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HomeMy WebLinkAboutL.I.D. Improvements History - Handbook (1977) The Public Official's Handbook for L . I . D . Improvements etc; ir _. fir The PUBLIC OFFICIAL'S HANDBOOK for LID IMPROVEMENTS • Published as a public service by Foster & Marshall Inc. June 1977 4 PREFACE This booklet has been prepared for use by local public officials in Washington State as a convenient reference to the procedures used in connection with local im- provement districts. It has been prepared by Craig McMicken, a Municipal Consultant member of our staff. The information is intended to assist the public official — council member, administrator, engineer — who must work with the LID statutes as a layman. It does not take the place of legal advice which is necessary for each step of a successful LID project. Foster and Marshall has a long record of experience in financing capital improvements for local governments. Over the years, we have assisted many cities with the marketing of LID bonds, working closely with the bond counsel, city attorney, clerk, engineer, and finance of- ficer. We hope this handbook will be of assistance to you in following the sometimes confusing legal procedures for the creation of LID's. Yet the LID statutes have played a vital role in the building of Washington cities and towns and we predict continued reliance upon them in the years to come. Robert O. Yeasting Vice President and Manager Municipal Consulting Department 1 CONTENTS Introduction 3 Authority Generally 5 Initial Steps for Formation 6 Preliminary Estimates and Assessment Roll 7 Public Hearing for Formation 8 Effect of Protests by Property Owners 9 Improvement Made Pursuant to Bid 10 Utility LIDS 11 Interim Financing 12 Acceptance of Work 13 Costs to Be Included for Assessment 14 Method of Computing Assessments 15 Public Hearing on Assessment Roll 16 Confirming the Assessment Roll 17 Payment of Assessments 18 Remaining Assessments Bonded 19 Marketing LID Bonds 20 Securing the Bonds 21 LID Checklist 24 2 INTRODUCTION The subject of special assessments(and assessment dis- tricts) is a very broad subject and is impossible to cover in a small booklet of this type. Aside from the many statutes pertaining to this subject and their various applications to particular projects, there are many court decisions which over the years have helped form a comprehensive body of law governing public improve- ments financed by assessments. Nevertheless,the wide- spread use of LID's makes this booklet a handy reference for the layman to refer to the more basic and frequently used portions of the law. The LID statutes provide a means whereby property owners representing a majority can make an improve- ment benefiting their neighborhood and distribute the cost equitably among all owners. Generally, assess- ments are made in accordance to the size of each parcel and its location in respect to the improvement. The right of a city to create an LID is purely statutory. No right exists at common law. The constitution of the State of Washington, in Section 9 of Article VI I, specifically authorizes the state legislature to vest in cities and towns the right to make local improvements and to pay for the same by special assessments on the property specially benefited thereby. Therefore, portions of the law date back to 1890 although most basic provisions were adopted in 1911. The opening paragraphs of the act designates fourteen different categories of local improvement, from alleys to"canals or ditches to protect the public from the hazards thereof."Interpretation of the broad language 3 results in virtually no limitations placed on the type of improvement. Further, improvements need not be restricted to"new," but may include reconstruction, repair or renewal of a previous improvement. Ordinarily, a district involves an improvement where all benefitted properties are contiguous. However, a noncontinuous improvement district is also legal. For instance, various short isolated streets may be combined into one district. In like manner, the consolidation of several paving jobs may be let under a single contract, thereby reducing the unit cost. However, the cost of each improvement must be kept separate and the cost properly charged against each parcel. City councils who have not used assessment districts extensively should be encouraged by the experience of other cities where this method of solving a local problem has been successfully employed time and time again covering a wide range of projects. The format of this Handbook is that the basic steps'are briefly described across the top of each page; for a more complete reference, sections of the Revised Code of Washington are reprinted on the lower portion of the page. City Clerks and Finance Officers will find the "Checklist"at the back of the booklet helpful in keeping track of each step and maintaining an official file. For particular advice, consult your city attorney or bond counsel. 4 AUTHORITY GENERALLY • LID statutes apply to all incorporated cities and towns and supersede city charters. 35.43.030.* • Local improvement districts and utility local improvement districts may be formed entirely or in part of unincorporated territory outside city limits. 35.43.030. • As to the kind of improvements which qualify for financing under LID laws, a broad variety is allowed but must be specifically authorized by statute. 35.43.040. 35.43.030 Charters superseded — Application — Ordinances — Districts outside city authorized. This and the following chapters relating to municipal local improvements shall supersede the . provisions of the charter of any city of the first class. They shall apply to all incorporated cities and towns, including un- classified cities and towns operating under special charters. The council of each city and town shall pass such general ordinance or ordinances as may be necessary to carry out their provisions and thereafter all proceedings relating to local improve- ments shall be conducted in accordance with this and the following chapters relating to municipal local improvements and the ordinance or ordinances of such city or town.• Cities or towns may form local improvement districts or utility local improvement districts composed entirely or in part of unincor- porated territory outside of such city or town's corporate limits in the manner provided in this chapter. 35.43.040 Authority generally. Whenever the public interest or convenience may require, the legislative authority of any city or town may order the whole or any part of any local improvement including but not restricted to those, or any combination thereof, listed below to be constructed, reconstructed, repaired, or renewed and landscaping including but not restricted to the planting, setting out, cultivating, maintaining, and renewing of shade or ornamental trees and shrubbery thereon;may order any and all work to be done necessary for completion thereof; and may levy and collect special assessments on property specially benefited thereby to pay the whole or any part of the expense thereof, viz: (1) Alleys, avenues, boulevards, lanes, park drives, parkways, public places,public squares,public streets,their grading, regrading, planking, replanking, paving, repaving, macadamizing, remacada- mizing, graveling, regraveling, piling, repiling, capping, recapping, or other improvement; if the management and control of park drives, parkways,and boulevards is vested in a board of park commissioners, the plans and specifications for their improvement must be approved by the board of park commissioners before their adoption; (2) Auxiliary water systems; (3) Auditoriums, field houses, gymnasiums, swimming pools, or other recreational or playground facilities or structures; (4) Bridges, culverts; (5) Bulkheads and retaining walls; • (6) Dikes and embankments; (7) Drains, sewers and sewer appurtenances which as to trunk sewers shall include as nearly as possible all the territory which can be drained through the trunk sewer and subsewers connected thereto; * All references refer to the Revised Code of Washington. 