Lake Associations and Special Districts

TO:

FROM: Matthew Ranelli, Research Attorney

RE: Lake Associations and Special Districts

You asked what grant of authority lake associations operate under and what powers they possess. You also asked what rights members of such associations have if they have a dispute with the association. You also asked what legal differences exist between (1) associations, (2) tax districts, and (3) “cities within towns.”

Lake associations are special districts. Special districts in Connecticut are established either by special act of the General Assembly or by the uniform statutory process in CGS Title 7, Chapter 105. Traditionally such districts preform one or two functions of local government. Special districts are all bodies corporate and politic and have the powers granted to them in their special act or the powers available under CGS § 7-326. Residents or voters in special districts have limited options to redress disputes with the district and most commonly must attempt to resolve disputes at district meetings. Special districts are essentially the same type of entity as cities within towns (unconsolidated cities), the primary difference is that the cities offer a much broader array of services.

Special districts are bodies corporate and bodies politic authorized by special act or by statutory process in accordance with CGS Title 7, Chapter 105. They include fire, sewer, and lighting districts; village, beach, or improvement associations; and any other district or association, except a school district, wholly within a town and having the power to make appropriations or to levy taxes (CGS § 7-324). Originally, creating a district required property owners to petition the General Assembly for a special act. The act delineated the organization, powers, and functions of the district. Over the years, culminating in 1957, the legislature established a uniform, statutory process for establishing special districts without the need for a special act. The statutes set out the process for establishing a district and the organization and powers that the district could exercise (CGS §§ 7-324-329).

Most special districts in Connecticut are established to perform either one or several functions. They can be categorized into one of four groups depending on the purpose for which they were established: (1) fire districts, (2) utility districts, (3) improvement districts, and (4) beach and lake association districts. The essential distinction is that fire and utility districts provide a traditional government service for a broad public purpose, while improvement districts and associations provide a service for purposes that are exclusive to their members or areas open to members.

Special districts created by special act of the General Assembly can exercise any powers granted in that act. Special districts established under the statutory process can have any or all of the powers enumerated in CGS § 7-326, including to:

5. appoint and employ watchmen or police officers;

6. acquire, construct, maintain, and regulate the use of recreational facilities;

7. plan, lay out, acquire, construct, reconstruct, repair, maintain, supervise and manage a flood or erosion control system;

8. plan, lay out, construct, maintain, operate and regulate the use of a community water system;

9. collect garbage, ashes, and all other refuse matter in any portion of the district and provide for the disposal of such matter;

10. establish a zoning commission and a zoning board of appeals or a planning commission or both, which must be dissolved when the town's planning or zoning commission adopts subdivision or zoning regulations;

11. adopt building regulations which are superseded when the town adopts building regulations; and

12. contract with a town, city, borough, or other district for carrying out any of the district's purposes.

In addition to the powers listed above, special districts have taxing authority (CGS § 7-328). The municipality within which the special district is located is responsible for assessing the property within the district and providing the district clerk with a list of such property. The district tax rate must be set at a district meeting and it is separate and in addition to the town's tax rate. The special district can enforce payment of the tax in the same manner as the town. The taxes are a lien on the property. Such liens may be continued by certificate recorded in the town's land records and may be foreclosed by the district in the same way as liens for town taxes. A district may also levy special benefit assessments to pay for the construction of drains, sewers, sidewalks, curbs, or gutters. Such special benefit assessments must be proportional to the properties specifically benefited by such construction.

Special districts also have the authority, with certain limitations, to issue bonds for constructing public works or acquiring recreational facilities. The district's authority is subject to the bonding provisions of the general statutes, and any bonds issued are considered as underlying debt of the town within which it is located in considering the town's debt ceiling. According to David Russell of the Office of Policy and Management, such debt is also considered as part of the town's debt by credit rating agencies. If a district is to be terminated while it still has outstanding bonds, it must either (1) pay off all of the outstanding debt or (2) turn over its liabilities to the town (CGS § 7-329).

Residents of a special district generally have three options for redressing disputes with the district. They may (1) raise the issue at the annual or any other district meeting, (2) act to terminate the district, or (3) file suit against the district in a court of appropriate jurisdiction.

Once a district has been established and organized it must hold an annual meeting and it may hold special meetings. The annual meeting must be held within 30 days before the beginning of the fiscal year (July 1), for the purpose of adopting an annual budget, fixing the tax rate, and laying the tax. Special meetings may be called by (1) 10% of the voters in the district or 20 such voters, whichever is less; (2) the president; and (3) any three directors. Meetings called by application of the voters must be held within 21 days of such application. Notice of any meetings must be published in a local paper at least 10 days before the meeting.

Voters may petition the clerk of the district for a referendum on any of the items on the agenda of a meeting (CGS §§ 7-327, 327a). A successful petition must be signed by 200 people or 10% of the qualified voters of the district. The petition may request that the items on it be submitted to a vote of the district within the next seven to 14 days. The exact date of the vote may be set at the district meeting or may be set by the board of directors. A quorum of 15 voters must be present at a meeting in order to conduct business.

For most disputes between associations and residents, termination of the district or actions in court are not practical options, but they are available alternatives.

A special district may be terminated by a vote of its residents. A meeting to vote to terminate a district may be called in the same manner as a special meeting. The vote to terminate the district may be held at the meeting or at a referendum, in either instance a two-thirds majority of the voters present (in the case of a referendum two-thirds of the votes cast) is necessary. However a district may not be terminated by this method until its outstanding debts have been paid or the municipality has agreed in writing to assume the debt.

An action may be brought against a special district in the same manner as against any municipality. Such action must be brought in a court of appropriate jurisdiction.

The distinctions between cities within towns (like Groton) and special tax districts (or associations) are differences in degree not of kind. For instance, there are districts that have changed into boroughs and there are boroughs that have change into unconsolidated cities. The distinction is best understood by observing the functions of the two entities. Generally, special districts provide one or two functions or services while unconsolidated cities provide an array of services, but both exist within a host municipality and historically both were created by a special act which delineated their boundaries and powers. Because unconsolidated cities were all created by special act as were many special districts, the specific distinctions vary depending on which city and district are compared, however the salient features of these two entities are that they both: (1) are bodies corporate and politic, (2) have the power to sue and be sued, (3) have the authority to tax and in certain instances to bond, (4) are organized and function in the same manner, (5) have the power of home rule actions, and (6) perform one or more functions or services of government. Additionally, neither unconsolidated cities not special districts are required to operate a school system.

The general statutes do not have provisions for the establishment of unconsolidated cities, but there have been as many as 20 in Connecticut's history; the only remaining one being the city of Groton. Historically, towns performed all the local governmental service needs of an area. As certain areas of towns grew became more urban, the residents of these areas desired new services (such as street lights) or more of the traditional services (such as police), but the residents of the rural sections of town did not need or want to pay for such services. The General Assembly responded by creating boroughs and cities within the urban areas of the town to provide the services that the residents desired. The boroughs and cities would levy an a tax, in addition to the host town's tax, on their residents to pay for the new or increased services. Eventually, as the rest of the town's residents desired these services, the general level of town services rose and the need for the boroughs and cities faded; and they were consolidated into the host towns.