5) (a) Despite the presence of one or more of the conditions listed in Subsection (3), the
532 board of trustees may approve a resolution withdrawing an area from the local district imposing
533 terms or conditions that mitigate or eliminate the conditions listed in Subsection (3), including:
534 (i) a requirement that the owners of property located within the area proposed to be
535 withdrawn or residents within that area pay their proportionate share of any outstanding district
536 bond or other obligation as determined pursuant to Subsection (5)(b);
537 (ii) a requirement that the owners of property located within the area proposed to be
538 withdrawn or residents within that area make one or more payments in lieu of taxes, fees, or
539 assessments;
540 (iii) a requirement that the board of trustees and the receiving entity agree to reasonable
541 payment and other terms in accordance with Subsections (5)(f) through (g) regarding the transfer
542 to the receiving entity of district assets that the district used before withdrawal to provide service
543 to the withdrawn area but no longer needs because of the withdrawal; provided that, if those
544 district assets are allocated in accordance with Subsections (5)(f) through (g), the district shall
545 immediately transfer to the receiving entity on the effective date of the withdrawal, all title to and
546 possession of district assets allocated to the receiving entity; or
547 (iv) any other reasonable requirement considered to be necessary by the board of trustees.
548 (b) Other than as provided for in Subsection 17B-2-609 (2), and except as provided in
549 Subsection (5)(e), in determining the proportionate share of outstanding bonded indebtedness or
550 other obligations under Subsection (5)(a)(i) and for purposes of determining the allocation and
551 transfer of district assets under Subsection (5)(a)(iii), the board of trustees and the receiving entity,
552 or in cases where there is no receiving entity, the board and the sponsors of the petition shall:
553 (i) engage engineering and accounting consultants chosen by the procedure provided in
554 Subsection (5)(d); provided however, that if the withdrawn area is not receiving service, an
555 engineering consultant need not be engaged; and
556 (ii) require the engineering and accounting consultants engaged under Subsection (5)(b)(i)
557 to communicate in writing to the board of trustees and the receiving entity, or in cases where there
558 is no receiving entity, the board and the sponsors of the petition the information required by
559 Subsections (5)(f) through (h).
560 (c) For purposes of this Subsection (5):
561 (i) "accounting consultant" means a certified public accountant or a firm of certified public
562 accountants with the expertise necessary to make the determinations required under Subsection
563 (5)(h); and
564 (ii) "engineering consultant" means a person or firm that has the expertise in the
565 engineering aspects of the type of system by which the withdrawn area is receiving service that is
566 necessary to make the determination required under Subsections (5)(f) and (g).
567 (d) (i) Unless the board of trustees and the receiving entity, or in cases where there is no
568 receiving entity, the board and the sponsors of the petition agree on an engineering consultant and
569 an accounting consultant, each consultant shall be chosen from a list of consultants provided by
570 the Consulting Engineers Council of Utah and the Utah Association of Certified Public
571 Accountants, respectively, as provided in this Subsection (5)(d).
572 (ii) A list under Subsection (5)(d)(i) may not include a consultant who has had a contract
573 for services with the district or the receiving entity during the two-year period immediately before
574 the list is provided to the local district.
575 (iii) Within 20 days of receiving the lists described in Subsection (5)(d)(i), the board of
576 trustees shall eliminate the name of one engineering consultant from the list of engineering
577 consultants and the name of one accounting consultant from the list of accounting consultants and
578 shall notify the receiving entity, or in cases where there is no receiving entity, the sponsors of the
579 petition in writing of the eliminations.
580 (iv) Within three days of receiving notification under Subsection (5)(d), the receiving
581 entity, or in cases where there is no receiving entity, the sponsors of the petition shall eliminate
582 another name of an engineering consultant from the list of engineering consultants and another
583 name of an accounting consultant from the list of accounting consultants and shall notify the board
584 of trustees in writing of the eliminations.
585 (v) The board of trustees and the receiving entity, or in cases where there is no receiving
586 entity, the board and the sponsors of the petition shall continue to alternate between them, each
587 eliminating the name of one engineering consultant from the list of engineering consultants and
588 the name of one accounting consultant from the list of accounting consultants and providing
589 written notification of the eliminations within three days of receiving notification of the previous
590 notification, until the name of only one engineering consultant remains on the list of engineering
591 consultants and the name of only one accounting consultant remains on the list of accounting
592 consultants.