5 INITIAL STEPS FOR FORMATION • A local improvement may be ordered only by an ordinance of the city council, pursuant to either a resolution passed by it, or a petition filed by property owners. 35.43.070. • A project may be initiated upon a petition signed by the owners of property representing a majority(1)of the lineal frontage upon the improvement and(2) of the area within the proposed district. 35.43.120. • A proposed improvement may also be initiated by a resolution of the city council, setting forth the nature and boundaries of the project, and notifying property owners of a hearing. 35.43.140. (8) Escalators or moving sidewalks together with the expense of operation and maintenance; (9) Parks and playgrounds; (10) Sidewalks, curbing, and crosswalks; (11)Street lighting systems together with the expense of furnishing electrical energy, maintenance, and operation; (12) Underground utilities transmission lines; (13) Water mains, hydrants and appurtenances which as to trunk water mains shall include as nearly as possible all the territory in the zone or district to which water may be distributed from the trunk water mains through lateral service and distribution mains and services; (14) Fences, culverts, syphons, or coverings or any other feasible safeguards along, in place of, or over open canals or ditches to protect the public from the hazards thereof. 35.43.070 Ordinance — Action on petition or resolution. A local improvement may be ordered only by an ordinance of the city or town council,pursuant to either a resolution or petition therefor. The ordinance must receive the affirmative vote of at least a majority of the members of the council. Charters of cities of the first class may prescribe further limitations. In cities and towns other than cities of the first class, the ordinance must receive the affirmative vote of at least two-thirds of the members of the council if, prior to its passage, written objections to its enactment are filed with the city clerk by or on behalf of the owners of a majority of the lineal frontage of the improvement and of the area within the limits of the proposed improvement district. 35.43.120 Petition — Requirements. Any local improvement may be initiated upon a petition signed by the owners of property aggregating a majority (1) of the lineal frontage upon the improvement and (2) of the area within the proposed district. The petition must set forth the nature and territorial extent of the proposed improvement, the mode of payment, and what proportion of the lineal frontage upon the improvement and of the area within the proposed district is owned by the petitioners as shown by the records in the office of the coGnty auditor. If any of the property,within the area of the proposed district stands in the name of a deceased'person,or of any person for whom a guardian has been appointed and not discharged,the signature of the executor, administrator, or guardian, as the case may be, shall be equivalent to the signature of the owner of the property on the petition. The petition must be filed with the clerk or with such other officer as the city or town by charter or ordinance may require. • 6 PRELIMINARY ESTIMATES AND ASSESSMENT ROLL • The designated official — usually the city engineer — prepares an estimate of the cost accompanied by a diagram showing the parcels of land in the proposed district and the preliminary assessment roll. This and other required information is assembled and certified to the council. 35.43.130. • As a practical matter, city councils often initiate LID proceedings by the adoption of a resolution, followed by a hearing, even though a petition has been filed. This in effect overcomes any legal defi- ciencies of the petition, ensures a hearing for all in- terested property owners, and permits a consistent procedure for compliance with state statutes. The procedures described on the following pages are based on this premise. 35.43.140. 35.43.130 Preliminary estimates and assessment roll. Upon the filing of a petition or upon the adoption of a resolution, as the case may be, initiating a proceeding for the formation of a local improvement district or utility local improvement district,the proper board, officer, or authority 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 certify it to the legislative authority of the city or town together with all papers and information in its possession touching the proposed improvement,a description of the boundaries of the district,a statement of what portion of the cost and expense of the improvement should be borne by the property within the proposed district, a statement in detail of the local improvement assessments outstanding and unpaid against the property in the proposed district, and a statement of the aggregate actual valuation of the real estate including twenty-five percent of the actual valuation of the improvements in the proposed district according to the valuation last placed upon it for the purposes of general taxation. If the proceedings were initiated by petition the designated board, officer or authority shall also determine the sufficiency of the petition and whether the facts set forth therein are true. If the petition is found to be sufficient and in all.proceedings initiated by resolution of the legislative authority of the city or town, the estimates must be accompanied by a diagram showing thereon the lots, tracts, and parcels of land and other property which will be specially benefited by the proposed improvement and the estimated amount of the cost and expense thereof to be borne by each lot, tract, or parcel of land or other property: Provided, That no such diagram shall be required where such estimates are on file in the office of the city engineer, or other designated city office, together with a detailed copy of the preliminary assessment roll and the plans and assessment maps of the proposed improvement. For the purpose of estimating and levying local improvement assessments,the value of property of the United States, of the state, or of any county, city, town, school district,' or other public corporation whose property is not assessed for general taxes shall be computed according to the standards afforded by similarly situated property which is assessed for general taxes. 7 . PUBLIC HEARING FOR FORMATION • The city council, on its own initiative or in response to a petition, adopts a resolution declaring its intention to form the LID, and calls for a hearing. 35.43.150. • Notices are mailed to all affected property owners at least fifteen days before the date of hearing. 35.43.150. • The resolution of intention is published at least two • consecutive issues of the official newspaper, the first publication at least fifteen days prior to the hearing. 35.43.140. • The hearing may be held before the council, or a committee of the council; if before a committee, the committee must report its recommendation to the city council. 35.43.140. 35.43.140 Resolutions — Contents, publication — Hearing, by whom held.Any local improvement to be paid for in whole or in part by the levy and collection of assessments upon the property within the proposed improvement district may be initiated by a resolution of the city council or other legislative authority of the city,declaring its intention to order the improvement, setting forth the nature and territorial extent of the improvement and notifying all persons who may desire to object thereto to appear and present their objections at a time to be fixed therein. In the case of trunk sewers and trunk water mains the resolution must describe the routes along which the trunk sewer, subsewer and branches of trunk water main and laterals are to be constructed. In case of dikes or other structures to-protect the city or town or any part thereof from overflow or to open, deepen, straighten, or enlarge watercourses, waterways and other channels the resolution must set forth the place of commencement and ending thereof and the route to be used. In the case of auxiliary water systems, or extensions thereof or additions thereto for protection of the city or town or any part thereof from fire,the resolution must set forth the routes along which the auxiliary water system or extensions thereof or additions thereto are to be constructed and specifications of the structures or works necessary thereto or forming a part thereof. The resolution shall be published in at least two consecutive issues of the official newspaper of the city or town,or if there is no official newspaper, in any legal newspaper of general circulation therein;the first publication to be at least fifteen days before the day fixed for the hearing. The hearing herein required may be held before the city council,or other legislative authority, or before a committee thereof. If the hearing is before a committee, the committee shall following the hearing report its recommendation on the resolution to the city council or other legislative authority for final action. 