Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
2016-05-09-minutes-public-works-study-session
O��CpSCpOFS L XITTFTA5 COUNTY 3PKX=Xqrg9% co DEPARTMENT OF PUBLIC WORKS Mark Cook, Director STUDY SESSION MINUTES May 9, 2016 THOSE PRESENT: Obie O'Brien, Paul Jewell, Laura Osiadacz (BOCC), Mark Cook, Candie Leader (DPW), Doc Hansen, Steph Mifflin, Angela San Filippo, Mike Flory (CDS) GUESTS PRESENT: Chad Bala DISCUSSION OF ROAD IMPROVEMENT DISTRICTS: Mark Cook reported that he sent some briefings over to the Board for review for Road Improvement Districts. He stated that the Department received a petition signed by about 30 property owners of Biltmore Drive. There are two processes in the State of Washington where RID's formulated either through the petition process or by Resolution by the Board of County Commissioners. This is the first petition he has received as the new Public Works Director. If we elect to move forward then we should pull the Prosecuting Attorney's Office in for some consultation to formulate the process to be used. The statutes are available and the RCW's are as well. Mark will forward those over to the BOCC. The Legislature refers to bonds and warrants but we are proposing to fund the RID construction of Biltmore at 3% interest for 10 years out of the Public Works reserve fund. In a similar process other departments are to be included which are the Auditor's, Treasurer's and perhaps the Clerk's Office. The other two may go to election. The first being Wiehl Road with approximately 64 parcels involved. Mark stated he spoke with about 32 of those residents. What staff isn't sure about is what to do with the remaining property owners. There will be costs associated in the election and voting of the RID. The last RID is a 3 property owner RID with two residents and a commercial operation. The commercial operation is a marijuana grow operation. The traffic from that operation is causing some wear on the road. The grow operation has elected to not participate in the RID and the two remaining property owners would like to see the Resolution and election and force the last property owner to participate. All these issues will need to be worked out prior to formation. Biltmore Road could be completed this season. Wiehl Road will not be completed 411 N. Ruby, Suite #1 TEL (509) 962-7523 Ellensburg,'NA 98926 FAX (509) 962-7663 Dept. of Public Works Page 2 Board Direction: due to the unknowns of the remaining property owners and that process will take months. The Badger Pocket RID could be done quickly since there is only one property owner unwilling to participate. Discussion was held. Commissioner Jewell inquired how the election process works. Mark responded that a Public Hearing can be held in lieu of the election. Commissioner Jewell asked why the petition method could not be used with the Badger Pocket property owners with 60% in favor. Further discussion was held. Mark committed to mapping out the timelines and process and come back to the BOCC with the information. Mark would like to send a request with DPA Cauikins to go over the process of the formations. Discussion on public benefit will also need to be addressed. No Direction Other Business: Mark stated that National Highway Institute is offering a Sediment Transport Seminar. It's $1,000.00 with only 10 seats available. There is also a Bridge Scour class that Mark would attend. Mark R. Cook Director of Public Works 411 N. Ruby, Ste. #1 TEL (509) 962-7523 Ellensburg, WA 98926 FAX (509) 962-7663 KITTITAS COUNTY COMMISSIONERS REGULAR MEETING PUBLIC WORKS STUDY SESSION MONDAY, MAY 09, 2016 1:30 PM Commissioners' Auditorium 205 West 5th Room 109 - Ellensburg 1. Call to Order 2. Discussion of Road Improvement Districts 3. Other business 4. Adjourn Created on 5!612016 9:54:17 AM KITTITAS COUNTY DEPARTMENT OF PUBLIC WORKS PUBLIC WORKS — BOARD OF COUNTY COMMISSIONERS WORK SESSION STAFF REPORT WORK SESSION DATE: May 9, 2016 TOPIC: Road Improvement Districts ACTION REQUESTED: Authorize DPA Services LEAD STAFF: Mark R. Cook RECOMMENDATION: Authorize Deputy Prosecuting Attorney Services defining the Road Improvement District process for use in Kittitas County. BACKGROUND: During the past year, Public Works has reached out to three separate communities discussing transportation improvements funded by area residents. In all cases, poorly maintained private roads are failing to serve resident needs. Two communities in the Pocket and in Upper County are anxious to proceed. The community using Biltmore Drive has submitted a signed petition to formulate an RID. A second group of owners is requesting support using the resolution and election process to set up an RID. In this case, three owners are using a poorly maintained roadway for parcel access. Two owners desire improving the roadway but the third owner (a commercial use) is refusing to participate. The election process should draw the reluctant third owner in for fair share contribution. A third community in Upper County (Wiehl Road) desires improving Wiehl Road from Red Bridge Road to Loping Lane. The improvement will eliminate the final temporary occupancy permits remaining for a handful of area residents. DISCUSSION: Biltmore has 100 percent commitment and Public Works is scheduling the improvement for the end of the 2016 Chip Seal program. The other Badger Pocket Road is at the end of Upper Badger Pocket Road. The commercial operation is placing numerous trips daily on the road providing access to its employees. Initial discussions with the commercial operator were promising but attitudes have now declined and Public Works has been informed that the operation is refusing to participate. An elective process is expected to force fair share contribution from the commercial operator. Page 1 of 5 PUBLIC WORKS BOARD OF COUNTY COMMISSIONERS WORK SESSION STAFF REPORT Several months ago, Public Works met with 32 residents residing on Loping Lane and Wiehl Road. A vast majority of owners expressed interest in pursuing an RID. We have prepared a detailed cost estimate and provided it recently to the community. Wiehl Road serves approximately 64 total lots. The community is now deciding how best to proceed. We expect that an elective process is the best course of action for the permanent residents served by Wiehl Road. Public Works anticipates another Teanaway Grange meeting in the near future discussing the best path forward with area residents. FISCAL IMPACTS: Public Works proposes constructing all three proposai using financial reserves. RID costs are being run at an interest rate of three (3) percent. The target cost recovery period for all three proposals in ten (10) years. ATTACHMENTS: EXHIBIT 1: BILTMORE DRIVE PETITION FOR RID EXHIBIT 2: COST ESTIMATE FOR WIEHL ROAD EXHIBIT 3: PRELIMINARY COST EVALUATION FOR DOUGLAS AND BROWN Page 2 of 5 PUBLIC WORKS BOARD OF COUNTY COMMISSIONERS WORK SESSION STAFF REPORT EXHIBIT 1: BILTMORE DRIVE PETITION FOR RID Page 3 of PUBLIC WORKS BOARD OF COUNTY COMMISSIONERS WORK SESSION STAFF REPORT � - 1 16 1 -?k Ah) i A "ie Ile- fA PETITION TO CREATE A KITTITAS COUNTY ROAD IMPROVEMENT DISTRICT PURSUEANTTO THE PROCEEDURES OF RCW 36.88.050 Tentatively Designated as the VANDERBILT COUNTRY ESTATES ROAD DISTRICT Pursuant to the procedures as spelled out in Chapter 36.88.050 RCW the following signatories request that the Kittitas County Commission establish a County Road Improvement District known tentatively known as the Vanderbilt Estates Road District, road district number to be assigned upon final establishment. The proposed road district Is located in Township 16 North, Range 19 East of Kittitas County specifically for improvements associated with Biltmore Drive located in or adjacent to the recorded plat of Vanderbilt Country Estates off of public road Kaynor. The road district boundaries would be composed of 30 individual recorded lots or parcels as shown on the attached district boundaries map. The intent of the District Is to prepare and chip seal pave approximately one mile of gravel private road with the application of three chip seal lifts, and to provide for an improved paved turn -around for Kaynor Road, a County public road currently lacking an appropriate turn- around. In return for the community provision of a turn -around for Kaynor Road, the County would provide snowplowing to the end of pavement. A preliminary cost estimate provided by the Kittitas County Public Works Department for the preparation and improvements is $100,000. As proposed the cost would be proportioned on an equal share basis between each of the 30 parcels with a district payback period of 10 years. Estimated annual property tax assessment including interest for the ten year period would be $371 per lot. Petition signatures represent according to the records of the county auditor an aggregate amount of a majority of the lineal frontage upon the improvement to be made and of the area within the limits of the assessment district to be created. It is understood that property owners may add or withdraw their names from the petition at any time prior to five o'clock p.m. of the day before the official County Commission hearing and that any effected property owner will receive a written notice of the Bearing from the County at least 15 days before the hearing. oCIAAWC� signature Print Name t-, Okw.0 Z_©o`v-.yLe_., (24 C kx Ptce_/ Print Mame Print Name &�vle�2 Signatur Signature Orol� —72i Signature Uj 041— -11A Signature Sig ature Si ure ���' YI'.11FIIY0 Signature Signature agro/ Print Name Print Name L u 1.5 Print Name w aam M Print Name Print Name K�I� .S!s� Print Name Print Name Print Name ie Print Name Print Name 4o6ff Print Name Print Name Print Name Signature Print Name PETITION TO CREATE A KITTITAS COUNTY ROAD IMPROVEMENT DISTRICT PURSUE -ANT TO THE PROCEEDURES OF RCW 36.88.050 Tentatively Designated as the VANDERBILT COUNTRY ESTATES ROAD DJSMCT Pursuant to the procedures as spelled out to Chapter 36.88.050 RCW the following signatories request that the Kittitas County Commission establish a County Road Improvement District known tentatively known as the vanderbitt Estates Road District, road district number to be assigned upon final establishment. The proposed road district is located in Township 16 North, Range 39 East of I ttitas County specifically for improvements associated with Biltmore Drive located in or adjacent to the recorded plat of Vanderbilt Country Estates off of public road Kaynor. The road district boundaries would be composed of 30 individual recorded lots of parcels as shown on the attached district boundaries map. The intent of the District Is to prepare and chip seal pave approximately one mile of gravel private road with the application of three chip seal lifts, and to provide for an Improved paved tum -around for Kaynor Road, a County public road currently lacking an appropriate turn- around. in return for the community provision of a turn -around for Kaynor Road, the County would provide snowplowing to the end of pavement. A preliminary cost estimate provided by the Kirttitas County Public Works Department for the preparation and Improvements is $100,000. As proposed the cost would be. proportioned on an equal share basis between each of the 30 parcels whit a district payback period of 10 years. Estimated annual property tax assessment including interest for the ten year period would be $371 per lot. petition signatures represer!t according to the records of the county auditor af<aggregate amount of a majority of the lineal frontage upon the impmvernnt to be made and of the area within the limits of the assessment district to be created. it is understood that property owners may add or withdraw their names from the .petition at any time prior to five o'clock p.m. of the day before the official County Commission hearing and that any effected property owner will rec a w ttten notice ofLLtf hearing, from the County at least 15 days before the hearing. ature Print Name Signature Print Name Signature Print Name �__ PETITION TO CREATE A KITTITA5 COUNTY ROAD IMPROVEMENT DISTRICT FURSUEANT TO THE PROCEEDURES OF RCW 36.88.050 Tentatively Designated as the VANDERBILT COUNTRY ESTATES ROAD DISTRICT Pursuant to the procedures as spelled But in Chapter 35.88.050 RCW the following signatories request that the K ttitas County Commission establish a County Road Improvement District known tentatively known as the Vanderbilt Estates Road District, road district number to be assigned upon final estabMment. The proposed road district is located in Township 16 North, Range 19 East of Kittitas County spedfically for Improvements associated with Biltmore Drive located in or adjacent to the recorded piat of Vanderbilt Country Estates off of public road Kaynor. The road district boundaries would be composed of 30 individual recorded lots or parcels as shown on the attached district boundaries map. The latent of the District is to prepare and chip s-eal pave approximately one mile of gravel private road with the application of three chip seal lifts, and to provide for an improved paved turn -around for Kaynor Road,,a County pubilc road currently lacking an appropriate turn- around. in return for the community provision of a turn -around for Kaynor Road, the County would provide snowplowing to the end of pavement. A preliminary cost estimate provided by the IC"rttitas County public Works Department for the preparation and improvements is $1001 M. As proposed the cost would be proportioned on an equal share iasis between each of the 30 parcels with a district payback period of 10 years. Estimated annual property tax assessment Including Interest for the ten year period would be $371 per lot. Petition signatures represent according to the records of the county auditor an aggregate amount of a majority of the lineal frontage upon the improvement to be made and of the area within the limits of the assessment district to be created. it is understood that property owners may add or withdraw their names from the petition at any time prior to five o'clock p,rn. of the day before the o'Pficlal County Commission hearing and that any effected property owner will r+eeeNe Often notice of the bearing from the County ffat Ieast ��15 days before the hearing. J'YY�'[�i S ture Print ame 71 467 n c y Alt X r I Ile il Signature Writ Dame Signature Print Name PETITION TO CREATE A KiTTITAS COUNTY ROAD IMPROVEMENT DISTRICT PURSUEANT TO THE PROCEEDURES OF RCW 36.88.050 Tentatively Designated as the VANDERBILT COUNTRY ESTATES ROAD DISTRICT Pursuant to the procedures as spelled out in Chapter 36.88.050 RCW the following signatories request that the Kittitas County Commission establish a County Road Improvement District kn6vn tentatively known as the Vanderbilt Estates Road District, road district number to be assigned upon final establis mtent. The proposed road distr€ct Is located in Towmhlp 16 North, Range 19 East of Kittitas County specifically for Improvements associated with Rlltmore Drive located in or adjacent to the recorded plat of Vanderbilt Country Estates off of public road Kaynor. The road district boundaries would be c cwnposed of 30 Individual recorded lots or parcels as shown on the attached district boundaries map. The intent of the DlstrlCt it, to prepare and thip seal pave appra"cimately one mile of gravel private road with the application of three chip seal lifts, and to prDvide for an Improved paved turn -around for Kaynor Road, a County public road currently lacking an appropriate turn- around. In return for the community provision of a turn -around for Kaynor Road, the County we'uld provide snowplowing to the end of pavement. A preliminary cost estimate provided by the Kittitas County Public Works Department for the preparation and improvements Is $100,000. As proposed the cost would be proportioned on an equal shag basis between each of the 30 parcels with a district payback period of 10 years. Estimated annual property tax assessment Including Interest for the ten year period would be $371 per lot. Pet4lon signatures represent according to the records of the county auditor an aggregate arnount of a majority of the lineal frontage upon the Improvement to be made and of the area Within the limits of the assessment district to be created. It is understood that property owners may add or withdraw their names from the petition at any time prior to fine o'clock p.m. of the day before the official County Commission hearing and that any effected property owner will re lace ice of the Dearing From the County at least 15 days before the fearing. Signature print Name Sture If Print Nance signature Print Name PETITION TO CREATE A KITTiTAS COUNTY ROAD IMPROVEMENT DISTRICT PURSUEANT TO THE PROCEEDURES OF RCW 36.88.050 Tentatively Designated as the VANDERBILT COUNTRY ESTATES ROAD DISTRICT Pursuant to the procedures as spelled out in Chapter 38.88.050 RCW the following signatories request that the Kittitas County Commission establish a County Road Improvement District known tentatively known as the Vanderbilt Estates Road District, road district number to be assigned upon final establishment. The proposed road district is located in Township 16 North, Range 19 East of Kittitas County specifically for Improvements associated with Blitmore Drive located In or adjacent to the recorded plat of Vanderbilt Country Estates off of public road Kaynor. The road district boundaries would be composed of 30 individual recorded lots or parcels as shown on the attached district boundaries reap. The intent of the District is to prepare and chip sea[ pave approximately one mile of gravel private road with the application of three chip seal lifts, and to'provide for an Improved paved turn -around for Kaynor Road, a County public road currently lacking an appropriate turn- around. In return for the community provision of a turn -around for Kaynor Road, the County would provide snowplowing to the end of pavement. A preliminary cost estimate provided by the Klt&as CoUnty Public Works Department for the preparation and improvements is $100,000. As proposed the cost would be proportioned on an equal share basis between each of the 30 parcels with a district payback period of 10 years. Estimated annual property tax assessment including interest for the ten year period would be $371 per lot. Petition signatures represent according to the records of the county auditor an aggregate amount of a majority of the lineal frontage upon the Improvement to be made and of the area within the limits of the assessment district to be created. it is understood that property owners may add or withdraw their names from the petition at any time prier to five o'clock p.m. of the day before the official County Commission hearing and that any effected property owner will receiv ritterrKotice of the hearing from the County at least 15 days before the hearing. Signa Print Na Jk M� nZ r ftit SF�na re Print Name Signature Print Name PETITION TO CREATE A KITTITAS COUNTY ROAD IMPROVEMENT DISTRICT PURSUEANT TO THE PROCEEDURES OF RCW 36.88050 Tentatively Designated as the VANDERBILT COUNTRY ESTATES ROAD DISTRICT Pursuant to the procedures as spelled out in Chapter 36.88.060 RCW tl^e following signatories request that the Kittitas County Commission establish a County Road Improvement District known tentatively known as the Vanderbilt Estates Road District, road district number to be assigned upon final establishment. The proposed road district is located in Township 16 North, Range 19 East of Kittitas County specifically for improvements associated with Biltmore Drive located In or adjacent to the recorded plat of Vanderbilt Country Estates off of public road Kaynor. The road district boundaries would be composed of 30 individual recorded lots or parcels as shown on the attached district boundaries map. The intent of the District is to prepare and chip seal pave approximately one mile of gravel private road with the application of three chip seal lifts, and to provide for an improved paved turn -around for Kaynor Road, a County public road currently lacking -an approprlate turn- aroynd. In return for the community provision of a turn -around for Kaynor Road, the County would provide snowplowing to the end of pavement. A preliminary cost estimate provided by the Kittitas County Public Works Department for the preparation and improvements is $100,000. As }proposed the cost would be proportioned an an equal share basis between each of the 30 parcels with a district payback period of 10 years. Estimated annual property tax assessment including interest for the ten year period would be $371 per lot. Petition signatures represent according to the records of the county auditor an aggregate amount of a majorityof the lineal frontage upon the improvement to be made and of the area within the limits of the assessment district to be created. it is understood that property owners may add or withdraw their names from the petition at any time prior to five o'clock p.m. of the day before the official County Commission hearing and that any effected property owner will receive a Written notice of the hearing from the County at least 15 days before the hearing. r4✓ultl h"_1 %.2.t i/ -/fit rpt Cit ALQxJ Signature Print Name Signature Signature Print Name Print Name PMON TO A 0111RAN CMJNTY RL] ADM.PWVWrN*z DSTR)CT PURVEANTM-THE PROCEDURES OF RCW 39.88,050 TeWOWeIVDW9OMed9$ft VANURSILT COUNTRY ESTATES ROAD DISTRICT F;AaWWl'JWO-.- CLAW*.% ftSpilsdobt In -ChoWer WWOWNCWOmfq&-*ing.-.t@ivWdm reh�WtiMt*1 Klift-.ktCcmyCWmh,*ibm amb1th CdUrftV AW Impfa'Mr.lan't D'IftVkt Vand~stotm FW4 Vatrkx, rcAil ak*t mm*grto he RHIWAd UPcW fbW ItamwmLft � pmpw&d mad dlfstrkt Is Immod in'mmmip 16-mwth, 04mga ig EZA of raittas coumv xW4f.;,r,NRf for in p. romwents am;mbWd WM egb%am WOO $Do ltvd In of ad] to IM rmwded plat OfVfirAWbft (bunny fitn" at? at puM.- Food Owws Thu mW dLnft Pif--W *Wkt *�04WIQO .fW krlWW *9 thit abtrmt is W #Wft ad C* " Pove appmmmate.7yom Ne of Fawl prwaW rL-;,3 vM ate vWWation afftu ft seg 4t5, and to proWds ?gar an kMraved pawed Ww.amufid .-v Ki ynx ftvd, a ComLy VuMi; toad rairmn* *O�g an oppmriale lomr- ST4-MOL In roan tar the om=r&v KoWiAm of a tWfl -knound NO KAWMX ft4 ftQwttV %VUl9trP4V!* VM#PbWlF4tU On- MW O'PMMMWR' A Pn*nir" amt mWmiae Proveed by U a MW-CmmvPubk Waft Umm Unm4t fair We vviwaUm and ftProvmwts ti ii , �i O -m mmmoftwo,mmad be pyi rtl d a an gseaF erre sSls be ec t each 4"ftarcch %ft at dstfldpwb3t q*ftlx(WlOvWm BWM*m0"UW PrOPOW to I.. IndudhigtriMr ttOrtlsr�ii ym pMoi wauld ba S371 pvrlvt- W01A V* ftft OftM at &Wlct to be aemmL ri is umlmmmd tha poupem oww-. nays at *d"mw *" meaft Wom the pian at artyt;tm priorto five edimkpmi pF*a uLig,befto tf* officbl County rmm**&datT karft und that a6y aftMd prop" Omer Of McmWee wftm mc&e aFtbq homing fmm the ChumV at kmt 15 dqs b0cm the hmMq. PETITION TO CREATE A KITTITAS COUNTY ROAD IMPROVEMENT DISTRICT PURSUEANTTO THE PROCEEDURES OF RCW 36.88.050 Tentatively Designated as the VANDERBILT COUNTRY ESTATES ROAD DISTRICT Pursuant to the procedures as spelled out in Chapter 36.88.050 RCW the fallowing signatories request that the Kittitas County Commission establish a County Road Improvement District known tentatively known as the Vanderbilt Estates Road District, road district number to be assigned upon final establishment. The proposed road district is located in Township 16 Forth, Range 19r East of Kittitas County specifically for improvements associatedwith Biltmore Drive located in or adjacent to the recorded plat of Vanderbilt Country Estates off of public road Kaynor. The road district boundaries would be composed of 30 individual recorded lots or parcels as shown on the attached district boundaries map.. The intent of the District is to prepare and chip seal pave approximately one mile of gravel private road with the application of three chip seal lifts, and to provide for an improved paved turn -around for Kaynor Road, a County public road currently lacking an appropriate turn- around. In return forthe community provision of a turn -around for Kaynor Road, the County would provide snowplowing to the end of pavement. A preliminary cost estimate provided by the Kittitas County Public Works Department for the preparation and improvements is $100,000. As proposed the cost would be proportioned on an equal share basis between each of the 30 parcels with a district payback period of 10 years. Estimated annual property tax assessment including interest for the ten year period would be $371 per lot. Petition signatures represent according to the records of the county auditor an aggregate amount of a majority of the lineal frontage upon the improvement to be made and of the area within the limits of the assessment district to be created. It is understood that property owners may add or withdraw their names from the -petition at any time prior to five o'clock p.m. of -the day. before the'official County Commission hearing and that any effected property owner will receive a written notice of the hearing from the County at least 15 days before the hearing. ze_Z� - — aIVAL.�q Q "46-lz-L Signature Print Name Signature Signature Print Name Print Name EXHIBIT 2: COST ESTIMATE FOR WIEHL ROAD Page 4of: PUBLIC WORKS BOARD OF COUNTY COMMISSIONERS WORK SESSION STAFF REPORT ASSUMPTIONS WEIHL ROAD RID PRELIMINARY COST ESTIMATE 2 -May -16 PROJECT: IMPROVE DRAINAGE AND SURFACE APPROXIMATELY 0.25 MILES OF WEIHL ROAD FROM RED BRIDGE ROAD TO LOPING LANE UPDATED MAY 02, 2016 ITEM [TEM DESCRIPTION_ UNIT UNIT PRICE QUANTITY PRICE 1 MOBILIZATION LS $ 10,000.00 1 $ 10,000.00 2 SHAPE D[TCHLINE LF $ 3.00 1320 $ 3,950,00 3 INSTALL QUARRY SPALLS LF $ 1270 1320 $ 15,840.00 4 INSTALL 18 INCH CMP LF $ 60.D0 60 $ 3,600.00 5 GRADE ROADWAY LF $ 3.00 1320 $ 3,990.00 6 INSTALL CSBC TON $ 30.00 BB0 $ 25,800.00 7 INSTALL CSTC TON $ 35.00 322 $ 11,270,D0 8 MISC EMBANKMENT SF $ 0.50 10000 $ 5,000.00 9 THREE SHOT BST MILE $300,D00.00 0.25 $ 75,000.00 10 CONSTRUCTION MANAGEMENT LS $ 12,D00.00 1 $ 12,000.90 11 CONSTRUCTION ADMINISTRATION LS $ 1,650.00 1 $ 1,650,00 12 TRAFFIC CONTROL LS $ 3,000.00 1 $ 3,000.00 PRELIMINARY ESTIMATE $ 171,080.00 FOR PLANNING PURPOSES ONLY: ASSUME ALL LOTS EQUAL SHARE ASSUME 64 TOTAL LOTS ASSUME 3% INTEREST RATE ASSUME FIRST PAYMENT AT THE START OF THE FIRST YEAR TEN YEAR RECOVERY PERIOD PER LOTASSESSMENT IS: $19,472164 = $304.261YEAR EXHIBIT 3; PRELIMINARY COST EVALUATION FOR DOUGLAS AND BROWN Page 5 of PUBLIC WORKS BOARD OF COUNTY COMMISSIONERS WORK SESSION STAFF REPORT !Unitas County PL*Ar Works Doug asl6mwtdLNe Gardens FUD Participant Shore tMdthl Fr) Shots Len Gastlt t Percent Cas: Period Rate M Payment MODELI Brown 4 20 0.2 353 576 5,303 20 3 S 346.03 DDugiss 4 20 0.2 350 $76 55,320 20 3 $ 346.0 Los Gardena 18 20 O.B 700 876 $42,660 20 3 S 2.777.00 Lire Gardena 20 20 1 700 576 553,200 20 3 S 3A72t10 $6y49M SUM Brawn 350 $78 326,556 20 3 $ 1,730.00 MODEL2 Douglas 850 176 328.600 20 3 $ 1,730.00 Ufa Gardens $76 $0 20 3 S Life Gardena 700 $75 $53.200 20 3 8 3,47200 53.472.00 SUM Brown 70013 233 576 $17,662.08 20 3 3 1.152.00 MODEL3 Dauu�u 70013 233 316 517,708.00 20 3 $ 1,152.00 lfle Gardens 70013 233 $76 317.708.00 20 3 S 1,162.00 Life Gardena 700 700 $TB $53,20Q00 20 3 S 3,472.00 $4,624,00 SUM Local and Road Improvement Districts Manual for Washington State REPORT NUARDER 59 Revised Municipal Research and Services Center October 2909 Washington State Chapter American Public Works Associat;on Local and Road Improvement Districts Manual for Washington State REPORT NUMBER 55 Revised October 2009 • $30 A�KIW RIY�1WRRf /1�P�1eM riRftigton State Chapter Municipal Research and Services Center Washington State Chapter American Public Works Association Copyright © 2009 by the Municipal Research and Services Center of Washington. All rights reserved. Except as permitted under the Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means or stored in a database or retrieval system without the prior written permission of the publisher; however, governmental entities in the state of Washington are granted permission to reproduce and distribute th,s publication for officiai use. Municipal Research and Services Center 2601 4th Avenue, Suite 800 Seattle, WA 98121-1280 '�. www.rnrsc.org mrsc@mrsc.org 206.625.1300 n3+�..eCdW3 t10n ... ..... LIDs ar.d Other Strange Creatures "Are We Having Fun Yet?" .. . When the Natives Are Restless Legal Surremary 9 Checklist(Outiine of Local improvement District Procedures in Washington, Cities ... 17 Procadui�i.as ... . + +.. + , . _ _ 23 Introduction/Flow Chart .. .. + , ... ... 23 Pre -Formation Activities .... _ ........ , , . .. , .. ......... • ... + . 23 Formation Process ......... .... . ... +.... r , . , .. , . 24 Designs, Construction, and Interim Financing . + ...... , . .. — 31 LID Closeout Process . . + .. 32 Final Assessment Roll and Hearing ....... 33 Post Assessment Roll Hearing Actions and Appeals r . 35 flinanoing L1111a introduction .... Financing LIDs i►fiS' s�rG":7J7�'s Methedia Introduction ............ . LIDIRID Special Benefit/Proportionate Assessment Study Summary of LID Special Benefit Analysis . . Mathematical Methods 9uW11c Hearings Introduction ................ Making Your Record — Orchestration for Litigation The Formation Hearing ......... The Final Assessment. Roll Hearing Conclusion ............ Use of Hearings Examiner 42 42 42 52 52 52 56 58 59 59 59 60 61 73 73 R# pz Introduction .... Formation Procedures Hearing Process and Steps to Follow When Creating or Terminating a Proposed RID . After RID Formation and on to the Bond Sale ... ...... .... L1.Q Programs -nd E„- b-aNiMRos LID/RID Programs/Cooperative Improvement Programs ..... Latecomers Agreements .......... . . Sidewalk Statutes ................... parking and Business Improvement Areas A-ppereiicas An extensive set of appendices to the Sixth Edition is online at http://www.mrsc.org/Subjects/PubWorksAidpg.espx 74 74 75 79 81 83 83 83 84 85 Contributors Rod P. Kasegame 777 108th Avenue Nc, Suite 1900, Bellevue. WA 98004 Attorney (425) 455-1234 Inslee, Best, Doezie 6 Ryder, P.S. rkaseguma@insleebest.com Rod Kaseguma has advised and represented Washington cities and special purpose districts for over 32 years. He served as an assistant city attorney for the City of Seattlefrom 1977 through 1985, focusing on general municipal law. From 1985 through 1989, he was ar associate with Foster Pepper €+ Shefelman, focusing on municipal finance, special purpose district representation and LID formation, financing and proceedings. While at Foster Pepper 6 Shefelman, Rod prepared a comprehensive paper/manual regarding LID assessment delinquencies, liens and foreclosures, and presented it to the Association of Washington Cities and the Washington Association of Sewer Districts. Rod joined Inslee, Best, Doezie 8 Hyder, P.S., in 1990. Since joining the firm, he has served as City Attorney and special City Attorney for several cities, and as general counsel and special legal counsel for water -sewer districts, fire districts, a joint operation of fire districts and cities, a ferry district, a flood district and a 911 -call center. He is legal counsel to the Washington Association of Sewer and Water Districts. A significant portion of his work for municipalities has involved all aspects of LID's, ULID's and RID's, including formation, financing, special benefit studies, methods of assessment, deferral of assessments, construction of improvements, levying and collection of assessments and appealsfrom final assessment rolls. Recently, Rod worked on an LID having noncontiguous units of improvements and areas, which is an LID that is authorized but infrequently used. P. Slaphen DiJello 1111 Third Avenue, Seattle, WA 98101-3299 Attorney (206) 447-8971 Foster Pepper Ft Shefelman PLLC dijup@foster.com P. Stephen DiJO% a partner in the Seattle office of Foster Pepper PLLC ("FP"), focuses his practice on litigation involving majorinfrastructure projects. Before joining FP in 1986, Mr. DiJulio was a Seattle Assistant City Attorney. He served in that capacity from 1977 through 1982. Mr. Di.:ulio was the City Attorney for the City of Kent from 1982 through 1986, serving additionally as City Administrator in 1986. His valuation work for local government has included such diverse public facilities as wastewater treatment plants, solid waste handling facilities, city halls, golf courses and cemeteries, as well as operating utility systems and franchises. His extensive experience in eminent domain and valuation proceedings includes representation of large and small jurisdictions. See Wong v. City of Long Beach, 119 Wn. App. 628 (2004); (successful trail corridor acquisition); CentralPugetSoundRegionalTransitAuthorityv.Miller 12B P.3d 588 (2006); and, NTKv Seattle Popular Monora#Autharity, 155 Wn.2d 612 (2005). Mr. DUulio has served as special litigation counsai fcr the City of Lynnwood in contested proceedings in federal and state courts over development of the 196th Street Interchange at 1-5. Mr. DiJu!io represented the City in acquisition of the main, 12 -acre parcel necessary for the freeway interchange construction. He also represented the City in the extensive Local Improvement District va!uation proceedings proVding necessary funding for that project. Similarly, the City of Kent's extensive transportation corridor financing programs (LIDS) were represented by Mr. Dklulio, and were affirmed in little Deli Marts, Inc. v City of Kent, 108 Wn. App. 1, 32 P.3d 286 (2001); rev. denied 145 Wn.2d 1030 (2002) and in Tiffany Family Trust v. City of Kent, 119 Wn. App 262, 77 P.3d 354 (2003); affirmed 155 Wash.2d 225,119 P.3d 325 (2005). He represented the City of Seattle on the recently successfu! South Lake Union Streetcar LID. For the Seattle Monorail Project, Mr. DiJulio was integral to the prccess for valuing air rights as well as the assessment of damages relating to the proximity of elevated transit. He has managed relocation assistance contracts and has successfully managed both claims for and opposition to claims for relocation benefits. And, with Professor Richard Settle, Mr, DiJulio was successful in redefining the law regarding condemnation of private ways of necessity in ✓Nagle v. Williamson, 51 Wn. App. 312, 754 P.2d 684 (1988) and 61 Wn. App. 474, 810 P.2d 1372 (1991). Mr. DiJulio has extensive trial experience in environmental and administrative actions. He served as Special Deputy Prosecuting Attorney in the eight lawsuits involving the Klickitat County solid waste management program, and the development of the Roosevelt Regional Landfill. See, e.g., KlickitatCitizens v. KlickitatCounty, 122 Wn.2d 619 (1993); Waste Management v. Clark County, 115 Wn.2d 74 (1990) (counsel to Washington State Association of Counties), He successfully defended King County's solid waste program in Rabanco v. 16ng County, 125 Wn. App. 794 (2005), including the management of the process forvaluation of the County's Cedar Hills Landfill, and lease rates relating to that use of County property by a County department. He regularly represents local government in litigation over constitutional disputes and annexation. He successfully argued on behalf of Moses Lake before the Supreme Court in defense of cities' petition annexation authority, Grant County Fire District No. 5v. CityofMoses Lake, 150 Wn.2d 791 (2004). In Brower v. State, 137 Wn.2d 44 (1998) he represented the Seattle Seahawks in defense of a state-wide referendum election supporting development of Qwest Field. Mr. DiJulio regularly represents associations of municipalities, including the Association of Washington Cities, Washington State Association of Counties and the Washington Fire Commissioners Association. He is a lecturer at the University of Washington's Evans Graduate School of Public Affairs, John W. Carplita, P.E. 2601 Fourth Avenue, Suite 800, Seattle, WA 98121-1280 Public World Consultant (206) 625-1300 Municipal Research and Services Center of Washington jcarpita@mrsc,org John Carpita joined MRSC in January 1996. He has BS and MS degrees in Civil Engineering