593 (e) The requirement under Subsection (5)(b) to engage engineering and accounting
594 consultants does not apply if the board of trustees and the receiving entity, or in cases where there
595 is no receiving entity, the board and the sponsors of the petition agree on the allocations that are
596 the engineering consultant's responsibility under Subsection (5)(f) or the determinations that are
597 the accountant consultant's responsibility under Subsection (5)(h); provided however, that if
598 engineering and accounting consultants are engaged, the district and the receiving entity, or in
599 cases where there is no receiving entity, the district and the sponsors of the petition shall equally
600 share the cost of the engineering and accounting consultants.
601 (f) (i) The engineering consultant shall allocate the district assets between the district and
602 the receiving entity as provided in this Subsection (5)(f).
603 (ii) The engineering consultant shall allocate:
604 (A) to the district those assets reasonably needed by the district to provide to the area of
605 the district remaining after withdrawal the kind, level, and quality of service that was provided
606 before withdrawal; and
607 (B) to the receiving entity those assets reasonably needed by the receiving entity to provide
608 to the withdrawn area the kind and quality of service that was provided before withdrawal.
609 (iii) If the engineering consultant determines that both the local district and the receiving
610 entity reasonably need a district asset to provide to their respective areas the kind and quality of
611 service provided before withdrawal, the engineering consultant shall:
612 (A) allocate the asset between the local district and the receiving entity according to their
613 relative needs, if the asset is reasonably susceptible of division; or
614 (B) allocate the asset to the local district, if the asset is not reasonably susceptible of
615 division.
616 (g) All district assets remaining after application of Subsection (5)(f) shall be allocated to
617 the local district.
618 (h) (i) The accounting consultant shall determine the withdrawn area's proportionate share
619 of any redemption premium and the principal of and interest on:
620 (A) the local district's revenue bonds that were outstanding at the time the petition was
621 filed;
622 (B) the local district's general obligation bonds that were outstanding at the time the
623 petition was filed; and
624 (C) the local district's general obligation bonds that:
625 (I) were outstanding at the time the petition was filed; and
626 (II) are treated as revenue bonds under Subsection (5)(i); and
627 (D) the district's bonds that were issued prior to the date the petition was filed to refund
628 the district's revenue bonds, general obligation bonds, or general obligation bonds treated as
629 revenue bonds.
630 (ii) For purposes of Subsection (5)(h)(i), the withdrawn area's proportionate share of
631 redemption premium, principal, and interest shall be the amount that bears the same relationship
632 to the total redemption premium, principal, and interest for the entire district that the average
633 annual gross revenues from the withdrawn area during the three most recent complete fiscal years
634 before the filing of the petition bears to the average annual gross revenues from the entire district
635 for the same period.
636 (i) For purposes of Subsection (5)(h)(i), a district general obligation bond shall be treated
637 as a revenue bond if:
638 (i) the bond is outstanding on the date the petition was filed; and
639 (ii) the principal of and interest on the bond, as of the date the petition was filed, had been
640 paid entirely from local district revenues and not from a levy of ad valorem tax.
641 (j) (i) Before the board of trustees of the local district files a resolution approving a
642 withdrawal, the receiving entity, or in cases where there is no receiving entity, the sponsors of the
643 petition shall irrevocably deposit government obligations, as defined in Subsection 11-27-2 (6), into
644 an escrow trust fund the principal of and interest on which are sufficient to provide for the timely
645 payment of the amount determined by the accounting consultant under Subsection (5)(h) or in an
646 amount mutually agreeable to the board of trustees of the local district and the receiving entity, or
647 in cases where there is no receiving entity, the board and the sponsors of the petition.
648 Notwithstanding Subsection 17B-2-610 (1), the board of trustees shall not be required to file a
649 resolution approving a withdrawal until the requirements for establishing and funding an escrow
650 trust fund in this Subsection (5)(j)(i) have been met; provided that, if the escrow trust fund has not
651 been established and funded within 180 days after the board of trustees passes a resolution
652 approving a withdrawal, the resolution approving the withdrawal shall be void.
653 (ii) Concurrently with the creation of the escrow, the receiving entity, or in cases where
654 there is no receiving entity, the sponsors of the petition shall provide to the board of trustees of the
655 local district:
656 (A) a written opinion of an attorney experienced in the tax-exempt status of municipal
657 bonds stating that the establishment and use of the escrow to pay the proportionate share of the
658 district's outstanding revenue bonds and general obligation bonds that are treated as revenue bonds
659 will not adversely affect the tax-exempt status of the bonds; and
660 (B) a written opinion of an independent certified public accountant verifying that the
661 principal of and interest on the deposited government obligations are sufficient to provide for the
662 payment of the withdrawn area's proportionate share of the bonds as provided in Subsection (5)(h).
663 (iii) The receiving entity, or in cases where there is no receiving entity, the sponsors of the
664 petition shall bear all expenses of the escrow and the redemption of the bonds.