35.43.150 Resolutions — Hearing upon — Notice. Notice of the hearing upon a resolution declaring the intention of the legislative authority of a city or town to order an improvement shall be given by mail at least fifteen days before the day fixed for hearing to the owners or reputed owners of all lots, tracts, and parcels of land or other property to be specially benefited by the proposed improvement,as shown on the rolls of the county treasurer, directed to the address thereon shown. The notice shall set forth the nature of the proposed improvement, the estimated cost, and the estimated benefits of the particular lot, tract, or parcel. 8 EFFECT OF PROTESTS BY PROPERTY OWNERS • After hearing, if the city council wishes to proceed, an ordinance creating the LID is passed by vote of the majority of the council. 35.43.070. • The LID ordinance is published and a 30-day protest period begins. If owners of land subject to more than 60%, of the total cost of the improvement file written protests — such filings are usually made with the city clerk — the project is restrained. 35.43.180. • Provided, however, if the improvement is a sewer or watermain and fire hydrants where public health and safety are involved, the protests do not restrain the council and the LID may be formed upon unanimous vote of all members present. 35.43.180. 35.43.180 Restraint by protest. The jurisdiction of the legislative authority of a city or town to proceed with any local improvement initiated by resolution shall be divested by a protest filed with the city or town council within thirty days from the date of passage of the ordinance ordering the improvement, signed by the owners of the property within the proposed local improvement district or utility local improvement district subject to sixty percent or more of the total cost of the improvement including federally-owned or other nonassessable property as shown and determined by the preliminary estimates and assessment roll of the proposed improvement district or, if all or part of the local improvement district or utility local improvement district lies outside of the city or town, such jurisdiction shall be divested by a protest filed in the same manner and signed by the owners of property which is within the proposed local improvement district or utility local improvement district but outside the boundaries of the city or town, and which is subject to sixty percent or more of that part of the total cost of the improvement allocable to property within the proposed local improvement district or utility local improvement district but outside the boundaries of the city or town, including federally-owned or other nonassessable property: Provided, That such restraint by protest shall not apply to any local improvement by sanitary sewers or watermains and fire hydrants where the health officer of any city or town shall file with the legislative authority thereof a report showing the necessity for such improvement accompanied by a report of the chief of the fire department in the event such improvement includes fire hydrants, and such legislative body finds and recites in the ordinance or resolution authorizing the improvement that such improvement is necessary for the protection of the public health and safety and such ordinance or resolution is passed by unanimous vote of all members present. 35.43.190 Work— By contract or by city.All local improvements, the funds for the making of which are derived in whole or in part from assessments upon property specially benefited shall be made by contract on competitive bids whenever the estimated cost of such improvement including the cost of materials, supplies, labor, and equipment will exceed the sum of five thousand dollars. The city or town may reject any and all bids. The city or town itself may make the local improvements if all the bids received exceed by ten percent preliminary cost estimates prepared by an independent consulting engineer or registered professional engineer retained for that purpose by the city or town. 9 IMPROVEMENT MADE PURSUANT TO BID • Once the thirty-day protest period has passed, (and assuming insufficient protests were filed to restrain the project), the improvement is made by contract . awarded on competitive bids whenever the estimated cost exceeds $5000. (Charter and Code Cities should see RCW Ch. 35 and 35A statutes' which apply to them.) 35.43.190 and 35.23.352. • For cities other than the first class, a call for bids for construction is published once a week for two consecutive weeks before bid opening. 35.23.352. • A call for bids is also posted in a public place two weeks before bid opening. 35.23.352. • The council receives bids, obtains an engineer's analysis, accepts the lowest, responsible bid and awards a contract. 35.23.352. • 35.23.352 Contracts,purchases,advertising— Call for bids — Ex- ceptions. Any city or town of the second, third or fourth class may construct any public work or improvement by contract or day labor without calling for bids therefor whenever the estimated cost of such work or improvement, including cost of materials, supplies and equipment will not exceed the sum of five thousand dollars. Whenever the cost of such public work or improvement, including materials,supplies and equipment,will exceed five thousand dollars, the same shall be done by contract.All such contracts shall be let at public bidding upon posting notice calling for sealed bids upon the work.Such notice thereof shall be posted in a public place in the city or town and by publication in the official newspaper once each week for two consecutive weeks before the date fixed for opening the bids. The notice shall generally state the nature of the work to be done that plans and specifications therefor shall then be on file in the city hall for public inspections, and require that bids be sealed and filed with the council or commission within the time specified therein. Each bid shall be accompanied by a bid proposal deposit in the form of a cashier's check,postal money order, or surety bond to the council or commission for a sum of not less than five percent of the amount of the bid, and no bid shall be considered unless accompanied by such bid proposal deposit. If there is no official newspaper the notice shall be published in a newspaper published or of general circulation in the city or town. The city council or commission of the city or town shall let the contract to the lowest responsible bidder or shall have power by resolution to reject any or all bids and to make further calls for bids in the same manner as the original call,or if in its judgment the improvement or work, including the purchase of supplies, material and equipment,can be done by the city at less cost than the lowest bid submitted it may do so without making a further call for bids or awarding any contract therefor and in such case all such bid proposal deposits shall be returned to the bidder; but if the contract is let then all bid proposal deposits shall be returned to the bidders except that of the successful bidder which shall be retained until a contract is entered into and a bond to perform the work furnished, with surety satisfactory to the council or commission, in the full amount of the contract price. If the bidder fails to enter into the contract in accordance with his bid and furnish such bond within ten days from the date at which he is notified that he is the successful bidder,the check or postal money order and the amount thereof shall be forfeited to the council or commission or the council or commission shall recover the amount of the surety bond. If no bid is received on the first call, the city council or commission may readvertise and make a second call, or may enter into a contract without any further call or may purchase the supplies, material or equipment and perform such work or improvement by day labor. Any purchase of supplies, material, equipment or services other than professional services, except for public work or improvement, 10 UTILITY LIDs - • Whenever the improvement involves a water or sewer system, or off-street parking facilities, the legislative body may choose to issue revenue bonds to pay a part or all of the cost. 35.43.042. • The main difference between LID's and ULID's is the type of bonds issued. LID bonds are secured solely by assessments against the benefited property; with a ULID, revenue bonds are secured by both the assess- ments and net revenues. 