Assigned to GOV                                                                                                        AS PASSED BY THE SENATE

ARIZONA STATE SENATE

Forty-seventh Legislature, Second Regular Session

AMENDED

FACT SHEET FOR H.B. 2236

community facilities districts; counties

Purpose

            Removes the school financing limitation on county-formed community facilities districts and authorizes these districts to levy property taxes and issue general obligation and revenue bonds. 

Background

            A community facilities district (CFD) is usually created to fill a need to enable infrastructures to be provided in an area that might otherwise be limited from receiving these capital improvements for various reasons.  A CFD may be formed            in a municipality for the purpose of public infrastructure improvements such as sewage and water systems, streets and roadways, parks and recreation facilities, public buildings, public safety and fire protection facilities, and school sites and facilities.  The formation of a district creates a funding stream to pay for the desired or needed infrastructure by placing the responsibility on those directly benefiting from that capital improvement.

            Municipal-formed CFD public infrastructure projects may be financed through the sale of general obligation (GO) bonds, revenue bonds, annual tax levies, user fees and special assessments.  GO bonds are secured by the taxing power of the governing body, and an annual property tax is usually collected on land within the CFD to repay the bonds.  A CFD may only issue GO bonds if the bonds are approved at an election of the landowners. 

            In 1996, the Legislature authorized counties to form CFDs for the sole purpose of financing the acquisition, construction or renovation of school facilities. CFDs formed by a county are prohibited from levying a property tax or issuing GO bonds.

            There is no anticipated fiscal impact to the state General Fund associated with this legislation.

Provisions

1. Expands the authority of county-formed CFDs to finance specified public infrastructure improvements except school facilities.

2. Prohibits municipal-formed CFDs from financing the acquisition, construction or renovation of school facilities.

3. Authorizes a county-formed CFD to levy a property tax, call GO bond elections and issue GO bonds and revenue bonds.

4. Requires the petition to form a county-formed CFD to have signatures of 100 percent of the property owners in the district and the CFD must be approved by the county and surrounding municipalities if the CFD is proposed to be formed in a county island.

5. Allows the county to waive posting, publication, mailing, notice, hearing and landowner election requirements if the petition is signed by 100 percent of the property owners and requires the county to form the CFD on receipt of the petition.

6. Requires the county to declare the district formed upon receipt of the required petitions and after approval by an election of 100 percent of the electors.

7. Makes technical changes.

8. Becomes effective on the general effective date.

Amendments Adopted by Committee

· Expands the petition requirement to include approval by the county and the surrounding city or town if the CFD is proposed to be in a county island.

Amendments Adopted by Committee of the Whole

· Removes the ability of municipal-owned and county-formed CFDs to finance the acquisition, construction or renovation of school facilities.

House Action Senate Action

CMMA            2/14/06   DPA    9-0-2                       GOV               3/9/06     DPA     6-0-1

3^rd Read            3/2/06               49-4-7                        3rd Read         3/28/06                23-6-0

Prepared by Senate Research

April 5, 2006

NS/ac