665 (iv) The receiving entity may issue bonds under Title 11, Chapter 14, Utah Municipal
666 Bond Act, and Title 11 Chapter 27, Refunding Bond Act, to fund the escrow.
667 (6) A requirement imposed by the board of trustees as a condition to withdrawal under
668 Subsection (5) shall, in addition to being expressed in the resolution, be reduced to a duly
669 authorized and executed written agreement between the parties to the withdrawal.
670 (7) An area that is the subject of a withdrawal petition under Section 17B-2-603 that
671 results in a board of trustees resolution denying the proposed withdrawal may not be the subject
672 of another withdrawal petition under Section 17B-2-603 for two years after the date of the board
673 of trustees resolution denying the withdrawal.
674 Section 13. Section 17B-2-609 is enacted to read:
675 17B-2-609. Continuation of tax levy after withdrawal to pay for proportionate share
676 of district bonds.
677 (1) Other than as provided in Subsection (2), and unless an escrow trust fund is established
678 and funded pursuant to Subsection 17B-2-608 (5)(j), property within the withdrawn area shall
679 continue after withdrawal to be subject to a tax by the local district:
680 (a) for the purpose of paying the withdrawn area's just proportion of the local district's
681 general obligation bonds, other than those bonds treated as revenue bonds under Subsection
682 17B-2-608 (5)(i), until the bonded indebtedness has been satisfied; and
683 (b) to the extent and for the years necessary to generate sufficient revenue that, when
684 combined with the revenues from the district remaining after withdrawal, is sufficient to provide
685 for the payment of principal and interest on the district's general obligation bonds that are treated
686 as revenue bonds under Subsection 17B-2-608 (5)(i).
687 (2) For a local district funded predominately by revenues other than property taxes, service
688 charges, or assessments based upon an allotment of acre-feet of water, taxes within the withdrawn
689 area shall continue to be collected for purposes of paying the withdrawn area's proportionate share
690 of bonded indebtedness or judgments against the local district incurred prior to the date the petition
691 was filed.
692 (3) Except as provided in Subsections (1) and (2), upon withdrawal, the withdrawing area
693 is relieved of all other taxes, assessments, and charges levied by the district, including taxes and
694 charges for the payment of revenue bonds and maintenance and operation cost of the local district.
695 Section 14. Section 17B-2-610 is enacted to read:
696 17B-2-610. Notice of withdrawal -- Contest period -- Judicial review.
697 (1) (a) Within ten days after adopting a resolution approving a withdrawal, the board of
698 trustees shall file a written notice of the withdrawal with the State Tax Commission and the
699 assessor and recorder of each county in which any part of the withdrawn area is located,
700 accompanied by a copy of the resolution approving the withdrawal, an accurate map depicting the
701 boundaries of the withdrawn area or a legal description of the withdrawn area, adequate for
702 purposes of the county assessor and recorder.
703 (b) Upon the filing of the notices required by Subsection (1)(a), the withdrawal shall be
704 effective, subject to the conditions of the withdrawal resolution.
705 (2) The local district may provide for the publication of any resolution approving or
706 denying the withdrawal of an area in a newspaper of general circulation in the area proposed for
707 withdrawal. In lieu of publishing the entire resolution, the local district may publish a notice of
708 withdrawal or denial of withdrawal, containing:
709 (a) the name of the local district;
710 (b) a description of the area proposed for withdrawal;
711 (c) a brief explanation of the grounds on which the board of trustees determined to approve
712 or deny the withdrawal; and
713 (d) the times and place where a copy of the resolution may be examined, which shall be
714 at the place of business of the local district, identified in the notice, during regular business hours
715 of the local district as described in the notice and for a period of at least 30 days after the
716 publication of the notice.
717 (3) Any sponsor of the petition or receiving entity may contest the board's decision to deny
718 a withdrawal of an area from the local district by submitting a request, within 60 days after the
719 resolution is adopted under Section 17B-2-608 , to the board of trustees, suggesting terms or
720 conditions to mitigate or eliminate the conditions upon which the board of trustees based its
721 decision to deny the withdrawal.
722 (4) Within 60 days after the request under Subsection (3) is submitted to the board of
723 trustees, the board may consider the suggestions for mitigation and adopt a resolution approving
724 or denying the request in the same manner as provided in Section 17B-2-608 with respect to the
725 original resolution denying the withdrawal and file a notice of the action as provided in Subsection
726 (1).
727 (5) (a) Any person in interest may seek judicial review of:
728 (i) the board of trustees' decision to withdraw an area from the local district;
729 (ii) the terms and conditions of a withdrawal; or
730 (iii) the board's decision to deny a withdrawal.