35.43.042. • The pledge of net revenues of the water and/or sewer system, or parking facility, technically upgrades the quality of the bonds to the level of other revenue bonds; however, all of the capital costs may be assessed against the benefited property and, often, assessments are made sufficient to pay all principal and interest on the bonds. 35.43.042. where the cost thereof exceeds two thousand dollars shall be made upon call for bids in the same method and under the same conditions as required herein on a call for bids for public work or improvement. Bids shall be called annually and at a time and in the manner prescribed by ordinance for the publication in a newspaper published or of general circulation in the city or town of all notices or newspaper publications required by law. The contract shall be awarded to the lowest responsible bidder. 35.43.042 Authority to establish utility local improvement districts — Procedure.Whenever the legislative authority of any city or town has provided pursuant to law for the acquisition, construction, reconstruction, purchase, condemnation and purchase, addition to, repair, or renewal of the whole or any portion of a: (1) System for providing the city or town and the inhabitants thereof with water, which system includes as a whole or as a part thereof water mains, hydrants or appurtenances which are authorized subjects for local improvements under RCW 35.43.040 (13)or other law; or a (2) System for providing the city or town with sewerage and storm or surface water disposal, which system includes as a whole or as a part thereof drains, sewers or sewer appurtenances which are authorized subjects for local improvements under RCW 35.43.040(7) or other law; or (3) Off-street parking facilities; and Has further provided in accordance with any applicable provisions of the Constitution or statutory authority for the issuance and sale of revenue bonds to pay the cost of all or a portion of any such system, such legislative authority shall have the authority to establish utility local improvement districts, and to levy special assessments on all property specially benefited by any such local improvement to pay in whole or in part the damages or costs of any local improvements so provided for. The initiation and formation of such utility local improvement districts and the levying, collection and enforcement of assessments shall be in the manner and subject to the same procedures and limitations as are now or hereafter provided by law for the initiation and formation of local improvement districts in cities and towns and the levying, collection, and enforcement of assessments pursuant thereto. It must be specified in any petition or resolution initiating the formation of such a utility local improvement district in a city or town and in the ordinance ordered pursuant thereto, that the assessments shall be for the sole purpose of payment into such revenue bond fund as may be specified by the legislative authority for the payment of revenue bonds issued to defray the cost of such 11 • INTERIM FINANCING • In order to provide funds to pay the contractor for work in progress, interest-bearing warrants may be issued periodically. All warrants are claims against the LID Fund established for the project. 35.45.130. • Local banks are usually willing to buy warrants upon the assurance that bonds will later be issued after project completion and the warrants redeemed. • As an alternative, local improvement bonds may be issued to the contractor, if he is willing, in lieu of cash payment. 35.45.040. system or facilities or any portion thereof as provided for in this section. Assessments in any such utility local improvement district may be made on the basis of special benefits up to but not in excess of the total cost of the local improvements portion of any system or facilities payable by issuance of revenue bonds. No warrants or bonds shall be issued in any such utility local improvement district, but the collection of interest and principal on all assessments in such utility local improvement district, when collected, shall be paid into any such revenue bond fund. When in the petition or resolution for establishment of a local improvement district and in the ordinance ordered pursuant thereto, it is specified or provided that the assessments shall be for the sole purpose of payment into a revenue bond fund for the payment of revenue bonds, then the local improvement district shall be designated a"utility local improvement district". The provisions of chapters 35.45, 35.47 and 35.48 RCW shall have no application to utility local improvement districts created under authority of this section. 35.45.130 Warrants against local improvement fund authorized. Every city and town may provide by ordinance for the issuance of warrants in payment of the cost and expense of any local improvement, payable out of the local improvement district fund. The warrants shall bear interest at a rate or rates as authorized by ordinance and shall be redeemed either in cash or by local improvement bonds for the same improvement authorized by ordinance. All warrants against any local improvement fund sold by the city or town or issued to a contractor and by him sold or hypothecated for a valuable consideration shall be claims and liens against the improvement fund against which they are drawn prior and superior to any right, lien, or claim of any surety upon the bond or bonds given to the city or town by or for the contractor to secure the performance of his contract or to secure the payment of persons who have per- formed work thereon,furnished materials therefor, or provisions and supplies for the carrying on of the work. 12 ACCEPTANCE OF WORK • Upon completion of the project, the necessary clearances are obtained from the Department of Revenue that all taxes have been paid by the contractor. 60.28.050. • Similarly, clearance is also necessary from the Department of Labor& Industries that the contractor and subcontractors have made payments to the workmen's compensation fund. 51.12.050. • 60.28.050 Duties of disbursing officer upon final acceptance of contract. Upon final acceptance of a contract, the state, county or other municipal officer charged with the duty of disbursing or authorizing disbursement or payment of such contracts shall forthwith notify the department of revenue of the completion of said contract.Such officer shall not make any payment from the retained percentage fund or release any retained percentage escrow account to any person, until he has received from the department of revenue a certificate that all taxes, increases and penalties due from the contractor,and all taxes due and to become due with respect to such contract have been paid in full or that they are, in the department's opinion,readily collectible without recourse to the state's lien on the retained percentage. 