PA 07-196—sSB 1440
Finance, Revenue and Bonding Committee
Planning and Development Committee
AN ACT CONCERNING THE SPECIAL TAXING DISTRICTS WITHIN REDDING AND BRIDGEPORT AND THE AUTHORITY OF SPECIAL SERVICES DISTRICTS TO BORROW MONEY
SUMMARY: This act extends the maximum time a special services district has to repay its debt obligations from one to seven years after it incurs them. It must discharge the debt according to the provisions of the ordinance that established the district. It also allows a district to construct, own, operate, and maintain common, as well as public, improvements in the district.
The act raises the threshold, from $200,000 to $1 million in annual revenues, for a municipality or local agency to comply with the auditing requirements of the Municipal Auditing Act. That act requires each agency above the threshold to be audited annually by an independent auditor and file the audit with the Office of Policy Management for its review. Agencies below the threshold do not have to be audited but must file annual financial statements with their town clerks.
The act also gives a special taxing district in Redding additional powers, including the authority to finance more types of infrastructure improvements, adopt and enforce design codes on district property, and impose and collect taxes on land and buildings in the district that benefit from its improvements. The act also allows the district's board to secure district debt through trust agreements pledging or assigning district revenues.
Finally, the act adjusts the boundaries of a special taxing district in Bridgeport.
EFFECTIVE DATE: The statutory special district changes take effect October 1, 2007. The Redding special taxing district provisions are effective on passage, except for the section defining a “clean renewable energy bond qualified project,” which is effective July 1, 2007. The Bridgeport special taxing district boundary and Municipal Auditing Act changes are effective July 1, 2007.
REDDING SPECIAL TAXING DISTRICT
§ 1 & 2 – District Powers
Special Act 05-14 allowed Redding to form a special taxing district to provide various services and build and maintain certain infrastructure, such as roads, drains, and sewers.
The act also allows the district to finance, plan, acquire, own, lease, mortgage, maintain, operate, and regulate the use of other infrastructure improvements, including open space, parks, parking facilities, and other real and personal property interests. Among the infrastructure projects the act authorizes is any clean renewable energy project that qualifies for clean renewable energy bonds under the federal tax law (see BACKGROUND). It also allows the district to make, transfer, and assign mortgage and other loans related to such an energy project.
The act allows the district to adopt and enforce design codes and property use restrictions within the district.
§ 3 – District Bonds
The special act allows the district to issue bonds to finance its activities. This act makes the district's bonds urban renewal debt for purposes of the municipal debt limit. By law, municipal debt for urban renewal projects is capped at 3. 25 times the municipality's aggregate annual receipts.
The act allows the district's board of directors to secure district debt through a trust agreement that pledges or assigns district revenues. It allows either the bond issuance resolution or the trust agreement to include reasonable protections of bondholders' rights. It allows the expenses for carrying out any trust agreement to be part of the district's operating costs. It requires any pledged revenues to be subject to a lien that is valid and binding on all parties, regardless of notice. It exempts the trust agreement or resolution that contains the pledge from all filing and recording requirements other than the requirement that it be recorded in the records of the district's board of directors.
The act makes the district's bonds valid and legal investments for governments, banks, insurance companies, and fiduciaries.
§ 4 – Taxing and Other Revenue Raising Powers
The act gives the district the power to impose and collect taxes, fees, rents, and benefit assessments on land and buildings in the district that benefit from its infrastructure improvements. It allows it to charge reasonable fees, rents, and benefit assessments for their cost, maintenance, improvement, and operation. The district can allow payment of the benefit assessments for infrastructure in up to 30 annual installments and can forgive any single annual assessment without causing the remaining ones to be forgiven. The act specifies that providing open space either within the district or elsewhere in Redding benefits all property within the district.
The act gives the Redding district the same powers to collect and enforce its taxes, assessment, fees, and rents as statutory special districts have. It establishes any unpaid amounts as a lien against the property and requires the owners to pay the same interest rate on delinquent amounts as on delinquent property taxes (1. 5% per month or 18% per year). The liens take precedence over all other liens except tax liens from the town of Redding.
The act requires the district board of directors to adopt or revise benefit assessments at a meeting and to provide notice to interested parties. It requires the board to hold at least one public hearing. It must give notice of the hearing to Redding's first selectman and publish a hearing notice in a local newspaper at least 10 days in advance. The board must follow the same statutory hearing and appeal procedures as a water pollution control authority.
The act specifies that the district is tax-exempt and not subject to state or local taxes or assessments and that interest on the district's bonds is tax-exempt. Individuals and entities operating within the district are subject to state and local taxes.
Clean Renewable Energy Bonds
Federal law allows qualified borrowers to issue clean renewable energy bonds (CREBs) to finance certain types of renewable energy projects. Instead of receiving interest, CREB holders receive federal tax credits, thus allowing the bond issuer to borrow at zero interest. Qualified CREB issuers include state and local governments and their political subdivisions, among others. Qualified projects are facilities that use the following types of renewable energy resources: wind, open- and closed-loop biomass, geothermal, solar, small irrigation power, landfill gas, trash combustion, refined coal, and certain types of hydropower (26 USCA §§ 45 & 54).
PA 07-154 also extends the maximum special district debt repayment term from one to seven years.
OLR Tracking: JSL: JR: PF: RO