Assigned to FIN FOR
COMMITTEE
Assigned to FIN FOR
COMMITTEE
ARIZONA STATE SENATE
Fifty-Third Legislature, Second Regular Session
aquatics facility maintenance districts
Purpose
Establishes an aquatics facility maintenance district (district) as a new type of special taxing district.
Background
Special taxing districts, often referred to as special districts, are usually created to fill a need and to enable the provision of services in an area that might otherwise be limited in receiving those services for various reasons, including size, location, financial limitations or unavailability of other government support. The formation of a special taxing district creates a funding stream to pay for the desired or needed services by placing the responsibility on those who benefit from that service.
Arizona statute currently allows and specifies the process for the formation of 42 types of special taxing districts such as fire districts, irrigation districts, hospital districts, pest abatement districts and power districts. Although the specific process depends on the type of district to be created, in many cases formation requires the submission of petitions to the county Board of Supervisors (BOS), followed by a public hearing. Sometimes, an election may be required for final approval of district formation. Statute also prescribes mechanisms for the dissolution of districts and methods for changing district boundaries (A.R.S. §§ 48-261 and 48-262).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
District Formation
1. Requires the creation of a district to follow the same process as is required of fire, community park, sanitary and hospital districts, including:
a) the submission of a petition and district impact statement to the county assessor;
b) a review by the county BOS; and
c) a public hearing.
2. Limits the creation of a district to counties with a population of less than 100,000 persons.
3. Prohibits a district from being created after September 1, 2021.
Board of Directors
4. Requires a district Board of Directors (Board) to consist of the following:
a) one person from each municipality in the district with a population of 1,000 persons or more;
b) one person from a municipality in the district with less than 1,000 persons; and
c) three persons from unincorporated areas of the county in the district.
5. Requires a quorum of the Board to appoint an interim member from the same area as the previous member in the event of a vacancy due to the expiration of a term.
6. Requires an interim member to be appointed within 90 days of the vacancy.
7. Requires the BOS to appoint an interim member within 60 days if the Board cannot fill the vacancy within the 90-day period.
8. Requires the BOS to appoint interim members if:
a) the entire Board resigns;
b) the Board cannot fulfill its duties for any reason; or
c) the Board does not have sufficient members to constitute a quorum.
9. Allows the Board to appoint an administrator with the same duties and obligations as the Board to serve until the next election.
10. Specifies that a majority of the Board constitutes a quorum.
11. Stipulates that Board members must serve without compensation, but may be reimbursed for actual expenses incurred in performing statutorily required duties.
12. Requires the Board to elect a chairperson and a clerk from its membership on the first meeting of the month immediately following each general election.
13. Stipulates that the members receiving the first, second and third highest number of votes in the general election shall serve four-year terms, while the members receiving the fourth and fifth highest number of votes shall serve two-year terms.
14. Stipulates that all members elected after the first members serve four-year terms.
Board Elections
15. Requires elections for members of the Board to be conducted in the same manner as elections for county officers as nearly as practicable.
16. States that the candidate who receives the highest number of votes in each specified municipality, and the candidates that receive the first, second and third highest votes in an unincorporated area are declared elected.
17. Requires candidates to be qualified electors of the applicable area for at least one year preceding the election and throughout their incumbency.
18. Prohibits a person related by affinity or by consanguinity within the third degree to a person on the Board from being eligible for election to the Board.
19. Requires elections to be held at the same time as a general election following the year the district is created.
20. Requires nominating petitions to be submitted to the BOS as prescribed by statute.
21. Requires the nominating petition to indicate the applicable area where the candidate is from.
22. Allows a BOS to cancel an election and appoint a person to fill a position on the Board if only one nominating petition is filed for a given area.
23. Allows a BOS to appoint a member to the Board as provided by law if no nominating petitions are filed.
24. Specifies that an appointee is vested with the same powers and duties as if elected to the Board.
25. Requires names for all nominated persons to appear without partisan designation.
26. States that only qualified electors of Arizona within the district boundaries who have registered to vote at least 29 days before an election may vote in an election.
27. Requires a person offering to vote in an election for which no district register has been supplied to sign an affidavit stating the person's address and swearing the person is qualified to vote.
Tax Elections
28. Allows the qualified electors of a district, after the Board has determined that 80 percent of the costs of initial construction of a district are available, to vote on the authorization of a secondary property tax levy at a general election.
29. Provides the BOS, if authorized by the electors, to levy a secondary property tax not exceeding $1.80 per $100 of net assessed valuation (NAV).
30. Requires the maximum tax rate to remain in effect once approved at an election.
31. Stipulates that the tax is subject to primary property tax levy limits
32. Requires the property tax levy of a district to include in lieu payments pursuant to statute.
33. Requires the county treasurer to keep monies collected from the tax in a separate fund, known as the district general fund.
34. Requires the Board to mail an informational report and the ballot to each qualified elector at least 35 days before an election which contains the following:
a) the date of the election;
b) the voter's polling place and the times the polling place is open;
c) the estimated amount that will be collected from the levy of the tax for the first year it will be levied;
d) arguments for and against the proposed tax subject to statutory guidelines; and
e) the current limited property value and NAV provided by the Arizona Department of Revenue and the estimated secondary property tax impact on certain specified residences and businesses.
