Phoenix, Arizona

county improvement districts


Makes several changes to statutes governing county improvement districts, including authorization to include noncontiguous land within the district, mail public notices rather than publish them in newspapers, and issue refunding bonds.


Pursuant to Arizona Revised Statutes, Title 48, Chapter 6, a county improvement district my be established in any unincorporated area by the Board of Supervisors of the county in which the proposed district is located. (A county improvement district may, under specific circumstances may include area in an incorporated city or town with the consent of the city's or town's governing body.)

In order to form a county improvement district, a petition, signed by a majority of the persons owning real property or by the owners of at least 51 percent of the real property and more than 50 percent of the qualified electors within the limits of the proposed district, shall be filed with the clerk of the board. The petition must include the name of the proposed improvement district, an explanation of how the proposed district will promote public convenience, necessity or welfare of the area, the proposed boundaries of the district and a general outline of the proposed improvements.

A public hearing, made known to the residents and landholders of the affected area though publication of notices along streets and in a newspaper of general circulation in the county, shall be held to take public testimony. Any person wishing to object to the establishment of the district, or addition, may, before the date set for the hearing, file objections with the clerk of the Board of Supervisors. After hearing all testimony, the Board may declare the improvement district organized under a corporate name by which it shall be known in all proceedings.



1. Allows county improvement districts to include noncontiguous land, and be formed regardless of whether the land is contiguous.

2. Allows districts to include state trust lands if the State Land Commissioner consents in writing. State trust lands will not be included for the purpose of forming, objecting to the formation, or expanding a district.

FACT SHEET H.B. 2508 - Final Revised Page

3. Expands the purposes of county improvement districts to include:

landscaping and maintaining streets;

acquiring and maintaining wastewater treatment facilities, sewers, ditches, drains, conduits, pipelines and channels for sanitary and drainage purposes;

purchasing an existing domestic water delivery system outside the district or constructing or improving an existing system inside or outside of the district;

constructing a new domestic water delivery system outside of the district;

acquiring lighting plants and poles, wires, conduits, lamps, standards and other appliances for the purpose of lighting and beautifying public lands; and

operating, maintaining and repairing the streets within the district and any other improvements.

4. Authorizes a county board of supervisors to summarily order the formation of a district, without holding a hearing, if the petition to form the district is signed by all of the owners the property in the proposed district.

5. Allows county improvement districts, through its board of directors, to join with any Indian tribe or instrumentality of an Indian tribe to:

construct, operate or maintain district improvements.

improve streets running upon or along the boundary of the district and levy assessments and issue bonds for the districts portion of the costs of the improvement.

6. Allows a district, located in a county with a population of less than 200,000 persons to purchase an interest in any statutorily authorized improvement. The district may acquire joint, several or joint and several interests in the improvement.

7. Eliminates references regarding the posting of notices along streets in the district and in a newspaper of general circulation within the county in which the district is or is to be formed. Does not prohibit the district board of directors from publishing notices in a newspaper of general circulation in the area the district is located.

8. Requires the following to be mailed, via United States postal service first class mail, to owners of real property within the district, notice:

of hearings to form or expand a district;

of intent to levy taxes and issue bonds;

that an installment of principal or interest is due;

of bonds and assessments issued and levied;

of all special assessments due;

of delinquency of an installment;

of intent to sell the lot or parcel on which an installment is delinquent.


9. Specifies that notices shall be mailed to the State Land Commissioner, if state trust lands are included in the district.

10. Requires the clerk of the board of supervisors to prepare a list containing the names and addresses of all mailed notices that are returned to the clerk as undeliverable or due to an incorrect address.

11. Directs the clerk to deliver the list of names and addresses of returned mailings to the county recorder or search of records to determine their validity based upon the records in the office of the county recorder.

12. Specifies that the clerk shall utilize any corrected addresses provided by the county recorder or searcher of records until a new assessment roll is approved by the county board of supervisors.

13. Stipulates that a district may be formed or its boundaries changed without prior notice being mailed to the new owners or new addresses that are found due to a search of records on returned mailings.

