Chapter 0108 - 532R - S Ver of SB1499

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 48-702, Arizona Revised Statutes, is amended to read:

START_STATUTE48-702. Resolution declaring intention to form district

A. If the public convenience and necessity require, and on presentation of a petition signed by the owners of at least twenty‑five percent of the land area proposed to be included in the district, the governing body may adopt a resolution declaring its intention to form a community facilities district that shall include contiguous or noncontiguous property that is wholly within the corporate boundaries of the municipality or county.

B. On presentation of a petition signed by the owners of at least twenty‑five percent of the land area proposed to be included in the district and a completed application for formation of a district by an individual or entity, the governing body of a municipality or county within sixty days after submission of the completed application shall hold a public hearing to consider the application for formation of the district. Immediately after completion of the hearing, the governing body may adopt a resolution declaring its intention to form a community facilities district that shall include contiguous or noncontiguous property that is wholly within the corporate boundaries of the municipality or county. If the governing body does not adopt a resolution declaring its intention to form a district, the governing body shall provide a written basis for not adopting the resolution and shall identify the specific changes needed for the application to be approved. This subsection does not create a presumption of district formation.

C. The resolution adopted by the governing body shall state the following:

1. The area or areas to be included in the district.

2. The purposes for which the district is to be formed.

3. That a general plan for the district is on file with the clerk.

4. The date, time and place of the hearing to be held on the formation of the district.

5. The place where written objections to the formation of the district may be filed.

6. That formation of the district may result in the levy of taxes to pay the costs of improvements constructed by the district and for their operation and maintenance.

7. A reference to this article.

8. Whether the district will be governed by a district board that consists of the members of the governing body, ex officio, with two additional members who are designated initially by the owner who owns the largest amount of privately owned acreage in the proposed district and who are appointed by the governing body, or, at the option of the governing body, five directors appointed by the governing body. The applicant for formation of the district shall provide in the application a process for the designation of the two additional district board members, if applicable, on completion of the development of all of the property in the district, as certified by the applicant or its successors, and may provide for the designation of board members on expiration of the term of additional district board members and for the designation of a board member if a vacancy occurs on the district board because of the death, resignation or inability to discharge the duties of director of an additional district board member.

D. A completed application shall include at least the following information:

1. A petition signed by the owners of at least twenty-five percent of the land to be included in the district.

2. A description of the applicant, including the corporate and organizational structure of the entity or individual making the application, the names of all officers and corporate directors directly related to or associated with the proposed district, the name, address and telephone number of the primary contact for the applicant, the names of any legal representatives, engineers, architects, financial consultants or other consultants significantly involved in the application and a general description of the applicant's experience with similar types of developments.

3. A general plan setting out a general description of the public infrastructure for which the district is proposed to be formed, the general areas to be improved and the estimated costs of construction or acquisition of the public infrastructure to be financed, constructed or acquired by the district.

4. A preliminary financing plan that includes the sources and uses of monies for the public improvements.

E. In reviewing an application for formation of a district in a county, the governing body of the county may consider the district's proximity to a city or town, its inclusion in a metropolitan planning area or county growth area, the availability and capacity of utilities and public infrastructure, including the transportation network, law enforcement services, current levels of other public services and the terms of existing zoning, development agreements and capital improvement plans. END_STATUTE

Sec. 2. Section 48-705, Arizona Revised Statutes, is amended to read:

START_STATUTE48-705. Order forming district; election

A. After the hearing, the governing body may adopt a resolution ordering the formation of the district, deleting any property determined not to be benefited by the district or modifying the general plan and then ordering the formation of the district or determining that the district not be formed. A resolution ordering formation of the district shall state whether the district will be governed by a district board comprised that consists of the members of the governing body, ex officio, with two additional members who are initially designated by the owner who owns the largest amount of privately owned acreage in the district and who are appointed by the governing BODY, or, at the option of the governing body and if the total area included in the district is larger than six hundred acres, five directors appointed by the governing body. If the district board will be comprised of appointed directors, The resolution shall contain the names of the five initial directors and the terms of office of each.

B. If the governing body determines that the district should be formed, it shall submit the formation to an election of the owners of land in the district who are qualified electors of this state and other landowners, according to section 48‑3043, unless a petition is presented to the governing body pursuant to section 48‑707, subsection F. Each owner has the number of votes or portions of votes equal to the number of acres or portions of acres rounded upward to the nearest one-fifth of an acre owned by that owner in the submitted district. In addition to holding the landowner election required by this subsection or receipt of the landowner petition pursuant to section 48‑707, subsection F, and subject to section 48‑707, subsection G, the governing body shall submit the formation of the district to a vote of the qualified electors who reside within the boundaries of the proposed district. END_STATUTE

Sec. 3. Section 48-708, Arizona Revised Statutes, is amended to read:

START_STATUTE48-708. Formation; debt limitation; disclosure

A. If the formation of the district is approved by a majority of the votes cast at the election, the governing body shall order the formation, appoint the initial directors of the district board if the district will be governed by an appointed board that are not members of the governing body, ex officio, set the district boundaries and order that a map showing the district boundaries be drawn and a copy of the order forming the district be delivered to the county assessor and the board of supervisors of the county in which the district is located and to the department of revenue. A notice of the formation showing the number and date of the order and giving a description of the land included in the district shall be recorded with the county recorder.

