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HomeMy WebLinkAboutCOM 0807.003 1998-2000 Summary - County Council-Initiated Improvement District (ID) Process DESCRIPTION: The County Council may create improvement districts to pay for the cost of certain improvements to land when the Council finds that the improvements will "specially benefit" certain lands and if the improvements will be in the "public interest." AUTHORITY: Section 46-80, Hawaii Revised Statutes and Chapter 12, Hawaii County Code. The "special benefit" and public interest requirements are legal standards that must be met before an improvement district (ID) can be created. ID PROCESS: The process is divided into two parts: 1. Creating an ID. An ID is created by passing an ID ordinance. The ordinance levies (assesses) ID assessments and creates liens against the lots which are to pay for the cost of the improvements. The liens are similar to mortgages on lands. 2. Financing. Funding for the improvements are generated by selling an ID bond issue. INRIATINGAN ID: IDs can either be initiated by the County or by owners. 1. The County initiated proceedings begin with the County Council who refers the proposed project to the Chief Engineer for review and a preliminary report. a. Includes owner notification and participation public hearings. b. If hearing results in objections from 50% of affected owners, ID is terminated. IMPROVEMENTS: Includes roads, local water, electrical, telephone and drainage systems. 1. Because of the "special benefit" requirement, improvements that benefit the entire County should not be included. 2. In some cases, part of the cost of the improvement that services more than a particular area can be included because that part "specially benefits" the ID. PROCEDURE: (After the ID proceedings are initiated) 1. County agencies review the proposed ID and report their findings to the Council. 2. Chief Engineer determines assessment roll information, to include: a. List of ail affected owners b. Maximum unit of assessment ($/ft., $.sq, ft., etc.) c. Maximum amount paid per property 3. Council schedules a preliminary assessment roll hearing 7 QA - 003 Comm. No. 0 M File No.- T Ref. To: Ref. Date SUMMARY OF COUNCIL-INITIATED ID PROCESS - continued 4. Council processes the ID ordinance considering results of assessment roll hearings (and any amendments). 5. Although a proposed amendment may otherwise qualify under Chapter 12, the Council has the sole authority to decide whether an ID should be created. 6. No ID can be adopted without demonstrating: a. Tax assessment of the land is twice the cost of the improvement, or; b. Council finds the appraised value of the land is twice the cost of the improvement. c. Council finds that improvement is in the public interest. 7. Improvements built under an improvement district are done as County projects in accordance with ID procedures. 8. Subject to the special benefit and public interest requirements, the Council may pass on to the ID all of the costs of the improvements that it finds are appropriate. a. Costs include construction costs, construction contingencies, incidental expenses such as engineering and legal costs, cost of bond issuance and financing (including bond reserve funds). b. For all IDs, including County initiated, contributions from County funds for incidental expenses and construction costs is not required. c. Although the County may advance funds to prepare for an improvement district, it is not obligated to do so. d. For owner-initiated petitions, it may require that the owners advance funds as a condition to processing the improvement district. ID BONDS: ID Improvements are traditionally funded by the use of ID bonds. 1. Bonds are issued by the County Council. 2. Because they are not general obligation bonds, the County itself has no obligation to repay them. 3. The collateral for these bonds is the land which is subject to the ID assessments. 4. Because the issuance of these bonds and the subsequent use of bond proceeds is highly technical, the County may employ a financial advisor as well as a bond attorney to help in structuring and selling the bonds. COORDINATION: The ID process requires the close coordination of a number of County agencies as well as technical consultants. The process may also involve state agencies (and occasionally federal agencies). For these reasons, it is important to identify critical issues early in the process and to begin to work on those issues. It is also important to reach agreement on a realistic schedule for completion of various parts of the process and to have the petitioners and agencies committed to use their best efforts to follow that schedule.