51.12.050 State, county and municipal work — Liability for premiums.Whenever the state, county, any municipal corporation, or other taxing district shall engage in any work, or let a contract therefor, in which workmen are employed for wages, this title shall be applicable thereto. The employer's payments into the accident fund shall be made from the treasury of the state, county, municipality, or other taxing district. If the work is being done by contract,the payroll of the contractor and the subcontractor shall be the basis of computation and, in the case of contract work consuming less than one year in performance,the required payment into the accident fund shall be based upon the total payroll. The contractor and any subcontractor shall be subject to the provisions of this title, and the state for its general fund, the county, municipal corporation,or other taxing district shall be entitled to collect from the contractor the full amount payable to the accident fund and the contractor, in turn,shall be entitled to collect from the subcontractor his proportionate amount of the payment. Whenever and so long as, by state law, city charter, or municipal ordinance,provision is made for employees;or peace officers injured in the course of employment,such employees shall not be entitled to the benefits of this title and shall not be included in the payroll of the municipality under this title:Provided, That whenever any state law, city charter,or municipal ordinance only provides for payment to the employee of the difference between his actual wages and that received under this title such employees shall be entitled to the benefits of this title and may be included in the payroll of the municipality. 13 COSTS TO BE INCLUDED FOR ASSESSMENT • After acceptance of the work,total cost of the project is then determined. Costs to be included for assessment include construction, engineering, advertising, accounting, rights of way, legal, financial, and appraisal services, interest on warrants, and the issuance of bonds. 35.44.020. • The city council, at its discretion, may contribute general funds to the project on the basis there is general community benefit as a result of the improvement. Some cities have established rates for the commonly used LID projects which, in effect, place a ceiling upon an owner's participation. The excess cost is then borne by the city. 35.49.060. 35.44.010 Assessment district — All property to be assessed — Basis.All property included within the limits of a local improvement district or utility local improvement district shall be considered to be the property specially benefited by the local improvement and shall be the property to be assessed to pay the cost and expense thereof or such part thereof as may be chargeable against the property specially benefited. The cost and expense shall be assessed upon all the property in accordance with the special benefits conferred thereon in proportion to area and distance back from the marginal line of the public way or area improved. 35.44.020 Assessment district— Cost items to be included. There shall be included•in the cost and expense of every local improvement for assessment against the property in the district created to pay the same, or any part thereof: (1)The cost of all the construction or improvement authorized for the district including, but not limited to, that portion of the improvement within the street intersections; (2) The estimated cost and expense of all engineering and surveying necessary for the improvement done under the supervision of the city or town engineer; (3)The estimated cost and expense of ascertaining the ownership of the lots or parcels of land included in the assessment district; (4) The estimated cost and expense of advertising, mailing, and publishing all necessary notices; (5) The estimated cost and expense of accounting, clerical labor, and of books and blanks extended or used on the part of the city or town clerk and city or town treasurer in connection with the improvement; (6)All cost of the acquisition of rights of way, property, easements or other facilities or rights, whether by eminent domain, purchase, gift, or in any other manner: Provided, That any of the costs enumerated in this section may be excluded from the cost and expense to be assessed against the property in such local improve- ment district if the legislative body of such city or town so designates by ordinance at any time and may be paid from any other moneys available therefor. (7) The cost for legal, financial, and appraisal services and any other expenses incurred by the city or town for the district or in the formation thereof, or by the city or town in connection with such construction or improvement and in the financing thereof, including the issuance of any bonds. 14 METHOD OF COMPUTING ASSESSMENTS • All property within the district must be considered for assessment but is charged only to the extent it is specially benefited. 35.44.010. • Various methods of assessment may be used: zone and termini; rate per square foot; rate per front foot; flat rate; and other formulas. The test of fairness lies with the council in final judgement who determine the"special benefits"to each property. 35.44.047. 35.44.047 Other methods of computing assessments may be used. Notwithstanding the methods of assessment provided in RCW 35.44.030, 35.44.040 and 35.44.045, the city or town may use any other method or combination of methods to compute assessments which may be deemed to more fairly reflect the special benefits to the properties being assessed. The failure of the council to specifically recite in its ordinance ordering the improvement and creating the local improvement district that it will not use the zone and termini method of assessment shall not invalidate the use of any other method or methods of assessment. 15 PUBLIC HEARING ON ASSESSMENT ROLL • Upon the filing of the assessment roll with the city clerk, the council fixes a date for public hearing. 35.44.070. • Notices of hearing are mailed to all affected property owners at least fifteen days before the hearing. Notice is also published at least five times in a daily newspaper or twice in a weekly newspaper, the last publication at least fifteen days before the hearing. 35.44.090. • The council conducts hearings, acts on objections by modifying assessments and/or overruling them. 35.44.100. 35.44.070 Assessment roll — Filing — Hearing, date, by whom held. The assessment roll for local improvements when prepared as provided by law shall be filed with the city or town clerk. The council or other legislative authority shall thereupon fix a date for a hearing thereon before such legislative authority or may direct that the hearing shall be held before a committee thereof. The committee designated shall hold a hearing on the assessment roll and consider all objections filed following which it shall report its recommendations to such legislative authority which it shall report its recommendations to such legislative authority which shall either adopt or reject the recommendations of the committee. If a hearing is held before such a committee it shall not be necessary to hold a hearing on the assessment roll before such legislative authority. The same procedure may if so directed by such legislative authority be followed with respect to any assessment upon the roll which is raised or changed to include omitted property. Such legislative authority shall direct the clerk to give notice of the hearing and of the time and place thereof. 35.44.090 Assessment roll — Notice — Mailing — Publication. At least fifteen days before the date fixed for hearing, notice thereof • shall be mailed to the owner or reputed owner of the property whose name appears on the assessment roll,at the address shown on the tax rolls of the county treasurer for each item of property described on the list. In addition thereto the notice shall be published at least five times in a daily newspaper or at least two times in a weekly newspaper,the last publication to be at least fifteen days before the date fixed for hearing. If the city or town has an official newspaper, the notice must be published therein; otherwise it may be published in any legal newspaper of general circulation in the city or town. 35.44.100 Assessment roll— Hearing—Objections—Authority of council.At the time fixed for hearing objections to the confirmation of the assessment roll, and at the times to which the hearing may be adjourned,the council may correct, revise, raise, lower, change, or modify the roll or any part thereof,or set aside the roll and order the assessment to be made de novo and at the conclusion thereof confirm the roll by ordinance. 