from Montana State University. A registered professional engineer since 1972, he is currently registered in Washington. John has had a widely varied 40 -year career as a consultant, county engineer, city engineerand project manager. Hewas project managerfortwo large roadway and bridge improvement projects with the City of Issaquah combining TIB funds, FHWA funds and local improvement districts. With MRSC, .John is a resource for engineering design, contract document preparation, construction contract issues, local improvement districts, sewer, water, storm drainage and solid waste issues, and resource conservation. Steve Gaidos 25519 SE 159th Street, Issaquah, WA, 98027 Manager (425) 392-9322 Steve Gaidos Consulting. LLC gaidosconsulting@earthlink.net Steve, a native of Washington, has provided f `:r:ancia! advisory and underwriting services for the municipalities of the state of Washington and the northwest for over 30 years. During his career, he has arranged over $120 million of local im provement district financings for cities, counties, and special purpose districts and has achieved recognition as a leader in the area of assessment backed financing. In addition, he has served as advisor or investment banker for over $3 b1lion in other forms of financing for municipa'.ities of the Northwest, including cities, counties, hospital districts, ports, housing authorities and special purpose districts. He formed his own financial advisory firm in 1999 to concentrate his services on his primary client base of cities and counties. Steve is a member of Washington Finance Officers Association (WFOA), Association of Washington Cities (AWC), and the Washington Municipal Treasurers Association (WMTA) for all of which he has been a frequent presenter at conventions and seminars. He has also often been a panel member at conventions and seminars on LID financing of WMTA, WFOA, AWC and of the Municipal Research and Services Center (MRSC) and APWA LID Committee presenting LID seminars for cities at various locations around the state. Steve co-authored the LiDIRID Procedures Manual for Washington issuers as an active member of the American Public Works Association LID/RID Subcommittee. He has been asked by the House Local Government Committee to serve as a member of the Legislative Drafting Committee for local improvement district legislation to give the investment market prospective to the legislative drafting effort. In addition, he has been asked to testify before the House and Senate Local Government Committees of the State Legislature at hearings considering the development of new assessment district legislation. Steve is an MBAgraduate of Eastern Michigan University and has held Series 7 General Securities and Series 52 and 53 Municipal Securities licenses. Robert Macaulay 2927 Colby Avenue, Suite 100, Everett, WA 98201 Principal (206) 258-2611 Macaulay 6 Associates, LTD. crmac@macaulayandassociates.com Robert J. Macaulay is the President and co-owner of Macaulay 6 Associates, Ltd., a real estate appraisal and consulting firm. He received the MAI designation from the Appraisal Institute in 1995 and is a Certified Real Estate Appraiser — General Classification with the state of Washington. Mr, Macaulay is also a member of the International Right of Way Association, an approved appraiser and review appraiser with the Washington State Department of Transportation (WSDOT) and serves on the board of the Washington Center for Real Estate Research at Washington State University. Mr. Macaulay's appraisal experience is diverse and includes an emphasis on special benefit/proportionate assessment studies in connection with local improvement districts for a diverse range of municipal clients. Presenting testimony at quasi-judicial public hearings on these projects is also part of his expertise. The firm has extensive experience dating back to 1975 with local improvernent district (LID) special benefit and feasibility studies, including a variety of road improvement, utility and other infrastructure projects. Between 1990 and 2000, in addition to over 30 other feasibility and special benefit studies, almost a dozen major assignments were completed for projects costing from $1.5 to $82 million. Clients included the cities of Bellevue, Bothell, Burien, Issaquah, Lacey, Lake Stevens, Lynnwood, Ocean Shores, Redmand, Spokane, Sumner and Tukwila. Details on individual proiects will be provided upon request. Since2000, major special ben efitlproportionate assessment studies have included road improvement projects for the cities of Burien and Covington (2003), a freeway interchange and arterial improvement project for the City of Sumner (2002 to 2004), a utifity local improvement district for the City of Lake Stevens (2005), a city-wide road improvement project for the City of Ocean Shares (2006 to 2007) and a project improving access to the Southcenter regional shopping mall for the City of Tukwila (2006 to 2009). in the last three years (2006 to 2009), economic feasibility studies have been completed xor the cities of Burien, Ferndale, Freeland, Kent, Lynnwood, Ocean Shores, and Yeim. Ralph K. Rodriquez 747 Market Street, Room 620, Tacoma, WA 98402-3769 Senior UD Representative (253) 591-5522 City of Tacoma, Public Works Department rrodrigl@cityoftacoma.erg Ralph Rodriguez has beer involved with Local Improvement Districts since 1982. Since 1997, he has managed the implementation of the vision, strategy, priorities, plans and goals established by the Tacoma City Council, Tacoma Public Utility Board, City Manager and Utilities Director for the Local Improvement District(LID) program in the Public Works DepartmentandTacoma Public Utilities (TPU)Tacoma Power. He provides guidance and support all City of Tacoma departments for their LID program, including, but not limited to; street and alley paving, sidewalks, street lighting, sanitary sewer mains, new underground electrical service as well as the conversion of overhead utilities to underground, as well as "Mega" LIDs creating "Urban Villages" within existing commercial neighborhoods. Ralph also is responsible for the tracking and collecting of fees related to all sanitary sewer connection charges and administering "Utility Reimbursement Agreements" Scott Thomas 910 Cleveland Avenue, Mount Vernon, WA 98273 City Attorney sthomas@ci.burlington.wa.us City of Mount Vernon Scott Thomas' law practice focuses on representing municipal governments, as well as contractors, architects, and engineers in construction related issues. Mr. Thomas has served as an Assistant City Attorney for the City of Tacoma, as City Attorney for the City of Mount Vernon, and currently serves as the City Attorney for the City of Burlington. Mr. Thomas has advised his client's Finance and PublicWorks Departments in numerous matters, including issues concerning the formation of local improvement districts, and the foreclosure of delinquent LID assessments. Mr. Thomas took his B.S. in Architecture from the University of Nebraska in 1983, and his J.D. with honors from the University of Puget Sound School of Law in 1993. Pat Frenkovic, AICP 1026 West Broadway Avenue, Spokane, WA 99260-0170 RID Administrator (509) 477-7405 Spokane County, Public Works Department PFrankovic@spokanecounty.org Pat has 25 years experience with the Spokane County Public Works Department. He is currentlythe RID Administrator with the Spokane County Division of Engineering and Roads (1999 - present). Supervises a three-person section, which includes an Engineering Technician 3 and an Engineering Technician 2, which is responsible for the coordination of all aspects of the RID process; from initial citizen contact through bond sale. The team creates an average of eight to ten new MDs per year. For 19 years (1983 - 1999 and 1978 - 1979) he was a Senior Planner with the Spokane County Division of Planning. The majority of time was spentin the Long Range Planning Section involved with local implementation of the Washington State Growth Management Act (GMA). Pat also spenta number of years with the Current Planning Section responsible for various aspects ofland development review such as zoning and subdivision administration. He worked four years as a Private Consultant (1979 - 1983) with land development consulting firms in Washington and Montana serving as a Plarner or Land Survey Technician on a variety of private and public projects. Pat received a Bachelor of Arts Degree in Urban and Regional Planning from Eastern Washington University in 1976. He achieved his American Institute of Certified Planners (AICD) professional certification in 1996 Gary Huume, PE 1601 Fifth Avenue, Suite 500, Seattle, WA 98101 Senior vice President (206) 505-3400 BHC Consultants, LLC gary.bourne@bhcconsultants.com Gary Bourne, PE, PLS, has been involved in the design and corstruction of public works projects for more than four decades. During his professional experience he has provided consulting assistance from Alaska to California including long range planning, funding acquisition, design„ management, and administration of public works facilities. For the !ast 10 years Gary has specialized in LID funding and has been involved in more than 40 successfully completed LID funded projects over his career. Gary reports thatthe last 10 years of LID work has been more challenging than the first 30 years as the cost of improvements have continued to increase and supplemental funding has diminished and most recently disappeared. Gary's Knowledge and experience as a consulting engineer, surveyor and city engineer provides him with a broad understanding of public works projects from conception to construction. Completed recently was perhaps the most unique LID for the City of Bainbridge Island's South Island Sewer Project which featured a matrix driven assessment process for five distinctly different areas in one LID. Most recently he managed the formation of a $24,000,000 sewer LID for the City of Edgewood completed before the current economic downturn at the peak of property values. This LID will now present new challenges as the final assessment ro!I process wi!I be held with what is anticipated to be depressed property values, Introduction LIN and Other Strange Creatur3s Locai improvement districts (LEDs) and road improvement districts (R IDs) are more American tha n apple pie f but considerably less so than motherhood). They are uniquely American in origin, with roots back to colonial times. Most municipal governments in Washington can use LIDS, with most`y procedural differences distinguishing statutes for individual types of municipal government. Counties can use LEDs for water, sewer and storm sewer facilities, but must use RIDS. for road and street improvements. The following (non-`nclusive) table lists representative municipal governments and their enabling LID statutes: Municipal Government Statute City or Town Ch. 35.43 RCW County Water and/or Sewer County Road Ch. 36.94.220 RCW Ch. 36.88 RCW County Service District Ch. 36.83.050 RCW Water District Ch. 57.16.050 RCW Sewer District Ch. 56.20.010 RCW Fire Protection District Ch. 52.20.010 RCW Irrigation District Ch. 87.28.200 RCW Transportation Benefit District Ch. 36.73.080 RCW Port District Ch. 53.08.050 RCW Park and Recreation District Ch. 36.69.200 RCW By farthe longest body of LID statutes is that of cities and towns in Chapters 35.43 through 35.56 RCW. For this reason and because a number of other enabling statutes referto the city and town statutes, they are used as the basis for the procedures in th?s manual. Not all municipal governments have the flexibility to use both methods (petition and resolution) of LID formation described in the city and town statutes, In any evert, non city/town municipal governments should check their own enabling statutes and by all means involve their agency attorneys in the LID process. Smaller agencies generally use LIDS or RIDs infrequently, mostly for larger projects. Consequently, each new LID/RID becomes a learning experience for the agency, because the person who did the cast LID/RID has retired or moved on. There may be no cure for this, other Local and Road Improvement Districts Manual for Washington State Sixth Edition 1 than developing a good set of LID ordinances, policies and procedures. Some larger agencies, notably Tacoma and Ding and Spokane Counties have proactive programs in which they promote LID/RIDs not only for larger projects, but also for neighborhood improvement projects. See Chapter 8 for descriptions of programs within the state and in other states. Some agencies even have non -LID cooperative improvement programs, also described in Chapter 8. LIDs and RiDs are special assessment districts in wh,ch improvements will specially benefit primarily the property owners in the district. They are created under the sponsorship of a municipal government and are not self governing speciai purpose districts. To the extent and in the manner noted in ;he enabling statutes, they must be approved by both the local government and benefitted property owners, There are other strange creatures that look like LIDS in that assessments are levied against property in a specially benefitted area but whose formation does notfoliow LID or RID statutes. These include latecomer assessments, sidewalk assessments and parking and business improvement areas. See Chapter 8. .,A a We Hauing Fun Yet?" LIDS are more fun than: ...root canals without Novocain ...a three-month visit from your in-laws ...balancing agency budgets... Did you hear about the finance director who, through an extremely astute investment, increased the cash value of the city's investment portfolio by $3 million? When asked how the city would spend this unexpected windfall, he said: "Well, I guess we'll just keep on doing LIDS (Local Improvement Districts) until it's all gone." (John Carpita, Public Works Consultant, Municipal Research and Services Center, Municipal Research News, June 1896) The preceding is more theatrical than actual, as LIDs do not become a drain on a city's general fund unless something goes really wrong. LIDs, however, do have a reputation as difficult to administer, tine consuming, and a public relations disaster waiting to happen. LIDS can play a very positive and powerful role in developing and enhancing your city's infrastructure. ;n this section, we'll examine a few aspects of this uniquely American method of funding infrastructure improvements and how to ensure a worry -free LID financed project. What Is an UD or UUM Local Improvement Districts (LIDs) are a means of assisting benefitting properties in financing needed capital improvements through the formation of special assessment districts. A variation of the LID is the Utility Local Improvement District (ULID). LIDS can play a very positive and powerful role in developing and enhancing your municipality's infrastructure. LIDs permit improvements to befinanced and paid for overa period of time through assessments on the benefitting properties. The difference betwea UL'Ds and LIDs is that utility revenues are pledged to the repayment of the ULID debt, in addition to the assessments on the benefitting properties. State statutes provide that a LID can be converted to a ULID after formation; the reverse is not possib'e. 2 Local and Road Improvement Districts Manua! for Washington State Sixth EdNon LEDs Are Only Financing Tools The most important point to remember about LIDS is that the entire LID process is about financing capital improvements, not constructing there. Nowhere in the LID statutes will you find information on technical feasibility, design, cost estimates, construction management expertise and project closeout requirements. It is assumed that a city will do a superb job of design, estimates and construction managementforthe infrastructure improvement, justasforany other project not financed by a LID. LID processes lead, ultimately, to the sale of bonds to investors and the retirement of those bonds via annual payments by the property owners within a district. Goals of the LID process are twofold: to present a bond portfolio to investors that will entice them to invest at as low a rate of return as possible; and to assess property owners as fairly as possible in relation to the special benefit received. LIDs cost money to administer. Interim financing incurs interest costs. Bond sales involve bond counsel, underwriters and other costs. All these costs must be added to the share of project costs that LID participants are expected to assume. Unless reminded at times through the process, LID participants may unfairly compare project costsfrom other, non -LID projectsto the total cost to be assessed. UDs Are Personal LIDS are very personal. Projects not funded by LIDS may be controversial, cause traffic disruptions and generally make people irate. An LID asks them to not only put up with a project they may not like personally and which may disrupt their lives, but also to pay for it. Even if they are in favor of the project, property owners are going to be more interested in the project and cost issues than they would be if they had no personal financial stake. Involvement of as many potential LID participants as possible in the early stages of a project is a necessity. Informal meetings to discuss potential project scope, benefit area and other concerns will not only give the participants a sense of being involved but may also help a city to determine whether an LID will be feasible. Continued involvement of LID participants via participation in a steering committee during the environmental reviewand design stages will help the project team avoid unnecessary disruption to adjoining property owners. When an LID formation hearing is scheduled, project staff should be very open to individual or group meetings to explain overall LID processes and the type of testimony that is appropriate at the formation hearing. During construction, informal meetings or mailings to each LID participant at least monthly will keep your public relations star shining bright. Be sure to include financial information, good or bad. When the final assessment roll hearing is scheduled, project staff should, again, be very open to individual orgroup meetings to explain the assessment roll and the sortof testimony that is appropriate at the hearing. LIDS Are Complicated and Require a Cast of Thousands LIDS are not the most complicated thing in the world (programming a VCR (remember them?) is much harder), but they do require attention to detail and processes. Checklists and flow charts are very useful, perhaps even essential. Project management software for personal computers Local and Road Improvement Districts Manual for Washington State Sixth Edition 3 is also available. Several agencies have provided MRSC with samples, so there ?s no need to develop your own from scratch. Participants in the LID process include property owners and the general public, public wcrks staff, finance department staff, the city clerk, the mayor, council, city attorney, investment bankers, underwriters, financial advisors, engMeerslarchitects, real estate appraisers and bond counsel. One person on staff must be designated as the LID administrator. This person should not be a department head simply because of the amount of detail work required. The LID administrator can certainly have other duties, bit should not be overloaded. Training is important. Computer skills are essential, particularly in electronic spreadsheets and word processing. Superhuman powers are useful, as leaping over tal: buildings to escape irate property owners may be necessary. Depending on the c::lture of the agency, staff avaiiability and capabilities, it is common to have a consultant be the LID administrator and/or the LID advisorand public relations manager. LIDS Don't Have to Create Hardships Of legitimate concern are low income senior cit;zens and those who are economically disadvantaged. No ccuncilperson wants to vote for a project that will put someone out of their home. Two types of assessment deferrals are referenced in the statutes. Chapter 84.38 RCW provides for assessments to be deferred indefinitely for qualified senior citizens. RCW35.43.250 and 36.54. 100 provide for a deferral of up to four years for economically disadvantaged property owners, as defined in the formation ordinance. In both of these cases, the deferred assessment does not go away, but becomes a lien against the property. Other options for property owner relief may be available. Deferrals and other options for relief should be publicized early in the process, with a concerted effort made to identify those who may need such relief. Elected officials also need to know these options so that they can advise citizens who may contact them. Reference these options in the public hearings and enter any documentation available regarding your efforts to identify property owners eligible for deferrals. CID assessments Are Subject to Strict Criteria Statutes require that the assessment per parcel must not exceed the special benefit of the improvement to that parcel, which is defined as the difference between the fair market value of the property before and after the local improvement project. In addition, the assessments must be proportionate to one another. A corollary to these principles is that property not benefitted by the improvements may not be assessed. No matter what assessment method is used — per parcel, front foot, area, zone termini, traffic volumes, special benefit appraisal, etc the courts will be concerned only with these criteria. Even if a project lends itself very wel Ito a front footage assessment (i.e., uniform lots, similar zoning) or is not large enough to warrant a full-blown special benefit analysis, it is wise to check a few strategic parcels with a limited appraisal. This will prevent unpleasant surprises atthe final assessment roll hearing. LID Final Assessment Roll Hearings Are Quasi-Judidel Cities should do their absolute best to work with property owners and resolve their concerns. Lawsuits will happen despite a city's best efforts to do so. Statutory limitations and fairness to other property owners prevent a city from giving in to an individual property owner's every demand. Formation hearings and fina' assessment roll hearings should be conducted with 4 Local and Road Iruprovernent Districts Manual for Washington State Skth Edrilon possible litigation in mind. Formal rules of quasi-judicial procedure should be formulated and distributed well in advance of the hearings to the council and LID participants. In the final assessment roll hearing, the city council acts as a board of equalization, to consider evidence Presented by both staff and property owner as to the correctness of the assessment for each parcel. The hearing must be fair, open, impartial and structured, ��len the Natives Are Restless The Golden Rule Often overlooked in the rush to get projects accomplished and LID processes completed is the golden rule — "do unto others as you would have them do unto you." This may seem trite, but many a public relations gaffe can be avoided if we, as project engineers, LID administrators, etc„ seriously consider probable impacts of our projects and howwewOuld reactto a similar proposal affecting our property. Honesty, openness and a caring attitude are justas important as technical skills and knowledge. In addition to the above we should remember that LID funded projects are "by the people and for the people". The common attitude that city hail knows best will not promote or project the desired positive communications with property owners which is absolutely necessary if the goal is "to get to yes" at the formation hearing. Every property owner must be told the probable outcome of any scenario discussed. If a property owner has not been totally informed by staff and later feels they have been treated unfairly, they will have numerous opportunities in the future to remember the time they were not told the whole story. This can manifest itself as a backlash later at the Formation or Final Hearing and may eventually end up as a major complaint to the elected. Public Relations Plan An LID financed project tests an agency's public relations sKills IiKe no other, for reasons mentioned in the introduction. As each project is unique in its scope and impacts, a separate public reistions plan for each project is needed. These plans will be more effective if drafted in relation to overall city public relations policies, including those for media relations, conduct of meetings, parliamentary procedure and customer service. Examples of each of these are readily available. Public relations plans for an individual project need not be elaborate, but should recognize its unique scope and potential impacts. Use of individual meetings, open houses, formal or informal meetings and hearings at specific times during the project development process must be identified. Required hearings.or meetings should be "flagged," with notification requirements identified. The plan should be detailed enough to include those steps necessary for review and approval by other city or local agencies as well as the mayor and council, Appendix B contains a sample matrix for citizen participation in an EIS process, which can be adapted for use for other project phases, including LID processes. A public relations plan is a blueprint for communication. Public officials must have a sincere desire to communicate with property owners and the general public. Anticipation of concerns about, and objections to, a project is not enough — the agency must hear those concerns and objections directly expressed by property owners. The public responds better to accurate Local and Road Improvement Oistricts Manual for Washington State ,Sixth Edition 5 information and identification of all parameters that will attect final oecis!cns wtien made. It is important to identify, at the beginning of a project, those facets which are unchangeable and those which can be affected by public response. Identify procedures which will be followed, and inform the public as .o when input will be accepted or solicited. When an LID project is large or complex and potentially controversial it is often advisable to prepare a regularly published project newsletter. The newsletter will provide accurate and up to date information regarding project progress including; changes, schedules and major costs and funding developments. It is also advisable to have a website with the latest information upon which the newsletter would also be published. LID financed projects are unique in that property owners have the powerto decide, collectively, whether they will pay assessments for improvements to be built in the project. If they are not convinced thatthe project is needed and cost effective in the early stages, they may vote against it. An ideal LID financed projectwould be one in which specific propertyowner needs and overall city goals coincide precisely at minimal cost to both, with no adverse environmental impacts. ideal projects are rare. More common are projects where compromises are needed and in which a certain degree of disaffection exists or is generated between the city and property owners. Educating the public as to the what, how, when, why, etc., of a project is a never ending challenge, as new people are always entering the process. In addition, even those who have been previously involved will remember the project as it existed at that slice of time when they were last involved. It is important, in preparation for any meeting or project discussion, to think about the public participants in the meeting and where they are in relation to the current status of the project. Spend at least a few minutes at the beginning of the meeting making sure that all participants are aware of the current project status and on the same wavelength as nearly as possible. informal and Formal Meedogs Meetings can be the bane of a public servant's existence. In fact, an LID administrator is defined as a person who is in one meeting and mentally preparing for the next. All kidding aside, meetings with property owners and the general public are the most important element of any project's public relations plan. Informal meetings with individual or small groups of property owners in the early stages of a project can help the city to determine a possible scope for the project, provide education about project approval and LID processes and help to evaluate probable support for an LID. Apen houses are particularly effective in the predesign and EIS stages of a project, before any alternatives have been formulated. Larger, more formal meetings will be heeded as the project progresses. In addition to require public hearings for EIS, design approval, or L! D processes, a working (steering, advisory) committee should be established. With representation from as many competing interests as is possible (including property owners from the potential LID area), this committee can be an effective way to review design alternatives, identify potential fatal flaws, avoid unnecessary disruption to adjoining property owners and monitor probable LID support. This committee should meet monthly during the redesign and EIS stages and as frequently as needed during the design and approval stages. When the LID formation hearing is scheduled, project staff should be very open to individual or group meetings to explain overall LID processes and the type of testimony that is appropriate at the formation hearing. During construction, informal meetings or mailingsto each LID participant at least monthly will keep your public relations star shining bright. Be sure to include financial information, good or bad. When the final assessment roll hearing is scheduled, project staff 6 Local and Road Improvement Districts Manuel for Washington State Sixth Edition shouA, again, be very open to individuai or group meetings to explain the assessment roll and the sort of testimony that is appropriate at the hearing. Meeting Techniques i o assure a productive meeting, the foliowing (or similar; guidelines should be followed: 9. Plan the meeting (who will attend topics to be covered, location, etc.) in advance. 2. Have a written agenda. 3. Start on time. 4. Use the agenda. 5. Keep the meeting moving. 6. Buiid consensus. 7. Finish on time. 8. Keep minutes in relation to the agenda items. Meeting locations other than city hall or recognized central meeting places (i.e., homes, schools, etc.) should be cautiously evaluated in terms of convenience, safety, wheelchair accessibility and emergency response time. Other meeting techniques are included in Appendix B. Meeting times should be planned for maximum convenience to property owners. Public Hearings See Chapter 5. Media Relations "Turn your back to the camera and give an assumed name.' This is what most of us want to do when confronted by a reporter or television news crew. We also know this is not practical. Media coverage of LID proceedings is more than likely due to the direct impacts that LIDs have on property owners. A proactive policy of responding to the media will result in a better informed citizenry, an improved perception of local government, a positive city image and a strengthened sense of community. Media relations policies should establish a primary contact for the city, but avoid limiting media access to employees. Develop a healthy working relationship with the reporters or news crews on the city hail beat. Even if the story being written is negative, providethe reporterwith as much information as you would for someone writing a positive story. Take as much time as necessary to explain policy or technical issues. Things that are second nature to you are probably so much Greek to someone who does not deal with them on a daily basis. Remember that reporters have daily deadlines. Prompt responses to requests for information will make their day and probably help to give the story a more positive slant. Reporters need as much detail as possible, good photos, and simple drawings. Television crews need visual confirmation that you exist and will not hesitate to drag a camera and several technicians into your cubicle if needed. Their needs are very different. Anticipate both sets of needs. Be as concise, clear and factual as possible. When interviewed by any media, remember that the reporter does not expect you to have every answer at your fingertips. 1 don't know the answer to that question, but I'll find out and get right Local and Road Improvement Districts Manual for Washington State Sixth Edition 7 backto you," is a perfectly iegNmate response. As much as possible, prepareforthe interview in advance. Don'tramble. Repeat your key points several times. Rephrase any questions you are uncomfortable with, and ther. respond to the rephrased question. Speak slowly and enunciate clearly. Learn enough journalistic jargon to know what it means to be on and off the record. 8 local and Road Improvement Districts Manual for Washington State Sixth Edition Legal Summary Special Benefit Assessment Financing A. Some Basic Concepts 1. Fundamental Requirements a. Express statutory authority [A] municipal corporation's powers are limited to those conferred in express terms or those necessarily implied. In re Seattle. 96 Wash.2d 616, 629, 638 P.2d 549 (1981). ... The test for necessary powers is legal necessity rather than practical necessity. Hillis Homes— Inc. v. Snohomish Cir.,, 97 Wash.2d 604, 808, 650 P.2d 193 (1982). As we stated in }M : "[i]f the .Legislature has not authorized the action in question, it is invalid no matter how np=sary it might be. [Emphasis added.] Chemical Bank v. WPPSS, 99 Wn.2d 772, 792, 666 P.2d 329. b. Compliance with legal procedures "Where a person or board is charged by law with a specific duty and the means for its performance are appointed by law, there is no room for implied powers, and the means appointed must be followed, however inadequate _mav_be the result." [Emphasis in original.] State ex. rel Eastvold v. Maybury, 49 Wn.2d 533, 539, 304 P.2d 663 (1956). 2. Public improvements can confer both general benefits and special benefits on property in the community. 3. Property in Washington may be assessed for the special benefits conferred by the installation of certain public improvements. The special benefit assessment process has been authorized and implemented in moststates for many years. See,14 McQuillin, Municipal Cor orations §38.02 (3rd Ed.) Washington cities and towns may form local improvement districts (Lips) or utility local improvement districts (ULIDs) as authorized by RCW 36.43.04C and .042. Local and Road Improvement Districts Manuel for Washington State Sixth Edition 9 4. Legality has been recognized since the nineteenth century "The principle underlying special assessments to meet the cost of public improvements is that the property upon which they are imposed is pecOarly benefited, and therefore the owners do not, in fact, pay anything in excess of what they receive by reason of such improvement ...... Norwood v. Baker 172 U.S. 259, 278-279; 19 S.Ct. 187, 190; 43 L. Ed, 443, 447 (1898). Special benefits versus general public benefits "The theory upon which general taxation proceeds is entirely distinct from that of local assessments. General taxation is sought to be enforced against all classes of property upon an ad valorem basis,while local assessments are limited to real property within a given district, and are based entirely upon the theory of special benefit by which the value of property is enhanced in excess of the general good. General taxation is enforced to serve the necessary purposes of government, while local assessments are enforced to serve mere loca! convenience, and for the additional benefit of private property holders." McMillan v. Tacoma, 26 Wash, 358, 361, 67 P. 68 (1901). 