731 (b) Judicial review under this Subsection (5) shall be initiated by filing an action in the
732 district court in the county in which a majority of the area proposed to be withdrawn is located:
733 (i) if the resolution approving or denying the withdrawal is published under Subsection
734 (2), within 60 days after the publication or after the board of trustees' denial of the request under
735 Subsection (4);
736 (ii) if the resolution is not published pursuant to Subsection (2), within 60 days after the
737 resolution approving or denying the withdrawal is adopted; or
738 (iii) if a request is submitted to the board of trustees of a local district under Subsection
739 (3), and the board adopts a resolution under Subsection (4), within 60 days after the board adopts
740 a resolution under Subsection (4) unless the resolution is published under Subsection (2), in which
741 event the action must be filed within 60 days after the publication.
742 (c) A court in which an action is filed under this Subsection (5) may not overturn, in whole
743 or in part, the board of trustees' decision to approve or reject the withdrawal unless:
744 (i) the court finds the board of trustees' decision to be arbitrary or capricious; or
745 (ii) the court finds that the board materially failed to follow the procedures set forth in this
746 part.
747 (d) A court may award costs and expenses of an action under this section, including
748 reasonable attorney's fees, to the prevailing party.
749 (6) After the applicable contest period under Subsection (3) or (5), no person may contest
750 the board of trustees' approval or denial of withdrawal for any cause.
751 Section 15. Section 17B-2-611 is enacted to read:
752 17B-2-611. Termination of terms of trustees representing withdrawn areas.
753 (1) On the effective date of withdrawal of an area from a local district, any trustee residing
754 in the withdrawn area shall cease to be a member of the board of trustees of the local district.
755 (2) If the local district has been divided into divisions for the purpose of electing or
756 appointing trustees and the area withdrawn from a district constitutes all or substantially all of the
757 area in a division of the local district that is represented by a member of the board of trustees, on
758 the effective date of the withdrawal, the trustee representing the division shall cease to be a
759 member of the board of trustees of the local district.
760 (3) In the event of a vacancy on the board of trustees as a result of an area being withdrawn
761 from the local district:
762 (a) the board of trustees shall reduce the number of trustees of the local district as provided
763 by law; or
764 (b) the trustee vacancy shall be filled as provided by law.
765 Section 16. Repealer.
766 This act repeals:
767 Section 17A-2-334, Withdrawal from improvement district -- Petition by majority of
768 property owners -- Procedure.
769 Section 17A-2-335, Withdrawal from improvement district -- Appointment of
770 commissioners to determine rights and liabilities.
771 Section 17A-2-336, Hearing for withdrawal -- Commissioners' report -- Action by
772 court -- Taxes and charges on property.
773 Section 17A-2-337, Payment of indebtedness after withdrawal from district.
774 Section 17A-2-338, Recording decree after withdrawal from district -- Payment of
775 costs.
776 Section 17A-2-340, Withdrawal of territory in a municipality from improvement
777 districts for the supply, treatment, or distribution of water.
778 Section 17A-2-740, Petition for exclusion.
779 Section 17A-2-741, Notice of petition -- Objections.
780 Section 17A-2-742, Hearings by board -- Assent by petitioners.
781 Section 17A-2-743, Exclusion of lands, when -- Contracts with the United States.
782 Section 17A-2-744, Filings with county clerk and recorder.
783 Section 17A-2-842, Withdrawal from metropolitan water district.
784 Section 17A-2-1049, Withdrawal from public transit district.
785 Section 17A-2-1438, Procedures to petition a board to exclude land from a district.
786 Section 17A-2-1450, Content of petition for exclusion -- Deposit of money for cost of
787 proceedings.
788 Section 17A-2-1451, Notice of hearing.
789 Section 17A-2-1452, Criteria for approving or denying a petition.
790 Section 17A-2-1453, Order filed with district court clerk -- Criteria for affirmation
791 of order by the court.
792 Section 17A-2-1454, Terms of trustees representing excluded lands cease.
793 Section 17A-2-1809, Excluding land -- Procedures.
794 Section 17A-2-1810, Petition for exclusion.
795 Section 17A-2-1811, Notice of hearing.
796 Section 17A-2-1812, Approving or denying a petition.
797 Section 17A-2-1813, Orders excluding land -- Filing -- Contents -- Judicial review.
798 Section 17A-2-1814, Trustees residing in excluded lands -- Redistricting -- No
799 impairment.
Legislative Review Note
as of 11-14-01 4:29 PM
A limited legal review of this legislation raises no obvious constitutional or statutory concerns.
Office of Legislative Research and General Counsel
Committee Note
The Political Subdivisions Interim Committee recommended this bill.
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