Representative Justin L. Fawson proposes the following substitute bill:


1     
DISSOLUTION OF LOCAL DISTRICTS

2     
2017 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Justin L. Fawson

5     
Senate Sponsor: Jerry W. Stevenson

6     

7     LONG TITLE
8     General Description:
9          This bill modifies the procedure to dissolve a local district.
10     Highlighted Provisions:
11          This bill:
12          ▸     reduces the threshold petitioners must reach to initiate a dissolution;
13          ▸     modifies provisions regarding:
14               •     procedural and public hearing requirements for an administrative body;
15               •     required notice to the lieutenant governor regarding a dissolution;
16               •     recording a certification from the lieutenant governor;
17               •     payment of the costs of dissolution and the dissolved local district's debts and
18     liabilities; and
19               •     distribution of remaining assets of a dissolved local district; and
20          ▸     makes technical and conforming changes.
21     Money Appropriated in this Bill:
22          None
23     Other Special Clauses:
24          None
25     Utah Code Sections Affected:
26     AMENDS:
27          17B-1-1303, as renumbered and amended by Laws of Utah 2007, Chapter 329
28          17B-1-1306, as renumbered and amended by Laws of Utah 2007, Chapter 329
29          17B-1-1308, as last amended by Laws of Utah 2016, Chapter 176
30     ENACTS:
31          17B-1-1309, Utah Code Annotated 1953
32          17B-1-1310, Utah Code Annotated 1953
33     

34     Be it enacted by the Legislature of the state of Utah:
35          Section 1. Section 17B-1-1303 is amended to read:
36          17B-1-1303. Initiation of dissolution process.
37          The process to dissolve a local district may be initiated by:
38          (1) for an inactive local district:
39          (a) (i) for a local district whose board of trustees is elected by electors based on the
40     acre-feet of water allotted to the land owned by the elector, a petition signed by the owners of
41     25% of the acre-feet of water allotted to the land within the local district; or
42          (ii) for all other districts:
43          (A) a petition signed by the owners of private real property that:
44          (I) is located within the local district proposed to be dissolved;
45          (II) covers at least 25% of the private land area within the local district; and
46          (III) is equal in assessed value to at least 25% of the assessed value of all private real
47     property within the local district; or
48          (B) a petition signed by registered voters residing within the local district proposed to
49     be dissolved equal in number to at least 25% of the number of votes cast in the district for the
50     office of governor at the last regular general election before the filing of the petition; or
51          (b) a resolution adopted by the administrative body; and
52          (2) for an active local district, a petition signed by:
53          (a) for a local district whose board of trustees is elected by electors based on the
54     acre-feet of water allotted to the land owned by the elector, [a petition signed by] the owners of
55     [100%] 33% of the acre-feet of water allotted to the land within the local district; [or]
56          (b) for a local district created to acquire or assess a groundwater right for the
57     development and execution of a groundwater management plan in coordination with the state
58     engineer in accordance with Section 73-5-15, the owners of groundwater rights that:
59          (i) are diverted within the district; and
60          (ii) cover at least 33% of the total amount of groundwater diverted in accordance with
61     the groundwater rights within the district as a whole; or
62          [(b)] (c) for all other districts[,]:
63          (i) the owners of [100% of the] private real property that:
64          (A) is located within the local district proposed to be dissolved;
65          (B) covers at least 33% of the private land area within the local district; and
66          (C) is equal in assessed value to at least 25% of the assessed value of all private real
67     property within the local district; or
68          (ii) [100%] 33% of registered voters residing within the local district proposed to be
69     dissolved.
70          Section 2. Section 17B-1-1306 is amended to read:
71          17B-1-1306. Public hearing.
72          (1) For each petition certified under Section 17B-1-1305 and each resolution [adopted]
73     that an administrative body adopts under Subsection 17B-1-1303(1)(b), the administrative body
74     shall hold a public hearing on the proposed dissolution.