6. Amount of assessment a. May not exceed special benefit to a parcel "Under the local improvement district statutes, only that portion of the cost of the local improvement which is of special benefit to the property can be levied against the property. . . . Property not benefited by local improvement may not be assessed, and special assessments for special benefits cannot substantially exceed the amount of the special benefits. . . . The amount of the special benefits attaching to the property, by reason of the local improvements, is the difference between the fair market value of the property immediately after the special benefits have attached, and the fair market value of the property &ore the benefits have at`ached." (Emphasis in original.) In re Schmitz. 44 Wn.2d 429, 433-34,268 P.2d 436 (1954). 10 Local and Road Improvement Districts Manual for Washington State Sixth Edition b. Must be proportionate to other assessments "The method utilized isto assess each parcel of land within the district as nearly as reasonably practicable in accordance with the special benefits gained by that parcel from the entire improvement, and to assess each parcel its proportionate share in relation to other parcels throughoutthe improvement district. As phrased by Professor Trautman in his article 'Assessments in Washington' 40 Wash. L Rev. 100, 120, 'The questions are: to what extent is the particular tract benefited by the entire improvement, and is the particular tract assessed proportionally with the other property included within the improvement district."' (Emphasis in original.) Sterling Realty Co. v. Bellev6e, 68 Wn.2d 760, 765, 415 P.2d 627 (1966). B. Sources of Applicable Law Constitutions a. Federal and state b. Due Process and Equal Protection considerations 2. Statutes governing L1Ds and ULIDs a. Title 35 RCW, especially Chapters 35.43, 35.44, 35.45, 35.49, 35.50, 35.51 and 35.54 RCW. b. See also, Titles 36, 54 and 57 RCW, 3. Administrative regulations 4. Court opinions Financing Alternatives for Public Improvements A. Customary Sources of Funding 1. Current budget or funded depreciation 2. Excess levies 3. Grants 4. General obligation bonds 5. Revenue bonds 6. Assessment bonds 7. Hybrids with multiple payment sources 8. Short-term obligations 9. Others? B. Reasons for Choosing an Assessment -Based Financing for Numerous Kinds of Projects Authorized by RCW 35.43.040. 1. Appropriateness due to special benefits 2. Political realities 3. Unavailability of other funding 4. Advantages of combining payment sources Local and Road Improvernant 6isWcts Manual for Washington State Sixth Edidon 11 III. Overview of the Assessment Financing Process A. Participants in the Process 1. Property owners and the pubiic 2. Public officials and staff 3. Advisors, consultants and legal counsel a. Investment bankers, underwriters and financial advisors b. Engineers and architects C. Local counsel and bond counsel d. Real estate appraisers S. Additional technical consultants f. Others? B. Usual Sequence of Events For an outline of procedures and checklist of documents relating to the statutory assessment district process that involves, among other things, three notices to property owners and two hearings, see Exhibit A attached. Typically, there also will be four ordinances. 1. Initiation of an LID, which may contain property outside the City (RCW 35.43.030) and may include territory that is noncontinuous or not contiguous (RCW 35.43.050). a. By petition (from owners of a majority of the area within the LID). RCW 35.43.120 and RCW 35.21.005. b. By resolution. RCW 35.43.140 and .150. 2. Creation of the assessment district: the "preliminary assessment roll" or formation hearing. RCW 35.43.100 and .150. "The purpose of the notice at this stage is not to accord a hearing upon the validity of the assessment, which has not yet been determined or the benefit to the property within the district, which has yet to be determined, but to accord a hearing upon the limits of the proposed district and upon the question whether the district should be formed at all. Objections by property owners at this stage should be directed to those questions." Trautman, Assessments in Washington, 40 Wash. L. Rev. 100, 112 (1965). 3. Protests and finality of the formation a. Written protests by owners of property subject to 60% of the "total cost of the improvement" will deprive the Councii of jurisdiction to proceed. RCW 35.43.180. i) Kasper v. Edmonds, 69 Wn.2d 799, 420 P.2d 346 (1966) regarding effects of City contributions. ii) Esping v. Pgsigka. 92 Wn.2d 515, 598 P.2d 1363, (1979) regarding the City's relinquishment of contractual rights as constituting a contribution. b. Time limitation and barring of collateral attacks on formaton of an LID. RCW 35.43.100. Hulo v. Redmond, 14 Wn.App. 568, 544 P.2d 34 (1975). 4. Interim financing by means of notes, lines of credit, warrants or interfund loans. Such interfund loans usually should be accompanied by declarations of intent to reimburse pursuant toTreas. Reg. §1.150-2, and 12 Local and Road Improvement Districts Manual for Washington State Sirfh Edifion be evidenced as prescribed by the State Auditor. See, BARS Manual, Von. 1, Ch. 3, Part 4. 5. Biddina and construction. RCW 35.43.190. Confirmation of assessments: the "final assessment roil" hearing provided for in RCW 35.44.100, Th is hearing can be conducted before a committee of the Council or a hearing officer as authorized by RCW 35.44.070. An LID may be converted to a ULID any time prior to adoption of the ordinance confirming assessments. RCW 35.43.043. "The hearing on the assessment roll is the proper time for raising the questions whether special benefits have been conferred and whether the amounts of individual assessments are correct." Trautman, Supra, at 123. 7 Appeals and the finglity of assessments. RCW 35.44.190 et seq. Note the anguage of the statute and the detailed mandatory requirements. "Whenever any assessment roll for local improvements has been confirmed by the council, the regularity, validity, and correctness of the proceedings relating to the improvement and to the assessment therefor, including the action of the council upon the assessment roll and the confirmation thereof shall be conclusive in all things upon all parties. They cannot in any manner be contested or questioned in any proceeding by any person unless he filed written objections to the assessment roll in the manner and within the time required by the provisions of this chapter and unless he prosecutes his appeal in the mannerand within thetime required by the provisions of this chapter." An appellant seeking judicial review mustfHetimelywrittsn objections with the city, file notice of appeal with both the city and Superior Court, file bonds, file in court a transcript of proceedings prepared by the city, and give notice that the cause will be called up for hearing, ail in a limited time in conformity with specific statutory requirements. B. Judicial review and the teaching of some important cases regarding assessment procedures: Abbenhaus v. Yakima. 89 Wn.2d 855,576 P.2d 888 (1978) - review is on the record and all expert appraisal testimony must appear there Fisher Bros. v. Des Moines Sewer Dist., 97 Wn.2d 227, 643 P.2d 436 (1982) - substantial compliance w!th statutory requirements by property owners may suffice on appea! in re Indian Trail Trunk Sewer. 35 Wn. App. 840, 670 P.2d 675 (1983)- unrebutted evidence in the record even gratuitously can overcome favorable presumptions Local and Road Improvement Districts Manual for Washington State Sixth Edition 13 IV Patchelly. Puyallup 37 Wn. App. 434,682 P.2d 913 (1984) -there are still some limits to acceptable substantial compliance on appeal Bellevue Associates v. Bellevue, 108 Wn.2d 671.741 P.2d 993 (1987)- costs of certain separate and distinct improvements may be levied properly In only part of a district Doolittle v. Everett, 114 Wn.2d 88.786 P.2d 253 (1990) - independent current use of adjoining parcels may prevent combining them for assessment purposes Bellevue Plaza M, Bel vue, 121 Wn.2d 397, 851 P.2d 662 (1993) - Council should adopt a non- speculative assessment method that produces equitable and valid assessments appropriate for the circumstances and so find 9. Collection of assessments, prepayments and subsequent annual installments. Chapter 35.49 RCW. 10. Permanent financing, usually by means of either LID bonds or ULID revenue bonds, occasionally by installment notes. Chapter 35.45 RCW. Crucial Decisions to Consider From the Outset A. Assembling the Participants $. Designing the Improvements 1. Location 2. Size 3. Cost C. Establishing the Boundaries of the Assessment District. RCW 35.43.080. D. Selecting the Method of Assessment. See, RCW 35.44.047, granting discretion to the Council. 1. Traditional zone and termini approach described by RCW 35.44.030 and M. 2. Variations on frontage and area charges 3. Additional formulas 4. Per lot or connection 5. Special benefit and proportionate assessment appraisal methodologies 6. Others? E. Key Points to Remember 1. There are several presumptions in favor of local governments In assessment proceedings. a. Al! actions taken were legal b. Property is specifically benefited C. Assessments are no greater than the benefits d. Assessments are equitable and proportionate 14 Local and Road Improvement Districts Manual for Washington State &[fr Edif'on e. Assessments are fair and valid Facts overcome presumptions. "The issue of special benefits is a judicial question, subject to review by the courts .... This question is ordinarily one of fact, dependent upon the physical condition, locality and environment of the property involved, and the character of the improvement. It is presumed that an improvement is a benefit; that an assessment is equal or ratable to an assessment upon other property similarly situated; and that the assessment is fair." Trainman,uL)ra at 118. But, as the courts have said: "A presumption is not evidence and its efficacy is lostwhen the other party adduces credible evidence to the contrary .... Presumptions are the bats of the law, fitting in the twilight but disappearing in the sunshine of actual facts." In re Indian Trail Trunk Sewer Svs.35 Wn. App. 840, 843, 670 P.2d 675 (1983). Nevertheless, presumptions will prevail if not rebutted. [Elvidence of appraisal values and benefits is necessary to rebut these presumptions. Appellate review of such cases does not permit an independent evaluation of the merits . It is presumed that a local improvement benefits property unlessthe challenging party produces competent evidence to the contrary. The burden of proof shifts to the City only after the challenging partypresents x agpraisal evidence showing thatthe propertvwould not be benefited by the improvement. [Emphasis added.] Seattle v. Rogers Clothing, 114 Wash.2d 23, 229-231, 787 P.2d 39, 48 (Wash. 1990). 3. It is not always possible to assess the entire cost of an improvement against the property in a district. 4. Formula methods of assessment often produce disproportionate or otherwise unlawful assessments for some parcels. The relationship between the city and property owners can become adversarial, particularly at the time of the final assessment roil hearing. Local and Road improvement Districts Manual for Washington State S&h Edition 15 6. The two hearings held in the course of the proceedings are for different and distinct purposes to which they should be limited, and both can be conducted with reasonable decorum. 7. Anticipate possible litigation and make a record adequate for judicial review of both formation and assessment proceedings. B. Executive sessions durirg meetings or hearings may serve proper public purposes, preserve confidentiality and protect the interests of the city. 9. AN requirements of the applicable statutes and any local procedural ordinances or regulations should be strictly and timely satisfied. 10. The appearance of fairness should be maintained, conflicts of interest should be disclosed and exp communications should be avoided. V. The Importance of Informing the Public and Promoting Confidence 1. Philosophy and perspective "While we are bound to conclude the actions of the respondent were legally proper when viewed in light of the trail court's findings, we cannot help but reflect upon the fact that legally proper action may, nevertheless, needlessly cause anger, dismay and antagonism on the part of citizens affected." State ex rel. Neuert v. Alderwood Water District, 1 Wn.App. 480, 482, 462 P.2d 948 (1969). Actions to take a. Plan and prepare carefully and thoroughly. b. Make reasonably full and timely disclosures of important details to the public C. Assure that all such information is correct and consistent 3. Potential practical advantages a. Fewer questions and less misunderstanding b. Reduced opposition and protests C. Increased credibility and acceptance 4. Conclusion Procedure for establishment of local improvement districts and determination of special assessments is well defined. Although there are potential traps for the unwary, careful reading and compliance with the detailed statutory provisions provide adequate protection for property owners. Ample provision is made for participation and protests by those affected. On the other hand, the procedure enables the city to proceed with necessary improvements in an expeditious manner. Trautman, Suora. at 132 50368141. i 16 Local and Road Improvement Districts Manual for Washington State Sixth Edition PoSTER PEPPER & SHEFELMAN PLLC AT TO R H IV A Y 1. h CHECKLIST/OUTLINE OF LOCAL IMPROVEMENT DiSTRICT PROCEDURES IN WASHINGTON CITIES For transcript documents, each copy of such document should be certified as a true and complete copy by the official custodian of the ori inal. The assistance of an engineer (either an independent consultant or the city engineer), a financial, advisor or investment banker, the city attorney, bond counsel and other professionals, including an environmental lawyer and an appraiser, as appropriate, should be secured at the outset to assure that each procedural requirement is timely met and that the council or commission has the information and advice needed to make the necessary decisions. INITIAL STEPS UNDER PETITION METHOD OFFORMATION Filing of a petition signed by owners of property aggregating a majority of the area of the proposed Local Improvement District (LID). RCW 35.43.120. Property owners' petition with all signatures. Certification of sufficiency of petition by the designated officer. RCW 35.43.130. Engineer's certificate of sufficiency of petition. Designated person prepares cost estimate, assembles other statutorily regaired information and certifies it to the council. RCW 35.43.130. STEPS UNDER BOTH RESOLUTION AND PETITION METHODS OF FORMATION Determine whether LID formation is categorically exempt from procedures of State Environmental Policy Act (SEPA), Chapter 43.21C RCW and Chapter 187-11 WAC. If not categorically exempt, prepare and issue Environmental Checklist and Determination of Non -Significance (DNS) (or Environmental impact Statemert (EIS)) before adopting ordinance creating LID and ordering improvements. Environmental Checklist and DNS (or EIS). 2. Adopt resolution declaring intention to form LID, or in response to petition, adopt resolution fixing hearing on forming LID. Resolution provides for hearing on formation whether petition or resolution method is used. RCW 35.43.130-150; 35.43.125. a. Resolution. b. Minutes (or excerpts) of council meeting reflecting adoption of such resolution. Local and Road Improvement Districts Manuel for Washington State &AEdtion 17 If resolution method is being used, designated person prepares cost estimate, assembles other statutorily required information and certifies it to the council, RCW 35.43.130. 4. Mail notice of hearing at least 15 days before the date fixed for hearing to the owners as shown on the rolls of the County Assessor of all property (a) within the proposed LID and (b) outside of the proposed LID, when such property is required at the time of notice to be connected to the proposed sewer or water facilities as a condition of Federal Housing Administration loan qualification. RCW 35.43.150; 35.43.270. If state-owned propertywill be assessed, notice must be given by registered or certified mail at least 30 days prior to hearing. RCW 79.44.040. Affidavit of mailing with form of notices attached. 5. Publish resolution declaring intention or resolution fixing hearing on forming LID in at least two consecutive issues of the official newspaper, the first Publication being at least 15 days prior to the hearing. RCW 35.43.140. Affidavit of publication of both ,such publications. 6. Conduct hearing on formation of LID. RCW 35.43.140. a. Minutes of council meeting, committee meeting, or proceedings before hearing officerreffecting such hearing, including recommendation of committee orhearing officer. b. Resolution designating hearing examiner or committee, if authorized. Pass ordinance creating LID and ordering the improvement. RCW 35.43.070. a. Ordinance creating LID. b. Minutes (or excerpts) of council meeting showing passage of such ordinance. S. if SEPA review required for LID formation, give official notice of the date and place for commencing an appeal under SEPA. RCW 43.21C.075(5). 43.21C,080; WAC 197-11- 680{5}. Official notice. 9. Publish ordinance creating LID in official newspaper. Affidavit of publication of formation ordinance. 10. Within 15 days after creation of LID, file ordinance creating LID, boundary diagram of LID and preliminary assessment roll with City Treasurer (sometimes referred to as Finance Director). Thereafter, City Treasurer should immediately post the proposed assessment roil upon his or her index of local improvement assessments. RCW 35.50.005. 11 If LID contains "farm and agricultural land" or "timber land" as defined in RCW 84.34.310, file notice of formation of LID with County Assessor and county legislative body. RCW 84.34.320. a. If LID does not contain such faun and agricultural land or timber land, a certificate from the CountyAssessor to that effect; or 18 Local and Road Improvement Districts Manual for Washington State Sixth EMon b. if LID does contain such farm and agricultural land or timber land, a certificate or receipt of filing such notice. 12. County Assessor shall mail notice of formation of LID to owners of "farm and agricultural land" or "timber land," as defined in RCW 84.34.310. RCW 84.34,320. Certificate or other evidence of mailing such notice. 13. Expiration of protest period for LID formed by resolution method 30 days following passage of ordinance forming LID. RCW 35.43.180. Clerks or engineer's certificate of maximum percentage of protest during that period. 14. Expiration of time limitation on litigation.. No lawsuit may be maintained challenging formation of the LID if not filed within 30 days after passage of the formation ordinance (if initiated by petition) or after expiration of the 30 -day protest period (if initiated by resolution). RCW 35.43.100. 15. Authorize final design work. 16. If required, authorize and publish call for bids for construction. RCW 35.22.620, 35.23.352, 35A.40.210, 35.43.190. Affidavit of publication of bid call. 17. If required, post call forbids. RCW 35.22.620, 35.23.352, 35A.40.210. Affidavit or certificate of posting of bid call. 18. Receive bids. 19. Engineer furnishes analysis of bids. All bids received and engineers tabulation. 20. Accept best bid and award contract. Minutes (or excerpts) of council meeting showing action on bids. 21. Authorize sale of interest-bearing warrants drawn on LID fund or short-term financing by means of a line of credit or notes and establish the interest rate or index by ordinance. RCW 35.45.130; ch. 39.50 RCW. a. Ordinance authorizing warrants or notes b. Minutes (or excerpts) of council meeting reflecting passage of such ordinance. C. Affidavit of publication of such ordinance. d. "Take out' commitment e. Preliminary warrant or note opinion. f. Other transcript documents, if required as the basis for such legal opinion. Local and Road Improvement Districts Manuel for Washington Stats Sixth Edition 19 22. Periodically issue such interest-bearing warrants, if any, drawn on LID fund to cover costs of improvement, as incurred. Individual warrant opinions, if any, and supposing vouchers. 23. On completion of project, obtain necessary state clearances, accept work and determine total cast. RCW 35.44.020, 60.28.040 (Dept. of Revenue), 51.12.050 (Dept. of Labor and Industries). 24. Direct engineer to prepare final assessment roll and file it with clerk. 25. Adopt resolution or motion setting time, date and place of assessment roll hearing. RCW 35.44.070. a. Resolution, if any. b_ Minutes (or excerpts) of council meeting reflectting adoption of such resolution or motion. 26. Mail notice of hearing to the owners of all property listed on the assessment roll as those owners' names appear on the records of the County Treasurer at least 15 days before date fixed for hearing. RCW 35.44.090. Affidavit or certificate of mailing with copy of notice attached. 27 Publish notice of hearing at least once a week for two consecutive weeks in the official newspaper, the last publication being at least 15 days before the hearing date. RCW 35.44.090. Affidavit of such publication. 28. Conduct final assessment roll hearing, considering objections and overruling them or modifying assessments. RCW 35.55.070, 35.44.100. a. Minutes of council meeting, committee meeting, or proceedings before hearing officerreflectingsuch hearing, including recommendation of committee orhearing officer. b. Resolution designating hearing examiner or committee, if authorized. 29. if any assessments are increased, set a new hearing and publish and mail notice to those properties with increased assessments in the same manneras forthe original assessment roll hearing. RCW 35.44.120. 30. Pass ordinance confirming and levying assessments as finally approved. RCW35.44.100. a. Ordinance confirming assessment roll. b. Minutes (or excerpts) of council meeting showing passage of such ordinance. 31. Publish ordinance confirming assessments. Affidavit of such publication. 20 local and Road Improvement Districts Manual for Washington State Sixth Edition 32. In LIQ containing any "farm and agricultural land" or "timber land" as defined in RCW 84.34,310, file notice with County Assessor, County legis ative authority and City Treasurer of adoption and confirmation of final assessment roll. RCW 84.34.320, a. Certificate or receipt of' the filing of such notice. b. Certified copies of any waivers of assessment exemptions given pursuant to RCW 84.34.320. 33. Appeal' period expires 10 days after the ordinance confirming assessment roll becomes effective. RCW 35.44.190-.210. 34. City Treasurer publishes in the official newspaper Once a week for two consecutive weeks, and (within 15 days after the first such publication) mails to all property owners, notice that rol! is filed for collection. RCW 35.49.010. a. Affidavit of such publications. b. Affidavit or certificate of such mailing with notice attached. 35. Prepayment period expires 30 days after first publication of Treasurer's notice. RCW 35.49.010; 35.49.050. Treasurer's certification of amount of prepayment and balance of unpaid assessments. 36. Sell bonds after expiration of prepayment period (bonds to be dated and delivered no eaHier than 20 days after conclusion of prepayment period) at public or private sale. RCW 35.45.010; 35.45.040. A. Public Sale (1) Contact financial consultant. (2) Pass and publish bond ordinance authorizing sale. a_ Ordinance. b. Minutes (or excerpts) of council meeting reflecting passage ofsuch ordinance. C. Affidavit of publication of such ordinance. t3) Publish notice of sale. Affidavit ofpublication of notice of sale. (4) Review bids and accept best bid. a_ All bids received and tabulation. b. Minutes (orexcerpts) of council meeting showing action on the bids received. B. Private Sail (1) Contact investment banker. (2) Receive proposai(s) for bonds and accept or refect. a. Proposal accepted b. Minutes (or excerpts) of council meeting reflecting acceptance of same. Local and Road Improvement Districts Manual for Washington State Sixth Edgon 21 (3) Pass and publish bond ordinance. a. Minutes (orexcerpis)ofcouncilmeetingreflecting passage ofsame. b. Affidavit of publication of such ordinance. 37 Pass and publish guaranty fund ordinance if none exists. a. Ordinance. b. Minutes (or excerpts) of council meeting reflecting passage of such ordinance. C. Affidavit of publication of such ordinance. 38. Use prepaid assessments to redeem outstanding LID fund warrants or short-term financing. 39. Deliver bonds, no earlier than 20 days after conclusion of prepayment period, either in exchange for remaining outstanding warrants or for cash sufficient to redeem such warrants or financing. a. Preliminary cfficial statement_ b. Official statement. C. Closing certificate. d. Certificates of manual signature and mailing. e_ Signature identification certificate. f. Tax exemption and nonarbitrage certificate. g. Internal Revenue Service Form 8038-G. h. Specimen bond. i. Cerdfical a of bond registrar. j. Receipt for Bonds and Receipt for Payment. k. Approving legal opinion and reliance letter. L BAN transcript if applicable. M. State Bond Report Form 22 Local and Road Improvement Districts Manual for Washington State Sixth Edmon Procedures Introduction/Flovy Chart As noted in Chapter 1, L1Ds are not the most complicated thing in the world, but they do require attention to detail and processes. The narrative in this Chapter 3 is intended to "flesh out" the Legal Summary in Chapter 2. Your LID administrator will want to make a copy of the Checklist/Outline in Chapter 2 and/or other resources in the online appendices. Some of us (engineers mostly) may find the LID flow chart, based on Chapters 35.43 through 35.56, on the following pages useful. Pre -Formation Activities An LID may originate with an inquiry from a c tizen asKing about improvements in his/her neighborhood. Or an LID may be considered by an agency as a source of funding for a project in the capital improvement program. An LID may be looked to as a method to mitigate impacts of a proposed development and distribute costs equitably to other landowners benefitting from the improvements in the development. Whatever the reason for an LID, the agency's LID administrator (which may vary by project) and public works staff must review the proposed project to de -ermine if it is practical or feasible and whether it lends itself to financing through an LID. To determine preliminarily whether an LID is feasible, the LID administrator and public works staff often should consult with a civil engineer, as well as experts in finance, law, and land value. After a project is found to be feasible, a typical first step by the LID Administrator is to determine the extent of landowner support for the project. One cost effective method of making this determination is for the Administrator to prepare a fact sheet and informal petition (not to be confused with a formal petition for LID formation per the statutes)for circulation by the project proponent(s). This informal petition should describe the nature of the project, the extent of the proposed improvements, the district boundaries, the method of payment, and the length of time of the payments (amortization period). Frequently, it is not economical to provide "up front" cost information, but if possible, a project cost estimate should be included on the petition However, avoid providing estimated costs whenever there is a reasonable possibility that the costs will be too low or whenever the proposed project may not occur far an extended period of time. Failing to provide costs will not be a popular choice; however, the escalation of costs overtime usually will make this the correct choice. Grant funds and city and/or developer contributions to the proposed project should be identified as early as possible, as these contributions will reduce assessments to properties in the LID. Local and Road Improvement 0Istricts Manual for Washington State Sigh Edition 23 Practice Tp Usually it is unwise to provide individual cost information at this point of development of an LID. This is especially true where a detailed engineering design, environmental reviews, and a financial report have not been completed; when the formula or type of method (frontfoot, square foot, special benefit, etc.) for cost distribution has not been determined; when a more complex cost distribution formula or method will be used (such as zane- termini); or when a combination of methods will be used. It is not necessaryto include an individual hreakdown of costs on the petition, because the petition is principally used to measure the desire for the improvement in the proposed LID area. The LID administrator and relevant experts should meet with small groups of property owners to explain the LlD process and the proposed project. if the owners of a substantial majority of the area of affected properties sign the informal petition, and if the petition represents a substantial majority of the probable total assessments, an LID formation attempt will likely succeed. If not, it is a good idea to solicit more signatures before proceeding or ascertain support through more informal meetings. Tracking costs (of both in-house staff and outside consultants) should begin as soon as the project seems to be feasible, because costs incurred before formation of the LID may be reimbursed bythe LID. There are occasions when an agency, usually a small city, will require that LID proponents pay for all or part of the LID formation costs. The proponents in this type of up front funding are usually a few large property owners who are more interested in development than solving problems. Practice Tip Because the proponents have paid money to form the LID, they will assume that they have unbridled access to staff, the LID administrator and the design team. In addition they will expect their special interests to be met. In this case, it is suggested that a detailed agreement be made between the proponents and the Agency as to how the proponents' participation and suggestions are to be considered, and then be prepared for plenty of interference. Formation Process Applicable Statrfts As explained In Chapter 1 the LI O process for cities and towns is extensive and detailed, The LID process for other municipalities, such as water -sewer districts and port districts, is based on the process for cities and towns, with some procedural variations. This chapter describes the LID process for cities and towns. The LID administrator must review carefully the LID statutes for the type municipality involved, and compare it to this chapter. Cast Estimates and Preliminary Assessment Roll In preparation for the LID formation hearing, more detailed cost estimates must be made. This should be done by the project engireerandthe LID administration team, The clerk -treasurer or finance director and an investment banker are usually necessaryto assist in compiling all of the 24 Local and Road Improvement Districts Manual for Washington State Sixth Edition, estimated costs, such as publication fees interim finance interest, financing fees, bond printing. and other relevant expenses. See RCW 35.44.020 and Chapter 4. Practice Tip Fel'cwing is a list of costs that maybe included in the costs of an LID. At the time of LID formation these costs will not be known in detail. Pre -Formation • Preliminary engineering • Comprehensive utility (or some portion) plan • Engineering report • Funding applications Preliminary special benefit analysis • Agency administration Legal costs LID Costs • LID management (public meetings, mailings, etc.) • Special benefit analysis • Preparation of preliminary assessment roll • Preparation of final assessment roll • Developer extension contracts in lid (RCW 35.91.050) ■ City costs (ads, miscellaneous supplies) • Hearing officer, court reporter • Legal fees • Legal defense and future legal fees Design • Design engineering • Ern ironmentaVpermitting/cultural resources • Surveying and geotechnical • Right of way acquisition • Agency costs, direct casts and (staff time for work related to project; Construction Phase • Construction administration • Ccnstruction inspection • Construction surveys • Construction testing • Agency administration Financing • Interim financing interest during design and construction • Permanent financing • Lid guarantee fund Local and Read Improvement Districts Manual for Washington State Sixth Edition 25 Environmental Ifeview Allow adequate time priorto the engineering cost estimate completion for required environmental reviews;SEPA and NEPA, if applicable). It is highly desirable to complete environmental reviews before adoption of the LID formation ordinance. The environmental -eviewmust be completed before awarding the construction contract for the project. Special Issue Properties if any of the lands within the proposed project area might have been designated as farm and agricultural or timber land, pursuant to Chapter 84.34 RCW, and the LID project is for water, sewer or roads, be sure to submit a request to the county assessor, along with a map showing the county tax lots, to determine the existence of such lands. Property designated as farm. agricultural or timber land may be assessed, but such assessments may not be collectable until the use changes or t,1 designation is removed, which might not occur for many years. Removal of the designation makes the assessment payable immediately, in full with interest. In addition to such land, Federal and Indian Trust Lands are non -assessable and a few other special purpose lands also may be non -assessable or subject to the delayed payment of assessments. When a municipality is working with its legal counsel and/or special legal counsel (bond counsel) and its financial advisor, issues arising from federal, reservation, housing authority, open space, and other potentially non -assessable or slow payment properties sometimes can be resolved, but they should be identified and addressed promptly to determine their financial impact on the viability of the project. Assessments As noted in previous chapters, the LID statutes require that the cost and expense of the LID project be assessed to all property that has received specialbenefrtfrom the LID project, Special benefit is the difference in the fair market value of the property withoutthe improvement and the fair market value of the property with the improvement (commonly called "before and after," more properly called "without and with"). LID assessments must meet two special benefit tests: • The first is that an LID assessment cannot exceed the special benefit. • The second is that LID assessments must be proportional to the special benefit derived. A number of different formula and methods, separately or in combination, can be used to distribute cost and expense to meet the special benefit test. It should also be noted that an LID may have a number of special benefit districts each using a different assessment method within the LID. See RCW 35.43.060. If there is doubt whether certain properties can meet the above special benefittests, a special benefit analysis should be prepared forthese marginal properties. Major projects, such as arterial street improvements, interstate highway interchange accesses, rapid transit terminals, and trunk sewer mains, may substantially influence the intensity of use and value of property and present interesting LID boundary problems. An economic feasibility study and LID boundary recommendation is often completed for a major project. The feasibility study may be expanded later in the LID process into a compiete special benefit study if desired. 