35.44.200 Procedure on appeal — Perfecting appeal.The decision of the councilor other legislative body,upon any objections made in the manner and within the time herein prescribed, shall be final and conclusive, subject however to review by the superior court upon appeal. The appeal shall be made by filing written notice of appeal with the city or town clerk and with the clerk of the superior court of the county in which the city or town is situated. 16 CONFIRMING THE ASSESSMENT ROLL • After the conclusion of the hearing, the city council confirms the assessment roll by ordinance. The ordinance is published. 35.44.100. • The action of the council is conclusive, except that an appeal for review by the superior court may be made if filed within ten days after the effective date of the confirming ordinance. 35.44.200 and .210. • The council may reassess the assessments or add an assessment on property previously omitted if a mistake has occurred. 35.44.280 and .360. • The treasurer publishes notice of the roll in the official city newspaper (once a week for two weeks) and mails to all property owners notice that the roll is filed for collection. 35.49.010. 35.44.210 Procedure on appeal — Notice of appeal.The notice of appeal must be filed within ten days after the ordinance confirming the assessment roll becomes effective and shall describe the property and set forth the objections of the appellant to the assessment. 35.44.280 Reassessments — When authorized. In all cases of special assessments for local improvements wherein the assessments are not valid in whole or in part for want of form, or insufficiency, informality, irregularity, or nonconformance with the provisions of law,charter,or ordinance,the city or town council may reassess the assessments and enforce their collection in accordance with the provisions of law and ordinance existing at the time the reassessment is made.This shall apply not only to an original assessment but also to any reassessment,to any assessment upon omitted property and to any supplemental assessment which is declared void and its enforce- ment refused by any court or which for any cause has been set aside, annulled or declared void by any court either directly or by virtue of any decision thereof. 35.44.360 Assessments on omitted property — Authority. If by reason of mistake, inadvertence,or for any cause, property in a local improvement district or utility local improvement district which except for its omission would have been subject to assessment has been omitted from the assessment roll, the city or town council, upon its own motion, or upon the application of the owner of any property in the district which has been assessed for the improvement, may proceed to assess the property so omitted in accordance with the benefits accruing to it by reason of the improvement in proportion to the assessments levied upon other property in the district. 35.49.010 Collection by city treasurer — Notices. All assessments for local improvements in local improvement districts shall be collected by the city treasurer and shall be kept in a separate fund to be known as"local improvement fund, district No. "and shall be used for no other purpose than the redemption of warrants drawn upon and bonds issued against the fund to provide payment for the cost and expense of the improvement. All assessments for local improvements in a utility local improvement district shall be collected by the city treasurer, shall be paid into the appropriate revenue bond fund,and shall be used for no other purpose than the redemption of revenue bonds issued to provide funds for the cost and expense of the improvement. As soon as the assessment roll has been placed in the hands of the city or town treasurer for collection, he shall publish a notice in the official newspaper of the city or town once a week for two 17 PAYMENT OF ASSESSMENTS • The prepayment period during which assessments may be made in cash without interest expires thirty days after the first publication of the treasurer's notice of collection. 35.49.040. • The number of installments shall be less by two than the number of years the bonds are issued. For example, assessments which are bonded by a twelve- year bond are required to be repaid in ten equal annual principal amounts plus interest on the unpaid balance. 35.49.020. • Interest on assessments is set by the city council with the passage of the bond ordinance; the ordinance also prescribes a penalty of not less than 5%on delinquent payments. 35.49.030. After an assessment is bonded, an owner may pay up the remaining installments together with interest to the next annual due date and relieve himself of further obligation. 35.49.050. consecutive weeks,that the roll is in his hands for collection and that all or any portion of the assessment may be paid within thirty days from the date of the first publication of the notice without penalty, interest or costs. Within fifteen days of the first newspaper publication, the city or town treasurer shall notify each owner or reputed owner whose name appears on the assessment roll,at the address shown on the tax rolls of the county treasurer for each item of property described on the list, of the nature of the assessment, of the amount of his real property subject to such assessment, of the total amount of assessment due, and of the time during which such assessment may be paid without penalty, interest, or costs. 35.49.020 Installments — Number— Due date. In all cases where bonds are issued to pay the cost and expense of a local improvement, the ordinance levying the assessments shall provide that the sum charged against any lot,tract,and parcel of land or other property,or any portion thereof,may be paid during the thirty day period allowed for the payment of assessments without penalty or interest and that thereafter the sum remaining unpaid may be paid in equal annual installments.The number of installments shall be less by two than the number of years which the bonds issued to pay for the improvement are to run. Interest on the whole amount unpaid at the rate fixed by the ordinance shall be due on the due date of the first installment of principal and each year thereafter on the due date of each installment principal: Provided, That the legislative authority of any city or town having made a bond issue payable on or before twenty-two years after the date of issue may provide by ordinance that all assessments and portions of assessments unpaid after the thirty day period allowed for payment of assessments without penalty • or interest may be paid in ten equal installments beginning with the eleventh year and ending with the twentieth year from the expiration of said thirty day period, together with interest on the unpaid installments at the rate fixed by such ordinance,and that in each year after the said thirty day period, to and including the tenth year thereafter, one installment of interest on the principal sum of the assessment at the rate so fixed shall be paid and collected, and that beginning with the eleventh year after the thirty day period one installment of the principal, together with the interest due thereon, and on all installments thereafter to become due shall be paid and collected. 35.49.030 Ordinance to prescribe time of payment — Interest — Penalties. Every city and town shall prescribe by ordinance within what time assessments or installments thereof shall be paid, and shall provide for the payment and collection of interest thereon at a rate as shall be fixed by the legislative body of the city or town. Assessments 18 REMAINING ASSESSMENTS BONDED • Local improvement bonds may be issued by ordinance any time after twenty days following the thirty day prepayment period. 