75          (2) [Each] The administrative body shall hold a public hearing under Subsection (1)
76     [shall be held]:
77          (a) no later than 45 days after certification of the petition under Section 17B-1-1305 or
78     adoption of a resolution under Subsection 17B-1-1303(1)(b), as the case may be;
79          (b) within the local district proposed to be dissolved;
80          (c) on a weekday evening other than a holiday beginning no earlier than 6 p.m.; and
81          (d) for the purpose of allowing:
82          (i) the administrative body to explain the process the administrative body will follow to
83     study and prepare the proposed dissolution;
84          [(i)] (ii) the public to ask questions and obtain further information about the proposed
85     dissolution and issues raised by it; and
86          [(ii)] (iii) any interested person to address the administrative body concerning the
87     proposed dissolution.
88          (3) A quorum of the administrative body shall be present throughout each public
89     hearing under this section.
90          Section 3. Section 17B-1-1308 is amended to read:
91          17B-1-1308. Second Public Hearing -- Dissolution resolution -- Limitations on
92     dissolution.
93          [(1) After the public hearing required under Section 17B-1-1306 and subject to
94     Subsection (2), the administrative body may adopt a resolution approving dissolution of the
95     local district.]
96          (1) (a) Within 180 days after the day on which the administrative body holds the public
97     hearing described in Section 17B-1-1306, the administrative body shall hold a second public
98     hearing to:
99          (i) publicly explain the result of the study and preparation described in Subsection
100     17B-1-1306(2)(d)(i);
101          (ii) describe whether the proposed dissolution meets each criterion described in
102     Subsection (2); and
103          (iii) adopt a resolution in accordance with Subsection (1)(b) or (c).
104          (b) Subject to Subsection (2), after a proposed dissolution petition has been certified
105     under Section 17B-1-1305, the administrative body shall adopt a resolution:
106          (i) certifying that the proposed dissolution satisfies the criteria described in Subsection
107     (2); and
108          (ii) (A) for an inactive local district, approving the dissolution of the local district; or
109          (B) for an active local district, initiating the dissolution election described in Section
110     17B-1-1309.
111          (c) Subject to Subsection (2), for a proposed dissolution of an inactive district that an
112     administrative body initiates by adopting a resolution under Subsection 17B-1-1303(1)(b), the
113     administrative body may adopt a resolution:
114          (i) certifying that the proposed dissolution satisfies the criteria described in Subsection
115     (2); and
116          (ii) approving the dissolution of the inactive local district.
117          (2) [A] The administrative body may not adopt a resolution under Subsection (1) [may
118     not be adopted] unless:
119          (a) any outstanding debt of the local district is:
120          (i) satisfied and discharged in connection with the dissolution; or
121          (ii) assumed by another governmental entity with the consent of all the holders of that
122     debt and all the holders of other debts of the local district;
123          (b) for a local district that has provided service during the preceding three years or
124     undertaken planning or other activity preparatory to providing service:
125          (i) another entity has committed to:
126          (A) provide the same service to the area being served or proposed to be served by the
127     local district; and
128          (B) purchase, at fair market value, the assets of the local district that are required to
129     provide the service; and
130          (ii) all who are to receive the service have consented to the service being provided by
131     the other entity; and
132          (c) all outstanding contracts to which the local district is a party are resolved through
133     mutual termination or the assignment of the local district's rights, duties, privileges, and
134     responsibilities to another entity with the consent of the other parties to the contract.
135          [(3) (a) (i) Any assets of the local district remaining after paying all debts and other
136     obligations of the local district shall be used to pay costs associated with the dissolution
137     process under this part.]
138          [(ii) Any costs of the dissolution process remaining after exhausting the remaining
139     assets of the local district under Subsection (3)(a)(i) shall be paid by the administrative body.]
140          [(b) Any assets of the local district remaining after application of Subsection (3)(a)
141     shall be distributed:]
142          [(i) proportionately to the owners of real property within the dissolved local district if
143     there is a readily identifiable connection between a financial burden borne by the real property
144     owners in the district and the remaining assets; or]
145          [(ii) except as provided in Subsection (3)(b)(i), to each county, city, town, or metro
146     township in which the dissolved local district was located before dissolution in the same
147     proportion that the land area of the local district located within the unincorporated area of the
148     county or within the city, town, or metro township bears to the total local district land area.]