26 Local and Road Improvement Districts Manual for Washington State Sixth Edition Once calculated by one of the formula or methods described in Chapter 5, a preliminary assessment roll is generated. The preliminary assessment roll should identify, at a minimum: each property owner's name and mailing address (from the county assessor's records); the LID parcel number or property address; the county tax lot number; the basis of calculation; and the estimated total assessment per parcel. Practice Tp Atthis point, the LJO administration team should reviewand compare the individual and categorized (residential, commercial, etc.) assessments. If the preliminary assessments appear to be excessively high, the UD administration team should hold more Informal meetings to gauge support. The LID administration team also should take a poll of property owners by sending a letter to each of them, which letter should include the estimated individual assessment; request a response to the project; and include a stamped, self-addressed postcard for return, indicating in favor," "opposed," or "undecided," in light of fully developed cost estimate. Based on the response that is received, the UD administration team should calculate the protest percentages in the same manner as for the preliminary hearing (based on estimated assessments). If the project has adequate support, continue with preliminary LID activities. If the project no longer has substantial support, report to the appropriate administrative staff and the city council or legislative body, recommending that no further work be done. Or. encourage the project proponents to do more marketing. In addition to the preliminary assessment roll, a preliminary assessment map is drawn showing the properties that are assessed (benefit area). The dollar amount of the estimated preliminary assessment against each property may be placed on the map as a helpful visual aid. The person or board designated by charter or ordinance to make the preliminary estimates and assessment roll shall cause an estimate to be made of the cost and expense of the proposed improvement, and shall certify it to the city council, together with other papers and information stated in RCW 35.43.130. The estimate shall be filed after the filing of a petition to form an LID (petition method of LI D formation), or concurrently with the adoption of the resolution of intention to form an LID (resolution method of LID formation), as the case may be. Resolution of Intention For an LID that is not initiated by a formw petition of property owners, the city council adopts a resolution declaring its intention to order the LID improvement and set the date for a formation `rearing on the proposed LID. (RCW 35.43.140) Unless the resolution of intention is a standard form previously approved by bond counsel, the resolution should either be prepared by, or be reviewed and approved by, bond counsel. Local and Road Improvement Districts Manual for Washington State Sixth Edition 27 Practice Tp For some agencies, the Resolution of Intention must be passed by the council/commission before pre- assessment work is performed in orderto obtain interim financing. A bond counsel is a specialized attorney who will provide official legal opinions regarding financing issues (interim and permanent), and LID bond and note issuance, and support/assistance on the LID in general, if requested. Such support and assistance may include review or preparation of petitions, resolutions, ordinances, notices, arbitrage certificates, and the bond or note closing documents. Generally, bond counsel will want to be involved very early in the project so that they are comfortable that the LID has been properly created and carried out. The city clerk publishes the resolution in two consecutive issues of the official newspaper. The first publication must be at least 15 days before the hearing date. There are time restraints on publication as set forth in RCW 35.43.150. Formation Hearing Notices RCW 35.43.150 also requires that notice be given by mail at least 15 days prior to the date fixed for the hearing to all owners of properties within the LID that are specially benefitted. It is not unusual for the formation hearing notices to be sent three weeks, or more, ahead of the hearing date. The notice should be prepared by, or reviewed and approved by, bond counsel. With regard to sanitary sewers and potable water facilities, RCW 35.43.270 requires under some circumstances that notice be given to the owners of property that lies outside of the proposed LID and that may want to connect someday to the proposed new facilities. Staff should meet with such property owners and explain whytheir property has been excluded from the proposed LID and whether they might be included within a future project, as well as advantages and disadvantages of not being included in the LID. The owners of property lying outside of the proposed LID, and any persons in the community as a whole, should be allowed to speak atthe formation hearing, perhaps ata porton of the hearing set aside for their testimony, separatefrom the testimony of property owners participating in the proposed LID. Formadon Hearing Notice The most important step in the LID formation process is to provide notification to property owners within the proposed LID. The hearing notice must describe the protect and give the estimated cost of the project, as well as the individual estimated benefits (assessment) to the parcel. The notices must be mailed to the current taxpayer as shown on the county assessor's records. (RCW 35.43.150) When undelivered notices are returned, keep the original return envelope and notice with official records for the project. A certificate of mailing of the notice of the LID formation hearing should be filed with the official record on the project at the time the notices are mailed. Bond counsel will prepare, or assist in preparing, this certificate. Although statutory notice requirements are met by publication of the resolution and mailing of notices to the property owners on the county assessor's records, it is recommended that additional hearing notices be sent to ali parties known to the city as having a legal interest in the assessed properties through real property documents such as easements and deeds of trust. 28 Focal and Road Improvemarrt Districts Manual for Washington State Sixth Edition Reasonable research should be performed to find the address of the property owner where the county tax notice is sent to a mortgage company and whenever a notice of hearing is returned. Sources that are often used to !ccate the property owner are the telephone book, reverse directory, and the utility billing department of the city. Practice Tip Often times it is advisable to send the notice to a;! of the addresses that may be known for the properly owner and not just the official mailing address. Informal meetings with property owners which are held prior to the formation hearing will be useful not just for explaining the process and project, but also for seeking further information regarding addresses of neighboring owners. Further, any notices of earlier meetings will identify problems before the formal notices are mailed for the LID formation hearing. All special efforts made to notify property owners should be made part of the public record at the formation hearing. Practice Tip _ If Washington State property is located within the LID and is to be assessed, notices must he handled differently than other property Isee Chapter 79.44 RCW). Formation Hearing An ordinance forming the LID may be prepared by, and should be reviewed and approved by, bond counsel. Under the LID statutes, the city council may pass the ordinance at the same meeting as the holding of the formation hearing. It is recommended that a hearing display map be prepared using a copy of the assessment map, with property owners' names and estimated final assessments shown on the individual properties. The formation of an LID may be appealed to the Superior Court. Consequently, the city should electronically record theformation hearing, and all discussion relating to the proposed LID. The Superior Court usually will require an audio only tape recording to be transcribed. An audio and visual tape recording (television) may not need to be transcribed. Thus, if the LID is highly controversial, or a significant number of property owners is expected to testify in opposition to the LID, the LID administration team may want to consider having a court reporter record the formation hearing. The LID formation hearing should have a structured format that is more formal than a normal city council meeting or hearing. It is recommended that legal counsel, bond counsel or special counsel and the LID administrator meet with the mayor of the city before the hearing to discuss the agenda for and recommendations regarding the hearing. By LID statute, the formation hearing may be held before a committee of the council, orthe ccuncil may designate an officer, such as the city hearing examiner, to conductthe hearing and make a recommendation to the ful! city council. (RCW 35.43.140) Local and Road Improvement Districts Manuel for Washington State S&th fdibon 29 Practice Tp Aworkshop with the entire city council, held well ahead of the formation hearing, will be helpful to facilitate a smooth and organized hear'ng. At the formation hearing, the LID administrator and LID team should present the details of the project proposal, the estimated costs, the portion of the LID costs paid for by the city (if ar+y), the individual preliminary assessments, and a summary of letters of support and/or opposition that were received after notice of the hearing was pubfshed and mailed. Engineering aspects of the LID pro;ect, such as project cost, design elements, and usefulness of the improvements, also should be addressed, aswell as the practical and financial benefits of the project, project support, and project amortizing. Remember that LIDs are legal and financial tools, and not engineering tools. Practice Tip When an LED project is large or complex and potentially controversial, i# is often advisable to regularly publish a project newsletter. The newsletter will provide accurate and up to date information regarding project progress including changes, schedules, and major cost and funding developments. It is also advisable to have a website with the latest information and archived copies of the newsletter. After all of the owners who have submitted written protests have had an opportunity to be heard and staff has had an opportunity to answer questions, the city council must decide whether or not to create the LID. A majority of the members of the city council must pass the ordinance creating the LID. Protest and Appeal Periods — Filing of ►nr b mation Within 15 days after the legislative body has passed the ordinance creating the LID, the LID administrator (or representative) must file with the city treasurer the title of the improvements, the LID number, a copy of the diagram or print showing the boundaries of the LID (preliminary assessment roll map), and the preliminary assessment roll or abstract of same showing thereon the lots, tracts, or parcels of land. (RCW 35.50.005) The treasurer then immediately posts the preliminary assessment roll on the index of local improvement assessments against the properties affected by the local improvement. Foran LID initiated bycitycouneil resolution (and not by formal petition), RCW35. 3.180 provides for a 30 -day protest period after the passage of the ordinance creating the LID. If written protests amounting to 60 percent or more of the dollar amount of preliminary assessments within the LID are filed during the 30 -day protest period, the city is divested of authority to proceed with the LID. if the proposed improvement is a sewer or water main and if the city council finds that the local improvement is necessary for the protection of the public health and safety then, if all of the city council members present vote in favor of the ordinance, then the LID may be formed regardless of the amount of property owner protest. (RCW 35.43.170) 30 Local and Road Improvement Districts Manual for Washington State S&M Edition Practice Tip Ever, though rnanytypes of municipalities use the city LIC statutes and procedures as set forth in Title 35 RCW, protest rules vary for various rnunicipalities. Care must be taken in the calculation of protest percentages. The following format for calculations is suggested: Total Assessment under Lid = Amount A Less assessments to properties in which a development agreement, annexation agreement or approval conditions requires participation in the LID. Less assessment to properties which are owned by a local or state government. (Note: Check with bond counsel and the city attomey orspecial legal counsel before deducting these assessments to verify whether assessments for specific properties are to be deducted.) Less assessments to properties which are owned by people who are being assisted by the local government in proportion to the amount of such assistance. (Note: Check with bond counsel and the city attorney or special legal counsel before deducting these assessments to verify whether assessments for specific properties are to be deducted.) Net Assessment = Amount B Assessment represented by those property owners who file written protests within the 30 days protest period = Amount C. Amo unt C divided by Amount B and expressed as a percentage is the protest percentage. If it exceeds 60 percent, the city is divested of its authority to proceed with the LID. There is an appeal to Superior Court from the ordinance creating the LID: "No lawsuit may be maintained challenging the jurisdiction of the council to proceed with the improvement and create the local improvement district unless that lawsuit is served and filed no later than 30 days after the date of passage of the ordinance ordering the improvement and creating the district, or when applicable, no later than 30 days afterthe expiration of the 30 -day protest period provided in RCW 45.43.180 in. LiDs initiated by resclut;on of intent." (RCW 35.43.100) Design, Construction, and nterilm Financing Following the protest and appeal periods, the engineers finalize the design of the project, obtain the necessary permits and acquire necessary rights-of-way for the project. The project is constructed pursuant to invitation to bid or pursuant to quotations for bid (small works roster), under applicable statutes. Generally, LID improvement construction responsibilites are the same as for other municipal capital protects. if during the design process, the bid process, or the right-of-way acquisition Local and Road Irnprovemant Qistricts Manual for Washington State Sixth Edition 31 process, it appears that assessments will significantly increase, then all property owners should be notified of the increase. While not a formal requirement, a 10 percent or more increase in the cost should trgger special informational meetings. Once the contractor has been selected and the contract documents executed, interim financing usually is required, by inter -fund loan or formal borrow'.ng (notes and warrants). Sometimes i; may be necessaryto obtain interim financing eariier, such as when. consulting engineers are used to perform preliminary design or facilitate informatiorai meetings, it may also be necessary to obtain interim financing fora special benefit study or right of -way acquisition. For these reasons, many cities will begin the interim financing process once the protestlappeal period has expired. Alternatives for the city to obtain interim financing for the project include internal financing, issuing warrants or issuing notes. There are other alternatives that can be utilized. Provisions for the method of interim financing may be incorporated into the ordinance creating the LID, or may be provided for by separate ordinance. Recommendations for financing alternatives are usually made by the finance department, often with the assistance of an investment banker and/or bond counsel. Factors such as interest cost, term, flexibility and Internal Revenue Service regulations (taxableftaxaxempt) are analyzed as part of the determination. If the city elects to seek outsidefinancing, a financial statement is prepared which describes the project, the cost, the security for repayment and other relevant factors important to a financial institution. Often the statement is prepared by the finance department, but it is sometimes prepared by the LID administrator or investment banker. During the warrant process, once the financial statement has been approved by the city's legal and financial officials, itis sentto the banks. Although the banks may be asked to respond within seven days and make a bid on the interestto be charged to loan the money for interim financing, it is better to allow two to four weeks. An alternative to warrants are bond anticipation notes (BANs), which are actually short-term notes, since all needed funds are obtained at the time the notes are issued, while warrants provide funds as project costs are incurred. Most BAN 9nanciai statements are prepared by the investment banker. BANS are different than warrants. The LID team should meet with an investment banker to discuss and become familiar with the advantages and disadvantages of both methods of financing. As stated earlier, it is both wise and prudent for a city to consult with an investment banker and bond counsel in the formative stages of the LID to assure that financing can be secured for the proposed project, because not all projects can be financed. An investment banker will be able to provide early information concerning interest a nd other costs for interim or long term financing. Financing costs need to be included and considered in the estimated project costs. Interim financing may be obtained through a negotiated sale or a public sale where a call for bids is used. Both methods are used extensively by municipalities in Washington. UD Closeout Process The LID closeout process begins when construction is completed and all the bills and costs are submitted. Atthis time, total projectcosts must be established, including contract administration, 32 Local and Road Improvement Districts Manual for Washington state Skh Edman engineering, inspection, record (as -built) drafting, legal, and financing. (RCW 35.44.020) Some frequently overlooked cost items are interest on borrowed money, bond counsel fees, bond printing, discounting sale of bonds, and bond registration. To calculate the actual interest on interim financing, it is necessary to determine the date of the LID bond sale (issue date) if an interim warrant was used. If BAN financing is used, there is probably a fixed maturity date with a known interest cost. Final costs to be assessed to the properties should be based as nearly as possible on actual costs, Since the costs of closing the LID are included in the final assessment, it is necessary to make some estimates regarding the final financing costs, legal fees and administrative costs. Grant funds and contributions from the city or other sources must be deducted from the total protect costs to arrive at the amount to be assessed to property owners. It may be possible to reduce financial, legal and administrative costs by combining the financing of several LIDS into a ccnsolidated bond issue known as a CLID (consolidated local improvement district). RCW 35.45.160. Once the final LID costs have been ascertained, they are distributed in a manner similar to the calculation of the estimated assessments on the preliminary assessment roll. If a special benefit analysis method of distributing costs for the final assessment roll is used, this analysis will need to be completed well in advance, in order to prepare the final roil, because the special benefit analysis can be a lengthyand very detailed process. The LID administrator should arrange several special meetings for the special benefit appraiserto meet with small groups of property owners to explain how the special benefit process works. These meetings should occur a month or more before the final assessment roll hearing to allow property owner concerns to be properly addressed. Unike the preliminary assessment roll, where cities use the county assessor's records, the "ownerships" for the final assessment roll must be determined from the county treasurer's records. The state law in this area is expected to be changed to read assessor's records for both sets of notices. Until the law is changed, take care not to interchange them. In many counties, the assessor and treasurer share a common database, so that the information is identical. It is a good idea to request a letter to that effect from the assessor or treasurer for LID files. Final Assessment Rall and Hearing Once the final assessment maps and rolls are completed, the date of the final hearing on the assessment roll is set. Often the date is set by resolution, but one is not required by state law. The date, therefore, may be fixed by city council motion. The assessment roll, togetherwith the resolution (when applicable), is filed with the clerk. The hearing notice, specifying the time and place, is mailed by the clerk, and must state that objections must be made in writing and filed with the clerk on or before the hearing date. The C7 ty council will consider the objections and correct or revise the roll, voting on an ordinance confirming the roil. (RCW 35.44.080) Bond counsel should either prepare, or review and approve, the notice. The notice is to be mailed to property owners whose names appear on the final roll at least 15 days prior to the date set for the assessment roil hearing. it is advisable to mail duplicate notices Local and Road Improvement Districts Manual for Washington State S&O Eamon 33 to any parties known to hold an ownership interest in the property, as was done on the preliminary assessment roll, Next, the clerk arranges for the notice to be published at least once a week for two consecutive weeks in the official newspaper, if it is a daily paper. If the off iciai paper is weekly, seek advice from bona counsel as to pub1caticn requirements. The last publication must be at least 15 days before the date fixed for the hearing. RCW 35.44.090. Practice Trp Putication requirements for LID formation (RCW 35.43.140) are not the same as the notice requirements for the ordinance confirming the final assessment roil (RCW 35.44.090). A new request is made to the county assessor to determine if any of the lands within the LID project area have been designated as farm and agricultural and timber land, pursuant to Chapter 84.34 RCW. This should be done by mailing another !atter to the assessor along with a map showing the county tax lots, requesting a written response. The assessment roll hearing is "quasi-judicial" in nature, and property owners may appeal their final assessment to Superior Court. Regardless of the type of recording, it ;s highly recommended that the hearing also is recorded by a court reporter. If you believe that a court reporter is not needed, consult first with your city attorney or special LID counsel to make sure they agree with you. The court reporter's recording does not need to be transcribed unless an appeal is filed. Typically, property owners will indicate early in the LID process whetheran appeal is likely. The assessment roll hearing should be structured. Again, because the hearing is "quasi-judicial" in nature, a structured hearing format is more important than at the formation hearing. It is helpful to hold one or more procedure/hearing structure workshops prior to the formal hearing with the city council, city attorney, bond counsel and/or special counsel to establish a structured hearing format. Reduced risks to the city from a structured format are worth the effort. At the assessment roll hearing, the LID administrator gives a report explaining the project. This report should include the total final cost, any public money paid or to be paid toward the LID costs, and a statement that all the proceedings were proper and in conformance with LID statutes, particularly that proper notice has been given. Questions from the city council are responded to by the LID administrator or other staff. if a property owner desires to file an appeal from the final assessment, the property owner must file a written objection/protest before oral the hearing. The protesting property owner should be allowed to testify at the hearing. (RCW 35.44.190) When property owners protesttheirfina l assessment, they shouldquestion the amount of benefit that the property will receive from the improvement. In other wards, the property owner should argue that the final assessment is greater than the special benefit resulting to the property from the LID improvement. The city is entitled to a presumption of special benefit exceeding the final assessment, and unless this presumption is nullified by expert testimony, such as an appraisal of a qualified MAI appraiser, the presumption should withstand attack. If a property owner has submitted an expert appraiser opinion rebutting the city's presumption, the city must counter with its own expert opinion substantiating the special benefits of the LID improvement to that property. To accomplish this, planning and timing are critical. Extensive preparation may be 34 local and Road Improvement f]istricts Manual for Washington State Sixth edition necessary in order to avoid delaying the hearing. Once the city presents information in the fora of an appraisal opinion, it is then a matter of decision by the city council as to which opinion of special benefit should prevail. The city council has authority to revise or amend the proposed final assessment roll as it sees fit. (RCW 35-44.1 OC) However, if any assessment is raised or if there is a need to include an omitted property not previously on the roll, the property owners are entitled to new notice and a new hearing as if no hearing on the final rcli ever occurred. Those parties originally on the final roll and whose assessments were not raised will have no opportunity to object at a later hearing. (RCW 35.44.120) Downward adjustment to any of thefinal assessments will require additional money from another source to make up for the reduced assessment. The difference could be made up from public funds; or the difference could be made up by reassessing the remaining property owners in the LID, which would require a new hearing and additional costs, including additional interest and notification costs. The entire city council makes the final determination without taking additional testimony. Variations of the assessment roll confirmation hearing process, such as using a hearing examiner or city council committee, should only be done after consulting with legal counsel. The assessment roll is approved by the majority of the city council by ordinance. As with the formation ordinance, the assessment roll ordinance should be prepared by, or reviewed and approved by, bond counsel. Procedures for submittal of the confirmation ordinance to the city council should, if possible, allow for final action on the ordinance to occur at the same meeting as and immediately following the assessment roll hearing. Post Assessment Roll Wearing Actions and Appeals After the final assessment roll is confirmed by ordinance, the roll is transmitted to the city treasurer for collection. On the effective date of the confirmation ordinance, a 10 -day appeal period begins to run. (RCW 35.44.120) During this period, only those property owners who have filed timely written objections to the final roll may appeal to Superior Court. (RCW 35.44.190-270) Upon expiration of the appeal period, the treasurer will publish and mail notice that the assessment roll is filed for collection. The notice states that the property owners have an opportunity to pay all or part of their assessments without interest. This is called a "pre -pay or interest-free" period. If all property owners pay their assessments during the 30 -day interest free period, no LID bond financing would be needed because there would be no unpaid balance. Typically, there is a balance still owing after the pre -pay period. If the final cost includes a financing fee (discount fee), any property owner paying all, or any portion, of the assessment during the pre -pay period should be rebated, deducted or forgiven that portion of the assessmentthat represents the financing fee. The bonds will be sold after the pre -pay period. Since the amount of the financing fee that the city will pay is based on the actual amount of the bond, assessments that are prepaid are not generating any financing fees. The result, then, is a need to treat prepaid assessment differently than amortized assessments. Itis appropriate (but not necessary) to provide this information in the pre -pay notice to the property owners. Lanai and Road Improvement Districts Manual for Washington State Sixth Edition 35 Practice Tip The Guarantee Fund share for an individual parcel may be eliminated from any the assessment for the Parcel if the assessment is prepaid in full. Discounting LID bonds is not required but is becoming a popular financing tool to obtain a more marketable bond with an Inherent iower interest rate, An investment banker provides advice on the structure, timing, terms, marketing strategy, and other matters. The investment banker assists the city in conducting negotiated sales or competitive sales, including preparing the official statement, The investment banker assists the city with the closing process arld the delivery of each bond issue. Cities that intend to use external funding sources to provide interim or long term financing should hire an investment banker. An underwriter purchases the bonds from the city. In a negotiated sale, the underwriter commonly structures the issue, prepares the official statement, and arranges forthe closing and delivery of the issue. In a non -negotiated sale, those services are performed by a financial advisor. It is possible for an investment banker to be the underwriterorto be a financial advisor for the city, but not both. Red Flag Issues The following "red flag issues" should be reviewed and considered for Lips of every size, so that the LID may proceed more smoothly: • Proposals for LIDS for the purpose of converting overhead utility lines to underground lines should always be handled with caution. Typically, the costs of such conversions are excessive in comparison to the special benefits derived. Even when costs are acceptable, spreading the coststo achieve proportionate special benefit is a problem, especially if the primary reason for the LID is to enhance views. For example, when the overhead lines do not equally affect the views of all the properties, the assessments to individual properties will need to be different; perhaps radically different. Homes with spectacular views out their back windows will likely have very different special benefit than homes with views out their front windows. Parking facility LI Ds need to be approached with caution, using experienced legal counsel and qualified real estate appraisers. The major problem is establishing special benefit. LIDS that encompass only a handful of property owners must be analyzed closely by bond counsel to determine whetherthe interest earnings on the bonds are taxable. (Note: LIDS can be done with taxable financing; however, the interest rates will be higher.) • On LIDS involving significant undeveloped property, two major problems exist. First, the value placed on the properties by the county assessor's office may not be sufficient to provide adequate security, thus preventing marketable financing. Second, investment property is generally high risk property. Timely LID payments are often a problem. Some LIDS should be closed (that is, final assessment roll adopted) prior to actual construction. Underground wiring, parking facilities, "hard to interim finance" projects (such as significantly undeveloped lands), controversial projects likely to result in significant legal challenges to the final assessment roll, are all examples of LID that 36 Local and Road Improvement Districts Manual for Washington State Sixth EdNon possibly should be close early. The chronological order of this manual does not address the timing of closing an LID prior to actual construction. Consul, special counsel and/or bond counsel before proceeding. A recommended process is to invite property owners who may be included in an LID to small, convenient meetings where details of the project can be discussed informally prior to the formation hearing. A sign -in for all those present is important. At this meeting, the LID administrator should discuss the entire proposal and provide property owners with information regarding the purpose and conduct of the formation hearing, The results of these types of meetings usually are that: } Property owners testifying at hearings are better able to give coherent, logical presentations in less time; a Property owners are generally less alienated; • Property owners favoring the projectwill more likely appreciatethe need fortheir testimony at the formal formation hearing. • Most, if not all, of the major issues will be aired at the meeting. o Typically, elected officials desire to have property owner involvement in the process. informal meetings serve to reduce incorrect and damaging rumors. When the arguments against a project are known prior to the formation hearing, corrective action, such as redesign or alternatives, can be addressed. Prior knowledge also allows staff to research and/or prepare information for the issues prior the hearing. Atthe formation hearing, itis recommended that the actual arguments against the project be presented by staff either in a formal written hearing report or in the staff presentation at the hearing or both. An objective presentation by staff of both sides of the issues will provide the city council with assurance that staff has addressed all the issues and will serve to reduce the impact of the arguments at the hearing. A proposal to construct improvements that will specially benefit properties in another jurisdiction, or to extend improvements into another jurisdiction, requires careful consideration. For example, does the jurisdiction that will be selling the bonds desire to encumber its own LID guarantee fund with an outstanding debt that benefits properties outside its boundaries? Is the interlocal agreement adequate to coverall contingencies of the LID process? Who is the lead agency? Special counselor bond counsel and investment banker must be consulted at the earliest formative stages to answer these questions. Under certain circumstances, cities may assess properties outside of their corporate limits. Counties cannot assess properties inside of cities. • Often LIDs are only one of a number of recent actions by the city in a neighborhood; for example, there may have been rezones, annexations, block grant actions, etc. Be sure to consider the following: Local and Road Improvement DEstricts Manual for Washington State Sixth Edition 37 o These neighborhoods are usually better organized, with more unified ideas on whatthey want to accomplish. The residents of these neighborhoods are usually more empowered and vocal. Special informal public meetings are essential to provide adequate information to these neighborhoods. o When several separate complex actions are occurring back-to-back, misconceptions and miscommunications often have occurred already. To reduce problems caused by complex actions, it is recommended: • The "big picture" (all the proposed actions involved) should be identified for the neighborhood at the earliest possible time; a The LO administrator must maintain a high profile in the earlier processes in order to respond to LID questions and reduce communication problems. LID administrator attendance at annexation and rezone meetings and hearings is important. • Several group and individual meetings with neighborhood spokespersons will assist in reducing the spokespersons communication problems when those leaders later canvas the area. � It is usually desirable for the staff person responsible for the preceding action to attend the informal LID meetings in the early LID formative stage. a Property owners have not had "10 years of experience" working with the various proposed actions. It is important to take the time necessary to acquaint property owners with the processes thattheyare facing , This effort will avoid or reduce the fears of property owners to the changes that are proposed. The time spentmay also serve to improve the image of government in general. o Property owners involved in back-to-back processes can become frustrated with the length of time involved to obtain what they want. Sharing the LID process information with them early shouid help them set realistic expectations. It is not uncommon for overzealous LID proponents to provide inaccurate information to their neighborhood when they are circulating a petition. All parties involved in circulating a petition, should be made thoroughly aware of the process and the consequences of giving misinformation. • When fixing final costs for an LID project where litigation is expected or threatened, it may be desirable to include the costs of litigating a challenge into the assessment roil. These costs would include legal fees and additional interest through the anticipated termination of the litigation. If no litigation occurs, the final assessment roll can be reduced. It is not unusual for a city council to be uncomfortable with significant numbers of property owners testifying against a proposed LID. For example, if 10 property owners testify against a protect that has a total of 50 equally assessed property owners, while oniy a couple owners testify in favor, there can be a perception that the project has very little support. There are at least three rescue techniques. First, the city council needs to have verbal and visual representation of the total percent of protest (colored maps are effective). Second, a reminder to the city council of a recent local landslide election to compare percentages its helpful; particularly if the landslide was a 55 percent to 45 38 Local and Road Improvement Districts Manual for Washington State Sixth EdNon percent type of landslide. Third, during the LID formation process, it is necessary to inform the project proponents that they will need to counter the perception of lack of support by testifying themselves. Before holding a public hearing, it is a good idea to prepare pre -numbered exhibits. There should be extra copies for the city council or hearings examiner, courtreporter, all the city legal representatives and project opponents when appropriate. Also, prepare a list of the exhibits ahead of time. Organizing exhibits during a formal hearing can be extremely disruptive to the flow of the hearing. Set time limits of presentations at hearings. Check with your legal counsel or bond counsel to determine if special language needsto be put into the notice. Getconcurrence from your city council well in advance of the hearing. ■ Hold a press workshop or individual meetings with appropriate reporters before the hearings. Reporters cannot be expected to understand the project simply by attending public hearings. Do a press release. Be as helpful as possible in providing the story that "should be printed". Give reporters enough background so that they can sort out the truth in the testimony that they will hear at the hearing. And, if there is a positive human - interest story — tell the reporter. E The cost of the project will likely be at issue. It is not uncommon to hear circulating rumors, statements and testimony at meetings and hearings suggesting that there is factual evidence that the improvement could have been built at half the cost. This can be a very com pelling argument to other property owners, to the city council, orto the media. The project will be well served if staff clearly — and often — conveys that an LI D is not a method to build streets, sewers, water and other capital improvements. It is one of several methods to finance those improvements. 