B. On its formation, the district is a special purpose district for purposes of article IX, section 19, Constitution of Arizona, a tax levying public improvement district for the purposes of article XIII, section 7, Constitution of Arizona, and a municipal corporation for all purposes of title 35, chapter 3, articles 3, 3.1, 3.2, 4 and 5. A district that distributes or sells groundwater is a private water company only for purposes of title 45, chapters 2 and 3.1. Except as otherwise provided in this section, a district is considered to be a municipal corporation and political subdivision of this state, separate and apart from the municipality or county. Under no circumstances may the amount of indebtedness evidenced by general obligation bonds issued pursuant to section 48‑719 and revenue bonds issued pursuant to section 48‑720 exceed the estimated cost of the public infrastructure improvements plus all costs connected with the public infrastructure purposes and issuance and sale of bonds, including, without limitation, credit enhancement and liquidity support fees and costs. The total aggregate outstanding amount of bonds and any other indebtedness for which the full faith and credit of the district are pledged shall not exceed sixty percent of the aggregate of the estimated market value of the real property and improvements in the district after the public infrastructure of the district is completed plus the value of the public infrastructure owned or to be acquired by the district with the proceeds of the bonds.

C. On formation of the district, the district board shall make a good faith effort to implement the general plan for the public infrastructure of the district and any development agreement entered into pursuant to section 9‑500.05 between the governing body and owners of land in the district. The district board shall be considered a party to that agreement.

D. For districts approved after August 9, 2017, the district board shall require that a seller of a property in the district who is otherwise required to obtain a subdivision public report as prescribed by section 32‑2183 disclose to a prospective purchaser the existence of the district, the purpose for which the district was formed as set forth in the resolution adopted by the governing body, the estimated tax rate and the estimated annual tax amount that is based on applying that tax rate to a hypothetical residential property value.

E. Fees and other charges assessed by a municipality or county in connection with the submission and consideration of an application to form a district shall not exceed fifteen thousand dollars. If an application is denied by the governing body, the municipality or county may not assess a fee or other charge in connection with the submission and consideration of a substantially similar application that is submitted within one year following the denial. Fees and other charges assessed by a municipality, county or district in connection with the administration of a district, including the issuance and sale of bonds, shall not exceed the actual expense incurred by the municipality, county or district for staff and consultant services and support facilities supplied by the municipality, county or district or the financial, legal and administrative costs of the district that are not reimbursed from proceeds of the bonds or other district revenue. Any fees or other charges paid by the applicant before formation of the district that exceed the actual costs of forming the district shall be used by the municipality or county solely to support the formation or administration of the district, including the issuance and sale of bonds. END_STATUTE

Sec. 4. Section 48-711, Arizona Revised Statutes, is amended to read:

START_STATUTE48-711. Records; board of directors; terms; vacancies; open meetings

A. The district shall keep the following records that shall be open to public inspection:

1. Minutes of all meetings of the district board.

2. All resolutions.

3. Accounts showing all monies received and disbursed.

4. The annual budget.

5. All other records required to be maintained by law.

B. If the resolution ordering formation of the district provides that the district will be governed by a district board that consists of five directors who are appointed by the governing body, all of the following apply:

1. Each appointed director shall serve for a term of six years, except that two directors initially appointed by the governing body in the resolution shall serve for a term of four years.

2. The resolution shall state which directors shall serve four year four‑year terms and which shall serve six year six‑year terms.

3. On the expiration of the term of an appointed director, the governing body shall appoint a person to fill the position.

4. If a vacancy occurs on the district board because of death, resignation or inability of the director to discharge the duties of director, the vacancy shall be filled by appointment made by the governing body.

C. If the resolution ordering formation of the district provides that the district will be governed by a district board that consists of the members of the governing body, ex officio, with two additional members who are initially designated by the owner who owns the largest amount of privately owned acreage in the district and who are appointed by the governing body, all of the following apply:

1. Each of the additional appointed directors shall serve for a term of six years.

2. On the expiration of the term of an additional appointed director, the governing body shall appoint a person according to the process for designating a director for a term of office as prescribed in the application for formation of the district submitted pursuant to section 48‑702, or if no process is prescribed in the application for formation, the owner who owns the largest amount of privately owned acreage in the district at the time the term expires shall designate a person to fill the position and the governing body shall appoint that person to fill the position.

3. If a vacancy occurs on a district board because of death, resignation or inability of either of the additional appointed members to discharge the duties of director, the governing body shall appoint a person according to the process for designating a person to fill a vacancy on the district board as prescribed in the application for formation of the district submitted pursuant to section 48‑702, or if no process for filling a vacancy is prescribed in the application for formation, the vacancy shall be filled by a person who is designated by the owner who owns the largest amount of privately owned acreage in the district at the time of the vacancy and who is appointed by the governing body to fill the vacancy.

D. A director appointed by the governing body to fill a vacancy on the district board shall hold office for the remainder of the unexpired term until that director's successor is appointed.

E. An appointed director shall not be a landowner owning more than forty acres in the district, an elected official of the municipality or county or an employee or agent of the landowner or municipality or county but may be a director of more than one district.

C. F. The members of the governing body of the municipality or county are not eligible to receive compensation for their services as members of the district board.

D. G. The board of directors shall comply with title 38, chapter 3, article 3.1 as a separate political subdivision, and the members of the board of directors are deemed public officers for the purposes of and shall comply with title 38, chapter 3, article 8.

E. H. The district manager, clerk and treasurer shall be the manager, clerk and treasurer of the municipality or county, respectively, unless the district board appoints a district manager, clerk and treasurer. END_STATUTE

Sec. 5. Emergency

This act is an emergency measure that is necessary to preserve the public peace, health or safety and is operative immediately as provided by law.