149          [(4) (a) The administrative body shall:]
150          [(i) within 30 days after adopting a resolution approving dissolution, file with the
151     lieutenant governor a copy of a notice of an impending boundary action, as defined in Section
152     67-1a-6.5, that meets the requirements of Subsection 67-1a-6.5(3); and]
153          [(ii) upon the lieutenant governor's issuance of a certificate of dissolution under
154     Section 67-1a-6.5:]
155          [(A) if the local district was located within the boundary of a single county, submit to
156     the recorder of that county:]
157          [(I) the original:]
158          [(Aa) notice of an impending boundary action; and]
159          [(Bb) certificate of dissolution; and]
160          [(II) a certified copy of the resolution adopted under Subsection (1); or]
161          [(B) if the local district was located within the boundaries of more than a single
162     county:]
163          [(I) submit to the recorder of one of those counties:]
164          [(Aa) the original of the documents listed in Subsections (4)(a)(ii)(A)(I)(Aa) and (Bb);
165     and]
166          [(Bb) a certified copy of the resolution adopted under Subsection (1); and]
167          [(II) submit to the recorder of each other county:]
168          [(Aa) a certified copy of the documents listed in Subsections (4)(a)(ii)(A)(I)(Aa) and
169     (Bb); and]
170          [(Bb) a certified copy of the resolution adopted under Subsection (1).]
171          [(b) Upon the lieutenant governor's issuance of the certificate of dissolution under
172     Section 67-1a-6.5, the local district is dissolved.]
173          Section 4. Section 17B-1-1309 is enacted to read:
174          17B-1-1309. Election to dissolve an active local district.
175          (1) When an administrative body adopts a resolution to initiate a dissolution election
176     under Subsection 17B-1-1308(1)(b)(ii), an election shall be held on the question of whether the
177     local district should be dissolved by:
178          (a) if the local district proposed to be dissolved is located entirely within a single
179     county, the local district clerk, in cooperation with the county clerk; or
180          (b) if the local district proposed to be dissolved is located within more than one county,
181     in cooperation with the local district clerk:
182          (i) the clerk of each county where part of the local district is located in more than one
183     municipality or in an unincorporated area within the same county;
184          (ii) the clerk or recorder of each municipality where part of the local district is not
185     located in another municipality or in an unincorporated area within the same county; and
186          (iii) the clerk of each county where part of the local district is located only in an
187     unincorporated area within the county.
188          (2) Each election under Subsection (1) shall be held at the next special or regular
189     general election that is more than 60 days after the day on which the administrative body
190     adopts a resolution in accordance with Section 17B-1-1308.
191          (3) (a) If the local district proposed to be dissolved is located in more than one county,
192     the local district clerk shall coordinate with the officials described in Subsection (1)(b) to
193     ensure that the election is held on the same date and in a consistent manner in each jurisdiction.
194          (b) The clerk of each county and the clerk or recorder of each municipality involved in
195     an election under Subsection (1) shall cooperate with the local district clerk in holding the
196     election.
197          (4) If the local district proposed to be dissolved is an irrigation district under Title 17B,
198     Chapter 2a, Part 5, Irrigation District Act:
199          (a) the electors shall consist of the landowners whose land has allotments of water
200     through the district; and
201          (b) each elector may cast one vote for each acre-foot or fraction of an acre-foot of
202     water allotted to the land the elector owns within the district.
203          (5) If the local district proposed to be dissolved is a district created to acquire or assess
204     a groundwater right for the development and execution of a groundwater management plan in
205     accordance with Section 73-5-15:
206          (a) the electors shall consist of the owners of groundwater rights within the district; and
207          (b) each elector may cast one vote for each acre-foot or fraction of an acre- foot of
208     groundwater that is within the district and reflected in the elector's water right.
209          (6) If the local district proposed to be dissolved is a basic local district, except for a
210     district described in Subsection (5), and if the area of the basic local district contains less than
211     one residential unit per 50 acres of land at the time of the filing of a petition described in
212     Subsection 17B-1-1303(2):
213          (a) the electors shall consist of the owners of privately owned real property within a
214     basic local district under Title 17B, Chapter 1, Part 14, Basic Local District; and
215          (b) each elector may cast one vote for each acre or fraction of an acre of land that the
216     elector owns within the district.