0 Do not allow owners and/or developers to go unchallenged when they incorrectly compare the costs to build capital improvements with legal and financial costs, and the design, acquisition of rights-of-way, and building casts. If there is a single issue that is more important than any other issue involving LID financing it is that Ll Ds are financing and legal tools, not engineering tools. Contributors: Gary Bourne, Rod Kaseguma, and John Carpita Local and Road Improvement Districts Manual far Washington State Sixth Edition 39 40 Local and Road impravement Districts Manual for Washington Stats Sixth Edifion Local and R mid Improvement Distr|tGsManuel %rWashington State Sixth Edition 4l Financing L1 Mtroduction Over the past several years there has been a significant decline ;n the number of LID projects financed in the state of Washington. At the same time, underwriters have shifted toward the institutional investor as apposed to the individual investor. As a result of this comb,nation of events, there is a reduced market for LID bonds at a time when, due to shrinking resources, L1Ds make sense as a method of imprcving infrastructure for those that will directly benefit from it. Picking a financing team with experience is more important now than ever before. The entire LID process is about financing infrastructure improvements, not constructing them. The construction is only possible if financing can be obtained. Consequently, a determination if an LID project can be financed should be made prior to formation of the LID. As a result of this determination, additional costs necessaryto attract investor or lender interest inthe financing can be included in the preliminary assessment roll, avoiding a surprise for the property owner at a later date. LID processes lead, ultimately, to loans or the safe of bonds to investors and the retirement of that financing via annual payments by the property owners within a district. Goals of the LID process are twofold: to present a financing to investors or lenders that will enticethem to invest at as low a rate of return as possible; and to assess property owners as fairly as possible in relation to the special benefit received. Financing LIDS Stratugic Planning Is Key to Successful UD Project Financing Projects that provide benefit to property owners that are well received by the owners, that are well secured for the investor, and that meet all statutory requirements and protect the funds of the municipality, are usually well received by the financial institutions and the bond marketwhen f nancing is required. Projects that provide marginal benefit to the property owner, that are not well secured for the investor, that put the municipality's funds at risk and that present legal challenges, may find it difficult if not impossible to get financing. Consequently, it is important to strategically plan the LID financing prior to the formation hearing to determine the viability of the financing that will be obtained when the project is completed. Planning ahead will allow the municipality to change the nature of the project or the repayment sources if necessary, to assure successful financing. LID financing typically involves two different lenders. One provides the construction financing after the district is formed. The other provides permanent financing after the project is completed and the assessment roll is finalized. The lender for the construction or "interim" funding is usually a bank. The iender for the permanent financing is usually investors to which an underwriter sells the LID bonds. The bonds can also be purchased by a bank for its own loan 42 focal and Road Improvement districts Manual for Washington Stats Sixth EdRion portfolio, I nsteaa of by an underwriter. Though this is less otten the case, it sometimes produces a lower cost of funding for small LID projects, particularly if the term is 15 years or less. Throughout this chapter the term underwriter will refer to either the underwriter which in turn sells bonds to investors, or a bank which purchases the bonds for its own portfolio. When referring to construction or interim financing, only the term lender will be used, referring to a bank. Put a Financing Team Together Early An essential feature of the planning process is to put a team together consisting of those that will be a party to the financing. The financing team includes the municipaiity, its bond counsel, financial advisor and even the investment banker representing the underwriter or the lender that will be providing the interim financing when the project is constructed and permanent financing when the project is completed. !n many cases, those providing the financing should be involved even if completion of the project and the permanent financing is over a year away, particularly for developer projects (significantly undeveloped properties). Additionally, a n MAI appraisermay be needed on the team if it is suspected that some of the properties may not benefitfrom market value increases equal to or greater than the assessed cost of the improvements, or if the ratio of the market value of the properties to the estimated assessment on the properties might be less than would be acceptable to the underwriter or lender. Using an experienced financing team will help make the financing process as smooth and trouble free as possible. It will also assure that the project can be financed and at favorable rates for the property owners. Prior to formation of the LID the financing team will help determine the financial risks for the project as originally envisioned and any difficulties there may be in obtaining funds for construction or permanentfinancing. if the project is a developer LID, one in which there are few property owners or largely undeveloped land, special considerations might be required of the property owners in order to make the financing a success. The considerations may consist of letters of credit, accelerated foreclosure agreements, deposits to special reserves, project contributions, ora combination of these or others. To be fair, the property owner needs to know these requirements and their resulting costs prior to formation, not after construction. The owners may be unable to pay for or unwilling to agree to add!tional considerations. Alternately if, in order to make the financing a success, the municipality must improve the security for the financing by increasing the balance in the guaranty fund or by contributing funds to the project, it must know that prior to formation so that it can determine the method of increasing the fund's balance or whether to withdraw support for the project. Roles of Financing Team Members The financing team is responsible for developing a financing plan that balances the risks to municipa!ity and to the financing provider with the costs to the property owners. If a proper balance is achieved, the project can be financed and at favorable rates. If the risk is too high or the cost too great, the financing will fail and the project should be abandoned. Members of the team contribute expertise related to their responsibilities that help assure success forthe project financing even before the legal formation of the district. 1. The municipality provides key information about its willingness to be involved and the importance of the project to the community and the property owners. This information includes: Local and Road Improvement Districts Manual far Washington State Sixth Edition 43 • political will of the council or commission; willingness of the municlpality to contribute funds to the project if needed; • need and desire for the infrastructure; • willingness of the property owner or the municipality to contribute funds to the guaranty fund, reserves, or other credit enhancements, if necessary; • ability to administer the assessment roll; • willingness and abilityto payfor pre -formation engineering and design costs, even if the project fails; Municipality's policy regarding the collection of delinquent assessments; and history of the municipality's willingness and commitment to foreclose on delinquent assessments. Information the municipality brings to the planning process in addition to its willingness and commitment to the project includes: • engineer's estimate of the project cost and the estimated assessment per parcel; • parcel listing and map of the LID area; • valuation of each parcel and whether they are improved or unimproved; • amount of LID notes and bonds outstanding secured by the guaranty fund; • whether properties within the district are in other districts and their assessment payment history and; balance in the guaranty fund available for the LID payments. 2. The financial advisor works on behalf of the municipality. The advisor examines the characteristics of the LID and those of the municipality, and through experience determines which characteristics can affect the marketability of the project's financing. The advisor presents his analysis to the team to assist with the planning effort. Among others, the characteristics include: ratio of each property's assessed or market value relative to the estimated assessment to be charged and the acceptability of those ratios to the financial markets; • ratio of improved and unimproved properties to the total assessments to be charged and the potential impact on financing; • potential impact on the financing of the delinquency history of property owners within the proposed LID, and if those properties are part of another outstanding LID,- 44 ID; 44 Local and Read Improvement Districts Manual for Washington State 5{xtfr Edition • whether property owners in the proposed LID are delinquent on tax payments and the potential impact on financing; distribution of the assessment load among the assessed properties and whether or not the distribution indicates the need for credit enhancements; • credit of the municipality and its potential impact on a lender's perceptions of the ability of the mu nicipalityto make payments in the event of property owner default and; • if there is a need for credit enhancement, the options and the amount needed to assure favorable marketability of the financing and to protect the municipality. The financial advisor can help select the underwriter. The underwriter works on behalf of the investor whom they sell the bonds to. The advisor will present the municipaiity's point of view and needs to the underwriter when negotiating financing structure, credit enhancement needs and other factors that represent financial risk to the municipality. Alternatively, with a well -secured and structured LID, the financial advisor can help prepare bid documents and take the financing to a competitive public bid, analyzing the bids received and making recommendations for council or commission action. It should be noted that, due to the unique nature of the LID, competitive bids are rare. 3. The Underwriter sells LID bonds to investors at the completion of the LID project construction. The lender prov'.des a short term loan or interim financing for the construction of the LID project. The credit quality of any LID is a balance of factors that contribute to an investors' or the lender's confidence that the financing will be repaid. If, after analyzing those factors, the financial advisor determines that the pending project may represent a risk to the investor or the lender, the underwriter should become a member of the financing team prior to formation of the LID. As a member of the financing team and a representative of the interests of the investor, It will be possible to negotiate directly with the underwriter to develop a financing structure that will provide the credit level the investors require. The negotiations may include among others, special creditenhancements, municipal contributions to the project and unique repayment structures. in addition, the involvement of the underwriter may be critical to the municipality's ability to obtain construction funding for the project as will be described in more detail later. If the underwriter requires special considerations, it is important to know those requirements and their associated costs prior to formation of the assessment district so that estimates of the costs can be included in the preliminary assessment roll. 4. Bond counsel works on behalf of the municipafty and guides the financing team through the legal and tax issues facing the project and it's financing. Minor errors in actions taken, documents written or statements made by municipal officials or representatives can have significant or damaging impact on the legal framework necessary to achieve the desired financing goal of the municipality. Bond counsel, in cooperation with the municipality's own counsel, can help to avoid these pitfalls or correct mistakes, if made. Bond counsel provides the legal and tax opinion required for financing. Also, if agreements, credit enhancements or inr:ovative solutions to financing problems are needed or proposed, Bond counsel provides advice on legality as well as the legal Local and Road Improvement Districts Manual for Washington State Sixth Edition 45 language to be used. Bond counsel is also an important resource for discussions relating to arbitrage compliance and securities regulations. Consequently, itis importantto make Bond counsel an early member of the financ,ng team. 5. Due to legal considerations and/or the quality of information available regarding the value of the properties to be assessed, an MAI appraiser may also be a necessary member of the team. The MAI is retained by the municipality and will establish the market value of the properties before and after the proposed improvements from which the preliminary and final assessment rolls can be "spread" among the property owners to be assessed. The before and after market values established by the MAI may also be critical in determining the municipality's abilityto obtain funding forthe project. The appraiserwill also provide the necessary support in the event of a legal challenge by property owners regarding the amount of assessment charged to their property. Casts to Be Included in an LID Statutes provide for the inclusion of virtually all of the costs associated with the creation, formation, construction, confirmation and related financing costs of an LID. Since, in most cases, the individual property owners realize a significant gain in the value of their property as a result of the project improvements, it makes sense to charge property owners for costs associated with the project as part of the LID financing rather than far the municipality to absorb those costs. All costs intended to be included should make it to the preliminary and final assessment rolls and be included in the financings. To assure that no costs are inadvertently missed, the financing team should reviewthe costs priorto the preparation of the preliminary and final assessment rolls to assure their inclusion. Once the final assessment roli is confirmed it is very diff icultto go back to include costs accidentally left out. Examples of cost related to an LID that can be assessed include are: µ Construction Engineering and design • Legal fees Rights-of-way acquisition • Interim (construction) financing interest and any issuance costs (including underwriting, bond counsel, note printing) + MAI appraisal fees Funding of the guaranty fund or reserve, if needed • The municipality's cost of: o administering the roll over the life of the LID; o administration of the LID project before formation to after confirmation; o annual bond registrar expenses; o arbitrage rebate tracking services; and o legal printing and publication. 46 Local and Road Improvement Districts Manual for Washington State Sixth &mien Issuance costs for the LID bonds: a bond counsel a underwriting e rating and insurance, if rated or insured a bond printing • official statements and continuing disclosure o closing If there is any doubt as to whether a cost should or legally can be included, check with the financing team members, particularly bond counsel and the financial advisor. Some costs may be customarily absorbed by individual municipalities. That is an individual choice. ProtecUng a MunicipalAys funds If property owners fail to make assessment payments, the municipality may be required to draw on the guaranty fund or reserves to make debt payments. If the guaranty fund is depleted, the municipalitywill be required to replenish the fund unless the ordinance or resolution underwhich the bonds were issued provides otherwise. Since foreclosure actions can take several years, there may be a significant threat of default on the bonds if provisions are not made to secure the bonds with the guaranty fund or a reserve. Underwriters will likely demand that a sufficient reserve or the guaranty fund be pledged to the payment of the bonds and that provision for replenishment of the guaranty fund or reserve be in force. Default is not acceptable. Default is a dirty word, which can affect the general credit of the municipality, even though it was not technically or legally liable for the debt repayment. To avoid default, it may be necessary to use funds of the municipalityto make payments until the guaranty fund or reserve can be replenished or foreclosure proceeds have been obtained. Consideration of this possibility should be made in the formation stages of the LID process. There are several ways the municipality can protect itself from such occurrences. These include among others: • Increase the size of the existing guaranty fund or reserve using financing proceeds (backed by the assessments) or municipal funds; • Avoid LIDs with single or few property owners; • Avoid LI Ds with largely undeveloped properties; • Only create LIDs in which properties have a high assessed or market valuation to assessment ratio; • Create stiff penalties for assessment delinquencies; • Have a reputation for aggressively collecting and foreclosing; • Avoid projects that are too big and expensive. Statutes have been created which affect the establishment and use of the guaranty fund for an LID. Prior to the formation of the LID, the use of the guaranty fund should be determined and the appropriate 'egai language for its use established. Bond counsel should provide this advice Local and Road Improvement Qistricts Manual for Washington State Sixth Edition 47 particularly since they are uniquely qualified to be fully current on municipal law and the statutes affecting financing. Estsbfishing the Size of the Guaranty Fund or Reserve It will be assumed for the purposes of this section that underwriters and lenders will require the pledging of the guaranty fund or an adequate reserve for most f not all of the LID and ULID project financings a municipality is likely to undertake. There may be exceptions to this rule but a municipality should not assume that it could finance an LID without such a pledge prior to actually negotiating the financing with the provider. Establishing an appropriate balance for the fund is important to protect the municipality and the financing provider. If there is a perceived risk that the guaranty fund wil? be drawn upon to make the required interest and principal payments on the debt, the fund should be sized to avoid the potential: of being fully depleted. Typically. LID guaranty funds are set at or just below the maximum amount above which the debt would be considered arbitrage bonds under treasury regulations. This is approximately 1 D percent of the principal amount of bonds issued. Arbitrage should be considered when establishing the guarantyfund balance with the aid of your financing team and/or an arbitrage compliance specialist. For LIDs that have fully developed properties and a high ratio of property value to assessment, a large guaranty fund or reserve may not be necessary as it is unlikely a property owner would risk foreclosure on his/her property by defaulting on his/her assessment payments. Conversely, an LID with few property owners who have much to gain from the LID project and little to lose may decide not to pay, forcing large draws on the guaranty fund. If the fund or reserve is not largeenough, municipal funds, taxes, or in the caseof ULIDs>Utility Local Improvement Districts), utility revenues may be at risk. In today's economy, the risk of bankruptcy or bank foreclosure is greater than it has been in many years. Consideration of this risk must betaken into account when sizing the guaranty fund and analyzing the credit of the LID as a whole, whether it be a developer project or one with a large number of property owners or one with high value to assessment ratios. Bond counsel can provide guidance as to how the municipality can protect itself and the investor should this issue present itself. The financial advisor and the underwriters or lenders can also provide guidance that will assure the marketability of the LID when funding is to be obtained. For certain LID projects, the lack of a sufficient guaranty fund balance can be supplemented or replaced by alternate sources of security. These alternate sources are usually available to LIDS which have a single or few property owners of substantial means. The security enhancements may include: • letters of credit; • accelerated foreclosure agreements; • corporate guarantees; separate reserves. These enhancements are provided by the property owner and effectively increase the amount of money ava1able to make payments on the debt in the event of non-payment of assessments. However, accelerated foreclosure agreements are not available to the provider of the construction funding, as they require the establishment of an assessment lien. It is very importart that if it is determined that one of these enhancements will be needed, that it be X13 Local and Read Improvement Districts Manuel for Washington State Sixth Edition obtained prior to construct on. It is not likely that the property owner will agree to provide the enhancement after the protect has been completed. Structuring LIDS and UUDs LID and ULID assessment roll lengths can impact the acceptability of financing for lenders and investors. Typically, ;nvestors prefer LID bonds that have annual estimated principal maturities that are of sufficient size to attract their interest. if a smal' project has a 20 -year assessment roll, the annual estimated principal maturities couid be too small to be attractive unless the interest rate is high relative to other issues available to the investor. The financial advisor can provide guidance on setting the length of the assessment roll such that it will provide favorable market acceptance for the financing and not prove too much of a payment burden, for the property owners. Typically, fully developed residential LIDs have assessment rolls of 15 to 20 years in length. Developer and business LIDs have roll's typically of 10 to 15 years in length. However for each, the average size of the individual assessments and the likely ability of the average property owner to make the annual payments, are considered in setting the length of the roll. Also considered is the likely amount of pre -payments that will be received during the prepayment period and over the life of the assessment roll. Once again, it is important to consider and make these decisions priorto the formation of the distrietto provide adequate information to the property owner about the annual payments required. The municipality is required to call as many LID bonds as reasonably possible each year with assessment payments received. Utility Local Improvement District bond issues do not have such a requirement. ULID bonds are typically structured to match the cash flow expectations of revenues produced by the rates of the utility in combination with the estimated assessment payments. ULID bonds typically have a call date that matches revenue bonds in the market with similar maturity lengths. However, it is possible to sell ULID bonds with an annual call, which will allow the matching of bond payments: with assessment collections. The interest rates on a bond issued with an annual call will likely be higher than those of similar bonds with a standard revenue bond call feature. But, depending on the municipality's utility cash flow and outstanding bond covenants, the higher rates may be an appropriate trade-off. Consideration of the call feature of a ULID bond will not have an impact on the structure of assessment payments but !twill have an impact on the assessment rate paid. Construction or Interim Financing Project construction and its financing are approved with the passage of the assessment district's formation resolution or ordinance. Between the formation of the district and the confirmation of the final assessment roll, long term LID funding cannot be obtained because no lien has been established on the properties in the district. Construction must be funded during this period. If internal funding is not advisable or possible, it will be necessary to obtain financing from a construction lender, typically a bank. There are unique prob€ems associated with construction financing. First, a properterm or length must be set for the funding. LlDs are notorious for having unpredictable construction and roll closing periods. This is due in large partto the hearing process and the tune is takes to complete an appraisal after construction, if one is required. After the fina! roll is spread and handed to the property owner, that owner has an opportunityto challenge the amount of the assessment at the final assessment roll hearing {confirmation Local and Road improvement Districts Manual for Washingtan State Sbdh Edidon 49 hearing). If there is a challenge and an unsatisfactory ruling is made at the hearing, the property owner could take the challenge through legal appeals. Bonds often cannot be sold while assessments are on appeal, forcing a delay in the repayment of the constr4ction financing. Also, the council or commission in its efforts to be fair and impartial could extend the hearing, causing a repayment delay, These and other factors contribute to the lack of predictability for the term of the interim financing. The ter.►n of the construction funding should be set long enough to take into account reasonable extensions of the period for closing the assessment roil. The loan sheuid also be callable at any time, with as little a penalty as possible, to provide the flexibility to pay off the loan at the earliest available date. Further complicating the issue forthe construction lender isthe lack of security forthefinancing. Since the lien on the property is not perfected until the completion of the final assessment hearing and the filing of the roll for collection, the construction lender has only the guaranty fund and the goodwill of the municipality as securityforthe financing unless some other arrangement is made. Consequently, it is very important to the lender that the long-term financing for the project be viable at completion of the project. Often it is a requirement of the construction lender that a "takeout letter" be available from a qualified financial institution or underwriter, committing to the purchase of the long-term debt, when issued, before the lander will provide financing for ,the construction. Since no assessment revenue is received during the construction period, intereston the loan that comes due during the construction period will have to be capitalized and paid from the proceeds of the construction loan. This is an important factor in the proper sizing of the LID construction loan. Often, if the lender consents, interest is paid only at the maturity of the loan. Some projects however, have construction periods that are too Zang for lenders to accept a delayed interest payment. NotA11 LID Projects Can or Should Be Financed It should not be assumed that a project can be financed through LID assessment bonds. Some projects may provide infrastructure improvements for properties that lack the value to support LID debt. There may also be legal or tax problems which will doom financing. Determination of risk to your municipality as well as the lender and the investor is an important part of the LID process and may determine the inadvisability of supporting a project. Use your financing team to help you make those determinations prior to formation of the assessment district. Understand the financial Risks Takers to fund LIDs A lender or underwriter risks capital, investors risk capital and investment return, and the municipality risks its own funds when embarking on and funding an LID project. As a municipality, work to minimize risk by helping to make sure the LID or ULID issue is of good credit quality, is well secured and that information regarding the project and its financing are fully disclosed to all interested parties. Since there are a limited number of investors willing to purchase LID issues, it is rnportartto understand their needs and if possible, properly balance the municipal and investor risk, Municipalities who ignore the needs of the investor, risk a higher cost financing at the least and at the worst, an inability to finance at project completion. 