35.45.010. • The portion of the cost of the improvement to be financed with bonds is determined by the collections received during the thirty day prepayment period, less contributions by the city, if any. Bonds are then issued to cover the unpaid portion of the assessments. 35.45.010. • The term of the bonds is normally twelve years(two years beyond the assessment period)although up to thirty years is authorized. The denomination is usually$5000. Bond number one is often a fraction- al denomination to account for the uneven amount to be bonded. Bonds are in coupon form. Since LID bonds are made payable to the bearer, ownership may be transferred without endorsement. 35.45.020 and .030. or installments thereof, when delinquent, in addition to such interest,shall bear such penalty not less than five percent as shall be by general ordinance prescribed. 35.49.040 Payment without interest or penalty. The owner of any lot, tract, or parcel of land or other property charged with local improvement assessment may redeem it from all or any portion thereof by paying to the city or town treasurer all or any portion thereof without interest within thirty days after the first publication by the treasurer of notice that the assessment roll is in his hands for collection. 35.49.050 Prepayment of installments subsequently due. The owner of any lot, tract, or parcel of land or other property charged with a local improvement assessment may redeem it from all liability for the unpaid amount of the assessment at any time after the thirty day period allowed for payment of assessments without penalty or interest by paying the entire installments of the assessment remaining unpaid to the city or town treasurer with interest thereon to the date of maturity of the installment next falling due. • 35.49.060 Payment by city or town. On or before the fifteenth day of August of each year,the city or town treasurer shall certify to the city or town council a detailed statement showing: (1) The proceedings authorizing and confirming any local improvement assessments or utility local improvement assessments affecting city or town property, (2) The lots, tracts, or parcels of lands of the city or town so assessed, (3) The several assessments against each, (4) The interest, penalties, and charges thereon. (5) The penalties and charges which will accrue upon the assessment to the date of payment, and (6) The total of all such assessments, interest, penalty, and charges. The longest outstanding liens shall be paid first,but if the money in the "city (or town) property assessments redemption fund" is insufficient at any time to discharge all such liens against the lands of the city or town upon a given assessment roll, the city or town treasurer may pay such portion thereof as may be possible from the funds available. If deemed necessary,the city or town council may transfer money from the general fund to the redemption fund as a loan to be repaid when the money is available for repayment. 19 MARKETING LID BONDS • Bonds may be sold at public sale or on a negotiated basis. The advantage of the public sale is that it may generate competitive bidding but with the added cost of preparing an official statement and related work. The advantages of a negotiated sale are savings in marketing costs and the flexibility in timing the sale for best market conditions. All bonds are sold at par. 35.45.040. • Proceeds from the sale of the bonds are used to redeem outstanding construction warrants and pay all other obligations of the LID. 35.45.040. • Bonds may be called whenever there is sufficient money in the LID fund in excess of current interest obligations and on a date when interest coupons become due. 35.45.050. • The marketing of LID bonds requires an approving legal opinion from a qualified bond attorney. Preparing bonds for public sale is a place where expert financial consulting service is usually required. Legal and financial services are eligible bond expenses. 35.44.020. 35.45.010 Authority to issue bonds. The city or town council may provide by ordinance for the payment of the whole or any portion of the cost and expense of any local improvement by bonds of the improvement district, but no bonds shall be issued in excess of the cost and expense of the improvement, nor shall they be issued prior to twenty days after the thirty days allowed for the payment of assessments without penalty or interest. 35.45.020 Bond issue — Due date — Interest. Local improvement bonds shall be issued pursuant to ordinance and shall be made payable on or before a date not to exceed thirty years from and after the date of issue, which latter date may be fixed by ordinance or resolution of the council, and bear interest at such rate or rates as authorized by the council. The council may, in addition to issuing bonds callable under the provisions of RCW 35.45.050 whenever sufficient moneys are available, issue bonds with a fixed maturity schedule or with a fixed maximum annual retirement schedule. 35.45.030 Bonds — Form — Content— Coupons. Local improve- ment bonds shall be in such denominations as may be provided in the ordinance authorizing their issue and shall be numbered from one upwards consecutively. Each bond shall (1) be signed by the mayor and attested by the clerk,(2)havethe seal of the city or town affixed thereto,(3)refer to.the improvement to pay for which it is issued and the ordinance ordering it, (4) provide that the principal sum therein named and the interest thereon shall be payable out of the local improvement fund created for the cost and expense of the improvement, or out of the local improvement guaranty fund, or, with respect to interest only,out of the general revenues of the city or town,and not otherwise.(5)provide that the bondholders'remedy in case of nonpayment shall be confined to the enforcement of the special assessments made for the improvement and to the guaranty fund,and(6)have attached thereto interest coupons for each interest payment. The interest coupons may be signed by the mayor and attested by the clerk,or in lieu thereof, may have printed thereon a facsimile of ' their signatures. 20 SECURING THE BONDS • LID bonds are secured by assessments levied against benefited properties and enjoy a lien on the improved property superior to mortgages and other encumbrances, subject only to general taxes. 35.45.080. • A Local Improvement Guaranty Fund must be established for the purpose of guaranteeing the pay- ment of outstanding bonds or warrants. Sources of revenue for the Fund include interest, surplus. remaining in any LID fund after all obligations have been met, and taxes levied for that purpose. 35.54.010. • The Guaranty Fund should maintain a balance of 5%- 10% of outstanding bonds and warrants. The use of the Fund is to purchase defaulted bonds, interest coupons, and warrants. 35.54.070. • For the purpose of protecting the Guaranty Fund, moneys in the Fund may be used to purchase general tax certificates and/or property which underlies obligations guaranteed by the Fund. 35.54.080. 35.45.040 Bonds — Sale of. Local improvement bonds may be issued to the contractor or sold by the officers authorized by the ordinance directing their issue to do so, in the manner prescribed therein and at not less than par and accrued interest. Any portion of the bonds of any issue remaining unsold may be issued to the contractor constructing the improvement in payment thereof. The proceeds of all sales of bonds shall be applied in payment of the cost and expense of the improvement. 