35. Requires the ballot to contain the words Tax, Yes and Tax, No.
36. Requires the election to be held with respect to statute relating to election law unless otherwise specified.
Financial Requirements
37. Requires the district to prepare an annual budget containing estimated expenditures for each fiscal year and provisions for the reserve fund.
38. Requires a budget summary to be posted in three public places and on the district website at least 20 days before a public hearing to adopt a budget.
39. Requires the district to adopt a budget after the public hearing, and post the final budget prominently on the district website within seven days of the hearing for at least five years.
40. Requires the chairperson of the Board to submit a budget estimate to the BOS not more than 10 days after district formation, and not later than August 1 of each year thereafter.
41. Requires every adopted budget to include the following:
a) a certification that the district has not incurred debt or liability exceeding the monies collected by the tax and unencumbered monies;
b) certification that the district is in compliance with requirements relating to funds drawn on the county treasurer; and
c) estimated revenues and expenses for the next two years.
42. Requires the Board to hold two hearings before adopting a revised budget, and hold a special meeting for the adoption of the revised budget.
43. Allows the chairperson of the Board to draw warrants, substitute checks or electronic funds transfers on the county treasurer if the district has insufficient monies in its general fund to operate.
44. Limits the aggregate amount of funds drawn from the county treasurer to 90 percent of the taxes levied by the county for the current fiscal year.
45. Requires a warrant, substitute check or electronic funds transfer, if the county treasurer cannot pay such request due to lack of monies in the district general fund, to be endorsed and bear interest to be redeemed as provided by statute.
46. Requires any audit, report or review of a district to be presented to the Board by the auditor either telephonically, in electronic format or in person.
47. Requires a public meeting involving the audit, report or review to include attestation by the auditor relating to the following:
a) whether the district has incurred any debt or liability in excess of levied taxes and unencumbered monies in the district general fund;
b) that the district is in compliance with requirements relating to funds drawn on the county treasurer; and
c) whether the audit disclosed any information contrary to that contained in the district's budget.
48. Allows the district to maintain separate accounts with a financial institution for the purpose of operating a payroll account or for holding revenues as necessary.
49. Requires the district to establish the necessary government funds for the proper management and fiscal accountability of district monies as defined by the Government Accounting Standards Board.
50. Allows these monies to be transferred between fund accounts according to the district budget unless restricted by contract, agreement or law.
51. Requires the district to reconcile all balance sheet accounts for each month within 30 days of the end of the calendar month to be reviewed by the Board.
52. Requires the district to produce monthly financial reports that include the following:
a) a register of checks, substitute checks, warrants and deposits, and a record of electronic funds transfers;
b) a statement of financial activities; and
c) a statement of net assets for each calendar month.
53. Requires the district to produce a cash flow projection with actual revenues and expenditures to be updated monthly.
54. Requires the Board to review all financial reports maintained by the district, the county treasurer or any affiliated financial institution and report any adverse impact to ongoing operations to the chairperson, the treasurer and the BOS.
55. Allows a district to register or record warrants, substitute checks or electronic funds transfers only if separate accounts are maintained for each governmental fund, which may include the following:
a) the maintenance and operation account;
b) the unrestricted capital outlay account; and
c) the special revenue account.
56. Stipulates the registration of recording of warrants, checks or funds transfers is only permissible if there is insufficient total cash balance in all three accounts and any revolving line of credit has been exhausted.
57. Allows the Board to charge and collect fees, rentals and service charges for any service performed on property furnished by the district payable to either the district general fund or the reserve fund.
58. Allows the Board to establish a reserve fund consisting of collected taxes and fees for the purpose of covering potential operating expenses if the tax levy fails to collect sufficient monies.
59. Requires the district to reimburse the county for services provided to the district by the county.
District Powers and Duties
60. Allows a district to maintain and operate an aquatics facility.
61. Allows a district to acquire any real or personal property or interest in property by gift, purchase or condemnation and own, control, manage or dispose of such property if necessary for the purpose of operating an aquatics facility.
62. Allows a district to sell, lease or dispose of property of the district if the property is no longer required for district purposes or if use of the property does not interfere with the district.
63. Allows private monies and contributions to defray the costs of work, including initial construction, provided that expenditures comply with specified terms and conditions.
64. Allows a district to join with a county or municipality within the district, or any federal or state agency in the maintenance and operation of the facility.
65. Allows a district to employ staff to maintain and operate the aquatics facility and perform other duties reasonably necessary.
66. Allows a district to formulate and adopt rules necessary to maintain and the operate the aquatics facility.
67. Allows a district to levy a tax pursuant to prescribed requirements.
68. Allows a district to establish reasonable fees, rental rates and charges for entrance and usage of the aquatics facility.
69. Allows a district to contract with individuals, nonprofit or for-profit organizations.
70. Allows a district to pay expenses incidental to the exercise of its powers.
71. Prohibits a district from using district monies for the initial acquisition or construction of the aquatics facility.
72. Prohibits a district from incurring long-term debt.
73. Prohibits a district from using monies from taxes to pay debt service on long-term debt or acquire interest in real property other than reasonably necessary for maintenance of the facility.
74. Designates a district Board as a public body subject to public meetings and procedures law as well as public records law.
Miscellaneous
75. Defines aquatics facility, board, chairperson, clerk, county, maintain, maintenance, operate, operation, operating expenses and treasurer.
76. Makes technical changes.
77. Becomes effective on the general effective date.
Prepared by Senate Research
February 12, 2018
FB/ZD/lb