50 Local and Road Improvement Districts Manual for Washington State Sixth Edition Continuing Disclosure Undertaking Publicly issued LiD financings fall under the requirements of the SEG 15c2-12 regulations. if the issue meets the size thresholds of the regulation, reporting to the Nationally Recognized Municipal Securities Information Repository (NRMSIR) is required. Of particular importance for reporting is the annual call of LID bonds. LID bonds are relatively unique in that they have annual unscheduled calls of bonds. The calls are unscheduled in that the number of bonds called is dependent on the receipt of assessment payments and cannot be scheduled at the time of issuance, only estimated. Prior to the issuance of the bonds and the passage of the financing ordinance or resolution, reviewthe reporting requirements under 15c2-12 with bond counsel and set up the mechanism for annual reporting under the regulation. Arbitrage Tracking LID financings are subject to the Arbitrage Regulations in the same manner that all other b are subject to the regulations. If arbitrage is earned, rebates must be paid. A rebate requirement will most likely be incurred as a result of the balance and interest earnings of the reserve or guaranty fund for the LID bonds. Arbitrage tracking is necessary to insure compliance with the regulations and may be accomplished by qualified people and software programs within your municipality or by independent professionals who specialize in providing the service. Given the potential penalties for failure to comply, the cost of the professional service is relatively low at the current time. Ask your financial advisor and/or bond counsel for a list of firms who provide the service. In addition, keep accurate records of the interest earned in the reserve or guaranty fund as well as the debt service fund and do not commingle the funds with other funds and accounts. Contributor: Steve Gaidos Local and Road Improvement Districts Manual for Washington State Sixth Edition 51 Assessment Methods introduction Statutes and case law specify that the assessment per parcel must notexceed the special benefit adhering to the parcel due to the improvement and the assessments must be proportionate to one another. Special benefit is defined as the difference between the fair market value of the property before and after the local improvement project. A corollary to these principles is that property not benefitted bythe improvements may not be assessed. No matter what assessment method is used — per parcel, front foot, area, zone -termini, traffic volumes, special benefit appraisal, etc. — a reviewing court will be concerned only with these criteria. Even if a project lends itself to a front footage assessment method (i.e., uniform lots, similar zoning) or is not large enough to warrant a complete special benefit analysis, it is wise to check a few strategic parcels with a feasibility study or a limited restricted type of appraisal. This will prevent unpleasant surprises at the final assessment roll hearing. Appendix Four contains examples of assessment computations using both mathematical methods and an analysis of special benefit. LID/RID Special Benefit/Proportionate Assessment Study Introduction For ease of reading, "LID" will be used rather than other acronyms although the information presented herein pertains to municipal districts otherthan a local improvement district (LID), such as road improvement district (RID) and local utility district (LUD). Typically, the scope of services involves a formation special benefit study or feasibility analysis which may be utilized by municipalities to establish a proposed LID boundary, ascertain the probable economic feasibility of the project and perhaps considerthe effectof alternative design elements on the preliminary assessment ratio. Afinal special benefit study is an assessment method that documents the proportionate amount of the total LID assessment to be levied on each specially benefitted assessable property. The special benefit estimates and resulting recommended assessments aredesigned to complywith RCW statutes and case law precedent. Municipalities and property owners may utilize municipal special benefit studies to become more informed aboutthe economic influence of the project on the neighborhood, the assessments recommended on other specially benefitted properties within the LID boundary and the validity of proposed assessments to be levied on specific properties. Owners may also engage real estate professionals to perform special benefit studies in order to document proteststo assessments atfinal assessment roll hearngs. Becausethe municipalities have the presumption of being correct in the administration of a LID, parcel appraisals or special 52 local and Rued Improvement Districts Manual for Washington State Sbah Edition benefit studies may be used by owners to attempt to remove the presumption that project improvements provide a special benefit and that proposed assessments are fair and equitable to each benefitted parcel. In the eventthatan owrer does rot prevail in protesting an assessment at the final assessment roll, the special benefit study may be used as part of the record to support appeals to Superior Court. The narrative special benefit study report serves as support for informed decisions by both municipalities and property owners. The reportand testimony, if requested, of the special benefit analyst/appraiser provide documentation of assessment recommendations at the final assessment roll hearing. Special Benefit hoporiionate Assessment Studies — Phases of Analysis Feasibility Analysis Due to the ever-changing real estate market, it is often advisable to conduct a feasibility study as an initial analysis in the LID formation process. This enables municipalities and property owners to evaluate the economic feasibility of a project by comparing the probable range in special benefit to the project cost or amount to be levied on assessable property. If the project is economically feasible, the next phase is a formation special benefit/proportionate assessment study, followed by a final special benefit study. Typically, but not always, the final specia i benefit study is undertaken at or near the completion of project construction. Each of the above phases is briefly discussed below. A feasibility study involves a preliminary investigation of the proposed improvements and the neighborhood in which they would be constructed, together with an analysis of the extent and intensity of influence of the proposed project on market value. Unlike the more detailed formation and final special benefit studies, the feasibility analysis does not provide a recommended per parcel assessment. The scope of work is more general in nature with benefitted properties segregated into classifications based on highest and best use. Representative parcels within each classification are then analyzed without as opposed to with the LID assumed: completed. The market value difference (special benefit), typically expressed as a range, is then extrapolated over similar properties in each respective classification, arriving at a total specia! benefit range that can be compared to the assessment amount. This phase of the study can be very useful to the client in considering a projects feasibility and is often used in decisions on whether or not to proceed with the LID. Special benefit/proportionate assessment studies for municipalities may consist of two separate assignments, both of which utilize mass appraisal techniques. The first assignment is an LID formation study and the second is a final assessment roll study. Formation Special Benefit Study Typically, the first work sequence, occurring in conjunction with the preliminary investigation, involves preparation of a property ownership map outlining the general extent of project improvements and measurable special benefit influence on market value due to the LID proiect. The ownership map is utilized in defining and documenting the extent of special benefit due to the project and is part of the basis forthe boundary location recommended forthe proposed LID. The work product from a prior feasibility study can also be utilized in this phase. Local and Road Improvement Districts Manual for Washington State Skh EdNon 53 Next, investigation of physical and economic characteristics of each parcel and abase study are undertaken, consisting of the assemblage of pertinent market data and study of the environmental, economic, governmental and social forces influencing the subject area. Consideration is given to current zoning, land use trends, existing building improvements, highest and best use and other factors influencing market value for each property type or ownership, without and with the amenity of the LID project. All tracts within the designated LID boundary are outlined on a map, with each tract's owner of record noted. Taking into consideration unity of ownership, continuity of the tracts and unity of use, a LID parcel map is prepared. This map provides a basis for preparation by engineers of a legal description of the district. When the probable increase in market value disclosed from this preliminary analysis is greater than the proposed assessment, the LID project is concluded to be feasible without modification. At this point, the analyst can also provide further insight for the municipality into the influence of alternative design elements of a project and the resulting change in the ratio of special benefit to total assessment. Completion of the analytical portion of the formation special benefit study results in the following major conclusions: 1. Recommendation as to location of the LID boundary, 2. Recommendation as to the assessment/special benefit ratio for the proposed project, 3. Recommendation as to a preliminary assessment to each benefitted parcel. Following is a brief discussion of the formation special benefit portion of the study that generates the results listed above. After exterior inspection of each parcel within the LID, the economic base study of the neighborhood is utilized to prepare estimates of highest and best use and probable market value of each parcel within the LID boundary without the proposed improvements. The base study is thea expanded to include the study of market data with e!ements of similarity to the subject parcels, assuming completion of the project. This expanded base study, relating to the LID under the assumption that LID project special benefits are attached, is utilized to prepare an estimate of highest and best use and probable marketvalue foreach parce, assu ming completion of the proposed improvements within a defined time span. The terms "without" and "with" LID -funded improvements are intended to be virtually synonymous with "before" and "after" references in precedent -setting legal decisions, The terms are utilized within this portion of the LID Manual to avoid an implication that the date of valuation is controlled by the date of physical construction of LID improvements. The increase In probable market value adhering to each parcel is the measure of special benefit dueto the LID project. The municipal LID administrator provides the total proposed assessment amount. The sum of special benefits estimated for each parcel is the total special benefit attributable to assessable property within the proposed LID; this total divided into the total UD assessment provides the assessment ratio, or the LID cost per dollar of special benefit. The special benefit to each parcel multiplied by this cost/benefit ratio results in the individual assessment recommended to that parcel. The recommended preliminary assessments meet the following two criteria: 1. Each recommended preliminary assessment is equal to or less than the special benefit adhering to that particular parcel. 54 local and Road Improvement Districts Manual for Washington State Sixth Edition 2. Each recommended assessment is reasonably proportionate to the special benefit adhering to that parcel and all other parcels due to the LID -funded project. Completion of the first assignment results in a formation special benefit study report which outlines the recommended LID boundary and provides a narrative summary of the study and a tabulation of recommended assessments to all assessable parcels specially benefitted by the project. This special berefit/proportionate assessment study may be utilized by the municipality and property owners as part of the basis of their decision to form or to oppose formation of an LID. Subsequent to completion of this assignment, the analyst can be engaged to make a presentation at the LID formation roll hearing. If requested, the special benefit analyst's presentation at the formation hearing outlines: (i) basis for location of the LID boundary, (2) economic feasibility of the project and (3) general description of the assumptions, data, analysis, and appraisal techniques. The purpose of this hearing is to inform property owners, respond to their concerns, and provide a forum for the municipality to decide if an LID is to be established within the boundaries they designate, taking into consideration proposed improvements, aggregate special benefits and total amount of proposed assessment. The various recommendations are presented to the municipal council for use in their decision on LID formation. Final Special Benefit Study A special benefit study for the tinal assessment roll hearing is typically the Tina] phase of this portion of the LID process. This study may occur prior to construction of the LID -funded project, during construction, or some time after project completion. The final special benefit study may be the initial special benefit study made on a LID project, in this event the study would follow a sequence of research and analysis similar to the preceding discussion relating to a formation special benefit study. if the final study was preceded by a formation special benefit study, an update is made of relevant market data, the base studies are reviewed and current trends resulting in indications of market value for each parcel are analyzed. Available records are again verified to research and document changes in ownership of all or any portions of the subject parcels. The impact of ownership changes, subdivision activity and trends affecting highest and best use and market value of each parcel is analyzed. Presentations are made at informational hearings or meetings with individual property owners, when requested by the municipal authority, prior to the final assessment roll hearing. Pertinent information provided by property owners is also noted and considered. Any discrepancies in factual data, such as usable land areas, are researched and resolved. The probable market value of each parcel without and with the special benefit characteristics resulting from the LID project is estimated (typically as of the date of the final assessment roll hearing) in order to arrive at an opinion of special benefit to each parcel. Two appraisals are made of each parcel or economic entity. One appraisal results in an opinion of market value of existing property rights without the influence, if any, of the LID -funded protect. The second appraisal results in an opinion of marketvalue of property rights adhering to the property with the project constructed or to be completed within a specific time period. Property characteristics, highest and best use and marketvalue opinions in the without and with appraisals are considered as of the same date of valuation. Local and Road Improvement Districts Manuel for Washington State Sixth Edition 55 Again, special benefits are totaled and divided into the total LID assessment to obtain the overa!1 assessmentlbenefit ratio. The special benefit attributable to each parcel is multiplied by this constant ratio to arrive at recommended assessments. A significant variance ir. the assessment per squarefootor perfrontfoot is sometimes noted on adjacent properties. This can resultfrom the influence of factors including but not limited to existing building improvements, differences in zoning or projected intensity of use, corner influence, terrain, wetlands, ratio of frontage to area, or changes in access characteristics. Because differences in special benefitto individual properties are measured bythe special benefit analysis, the method results in a fair and equitable allocation of assessment to all parcels that is in proportion to the individual special benefit. Assessments made on a formula basis (such as zone and termini, per square foot or per front foot) may result in amounts that are not fair and equitable between parceis within the overall LID. Formula or mathematically -based assessments may be less thar, or exceed the proportionate assessments indicated by the special benefit adhering to parcels as a result of the project. Completion of the second assignment results in a special benefit study report that includes narrative and summary tabulation sections. The narrative section explainsthe assumptions made and techniques used forthe study as well as providing documentation for the conclusions shown in the final assessment roll tabulation. The tabulation section consists of a summary of recommended assessments to each benefitted parcel. As in the formation special benefit study, recommended assessments meet the following two important criteria: 1. Each recommended assessment is equal to or less than the special benefit adhering to that particular parcel. 2. Each recommended assessment is reasonably proportionate to the special benefit adhering to that parcel and to all other parcels due to the LID -funded project. The special benefit analyst is again prepared, if requested, to make a presentation at the final assessment roll hearing explaining techniques used, assumptions made, basis of special benefit and resulting recommended assessmentto each parcel. The analyst responds to LID protests or contradictory testimony in order to provide unbiased information to property owners and the hearing authority. Testimony of the analyst/appraiser, along with the special benefit study report as an exhibit, is ,made part of the record during the final assessment roll hearing. Summary of LID Speciai Benefit Analysis Major Phases 1 Recommend an LID boundary that encompasses all property specially benefitted by the proposed LID project, if requested by the client. 2. Document economic feasibility of the project, with separate analysis of alternative project improvements, if appropriate. 3. recommend assessments that are proportionate to the special benefit adhering to each assessable parcel. 56 Local and Hand Improvement Districts Manual for Washington State Sixth Edition Formation Criteria 1. Encompass only the legally assessable area, or include provisions for voluntary participation by the owners of exempt property. 2. Encompass only the area specially benefitted by the LID project. 3. The total special benefit must approximately equal or exceed the total assess mentto be levied. Need for a Special Benefit Study A special benefit analysis is recommended when: 1. Uncertainty exists regarding financial feasibility of the proposed project or portions thereof. 2. Uncertainty exists pertaining to the limit of special benefit influence and, therefore, location of the LID boundary_ 3. The proposed project includes property with irregularly shaped ownership lines or significant variation in other physical characteristics such as topography, soils, drainage. wetlands and amenities such as view or water frontage. 4. The LID boundary encompasses property with varying intensities of use or zoning designations, variations in use and value created by specific locations, changing land use regulations or highest and best use. A special benefit analysis is not recommended when: L It is acknowledged that the special benefit attributable to the project exceeds the total amount of LID assessment. 2. Ownership lines are reasonably regular or in proportion to each other. 3. There is insignificant variation in intensity of use because of land use regulations, topography, soils, drainage, wetlands or changes in highest and best use due to the LID project. 4. It is not probable that the LID formation, boundary location, property assessments or proportionality of individual assessments will be contested. Utilize a Special Benefit Analyst to Resolve Issues 1. Make a p�elirninary investigation at the inception of a proposed LID project and provide an opinion as to economic feasibility of the overall project and/or various components thereof. 2. Recommend an LID boundary which encompasses all specially benefitted property and provides support to withstand appeals to Superior Court. Local and Road Improvement Districts Manual for Washington State Sixth Eriifion 57 3. Consider general benefits as weli as special benefits; if appropriate, consult with bond counsei and recommend the documentation of underlying assumptions included in the foundation of estimates of special benefit resulting from the LED 4unded project. Consideration may also be given to those construction costs related to meeting design standards which may be general benefits, as distinct from construction costs emanating from requirements of the LID project. 4. Prepare a formation special benefit study report and, if requested, make a presentation at the formation hearing to document decisions on both overall project feasibility and boundaries selected as well as providing information to owners of property within the proposed LII, 5. Prepare a special benefit study report for the final assessment roll hearing. If requested, an appearance at the final assessment roil hearing serves to explain and present documentation for the basis and amounts of assessments and establish, for the record, that the assessments are fair, less than the special benefits and in proportion to all other assessments to be levied on property within the LID boundary. 6. Respond to conflicting testimony and cross examination by property owners or their attorneys with unbiased data that contributes to a complete final assessment roll hearing record. Mathematical Methods To calculate individual assessments for improvements in an LID where there is a grid work of north -south and east -west streets, the mathematical cost distribution formula calledzone-termini is often effective, This method of cost distribution is described in RCW 35.44.030 and .040. Other mathematical formulas include the area (square foot or acre) method and front foot method. Simple utility and street projects in platted residential neighborhoods are usually good candidates for equal assessments per lot. The area method of cost distribution is often preferable for major sewer and water projects and is often applicable to LIDs in commercial areas. Front foot distribution of costs is often preferable for street lighting projects. Itis possible to have a need for several different types of assessment units within one district. Assessments for trunk sewers and pump stations as well as assessments for lateral sewers against individual lots are examples. Mathematical cost distribution formulas such as area, frontfoot and zone -termini are usually easy to explain to affected property owners and they are always less expensive to calculate than the special benefit analysis method. Sometimes mathematical formulas will not fairly distribute special benefit. When a mathematical formula is not used, a qualified, experienced appraiser should be employed to conduct a special benefit analysis. On projects where there is a mixture of land uses, zoning, or when major topographic changes occur in the district, it is recommended that the special benefit analysis method be used. Note: Itis easy to embrace the thoughtrhatifan improvement willcost$400 per foot to constructalong the frontage of a certain property, then that property will be assessed $400 per foot. This is a deception! Remember that assessments must be based on the increased value of the properly resulting from the improvement, not on the cost of the improvement. Contributors: Robert J. Macaulay and Ralph Rodriouez 58 Local and Bead Improvement Districts Manual for Washington State Sixth Edition Public Hearings iii-oduc$ion Cities should do their absolutebesttowork with property owners toresolve their concerns. Even Where a city works closely with property owners, a lawsuit may be filed, despite the city's best efforts. Statutory limitations and fairness to other property owners prevent a city from granting all of a property owner's demands. Formation hearings and final assessment roil hearings should be conducted with possible litigation ?n mind. Formal rules of quasi-judicial procedure should be formulated and distributed well In advance of the hearings to the council and LID participants, In the final assessment roll hearing, the city council acts as a board of equalization to consider evidence presented by both staff and property owner as to the correctness of the assessment for each parcel. The final assessment roll hearing must be fair, open, impartial and structured. Both hearings maybe held before the full city council, a committee thereof ora hearings officer (examiner) (RCW 35.43,140). The following discussion under "Making Your Record" applies to all three instances. Making Your Record - Orchestration for Litigation Introduction Despite the best efforts of all involved — administrators, engineers, attorneys, and city officials — sooner or later a city will face the wrath of a property owner disgruntled with some aspect of an LID. A lawsuit will be filed. Therefore, every formation hearing and final assessment roll hearing should be conducted with an eye toward litigation. The city should takethose reasonable steps within its power to enhance its chances of winning a property owner's LID lawsuit. The discussion which follows outlines a number of steps which can be taken in anticipation of litigation. During the life of every LID, there are two hearings. The first hearing occurs when the city is contemplating ordering public improvements that are to be financed by LID assessments. (RCW 35.43.140; 35.43.150) A second hearing usually occurs afterthe improvements have been ordered and actually constructed. This is the hearing to confirm the finai assessment roll and the assessment levied against the individual owner's property. (FiCW 35.44.070-35.44.120) Lawsuits by property owners are normally filed after the hearing to confirm the final assessment roll. Because lawsuits challenging the formation of a local improvement district are rare, these materials will concentrate on steps to be taken to confirm successfully the final assessment roll. Local and Road Improvement Districts Manual far Washington Stste Sixth Edition 59 Fhe Formation ?fearing There are a number of attributes of the formation hearing which should be kept in mind by city officials. The participants in a hearing to form an LID should remember that the majcrity of the decisions to be made at such a hearing are ones with which our courts are reluctantto interfere. Under our LID laws, in the absence of fraud or bad faith, a judge is required to defer to the city council with respect to items which fall within its':egislative judgment, such as the necessity of the improvements, the character of the improvements and design, the location of the improvements, the boundaries of the LID, the cost of the improvements, and the city's contribution to the cost of the improvements. Each of these matters involves discretionary, legislative acts of the city council with which a court may not interfere. Any arguments concerning special assessments, whether as to theirvalidity or amount, can only be raised at the subsequent hearing on the assessment roll. This includes any arguments as to whether benefits conferred by the contemplated improvementwill be special or general. Citizens for Underground Equality v. Seattle, 6 Wn. App. 388,492 P.2d 1071 (1972). Itis for these reasons that lawsuits challenging the formation of an LID are less common and less successful than lawsuits challenging final assessments. So long as the city and its employees take steps to comply with the statutory requirements necessaryto form an LID, the chances of a successful challenge to the formation of an LID are remote. The courts have invalidated the formation of an LID where a municipality attempted to dilute the power of property owners to prevent or protest out the formation of an LID. Thus, where certain property owners within an LID are otherwise legally obligated to construct some or all of the proposed LID improvements, their "vote" should not be considered when determining whether the 60 percent protest level (which would divestthe municipality of its power to proceed with the LID improvements) has been reached. Kasper v. Edmonds, 69 Wn.2d 799,420 P.2d 346 (1966); Esping v. Pesicka, 19 Wn. App. 646,577 P.2d 152 (1978). The courts are loathe to let the limited voice of property owners in LID proceedings be impinged upon: Theformation of ULID's is underthe control of the landowners only atthe initiation stage. Landowners can force the commission into adopting a resolution to form a ULID by using the petition method, orthey can preventthe commissioners from forming a ULID by using the protest procedure. Once a resolution of intent has been validly passed and no protest has been successful, however, landowner control over whether a ULID is formed is effectively at an end. If the commissioners are permitted to exclude land from the calculations necessary to determine if the requisite number of landowners have signed a petition for formation of a ULID, they can seriously lessen the ability of landowners to control whether or not a ULID, for which they maybe assessed, will be formed. 13chmitt v. Cape George Sewer District No. 1, 61 Wn. App. 1, 6, B09 P.2d 217 (1991)]. If the city staff carefully follows the statutory prerequisites to formation, the primary concern of the city council should be the adoption of a plan and policy for the conduct of the formation hearing. City officials and employees must recognize that an LID hearing is a special proceeding, the format of which may be completely dictated and controlled by the city. This aspect of LID hearings is discussed in greater detail under "Final Assessment Roll Hearing" on the following page. The formation nearing differs in one fundamental way from the final assessment roll hearing. Because thefirst hearing is forthe purpose of deciding the basic question of whether to farm the LID, the city should permit all parties to present fully their views on the LID formation. The city 60 Local and Road Improvement Districts Manual for Washington State Siwh Edition council should, therefore, have all available information. After the LID is formed, any expenditures already incurred will either be assessed against the LID properties, if the LID is carried forward and the LID project is constructed, or paid for by city funds, if the LID is halted, for whatever reason. Therefore, once an LID is formed, the LID assessments should either be levied before the project is initiated or be levied after the project is completed. Local improvement districts are almost always controversial. Some property owners within the LID will object to its formation and will object to the LID assessment. If an LID is formed by the resolution method, property owners may divest the city of its power to proceed. (RCW 35,43. 180) hey can do this by gathering protests signed by the owners of property within the LID who are subject to 60 percent or more of the total costs of the LID improvements. The city council should be prepared, however, to deal with an LID in which 59 percent or 50 percent or even 40 percent of the property owners in the LID have protested. !tis helpful to have a study session before going into the formation process to adopt a policy to deal with protests which do not reach the statutory minimum. The adoption of a policy with regard to the acceptance of protests is only one of a number of policies which should be adopted by the city when it is dealing with LIDs. As discussed more fully below, policies should be adopted for city staff interaction with property owners, language in the notice that exceeds minimum statutory requirements, handling of public records requests, adoption of a hearing agenda, etc. These considerations are dealt with in the following section. o he Final Asssssment Roll Hearing 1, The Property Owner's Day in Court— Preliminary Considerations A. The Record — Looking Toward Appeal In order to know what steps must be taken in conjunction with the final assessment roll hearing, it is essential to have a basic understanding of the manner in which our courts evaluate an assessment roll appeal. Some of these basic considerations are fisted below. When a Superior Courtjudge is assigned the task of evaluating an assessment appeal, he or she engages in a different task than when a regular civil or criminal trial is conducted. Usually, when a judge is in trial, he or she is called upon to listen to witnesses, evaluate the contents of documents, and engage in a general fact finding search. At the conclusion of the trial the judge may be required to enter findings of fact and make conclusions of law based upon those facts. In such trials the judge is the primary decision maker with respect to any disputed facts. However, the judge's role in an assessment appeal is entirely different. The appeal from the confirmation of an assessment for local improvements is a special right created by statute. Since assessment appeals are special in nature, they are governed by a number of specfic rules of iaw and presumptions. From the perspective of those participating in the final assessment roil 'nearing the most important rules to keep in mind relate to the scope and standard of review that is used by a judge if an assessment appeal is filed. The most important case dealing with these matter is Abbenhaus v. City of Yakima, 89 Wn.2d 855, 576 P.2d 888 (1978). Local and Road Improvement Districts Manual for Washington State Sixth fdNon 61 In an assessment appeal, the judge must confine his or her review to the action taken by the city council, rather than viewing the assessments de novo or making an independent decision regarding the most desirable method of assessment. The judge should consider the information and evidence presented to the city council and determine whether the action of the council is supported. "Review, therefore, is limited to the record of the proceedings beforethe municipality."Abbenhaus v. CityofYakima, 89 Wn.2d at859. The court in Abbenhaus summarized the scope of review on appeal as follows: Review und erthe statutory standards shou!d notbean independent consideration of the merits of the issue but rather a consideration and evaluation of the decision making process. Upon appeal, only the record of the prior proceedings is considered. Further, this result requires complaining parties to place all relevant information and objections before the proper decision making body, the council, priorto the municipality's decision, instead of permitting iaterattack in the superior court based upon information which the municipality did not have the opportunity to consider. [Abbenhaus v. City of Yakima, 89 Wn.2d at 859-60.1 Since the scope of appeal (that is, the matters which the judge may consider) is limited, the standard of review used by the judge is also strictly limited. A judge may only reverse or modify the decision of the council if he or she determines, based upon the information contained in the record before the city council, that the council's decision was either "arbitrary or capricious" or made upon a "fundamentally wrong basis." The term "arbitrary and capricious" has a well-established meaning in Washington State. It refersto willful and unreasoning action, taken without regard to or consideration of the facts and circumstances surrounding the action. Where there is room for two opinions, an action taken after due consideration is not arbitrary and capricious even though a reviewing court may believe it to be erroneous. (Abbenhaus v. City of Yakima, B9 Wn.2d at 858-59.1 Whether property assessed for special improvements is specially benefitted by those improvements is a question of fact. Thus, under the arbitrary and capricious standard, a conflict in the facts presented to the council relating to special benefits should result in the confirmation of the final assessment if the assessment is appealed. The basis for this rule is explained in In re ElliottAvenue and Milwaukee Street, b4 Wash. 297, 298, 103 P. 20 (1909): The first assignment of error in this case is based upon the facts, and depends upon whether the assessments were too high or not. This is largely a matter of opinion. In this class of cases we said, in In re Seattle, 50 Wash. 402, 97 P. 444, "opinions will differ widely 1/4 as to the benefits to accrue to the different properties within the districts; but this court cannot substitute its judgmentforthe judgment of those whom the law has charged with a duty of establishing the district and apportioning the cost, whenever such difference of opinion may arise." Opinions do differ in this case between the commissioners who made the assessment and the witnesses called by the appellants. As seen above, the evidence in this case is corfiicting. It fails to convince us that the assessments upon the appellant's Jots were excessive or unjust. The order appealed from must therefore be affirmed. 