35.45.050 Call of bonds.Except when bonds have been issued with a fixed maturity schedule or with a fixed maximum annual retirement schedule as authorized in RCW 35.45.020,the city or town treasurer shall call in and pay the principal of one or more bonds of any issue in their numerical order whenever there is sufficient money in any local improvement fund, against which the bonds have been issued, over and above sufficient for the payment of interest on all unpaid bonds of that issue.The call shall be made for publication in the city or town official newspaper in its first publication following the date of delinquency of any installment of the assessment or as soon thereafter as practicable. The call shall state that bonds No. (giving the serial number or numbers of the bonds called) will be paid on the day the next interest coupons on the bonds become due and that interest on those bonds will cease upon that date. 35.45.080 Remedy of bondholders. If a city or town fails to pay any bonds or to promptly collect any local improvement assessments when due,the owner of the bonds may proceed in his own name to collect the assessment and foreclose the lien thereof in any court of competent jurisdiction and shall recover in addition to the amount of the bond and interest thereon,five percent, together with the cost of suit. Any number of holders of bonds for any single improvement may join as plaintiffs and any number of owners of property upon which the assessments are liens may be joined as defendants in the same suit. The owners of local improvement bonds issued by a city or town after the creation of a local improvement guaranty fund therein, shall also have recourse against the local improvement guaranty fund of such city or town. • 21 35.54.010 Establishment. There is established in every city and town a fund to be designated the"local improvement guaranty fund" for the purpose of guaranteeing, to the extent of the fund, the payment of its local improvement bonds and warrants issued to pay for any local improvement ordered in the city or town or in any area wholly or partly outside its corporate boundaries: (1) In any city of the first class having a population of more than three hundred thousand, subsequent to June 8, 1927; (2) in any city or town having created and maintained a guaranty fund under chapter 141, Laws of 1923, subsequent to the date of establishment of such fund; and (3) in any other city or town subsequent to April 7, 1926: Provided, That this shall not apply to any city of the first class which maintains a local improvement guaranty fund under chapter 138, Laws of 1917, but any such city maintaining a guaranty fund under chapter 138, Laws of 1917 may by ordinance elect to operate under the provisions of this chapter and may transfer to the guaranty fund created hereunder all the assets of the former fund and, upon such election and transfer, all bonds guaranteed under the former fund shall be guaranteed under the provisions of this chapter. 35.54.020 Rules and regulations. Every city and town operating under the provisions of this chapter[ch. 35.54 RCW re: LID Guaranty Fund]shall prescribe by ordinance appropriate rules and regulations for the maintenance and operation of the guaranty fund not inconsistent with the provisions of this chapter. 35.54.030 Source — Interest and earnings. Interest and earnings from the local improvement guaranty fund shall be paid into the fund. 35.54.040 Source — Subrogation rights to assessments. Whenever any sum is paid out of the local improvement guaranty fund on account of principal or interest of a local improvement bond or warrant,the city ortown as trustee of the fund shall be subrogated to all the rights of the holder of the bond or interest coupon or warrant so paid, and the proceeds thereof, or of the underlying assessment, shall become part of the guaranty fund. 35.54.050 Source — Surplus from improvement funds. If in any local improvement fund guaranteed by a local improvement guaranty fund there is a surplus remaining after the payment of all • outstanding bonds and warrants payable therefrom, it shall be paid into the local improvement guaranty fund. 35.54.060 Source - Taxation. For the purpose of maintaining the local improvement guaranty fund, every city and town shall, at the time of making its annual budget and tax levy, provide for the levy of a sum sufficient, with the other sources of the fund, to pay the warrants issued against the fund during the preceding fiscal year and to establish a balance therein: Provided, That the levy in any one year shall not exceed five percent of the outstanding obligations guaranteed by the fund. The taxes levied for the maintenance of the local improvement guaranty fund shall be additional to and, if need be, in excess of all statutory and charter limitations applicable to tax levies in any city or town. 35.54.070 Use of fund — Purchase of bonds, coupons and warrants. Defaulted bonds, interest coupons and warrants against local improvement funds shall be purchased out of the guaranty fund, and as between the several issues of bonds, coupons, or warrants no preference shall exist, but they shall be purchased in the order of their presentation. 22 35.54.080 Use of fund — Purchase of general tax certificates or property on or after foreclosure — Disposition. For the purpose of protecting the guaranty fund, so much of the guaranty fund as is necessary may be used to purchase certificates of delinquency for • general taxes on property subject to local improvement assessments which underlie the bonds, coupons, or warrants guaranteed by the fund, or to purchase such property at county tax foreclosures, or from the county after foreclosure. The city or town, as trustee of the fund, may foreclose the lien of general tax certificates of delinquency and purchase the property at foreclosure sale;when doing so the court costs, costs of publication, expense for clerical work and other expenses incidental thereto shall be charged to and paid from the local improvement guaranty fund. After acquiring title to property by purchase at general fax foreclosure sale or from the county after foreclosure, a city or town may lease it or sell it at public or private sale at such price on such terms as may be determined by resolution of the council. All proceeds shall belong to and be paid into the local improvement guaranty fund. 23 • LID CHECKLIST* FOR OFFICIAL FILE LID NUMBER TITLE ❑ 1. Certified copy of Resolution of Intention to form LID. ❑ 2. Certified copy of minutes of council meeting showing adoption of Resolution of Intention. ❑ 3. Affidavit of Publication of Resolution of Intention/No- tice of Public Hearing. ❑ 4. Affidavit of mailing of notices of hearing on Prelimin- ary Assessment roll to all affected property owners. ❑ 5. Copy of Preliminary Assessment Roll. ❑ 6. Certified copy of Ordinance creating LID and order- • ing improvement. ❑ 7. Certified copy of minutes of council meeting showing adoption of Ordinance creating LID. ❑ 8.. Affidavit of publication of above Ordinance. ❑ 9. Certificate from City Clerk as to percentage of pro- tests filed during 30-day period following passage of LID. ❑10. Affidavit of Publication of Ad for Bids. ❑11_ Affidavit of Posting of Ad for Bids. ❑12.. Tabulation of Bids received. ❑13. Certified copy of minutes of council meeting award- ing bid to contractor. ❑14. Copy of Contract for project. ❑15.. Copy of Notice to Proceed. ❑16.. Certified copy of Resolution fixing the date and place of hearing on the Final Assessment Roll. ❑17. Affidavit of mailing notices of hearing on Final As- sessment Roll to individual property owners. ❑18. Affidavit of publication of notice.of hearing on Final Assessment Roll. ❑19. Certified copy of Ordinance approving and confirm- ing assessments. ❑20. Copy of Final Assessment Roll. ❑21. Certified copy of minutes of council meeting showing passage of ordinance approving and confirming as- sessments. ❑22. Affidavit of publication of Ordinance approving and confirming assessment roll. ❑23. Affidavit of publication of notice that roll is filed for collection. ❑24.. Affidavit of mailing notices to property owners that roll is filed for collection. ❑25. Certified copy of bond Ordinance. ❑26. Affidavit of publication of above Ordinance. *Courtesy: City of Richland 24 • • Foster and Marshall Inc.,founded 39 years ago, has thirty offices located through Washington, Oregon, Idaho, Alaska and Utah. The firm has played an important role in helping finance the growth of many municipalities, industries, and utilities in the Pacific Northwest and Alaska. Foster & Marshall Inc. 205 Columbia Street Seattle 98104