OLR Bill Analysis
AN ACT CONCERNING THE SPECIAL TAXING DISTRICTS WITHIN REDDING AND BRIDGEPORT AND THE AUTHORITY OF SPECIAL SERVICES DISTRICTS TO BORROW MONEY.
This bill extends the 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.
The bill 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 bill also allows the district's board to secure district debt through trust agreements pledging or assigning district revenues.
Finally, the bill adjusts the boundaries of a special taxing district in Bridgeport.
EFFECTIVE DATE: The special district debt obligation repayment change takes 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 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 bill 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 bill authorizes is any clean renewable energy project that qualifies for clean renewable energy bonds under the federal tax law (see BACKGROUND).
The bill 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. The bill 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 bill 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 bill makes the district's bonds valid and legal investments for governments, banks, insurance companies, and fiduciaries.
§ 4 – Taxing Powers
The bill gives the district the power to impose and collect taxes 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 bill specifies that providing open space either within the district or elsewhere in Redding benefits all property within the district.
The bill 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 bill 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 bill 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 are 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).
sHB 6856 (File 801) and sHB 7223 (File 841) also extend special district debt repayment terms. The provision in sHB 6856 is identical to this bill, while sHB 7223 would extend the maximum repayment term from one to five years.
The Senate referred the original bill (File 725) to the Planning and Development Committee. The committee reported a substitute version that adds the extension of time for a special district to repay its debt.
Finance, Revenue and Bonding Committee
Joint Favorable Substitute
Planning and Development Committee
Joint Favorable Substitute