62 local and Road Improvement Districts Manual for Washington State Szrth Edition The term "fundamentally wrong basis" has a less well established meaning. [It] refers to some error in the method of assessment or in the procedures used by the municipality, the nature of which is so fundamental as to necessitate a nullification of the entire LID, as opposed to a modification of assessment as to particular property, [Abbenhaus v..City of Yakima, 89 Wn.2d at 859.' If a fundamental error is found to exist, however, the judge is limited to nullification or modification only of those assessments which have actually been appealed. Thus, under the scope and standard of review dictated by our LIQ laws, a judge must determine, solely on the basis of the record before the city council, whether the council acted in an arbitrary or capricious manner or proceeded on a fundamentally wrong basis. The scope and standard of review places a burden at the assessment roll hearing upon both the city and property owners who wish to objectto an assessment. Property owners are required: To placeall relevant information and objections beforeths proper decision-making body, the council, and prior to the municipality`s decision, instead of permitting later attack in the superior court based upon information which the municipality did not have the opportunity to consider. Obbenhaus v_ City of Yakima, 89 Wn.2d at 860.] Under this rule, if a property owner attempts to establish on appeal that he or she was assessed on a "fundamentally wrong basis," he or she must be able to do so by reference to information or evidence which he or she presented to the council and which is part of the transcript on appeal. The property owner cannot bring in any new witnesses, documents, or any other evidence to try to substantiate his or her objections to an assessment. If a property owner has failed to support his or her objections to an assessment by placing relevant evidence before the city, the assessment should be confirmed by the judge on appeal. Likewise, it is important that the participants from the city in the assessment roll hearing recognize that a judge will be reviewing the evidence that the city presents to the city council. In other words, all participants in the final assessment roll hearing on behalf of a city should be thinking in terms of what a judge should see when confronted with a property owner's assessment appeal. The city is also limited on appeal to the record which is made before the city council and it, too, cannot count upon calling additional witnesses or presenting additional information or evidence. B. The Assessment Roll Hearing is a "Trial" and the City Council Members are the "Judges" Since on an assessment appeal the Superior Court judge is restricted to consideration of the documents and evidence contained in the record of the proceedings before the city council. the finai assessment roll hearing must be approached as a "trial" by all participants. The final assessment roll hearing has been referred to by one court as "the property owner's day in court, so to speak, and the penalty, upon his failure to so appear, is that he waives objections or the right to an independent suit in equity." In re Grandview, 118 Wash. 464, 467, 203 P. 968 (1922). Locai and Road Improvement Districts Manuel for Washington State Sixth Ediidon 63 If the final assessment roll hearing ',s conceived of as the property owner's day in court, then it is appropriate to think of the members of the city council as the judges or triers of fact. The council sits as a board of equalization to considerthe evidence and information presented and to determine whether to confirm the assessment roll as proposed by the city staff. The city's participants should think of the hearing as being fundamentally different from the council's usual meetings. Ordinarily, the council members are acting solely as public servants, responding to the wishes of their constituents. When work is done under a LID, however, the city acts as an agency of the state. The council acts as the agent of the law, both in the letting of the contract for the improvements and in the levying of the assessments. Maiett'e v. CityofSpokane, 77 Wash, 205,137 P. 496 (1913), In confirming the final assessment roll, the council members act as judges whose purpose it is to weigh the information and evidence presented before confirming, modifying, or refusing to confirm the final assessment roll. C. The Five Presumptions — What Could Possibly Go Wrong? Many city employees and council members approach the final assessment roll hearing with trepidation. Employees are concerned not onlywith how their council members may react to actions taken on the LID, but also whether a property owner will be represented by an attorney who will subject them to undue scrutiny. Council members are often concerned with property owners who are angry with their assessments and are threatening legal or political action. It is important that all city employees and officers understand thatthe law provides them with a nu tuber of aids to protect the validity of the final assessment roll. The limited standard and scope of review discussed above are two of those aids. By prohibiting a judge from making an independent factual inquiry, the statutes are designed to preclude second guessing. Another valuable aid atthe Superior Court level is a series of presumptions favoring the validity of the city's actions. These presumptions play a major role in determining whether a city has acted in an arbitrary or capricious manner or proceeded on a fundamentally wrong basis. These presumptions further the clear public policy favorable to the construction and financing of local improvements. There are five specific presumptions applicable in Washington on an appeal from a special assessment. First, sincethe construction and financing of local improvements is favored underthe law, there is a strong judicial presumption that the city has acted legally and properly. This places the burden of proof upon the property owner challenging an assessment to establish that it was not correct. Second, if an issue is raised whether an improvement benefits property within the LID, it must be presumed that the improvement specially benefitted the affected property. Third, when a judge addresses the issue whether an assessment exceeds the amount of special benefits conferred by an improvement, the court is aided by the presumption that an assessment is no greater than the benefit. Fourth, if an issue is raised whether the property of those challenging assessments has been assessed proportionately in relation to other parcels throughout the LID, a judge must presume that an, assessment is equal or ratable to an assessment upon other property similarly situated. Fifth, there is a catch-all general presumption when an assessment is challenged that it is fair. See Abbenhaus v. City of Yakima, 89 Wn.2d at 861. It is helpful to analogize the presumptions which favor a municipality in an LID to the presumption of innocence to which everyone charged of a crime is entitled. here, a city's actions with regard to an LID are presumed correct until proven otherwise. 64 local and Road Improvement 0119dets Manuel for Washington State Shcth Edition D. The Two Absolutes: Assessments Cannot Exceed Benefits and Assessments Must be Proportionate As shown above, all aspects of the proceedings associated with the confirmation of the final assessment roll are biased in favor of the city. In addition, our LID statutes provide that if errors in procedure are made during the course of the proceedings to confirm the final assessment roll, the city may levy a reassessment to correct those errors. in theory, with the two exceptions discussed below, any error made by the city during the assessment process, be it one of neglecting to provide notice of the final assessment roll hearing, or letting contracts improperly, or in executing the work improperly, or in neglecting to comply with any other law, may be "fixed" by conducting a reassessment hearing. The only two absolutes with which the city must concern itself are: (1 ) Has the property which is being assessed received benefits commensurate with or in excess of the amount of the assessments? (2) Has the property in the LID been assessed proportionately in relation to other parcels throughout the LID? The paramount concern of a city in proceeding with an LID and in adopting an assessment method should be the issue of special benefits. it is fundamental to assessment proceedings that: Property not benefitted by local improvements may not be assessed, and special assessments for special benefits cannot substantially exceed the amount of the special benefit, [Inre Schmitz, 44 Wn.2d 429, 433, 268 P.2d 436 (1954).] The requirement that property be specially benefitted by the improvements constructed in at least the amount of the assessment is an absolute. If there is no benefit, there can be no assessment. To hold otherwise would be to deprive the owner of property without due process of law in contravention of the Fourteenth Amendment to the Federal Constitution. [Heavens v Krug County Rural Library District; 66 Wn.2d 558, 564, 404 ] P.2d 453 (1965). What are "special benefits"? Special benefits refer to special, as opposed to general, benefits conferred upon property by the improvements which are constructed. In other words, special benefits are those derived from the improvements which are substantially more intense to the property which is assessed than to the rest of the municipality. See Heavens v. King County Rural Library District, 66 Wn.2d at 563. Special benefits are measured in the following manner: The amount of the special benefits attaching to the property, by reason of the local improvement, is the difference between the fair market value of the property mmediately after the special benefits have attached and the fair market value of the pro pertybefore the benefits have attached. [In re Schmitz, 44 Wn.2d at 434.1 The distinction between public improvements which are local in character, as opposed to general, is expiained in another case: Local and Road Improvement Qistriets Manual! for Washington State Sba'fr Edition 65 Laws recognize a distinction between public improvements which benefit the entire community, and those local in their nature which benefit particular real property or limited areas. The property benefitted is usually required to pay the expense cf the latter. A local improvement is a public improvement, which, although it may incidentally benefit the public at large, is made primarily for the accommodation, and convenience of the inhabitants of a particular locality, and which is of such a nature as to confer a special benefit upon the real property adjoining or near the improvement. On the other hand, if its primary purpose and effect are to benefit the public, it is not a local improvement, although it may incidentally benefit property in a particular locality. Whether an improvement is local, is a question of fact, rather than one of law, to be determined from its nature and object. [City of Seattle v. Rogers Clothing for Men, Inc., 114 Wn.2d at 226, quoting 14 E. McQuillin, Municipal Corporations § 38.11 (3d ed. 1987)] The importance of measuring special benefits is far reaching and will be discussed more fully below. Issues relating to proportionality are raised far less frequently than special benefit questions. Although it is sometimes difficult to apply, the rule of law may be simply stated: each parcel in an improvement district may only be assessed "its proportionate share in relation to other parcels throughout the improvement district." Sterling Realty Company v. City ofBellevue, 68 Wn.2d 760, 765, 415 P.2d 627 (1966). In otherwords, like properties should receive like assessments. If staff and council keep the two absolutes of special benefit and proportionality in mind when confirming a final assessment roll, the chance of a court overturning an assessment is substantially reduced. 2. Pre -Presentation Considerations and Mechanics A. Attitude — Cooperative and Adversarial The employees of a city who are involved in the presentation of an assessment roll are placed in an awkward position. On the one hand they are called upon to serve as public servants whose role it is to provide assistance and guidance to members of their community in their dealings with the city. On the other hand, these same employees are charged with the task of being proponents of a project and, therefore, the adversaries of those property owners who oppose the LID or the assessments which are to be levied. There is no way to resolve this conflict. It is helpful, however, for staff and council to recognize the dual nature of the role of the City employees. .fudges do not look kindly upon employees of a city who have not been forthrightwith citizens seeking information or assistance. Likewise, council members are not pleased when an assessment is lost and the money must be made up from a different source ratherthan being charged to the property which has benefitted from the improvement. The only way to deal with this conflict is to recognize the dual role and to reach some accommodation. Each city will have to set its own policies with regard to deal'ng with property owners within an LID. Some cities only provide information which is directly requested and will volunteer nothing. Other cities advise the affected property owners 66 Local and Road Improvement Districts Manual for Washington State Sixth Edition of every aspect of an LID, including lega! rights and the impact of the LID statutes. Each city should consult with its attorney and adopt a policy with regard to the disclosures which the city wishes to make with respect to its LID proceedings. B. Notice — Beyond the Statutes The statutes for LIDs require notice of the hearing to confirm the final assessment roll be sent to property owners in advance of the final assessment roll hearing. At a minimum, the notice must conform to the requirements of the statutes. However, the city may give a more detailed notice, For example, a recurring issue on Superior Court assessment appeal's by property owners who did not present evidence at the final assessment roll hearing is that the city failed to advise them of the absolute necessity to make a record. Because this issue has arisen on a number of occasions, many cities now advise the property owners in the notice of the hearing to confirm the final assessment roll that the owners must present their protests, together with whatever information or evidence which they wish the council to consider. This type of more detailed notice helps blunt the property owner's attack in court, yet, at the same time, does not give the property owner all of the information needed to successfully challenge an assessment. Other cities choose to provide complete notice of the procedure to be used by a property owner not only at the assessment roll hearing itself, but also the manner of contesting the assessment in the Superior Court. Again, this is simply a policy decision to be decided upon by each city council. C, Public Records Requests Cities are frequently presented with requests to provide copies of public documents relating to LIDs or RIDS. There is nothing in the LID statutes which provides special protection for public documents relating to the LID. When a request for such public records is made, the response should be the same as in any other situation. If anything, because of thetighttime constraints for the final assessment roll hearing, the employees of a city should make an extra effort to comply with the public records request so thatthe property owner cannot claim in courtthat he or she was prejudiced by the slow response of the city in providing documents which had been legitimately requested. Again, this is a matter which should be governed by city council policy. D. Arranging for Transcription Since a judge is restricted to the record of the proceedings before the city in his or her consideration of an assessment appeal, the city must be prepared to compile an accurate record of the proceedings before the council, While the law is not completely settled on the subject, it is advisable that the city be prepared to provide a verbatim transcript of the final assessment roll hearing itself. This can be done by having the hearing tape recorded and transcribed by city employees, This process can be laborious and time consuming and rarely produces a fully satisfactory transcript. It is much betterto arrange to have a court reporter appear at the final assessment roll hearing and take down what is said verbatim. Court reporters are trained to take down every word that is said and to attribute it to the proper speaker. The cost of having a court reporter appear is usually nominal compared to the total cost of the L!D. !f no property owner files an appeal the hearing w':Ii not need to be transcribed. If an appeal is filed a court reporter can usually provide a transcript within a matter of days and the city can charge the property owners for the transcript on a per page basis along with the other documents constituting the record before the council. Moreover, the transcript provided by a court reporter is usually more Local and Road Improvement Districts Manual for Washington State Sixth Edition 67 accurate and can be created rapidly enough to permit the city to comply promptly with its statutory obligations to provide a complete record. Lastly, the cost of a court reporter is properly ircluded in the total costs of the improvement district to be assessed against the properties within the district. E. Appearance of Fairness The "appearance of fairness doctrine" is trequently raised at assessment roll hearings. For this reason, the persons conducting the final assessment roll hearing should be attuned to providing a procedure which is not only fair in form, but also appears fair. Likewise, it is advisable to ask any council member with a rear or apparent conflict to excuse him or herself from participation in the final assessment roll hearing. If there is any doubt, it is better to err on the side of withdrawal from the proceedings. Since the assessment roll proceedings are weighted against the property owner, it is prudent to avoid any situation which might give a judge an excuse to invalidate an assessment. At the final assessment hearing, the chairperson should ask if any property owners have any objection for whatever reason to the participation of any person in the final assessment roll hearing. If such an objection is raised it can be dealt with at the time. If no objection is raised but a property owner knows of a basis for objecting to the participation of someone in the final assessment roll hearing, any such objection will be deemed to have been waived. 3. Making Your Presentation A. The Hearing Agenda: Fair, ©pen, Impartial and Structured As noted above, the final assessment roll hearing is really a "trial" on the issues of special benefits and proportionality. The council members act as "judges" relating to the nature of the project, its costs, and the manner in which the assessments were computed. Even though the final assessment roll hearing has certain attributes of a trial, it does not have the formality of a trial in Superior Court. It has been held that the LID statutes contemplate that the proceedings before the council will be informal and that a property owner's objection or protest will not be measured by technical rules of pleading. SeeReat Estate Investment Company v. Cray of Spokane, 59 Wash. 416, 419, 109 P. 1057 (1910). The procedures surrounding an LID contemplate substantial public, as opposed to representative, participation. Since one of the primary aims of the city is to conduct proceedings which will not be subject to challenge in court, it is important that the final assessment roll hearing be fair, open, and impartial. This does not mean, however, that the final assessment roll hearing cannot be structured. In fact, it is advisable to adopt an agenda and script for the final assessment roll hearing which will insure that the city's viewpoint will be fully aired. The city should determine in advance who will speak on behalf of the staff with regard to the nature and scope of the improvements and the work performed, the method of computing assessments and spreading the costs of the project, the specie I assessment process, theform of permanentfinancing to be used, and any other information which the city decides a judge may want to consider. It is also advisable forthe council to adopt procedures forthe presertation of the property owner's protest and evidence. The order cf presenting protests, the manner of receiving documents or other evidence, and the time given persons to speak should be decided Upon in advance. The adoption of a formal procedure by the city council will make for a more orderly proceeding and one which will be more readily understood by a judge. 68 Local and Read Improvement Districts Manual for Washington State Sixth Edition B. Rules of Evidence No formal rules of evidence apply to a hearing to confirm the final assessment roll. in keeping with the notion that the city should do all that it can to avoid giving a judge an excuse to overturn an assessment, the council should err on the side of accepting any relevant information or evidence offered by a property owner, C. Premarked Exhibits The proponents of the final assessment roll on behalf of the city, in keeping with their role as the assessment roll "lawyers", shou!d decide in advance of the hearing what documents, maps, photographs, diagrams, or other aids should be made a part of the record. A judge will not be as familiar with the history and scope of an LID as the city's employees or officers. Therefore, anything which would assist a judge in understanding the project and the reason that it was built should be made a part of the record. The city employees in charge of making a presentation should coordinate with the city clerk so that a procedure for marking exhibits will be in place for the hearing. The city's exhibits can then be premarked and made a part of the record more easily at the final assessment roll hearing itself. It is important that the nature of the exhibits be identified at the assessment roil hearing, so that there is no question as to the evidence which the city council has considered. D. The City's Witnesses Just as it is important to consider what exhibits might assist a judge, the city's employees should carefully consider what person should speak on behalf of the assessment roll. Again, this is a policy decision to be made by the staff itself in consultation with the council. There are a number of possible witnesses. First, would be the LID administrator. This person could provide a description of the LID, giving its history, purpose, nature, scope and physical details of the improvements, the work which was performed, a summary of the project cost, and the method used to determine the final assessments. Second, an attorney, either the city's own attorney or special counsel, can be called upon to discuss the special benefit assessment process, the confirmation process, the purpose and conduct of the hearing to confirm the final assessment roll, financing, bonds, collection of assessments, and foreclosure. The underwriter marketing the bonds can be called upon to discuss the role of the underwriter, interim and permanentfinancing, the current tax exempt interest market, and the sale of bonds. Lastly, the city may wish to provide an opportunity to proponents of the LID. Far too often the final assessment roll hearing is dedicated soielyto negative comments from property ownerswho are dissatisfied with the improvements or their assessments. If the LID administrators aware of persons who are pleased with the project, it is helpful to have these persons speak at the final assessment roll hearing. The existence of positive testimony makes the council members` job easier politically and aiso makes it easier for a judge on appeal to feel comfortable in confirming the final assessment roll. 4. The Property Owner's Presentation A. Written Protest Since the hearing before the city council is the main "trial" and the hearing before the Local and Road improvement Districts Manual far Washington State Sbrth Fdi6on 69 Superior Court is really an "appeal" from that trial, a property owner must participate in that trial before he or she can take an appeal. This principle was established long ago; No reason is suggested why respondent did not appear and make his objection before the town council. That body had jurisdiction over the subject matter and was clothed with power to arrive at a correct determination. It was the tribunal appointed by the law for the correction of any mistakes or irregularities. The parties interested cannot be permitted to disregard the opportunities so afforded for a hearing, and to select a forum of their own choosing. They must make their objection seasonably, before the tribunal which the ;aw appoints forthat purpose, and failing to do so, cannot thereafter be heard to complain. [Town ofTumwater v. Picks, 18 Wash. 153, 61 P. 353 (1897)] The LID statutes provide that a property owner must put his or her protest in writing. The city council has the right to insist upon this. If, however, the council decides to hear the appeal in the absence of a written protest, the statutory requirementthat the protest must be in writing will be deemed to have been waived by the council. In re Indian Trail Trunk Sewer System, 35 Wn. App. 212,666 P.2d 378 (1983). It would be appropriate to have study session with the city attorney to discuss the importance of the written protest and the necessity for filing a written protest. B. The Property Owner's Burden of Proof The presumptions discussed above, which favor the city's action, place the burden directly upon the property owner to produce information or evidence to show that his or her final assessment is either excessive, disproportionate, orthe product of proceedings conducted by the city of a fundamentally wrong basis. A challenge to an assessmentthat is based upon special benefits will usually require the testimony of an appraiser. Since the determination of the amount of special benefits requires before and after market analyses of property, this is not an area in which most property owners will have sufficient expertise, if a property owner wishes to prove in court that his or her assessment is excessive, he or she is required to demonstrate that he or she offered before and after market value testimony to the city at the hearing to confirm the final assessment roll. Abbenhaus v. City of Yakima, 89 Wn.2d at 861. Expert evidence is clearly required to establish whether or not property is especially benefitted by an improvement and the extent of the benefit, Expert testimony also may be required to establish a disproportionate assessment. [Cammack v. City of PortAngeles. 15 Wn. App. 188, 197, 548 P.2d 571 (1976)] If a property owner fails to support his or her objection to an assessment by placing relevant evidence before the city council, the assessment should be confirmed by judge on appeal. Except with regard to the issue of special benefits, the evidence which a property owner will be required to place in the record before the council will vary with the type of objection ra;sed. The role of the city employees is to evaluate the evidence which is produced at the final assessment roll hearing and determine what evidence raises a significant question. Such items should be noted and responded to by the city. 70 Local and Road Improvement Districts Manual for Washington State Sixth Edition C. Right of Cross -Examination In addition to having the right to produce his or her own testimony and documentary evidence, the property owner has a right to cross-examine any person who provides information or evidence in support of the final assessment roll. If a property owner asks, this right should be freely given. 5. Rebuttal A. When Presumptions Vanish As noted above, there are a number of presumptions which favor the actions of a city in levying assessments. These presumptions are not absolute or set in stone, however. Even though the city council members take the role of judge and sit as fact finders and have the right to weigh evidence provided by a property owner, they cannot rely exclusively upon presumptions in the face of property owner evidence. A presumption itself is not evidence and its power is lost when the opposing party produces credible evidence which contradicts the presumption. As one court has stated, "presumptions are the'bats of the law, flitting in thetwilight butdisappearing in the sunshine of actual facts.'" In re Indian Trail Trunk Sewer System, 35 Wn. App. 840, 843, 670 P.2d 675 (1983). The sole purpose of the presumptions is to establish which party has the burden of going forward with the evidence on a particular issue. Because of the five basic presumptions, the burden of going forward with evidence rest initially on those persons attacking an assessment. Once evidence is produced, however, the ultimate burden of showing that land within an LID is benefitted remains with the city. Therefore, when a property owner produces evidence from which a reasonable person could conclude that an assessment is erroneous in any respect, the city must be prepared to rebut that evidence. Otherwise, the property owner will probably prevail in the event of an appeal. B. The Appraiser By farthe most common issue raised at assessment roll hearings is whether the property in question is specially benefitted by the improvements. As noted above, whether property is specially benefitted by an improvement and the extent of the benefit are questions of fact to be proved by expert testimony. In re Indian Trunk Sewer System, 35 Wn. App. at 842. Property owners who have sought the advice of lawyers will appear at the assessment roll hearing with an appraiser prepared to testify that there is no difference between the fair market value of the property before the improvements were installed and after the improvements were installed. if the city receives this kind of testimony, it is imperative to retain the service of a qualified appraiser to appraise the property. If the city does not already have an appraiser working with it in conjunction with the L,D, it should adjourn the assessment hearing and reconvene at a time when an appraisal study can be presented. This is an example of the city using to its own advantage its power to control the manner and time of the hearing. if a hearing is adjourned or continued, the city must rememberto complywith the requirements of the Open Public Meetings Act. C. The LID Administrator or Engineer With the exception of the appraiser, the most common person to testify on behalf of the city in rebuttal to evidence produced by the property owner is the LID administrator. When specific challenges are raised with regard to the nature of the improvements, the Local and Road improvement Districts Manual for Washington State Sixth Edrtian 71 way the contracts were let, the final cost assessed, or the method of computing the assessments, the administrator or engineer should be called upon to provide documentary and oral evidence showing why the actions which were taken were reasonable and the underlying reasons for such actions. 6. Concluding the Hearing A. Council Debate As noted above, a judge will evaluate the evidence of record to determine whether the council was arbitrary and capricious or proceeded on a fundamentally wrong basis. Usually, the judgewill be concerned with the arbitrary and capricious standard. He or she will be evaluating the record to determine whether there was willful and unreasoning action taken without regard or consideration of the facts and circumstances surrounding the challenged assessment. In this regard it is helpful to have the city council debate the evidence. If the judge sees that the matters which were presented are actually addressed by the council and discussed, he or she will be far less likely to interfere with the determination of the council members. This is another aspect of the final assessment roll hearing which should be governed by a policy established in advance of the hearing. B. Findings and Conclusions The LID statutes do not specifically require the city council to adopt findings of fact and conclusions of law with respectto the confirmation of thefinal assessment roll. However, our courts in the past have engaged in a steady process of analogizing zoning law to LID law. It is now established that findings of fact and conclusions of law are required with respect to zoning decisions. SeeParkridge v CityofSeatde, 89 Wn.2d 454,573 P.2d 359 (1978). This does not mean that the findings and conclusions must have the formality expected of a court pleading. It is helpful, however, on an assessment appeal to be able to refer to specific facts found by the city council and the conclusions drawn therefrom. This is a matter which should be discussed by the attorney used by the city to advise it during the final assessment process. C. Appeal Transcript Despite a city's best ettorts to intorm property owners and to build a record which is unassailable on appeal, it is inevitable that a property owner will, nevertheless, file an appeal. The LID statutes impose certain requirements upon the property ownerto perfect that appeal in the Superior Court in a speedy and timely fashion. This is another area in which the city should bend over backwards to comply as soon as possible with any requests made by a property owner in conjunction with that appeal. Therefore, if the employees of the city suspect that an appeal is going to be taken, steps should be taken to order the verbatim transcript from the court reporter and to assemble all documents which have been made exhibits at the final assessment roll hearing. In this way, as soon as the property owner requests certification from the city clerk of the transcript on the proceedings before the council, that appeal transcript can be supplied. if the property owner does not substantially comply with the requirements to perfect his or her appeal, the city can bring a motion to have the appeal dismissed entirely. It is surprising how often this occurs. 