14. Requires proof of mailing of notices to be made by affidavit by the person required to make the mailing.

15. Stipulates that an affidavit of mailing is prima facie proof and failure of a person to receive a mailed notice does not affect the validity of any notice that was mailed. Failure to mail a notice to one person does not effect the validity of a notice mailed to another. An error or informality in a notice does not void the validity of the other portions of the notice.

16. Allows the county recorder to charge up to three dollars for each record search.

17. States that costs of mailing notices and conducting record searches are incidental and are to be included in the assessment of the district.

18. Changes the method of protest against approved improvements to include owners of a majority of the acreage within the area limits of the proposed assessment.

19. Increases, from 15 to 20, the number of days the majority of the owners of property in or fronting a district have to protest against an approved improvement.

20. Clarifies that work contracted to be completed by the district board of directors must be done according to the contract.

21. Allows the board of directors to hold a contract in default if the contracted work is not performed according to the contract.

22. Specifies that unless the board of directors finds the action to be arbitrary and capricious, the board shall not pay interest to the contractor during any period that the contract is suspended or terminated.

District Financing

23. States that assessment liens are first liens, subject only to the lien for general taxes and prior special assessments.

24. Replaces the requirement that annual payments on liens over $25 be made in equal installments with the requirement that annual payments be made in installments that correspond to the maturity dates of the bonds.

25. Continues all assessment liens until the assessment is fully paid in lieu of allowing termination two years after the last installment becomes due.

26. Requires the superintendent, prior to the date of an auction to sell the property on which the assessment is delinquent, to obtain a record search showing the names and addresses of all claimants on all lots or parcels on which payment of an assessment is delinquent.

27. Directs the superintendent to mail a notice of the intended sale to the owner and to each of the lien claimants as shown by the search of records at least 10 days before the date of the sale. The notice must indicate the date and place of the sale, and the whole amount of the assessment including penalties, and mailing and record search costs.

28. Prohibits the sale from being held if the a notice is not provided to all lien claimants discovered in the search of records.

29. Allows a district to borrow monies from the county in amounts sufficient to pay current bond interest or principal that would otherwise be unpaid as a result of a postponed sale.

30. Allows the board of directors to determine the place, other than the office of the superintendent or regular meeting place of the board, to hold the auction to sell property upon which there is an assessment lien.

31. Adds the address of the owner and all lien claimants, as identified by the record search, to the certificate of sale for property that was sold for a delinquent assessment.

32. Increases, from 12 to 13 months, the span of time that must pass before the superintendent may provide to a purchaser the deed to the property that was sold for delinquent assessment.

33. Includes all lien claimants, as identified by the record search, and persons currently occupying the property (if different from the owner) to the list of persons that must be mailed written notice of the purchaser's intent to apply for the deed of the property sold for delinquent assessment.

34. Requires the sender of the notice of the purchaser's intent to apply for the deed to file an affidavit showing that notice was mailed.

35. Increases from $3 to $10 the fee a person, who has redeemed his or her property more than 12 months from the date of sale, must pay the superintendent for the service of notice and making the affidavit for the purchaser's intent to apply for the deed of the property sold for delinquent taxes.

36. Stipulates that if an assessment is adjudged void, voidable or uncollectible, the board of directors may levy a new assessment sufficient to pay the principal and interest on all bonds, or pay the contractor or reimburse the district or the county for incidental expenses.

37. Expands the general obligations of the district for which property taxes may be levied to include the repayment of loans and attorney fees and costs.

38. Provides that any bonds issued by an improvement district may be refunded.

39. Authorizes refunding bonds to be issued by improvement districts for the following reasons, to:

provide monies to pay the bonds being refunded at the maturity or before their redemption date.

purchase noncallable obligations issued or guaranteed by the United States in an amount sufficient to pay, at maturity or earlier, the redemption of the bonds being refunded.

exchange the refunding bonds for the bonds refunded.

40. Allows refunding bonds to be issued if the total amount of the principal and interest to be paid on the bonds does not exceed the total amount of interest to be paid on the bonds to be refunded. Provides for this calculation.

41. Permits the costs of issuing refunding bonds to be paid from refunding bond proceeds.

42. Authorizes districts to borrow monies from or receive financial assistance from the Water Infrastructure Finance Authority of Arizona (WIFA). Specifies that monies or assistance received from the WIFA may be used to construct or improve a wastewater treatment facility, sewer collection system or nonpoint source project, or any combination thereof.