217          (7) Except as otherwise provided in this part, Title 20A, Election Code, governs each
218     election under Subsection (1).
219          Section 5. Section 17B-1-1310 is enacted to read:
220          17B-1-1310. Notice to lieutenant governor -- Recording requirements --
221     Distribution of remaining assets.
222          (1) The administrative body, shall file with the lieutenant governor a copy of a notice
223     of an impending boundary action, as defined in Section 67-1a-6.5, that meets the requirements
224     of Subsection 67-1a-6.5(3):
225          (a) within 30 days after the day on which the administrative body adopts a resolution
226     approving the dissolution of an inactive local district; or
227          (b) within 30 days after the day on which a majority of the voters within an active local
228     district approve the dissolution of the local district in an election described in Subsection
229     17B-1-1309(2).
230          (2) Upon the lieutenant governor's issuance of a certificate of dissolution under Section
231     67-1a-6.5, the administrative body shall:
232          (a) if the local district was located within the boundary of a single county, submit to the
233     recorder of that county:
234          (i) the original:
235          (A) notice of an impending boundary action; and
236          (B) certificate of dissolution; and
237          (ii) a certified copy of the resolution that the administrative body adopts under
238     Subsection 17B-1-1308(1); or
239          (b) if the local district was located within the boundaries of more than a single county:
240          (i) submit to the recorder of one of those counties:
241          (A) the original of the notice of an impending boundary action and certificate of
242     dissolution; and
243          (B) if applicable, a certified copy of the resolution that the administrative body adopts
244     under Subsection 17B-1-1308(1); and
245          (ii) submit to the recorder of each other county:
246          (A) a certified copy of the notice of an impending boundary action and certificate of
247     dissolution; and
248          (B) if applicable, a certified copy of the resolution that the administrative body adopts
249     under Subsection 17B-1-1308(1).
250          (3) Upon the lieutenant governor's issuance of the certificate of dissolution under
251     Section 67-1a-6.5, the local district is dissolved.
252          (4) (a) After the dissolution of a local district under this part, the administrative body
253     shall use any assets of the local district remaining after paying all debts and other obligations of
254     the local district to pay costs associated with the dissolution process.
255          (b) If the administrative body is not the board of trustees of the dissolved local district,
256     the administrative body shall pay any costs of the dissolution process remaining after
257     exhausting the remaining assets of the local district as described in Subsection (4)(a).
258          (c) If the administrative body is the board of trustees of the dissolved local district,
259     each entity that has committed to provide a service that the dissolved local district previously
260     provided, as described in Subsection 17B-1-1308(2)(b), shall pay, in the same proportion that
261     the services the entity commits to provide bear to all of the services the local district provided,
262     any costs of the dissolution process remaining after exhausting the remaining assets of the
263     dissolved local district described in Subsection (4)(a).
264          (5) (a) The administrative body shall distribute any assets of the local district that
265     remain after the payment of debts, obligations, and costs under Subsection (4) in the following
266     order of priority:
267          (i) if there is a readily identifiable connection between the remaining assets and a
268     financial burden borne by the real property owners in the dissolved local district,
269     proportionately to those real property owners;
270          (ii) if there is a readily identifiable connection between the remaining assets and a
271     financial burden borne by the recipients of a service that the dissolved local district provided,
272     proportionately to those recipients; and
273          (iii) subject to Subsection (6), to each entity that has committed to provide a service
274     that the dissolved local district previously provided, as described in Subsection
275     17B-1-1309(1)(b)(ii), in the same proportion that the services the entity commits to provide
276     bear to all of the services the local district provided.
277          (6) An entity that receives cash reserves of the dissolved local district under Subsection
278     (5)(a)(iii) may not use the cash reserves:
279          (a) in any way other than for the purpose the local district originally intended; or
280          (b) in any area other than within the area that the dissolved local district previously
281     served.