72 Local and Road hnprovament Districts Manual for Washington State SbM Edition Conclusion It is essential that employees and officials of city understand fuily the basic premises underlying special assessments and the manner in which a fudge evaluates assessment proceedings. With this understanding the city can take a number of steps to build its own record in support of its actions and to blunt property owner challenges which might otherwise be successful. The key to winning assessment appeals is the preparation done by the city before the case is handed to the lawyer who is assigned to represent the city in court. If the city's employees and officials have performed their jobs, the lawyer's job is a simple and much less expensive undertaking. Use of Hearings Examiner During the last 25 years, the use of hearings examiners for a variety of purposes, mostly relating to land use planning in the state of Washington has become commonplace. Most large cities and counties use the services of a land use hearings examiner (RCW 36.70.970 - counties, RCW 35.63.130 and 35A.63.170 - cities). Passage of the Growth Management Act (RCW Chapter 36.70A) and the Land Use Regulatory Reform Act (RCW Chapter 36.70C) have enhanced the position of a hearings examiner. Use of a hearings examiner results in land use decisions that are based on the facts of a case and the applicable law and not on political considerations. Less common is the use of hearing examiners for LIDS, butthe option is available to busy elected officials. As part of the administrative processing of LIDS, cities can use the services of a hearings examiner. RCW 35.43.140 specifically allows a hearings examiner to be appointed for the purpose of conducting an LID formation hearing and an LID assessment roll hearing. The hearings are quasi-judicial in nature and the hearings examiner is under a legal responsibility to ensure due process for all participating in the process. The hearings examiner is responsible for providing city councils with information necessary to assist them in the formation of the LID or the establishment of the assessment roll. The function of the hearings examiner is to provide councils with facts and applicable law that is understandable and accurate. In conducting LID hearings, the hearings examiner must control the tenor of the hearing. This requires that the hearing be fair and that the hearings examiner's behavior and interest be above reproach. It also requires that adequate notice, pursuantto local ordinances and State statutes, be given in order that all parties have an opportunity to be heard. The purpose of the hearing is to gather necessary factual information needed to applythe law. All decisions must be supported by a complete record and the basis of all decisions must be set forth in Findings of Fact and Conclusions of Law. Decisions must be made pursuant to legal requirements of statutes and local ordinances. Use of a hearings examiner is beneficial to LID processes because it: (1) depoliticizes the process; (2) provides a neat, concise and accurate record of the specific issues of the LID formation and the assessment roll; and, (3) creates a complete, defensible record during court review. Hearings examiner fees are an a igible administrative cost of the LID. Contributors: Blair Burroughs, James M. Driscoll, Rod Kaseguma, and Steve DiJulio. uncal and Road Improvement Districts Manuel for Washington State Sixth Edition 73 RIDs introduction Counties in Washington State can utilize LIDs for water, sewer and storm sewer system improvements under Chapter 36.94 RCW. Procedures under that statute are very similar to LID procedures in cities and towns under Chapters 35.43-50 RCW and the material in the first six chapters of this manual are generally applicable to water, sewer and storm sewer LIDs in Counties. Assessment districts for road improvement projects in counties however, must follow the RID procedures under Chapter 36.881ICW, warranting a separate chapter in this manual. While RIDS operate under a separate state statute, they differ only somewhat from the provisions and procedures for LIN in cities and towns. Therefore the preceding six chapters, especially the details in Chapter 3, are very helpful resources for the RID process and should be used in conjunction with this RID chapter. This chapter attempts to highlight some of the items unique to cR I Ds. Road improvement projects under the RID statute obviously include paving. However, the law goes onto include several other types of improvement. RCW36.88.010 and RCW36.88.015 give counties the power to- "... create county road improvement districts for the acquisition of rights of way and improvement of county roads, existing private roads that will become county roads as a result of this improvement districtprocess and, with the approval of the state department of transportation, state highways,- for the construction or improvement of necessary drainage facilities, bulkheads, retaining walls, and other appurtenances therefor, bridges, culveMsidewalks, curbsandgutters, escalators, ormoving side walks; andforthe draining or filling of drainage potholes or swamps." and create county road improvement districts for the construction, installation, improvement; operation, and maintenance of street and road lighting systems for any countyroads, andsubjectto the approval of the state department of transportation, forstain highways, and forsafeguards to protectthe public from hazards of open canals, flumes, or ditches, ... " Much of the material in this chapter is adapted from Spokane County docurr.ents and the county's RID process. A complete set of Spokane County documents in electronic form is available (see appendix for listing). Spokane County's RID work is mostly upgrading of gravel roads to pavement with associated improvements to drainage facilities. Virtually all RIDs have been for public roads, though they have in a few instances used the process to improve private roads before taking them into the public system. 74 Local and Road Improvement Districts Manual for Washington State Sixth Edition The county has extensive experience with RI Ds, with the first RID in October 1955. Since then, over 700 RID projects have been attempted, with nearly 550 successfully completed, The vast majority were in the urbanized areas of the county. However, emphasis has now shifted to the rural areas where nearly 1,200 miles of gravel roadways remain. The creation method most commonly used by Spokane County in the recent past has been the resolution of intention — ballot method. It offers owners a much more inclusive, interactive, hands-on opportunity in the decision making process. The county also has an extensive history using the petition method. However the success rate has been higher using the ballot method. The resolution of intention — protest method has been used very seldom. It's not a good public relations tool when working with owners and neighborhoods. From the beginning of the process, it presents a confrontational climate. Spokane County spends a significant portion ofthe R!D process in pre -formation activities related to public education and participation. included are personal contacts, neighborhood meetings, detai!ed meeting summaries mailed to all owners, and periodic updates also mailed to owners (see appendix for some examples). While outside the mandatory statutes, the extensive public participation element generally helps the legal process move smoothly and minimizes owner misunderstandings and confrontations. That participation process has contributed to greater owner election turnout as well as the overall success rate of Spokane County's RID program. F-ormation Procedures Two methods of RID formation are authorized by the statutes (RCW 36.88.020): Resolution of Intention method. 2. Petition method. In addition under the Resolution of Intention method, the county commissioners may opt to use either ballots or protest procedures, as explained below. Summary of Road Improvement District (RID) Formation Methods Local and Road Improvement Districts Manual for Washington State Sixth Edition 75 Resolution of Irrtention Ballot Protest pontion Koth,A 0wWft3888030-.040X" {Chapter 35.43 RCW (Section 38 88 060 RCW) Initiated By Commissioners Commissioners Property owners Ballot Criteria Board may form RID if NIA NIA majority of votes cast are in favor. Ione vote far each $ of estimated assessment.) Protest Criteria N/A Board may not form RID if N/A protests representing more than BO percent of total estimated improvement costs (assessments) are received. Local and Road Improvement Districts Manual for Washington State Sixth Edition 75 76 Local and Road Improvement Districts Manuel for Washington State Sixth Edition Resolution of Intention BeHot Protest Petition rf hid peon 38 88:03a040 RCVVI (chapter 35 43 RC 4) isection Sts as tib RCYA Petition Sufficiency N/A NA Majority of owners, by both road frontage and area, must sign petition. Resolution of Intention Board of Commissioners Board of Commissioners Board of Commissioners to Create District adopts. adopts. adopts after de:ermir.ing petition sufficiency and that property in proposed district is 'sufficiently developed'... Notification to Required; mailed at least Required; mailed at least Required; mailed at least Property Owners 15 days prior to public 1.5 days prior to public 15 days prior to public hearing date; notice is to hearing date; notice is to hearing date; notice is to owner or reputed owner owner or reputed owner owner or reputed owner as shown on tax roils of as shown on tax rolls of as shown on tax rolls of county treasurer. county treasurer. county treasurer. Notice to Contain, ❑ Refer to the 0 Refer to the ❑ Refer to the (Sections 36.88.030 Resolution of Resolution of Resolution of and .050 RCW) Intention Intention intention (nonocclusive list) ❑ Identify the proposed ❑ Identify the proposed ❑ identify the proposed RID by number RID by number RID by number ❑ Nature of the ❑ Nature of the ❑ Nature of the proposed proposed proposed improvement improvement improvement ❑ Total estimated cost ❑ Total estimated cost ❑ Total estimated cost ❑ Proportion of total ❑ Proportion of total ❑ Proportion of total cost to be borne by cost to be borne by cost to be borne by assessments assessments assessments ❑ Estimated ❑ Estimated ❑ Estimated assessment for the assessment for the assessment for the indiv'dual parcel individual parcel individual parcel ❑ Date, time, place of ❑ Date, time, place of ❑ Date, time, place of hearing hearing hearing ❑ Statement that actual ❑ Statement that actual a Statement that actual assessments may assessments may assessments may vary from assessment vary from assessment vary from assessment estimates so long as estimates so long as estimates so long as they do not exceed a they do not exceed a they do not exceed a figure equal to the figure equal to the figure equal to the increased true and increased true and increased true and fair value the fair value the fair value the imProvemea* adds to Improvement adds to improvement adds to the property (Section the property (Section the property (Section 36.88.035 RCW) 36.88.035 RCW) 36.88.035 RCW) ❑ Directions for voting ❑ Statement that and election rules Property owners may withdraw or add their names on :he petition at an time prior to 5 pm ay before the hea�he 76 Local and Road Improvement Districts Manuel for Washington State Sixth Edition Reso►udon of Int ni on — Ballot Under this procedure (see RCW 36.88.030-.040), the board of county commissioners adopts a resolution which states its intention to proceed with formation of an RID. Within the resolution, the Board sets a date, time, and place for a public hearing to consider forming the RID. The Board directs that a notice of the hearing be sentto those who own propertywithin the boundary of the proposed district along with an estimated project cost and the estimated assessments. A copy of the Resolution of Intention, a ballot, a ballot return envelope, and election instructions are all included as part of the mailing, (Ballots need to be included in this mailing due to statutory time limits forvoting to be completed within 7 days of the hearing) The entire notification packet is mailed to property owners at least fifteen days prior to the date of the public hearing. The resolution of intention is also published in at least two consecutive issues of a newspaper of general circulation in the county, the date of the first publication to be at least fifteen days prior to the hearing date. The board of county commissioners conducts the public hearing and takes both oral and written testimony regarding district formation. The board then decides if the district is feasible. If the Board finds it to be feasible, they will so state in a resolution and direct the clerk of the board to proceed with the election. If the board cannot find the RID to be feasible, then they can adopt a resolution so stating and terminate all further proceedings in conjurncticn with the RID. If the proposed RID is fcurd to be feasible, then the public hearing is continued for the purpese of obtaining election results. The continuance is to a date specific, which must be not more than 15 days after the electLon deadline. Property owners have until one week after the hearing, atwh;ch the feasibility ofthe project was declared, to return their ballots to the clerk of the board. Ballots not received by 5:00 p.m. by the Local and Road Improvement Districts Manuel for Washington State Sixth Edkion 77 Resolution of Intention Ral'lot Prataat Pathan Method $ecbm 31188 030-040 RCW (Chapter 36 43 RCW) (Sw tjon 31B 88 05D RM) Public Hearing Required; no sooner than Required; no sooner than Required; no sooner than 15 days after first 15 days after first 15 days after first publication in official publication in official publication in official i newspaper, newspaper. newspaper. i Resolution to Create Public hearing is Resolution to create Resolution to create District continued to date not district can be passed at district can be passed at more than 15 days after or after hearing. or after hearing, un!ess ballot deadline. Decision petition is deemed ILO create or reject is insufficient. based on balloting results. Time Constraints Ballots must be returned After adoption of Property owners may add to the clerk by 5:00 p.m. resolution to create or delete names from the of the day one week after district, property owners petition until 5 pm on the the public hearing date. have a 30 -day perlod day before the hearing. Continued hearing must during which they may occur within 15 days of protest district formation. the ballot deadline. District is Formed Resolution to create district can be passed at District is created after protest period ends, if District can be created after hearing. continued hearing. valid protest not filed. Reso►udon of Int ni on — Ballot Under this procedure (see RCW 36.88.030-.040), the board of county commissioners adopts a resolution which states its intention to proceed with formation of an RID. Within the resolution, the Board sets a date, time, and place for a public hearing to consider forming the RID. The Board directs that a notice of the hearing be sentto those who own propertywithin the boundary of the proposed district along with an estimated project cost and the estimated assessments. A copy of the Resolution of Intention, a ballot, a ballot return envelope, and election instructions are all included as part of the mailing, (Ballots need to be included in this mailing due to statutory time limits forvoting to be completed within 7 days of the hearing) The entire notification packet is mailed to property owners at least fifteen days prior to the date of the public hearing. The resolution of intention is also published in at least two consecutive issues of a newspaper of general circulation in the county, the date of the first publication to be at least fifteen days prior to the hearing date. The board of county commissioners conducts the public hearing and takes both oral and written testimony regarding district formation. The board then decides if the district is feasible. If the Board finds it to be feasible, they will so state in a resolution and direct the clerk of the board to proceed with the election. If the board cannot find the RID to be feasible, then they can adopt a resolution so stating and terminate all further proceedings in conjurncticn with the RID. If the proposed RID is fcurd to be feasible, then the public hearing is continued for the purpese of obtaining election results. The continuance is to a date specific, which must be not more than 15 days after the electLon deadline. Property owners have until one week after the hearing, atwh;ch the feasibility ofthe project was declared, to return their ballots to the clerk of the board. Ballots not received by 5:00 p.m. by the Local and Road Improvement Districts Manuel for Washington State Sixth Edkion 77 clerk on the seventh day following the hearing are not opened or counted, although it is a good practice to keep the unopened ballots for the record, The outcome of the election is determined by a sirnp�e majority of the votes cast. Each property owner has one vote for each full dollar of estimated assessment. For example, a person who receives an estimated assessment of $3,129.85 will have 3,129 votes. The ballots are opened and counted by the clerk of the board. Validity of a signature on a ballot is governed by RCW 36.88.370. The clerk certifies the election results to the board of county commissioners at their continued public hearing. If a majority of the votes cast are in favor of district formation, then the Board may proceed with formation of the RID. They will pass a resolution creating the district and order the county engineer to proceed with construction. If the majority of votes are opposed to the RID, then the board will adopt a resolution terminating the proposed RID and all activities associated with it. Resofuiion of tntentian — Protest This method of district formation is authorized by RCW 36.88.065. E he yaw authorizes use of the formation procedures set forth in Chapter 35.43 RCW. The more specific procedures are contained in RCW 35.43.140 thru .180. This method is also employed by cities in the state of Washington. The protest process is nearly identical to the ballot method up to the decision point during the public hearing. Under the protest method, the board of county commissioners adopts a resolution which states its intention to form an RID. They set a date, time, and place for a public hearing. They direct that notice of the public hearing, a copy of the resolution of intention, and the estimated project cost along with the estimated assessment for the property be sent to all owners within the district. The board holds the public hearing and takes all relevant testimony. It is at this point that the protest process deviates from the ballot method. If the board finds that the district is feasible, they will pass a resolution to form the district. After adoption of this resolution, the property owners are given a 30 -day period during which they may write letters protesting district formation. Validity of a signature on a protest is governed by RCW 36.68.370. If protests representing 60 percent of thetotal estimated Improvement cost (assessment) for the distdct are received the Commissioners may not proceed with the district. The district is divested by protest. Notice of this opportunity to protest is usually sent with the r:otice of the public hearing. As a courtesy, the county engineer may also send a reminderto each property owner a couple of days after the public hearing. This reminder notifies them that if they choose to protest, the protest must be received no later than a day which is 30 days after the date of public hearing. There is no specified format in the RID statute for the written protest and none need be sent. Presumable, individual penned letters would be the norm. However, petitions or form letters arising from an organized opposition may suffice also. If the district is not divested, the Board directs the county engineer to proceed with construction of the project. Petition RIDS may be inAlated by a petition (RCW 36.88.020) signed by the owners according to the records of the office of the county auditor? To be a valid petition, it must represent a majority by two different tests: 78 Local and Road [mprovament Districts Manuel for Washington State S&M i:diion 1. of property aggregating a majority of lineal frontage upon the improvement and 2. of a majority of the area within the limits of the proposed RID. The form of the petition, or who can prepare it, is not addressed in the statute. Typically, staff should prepare the petition to avoid or minimize confusion and legal contentions. The RID staff can prepare the petition and formally delive.- it to the sponsor(s) for collection of signatures. In that way, the consistency and accuracy of the petition can be maintained. In addition, it can be prepared in such a fashion thatthe owner names and other relevant information according to the county auditors records are included. The validity of signatures on the petition is governed by Section 36.88.370 RCW. RCW 36.88.050 requires the board of county commissioners to review the petition for sufficiency in relation to RCW 36.88.020 and also to determine whether the property is sufficiently developed. The Board then adopts a resolution of intention, which is processed in a manner very similar to the Resolution of Intention method described previously. EXCEPT that the resolution must contain language that property owners maywithdraw their names from the petition or add their names thereto at any time prior to five o'clock p.m. of the day before the hearing. The hearing proceeds as discussed for the Resolution of Intention method with the goal of determining feasibility. Subsequentto the public hearing and based upon finding, the Board can move to create or terminate the RID. Hearing Process and Steps to Follow When Creating or Terminating a Proposed RID The public hearing process leading to the creation (or termination) of an RID is spelled out in RCW 36.88.060. Under that statute, the board of county commissioners must conduct a public hearing on the feasibility of forming the RID. The steps leading up to that hearing are discussed above. The following paragraphs focus on what must occur during and as a result of the hearing. (As an alternative. RCW 36.88.062 allows the board to adopt an ordinance providing for a committee of the county legislative authority or an officer to conduct the hearings. The committee or hearing officer reports recommendations on the resolution to the full county legislative authority for final action. The legislative authority need not hold a hearing on the proposed assessment roll and shall either adopt or reject the recommendations.) Generally, staff will present and describe the proposed RID to the Board atthe feasibility hearing. If possible, it's also helpful to provide the Board with a written report well in advance of the hearing so that they can be as informed as the owners are likely to be. The Board will consider the proposal as well as all public testimony in determining feasibility. The feasibility of the proposed RID is at the core of the public hearing that must be held prior to the Board making a decision on forming the RID. At that hearing, the Board must choose an assessment method and "... ascertain whether the plan of improvement or construction is feasible,' There is really no precise definition of what'feasible' is. However, the portion of the sentence following the above statement in RCW 36.88.060 probably comes closest to indicating what 'feasible' actually means. It states that the Board must also ascertain ... whether the benefits to be derived therefrom by the property within the proposed district, together with the amount of any county road fund participation, exceed the costs and expense of the formation of the proposed district and the contemplated construction or improvement...' In conclusion, the Local and Read Improvement Districts Manuel far Washington State Sixth Edition 79 statute states that the Board shall make a written finding on the teaslblllty issue. The formation resolution (or for that matter, the terminating resolution if that is the outcome of the hearing) should make a specific written finding regarding whether or not the proposed RID is feasible. If the RID is found to not be feasible, then the issue of petition sufficiency would be moot or, in the case of the ballot method, the election would obviousy not be allowed to occur. Note that RCW 36.88.060 refers to 'benefits derived by the property within the proposed district' in the proposed RID. It doesn't mention individual parcel benefits. So, in practice at Spokane County, we believe that the Board is at this point in the RID process examining the benefits to property as a whole in the RID and not the benefit to individual parcels. The issue of individual parcel benefit is to be addressed at the final assessment roll Dearing should a legal protest be raised. If the RID is found to be feasible, then the Board moves on to create the district if using the petition method or the protest method. If utilizing the ballot method, the Board at this point would only execute the feasibility resolution containing a directive that the election is allowed to proceed, that the hearing is continued to a date and time specific to receive the election results, and that action on the formation of the RID would be taken at that continued Dearing. If the results of the election favor formation of the RID, then the Board would proceed to adopt the creation resolution as outlined below in #1 thru #5. The creation resolution (which under either the petition method or the protest method would generally be one and the same as the feasibility resolution) must create the district and orderthe improvement to be made. Obviously, if county is following Chapter 35.43 RCW for the protest method, then the RID is not officially created until after the 30 -day protest period. No matter which method of creation is followed, the Board's feasibility/creation resolution has to discuss and address several other issues pursuant to RCW 36.88.060. Those include: 1. establishment of the district as the " County road improvement district # 11.1 2, a description of "...the nature and territorial extent of the improvement to be made and the boundaries of the improvement district... ", 3. a description of the selected method of assessment; 4. a declaration of the "... estimated cost"for the created RID "and the proportion thereof to be borne by assessments, ... ", and 5. determine whether the petition is sufficient OR make a finding as to results of the balloting. In considering RID formation, both during and afterthe public hearing, the board is limited to how much modification can be made to the proposed RID without starting the process anew. Some changes can be made to the boundary of the proposed district or to the proposed improvement plan. However. Section 36.88.060 RCW is very specific as to the three things thatcan't be done to a proposed RID without starting the public process over again. 1. The board cannot alter the proposed, advertised improvement so as to increase the estimated cost by an amount greater than ten percent above that stated in the notice. 80 Local and Road Improvement Districts Manual for Washington State Sixth Edition 2. They cannot increase the proportionate share of the cost to be borne by assessments from the proportion stated in the notice. 3. Finally, the board cannot change the boundaries of the district to include property not previously included therein.. If the board finds that they need to do any one of the above items, then they must first pass a new resolution of intention and give a riew notice to all property owners in the manner and form and within the time provided for the original notice. After IRID Formation and on to the 3oad Sale Following are both statutory and intuitive steps that need to be followed after the RID has been formed and the improvement ordered by the board. Generally, this part of the RID process is identical to that for LIDs. Therefore, other chapters of this LID/RID Manual will be very helpful in completing the RID process, particularly the post -formation sections of Chapter 3 and all of Chapters 4 and 5. The outline that follows contains the statutory reference for those steps that are mandatory. ❑ Prepare and consider State Environmental Policy Act (SEPA) review (RCW 43,120) or formally determine absence of need for it. This step may be required prior to adopting the resolution of creation if adoption of formation resolution is a final decision to undertake construction. ❑ Authorize and undertake the final engineering and design work. ❑ Publish call for bids for construction once a week for two consecutive weeks before bid opening. (RCW 36.88.320 and 36.77.020) ❑ Board receives bids and obtains analysis of bids and recommendation from the county engineer. ❑ Board accepts best bid and awards contract. (RCW 36,77.040) or 0 Board authorizes construction by county's own crews to proceed as 'day labor'. (RCW 36.77.065 and RCW 36.77.070) ❑ Upon completion of the project, obtain when necessary state clearances, accept work and determine total RID costs, (RCW 60.28.040, 61.12.050 and 36.88.300) ❑ County engineer prepares proposed final assessment roll based upon total actual costs and files it with the clerk of the board. (RCW 36.88.090) ❑ The board adopts a resolution setting time, date, and place of final assessment roll hearing before the board of county commissioners who will be sitting as a board of equalization. (RCW 36.88.030) or ❑ RCW 36.88.095 a;lows board to appoint a committee or officer to hear final assessment roll and forward recommendations to the board. Local and Road Improvement Districts Manual for Washington State Sixth fdiNon 81 ❑ Mail notice of date, time, and place of the tinal assessment roll hearing along with information on an owners right to objectthe proposed assessment. The notice must be mailed to all property owners within the RID at least fifteen days before date fixed for hearing. The notice shall state that all objections must be in writing and must be filed with the clerk of the board at or prior to the hearing. This notice will also include the proposed individual parce' assessment along with the parcel number identfier and Iega! description. (RCW 36.88.090) ❑ Publish notice of hearing at [east two times in a newspaper of general circulation in the county with the first publication at least fifteen days before the hearing date, (RCW 36.88.090) ❑ Siting as a board of equalization, the board conducts assessment roll hearing, considers written objections, and either overrules the protest or modifies assessment based upon the protest information. (RCW 36.88.090) ❑ If any assessments are to be raised, a new hearing must be set and notice given by publication and mailing in the same manner as for the original final assessment roll hearing. (RCW 36,88.090) ❑ The board adopts a resolution confirming and levying assessments as finally approved. (RCW 36.88.090) ❑ Expiration of appeal period ten days after the effective date of the confirming resolution. (RCW 36.88. 100 and 35.44.190 through 35.44.210) ❑ The county treasurer pub[[shes (once a week for two weeks in a weekly paper or two consecutive issues of daily paper) and mails (to all property owners) notice that roll is filed for collection. (RCW 36.88.270) ❑ Interest free prepayment period expires thirty days after first publication of the county treasurer's notice. (RCW 36.88.270) ❑ The board adopts bond -elated resolutions. (RCW 36.88.200 and 36.88.210) (see Chapter 4 for more detailed explanation) ❑ Sell bonds at public or private sale. (RCW 36.88.210) (see Chapter 4 for more detailed explanation) ❑ The county road fund is reimbursed from the bond sale for public funds that were used to finance the assessment portion of the RID costs. Contributor: Pat Frankovic 82 Local and Road Improvement Districts Manual for Washington State Sixth Edition LID Programs aend Lookalikes LID/ID Programs/C000pe. stile 'mprovement 'Programs Information about the City of Tacoma's LID program can be found at: http:/M►ww,tacoma.org/Page.aspx? r, id=526 Information about the King County RID program can be found at; http:/A4ww.kingcounty.g ov/transportation/kcdot/Roads/Engineeri ngServices/RoadImprove mentDistricts.aspx. Information about the Spokane County RID program can be found at: http://www.spokanecountV.org/engineer/content.aspx?c=1473 The City of Portland has an active LID program as well: http://www.portlandonline,com/transportationfindex.cfm?c=35715 Vancouver, Canada has a neighborhood self program called Country Lanes: http ://va ncouver. ca/engsvcs/streetsAoca lim prove m entsf m p rovem entTypesfenes/co u ntry.htm (Latecomers Agreements Important 2W9 Legislative Change EHB 1513 (Session Law C 234 L 09), Effective July 26, 2009 This legislation gives certain agencies, including cities and counties, the ability to participate in utility system latecomer agreements under Chapter 35.91 RCW. Before, cities and counties could participate only in street and transportation latecomer agreements under Chapter 35,72 RCW. What Are They? Latecomer agreements, also referred to as recovery contracts or reimbursement agreements, allow a property owner who has installed street or utility improvements to recover a portion of the costs of those improvements from other property owners who later develop property in the vicinity and use the improvements. Two different statutes, Chapter 35.72 RCW for streets, and Chapter 35.91 RCW for utilities, govern these. Both Chapter 35.72 RCW and Chapter 35.91 RCW allow a municipality to be considered as a property ownerthat can be reimbursed under a street latecomer agreement, thanks to EHB 1513 X2009). Local and Road Improvement Districts Manual for Washington State Sixth Edition 83 What They Are Not Latecomer agreement charges are not to be confused with local improvement district (LID) assessments. While the computation of charges to be recovered under a latecomer agreement can be very similar to that of an LID assessment, the procedures are very different, ard, under an LID, the money goes to the municipality rather than to the property owner. In addition, LID assessments apply to all properties within the reimbursement area, whether or not the property is developed. Latecomer assessments, however, are triggered only if a property owner submits an application for a development that would have required similar improvements. Latecomer agreement charges are also not to be confused with connection fees, also known as facilities charges or system development charges, for utilities under Chapter 35.92 RCW. Those fees or charges are a property owner's equitable share of the cost of the entire utility system and not just for improvements that serve his/her property. MRSC Web Pages Go to http://www.mrsc.org/Subjects/PubWorkshatecomers.aspx. Sidewalk Statutes Three chapters, 35.68 RCW, 35.89 RCW and 35.70 RCW, provide cities and towns with the authorityto require property owners abutting a public street to construct sidewalk improvements or, if the property owners refuse, to construct the improvements itself and assess the costs to them. Each of the statutes has a slightly different approach to the issue and must be read carefully to make sure all procedures particular to that statute have been followed. Sidewalk Statute Summary statute Chapter 35 68 Chapter 35 59 Chapter 35 70 Applicability All cities or towns Code cities, first and Code cities or second second class cities, or class cities and towns charter cities of equal population Improvement Construct, reconstruct Sidewalk construction and Any form of sidewalk Type and repair sidewalks, reconstruction less than construction curbs and gutters one block long Remarks City may require City requires City requires improvements to be improvements to be improvements to be made or accomplish them made and, if not, then made and, if not, then through contract accomplishes them accomplishes them through contract through contract All three statutes refer to limitations in RCW 35.69.020: (a) an abutting property owner cannot be charged more than 50 percent of the valuaton of the property, exclusive of improvements; (b) an abutting property owner cannot be charged .f action by city caused deterioration or damage or if the deterioration or damage was caused by failure of the city to enforce its ordinances. 84 Local and Read Improvement Districts Manual for Washington State Sbah Edtian The MRSCwebsite has a listing of resources for Sidewalk Repair and Maintenance programs at: http:I/www,mrsc.org/Subjects/PubWorks/Sidow,aspx Parking and Business improvement Araas What is a Parking and Business Improvement Area (PBIA)? A parking and business improvement area (PBIA) is designed to aid general economic development and to facilitate merchant and business cooperation. A PSIA is a local self-help funaing mechanism that ailows businesses and property owners within a defined area to establish a spacial assessment district. Funds raised can be used to provide management, services, facilities, and programs to the district. The Washington State Office of Trade and Economic Development pu blication, Organizing a Successful Downtown Revitalization Program Using the Main StreetApproach notes that PBIAs require a lot of effort and time to put together, and can be very politically sensitive. To date, very few PBlAs have withstood the test of time. What Can a Parking and Business Improvement Area DoT The activities in a parking and business improvement area are financed through a special assessmentthat is imposed on businesses, multifamily residential developments, and mixed-use developments located within the geographic boundaries of the area. The assessments can be used to finance: • construction, acquisition, or maintenance of parking facilities in the area; • decoration of public areas; • promotion of public events in public places in the area; • furnishing of music in any public place in the area; • provision of maintenance and security of common public areas; or • management, planning, and promotion of the area, including the promotion of retail trade activities in the area. Parking and business improvement areas are not explicitly authorized to promote tourism. MRSC Web Pages Go to http:l/www.mrsc.org/subjects/econ/ed-bia.aspx. Local and Road Improvement Districts Manual for Washington State Sixth Edition 85