43. Requires the district board of directors to notice all real property owners within the district of the board's intent to levy assessments to repay the WIFA.

44. Specifies district loan repayment agreements are payable from revenues authorized by law to be pledged to repay long-term indebtedness and may be secured by assessments and/or by a pledge of revenues. Loans secured by assessments will be treated as a series of bonds.

45. Allows loan repayment agreements to include covenants concerning the operation of the system, the setting of rates and provisions for the appointment of a receiver to take charge of and operate the system if the district defaults on a loan.

46. Requires districts to agree to pay the WIFA's costs of issuing bonds or otherwise borrowing from the WIFA. Pursuant to a loan agreement, districts may be required to pay: interest any WIFA loans; its proportionate share of expenses of administering the Clean Water Revolving Fund, and other financing and loan administration fees approved by the WIFA. Costs may be included in the assessment and revenue amounts pledged to repay the loan.

47. Stipulates that loan agreements are incontestable after the loan is funded by the WIFA.

48. Permits a district to employ or contract for the services of attorneys, accountants, financial consultants and other experts to perform services with respect to the loan repayment agreement. Stipulates that these costs are incidental and shall be included in any assessment of the district.

49. Authorizes a district to enter into a written agreement to join any person or entity to form a "multi-jurisdictional entity." The written agreement shall establish the duties and responsibilities of each party and state the costs to be borne by the parties. Liability limits established in the agreement stand without regard to the insolvency, bankruptcy or other limitation of the parties.

50. Permits a multi-jurisdictional entity to enter into a loan repayment agreement with the WIFA.

Domestic Water Improvement Districts

51. Allows domestic water improvement districts to be formed and expand whether or not the land proposed to be included is contiguous.

52. Stipulates that a domestic water improvement district may be formed to construct a domestic water delivery system.

53. Specifies that if the boundaries of a noncontiguous domestic water improvement district are within six miles of an incorporated city or town, the district must receive consent from the governing body of the city or town to form or expand the district to include the land.

54. Allows a domestic water improvement district to mail notices of a hearing to set water rates.

55. Clarifies that a domestic water improvement district obligates its revenues through a resolution, contract or by inclusion in any bonds issued by the district.

56. Allows revenues to be obligated to purchase or improve the system or pay bonds or other contractual obligations issued or incurred for the purpose of purchasing or improving the system.

57. Provides that all revenue obligations established by a domestic water improvement district are binding until the obligations are fulfilled.

58. Allows, rather than requires, the county board of supervisors to review all financial transactions of the board of directors of a domestic water improvement district.


59. Provides necessary definitions.

60. Makes numerous technical changes.

61. States that the provisions of this act do not apply to any actions taken before the effective date of the act. Applies the provisions of this act, after the effective date, to all county improvement districts formed before or after the effective date.

62. Provides for a general effective date.

Amendments Adopted by Committee

1. Removes 20% increase in the total amount of taxes a district may levy upon all property in the district to purchase property.

2. Changes the review of all financial transactions of a board of directors of a domestic water improvement district by the county board of supervisors.

3. Makes changes regarding the mailing of rate setting notices.

4. Includes the State Land Commissioner in reference to the inclusion of state trust lands in county improvement districts.

Amendments Adopted by Committee of the Whole

1. Reinserts language regarding the publishing of notices.

2. Provides for district mailings that are returned as "undeliverable."

Amendments Adopted by Conference Committee

1. Adds provisions relating to district receipt of financial assistance from the Water Infrastructure Finance Authority.

2. Allows for the creation of multi-jurisdictional entities.

3. Provides for the purchase of interest in any statutorily authorized improvement by districts in counties with populations of less than 200,000 persons.

House Action Senate Action

GOVOP 2/19/97 DP 9-0-0-2 GOV 3/24/97 DPA 7-0-0

Third Read 3/5/97 57-1-2-0 Third Read 4/18/97 26-4-0-0

Final Read 4/21/97 52-5-3-0 Final Read 4/21/97 24-5-1

Signed by Governor 4/29/97

Chapter 237

Prepared by Senate Staff

May 8, 1997

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