HF 2480 (LSB 5008HV (3) 83)

HOUSE FILE 2480

BY  COMMITTEE ON ECONOMIC GROWTH

(SUCCESSOR TO HSB 680)

A BILL FOR

An Act authorizing creation of sales tax bonding districts and providing for the issuance of bonds secured by certain tax revenues collected within a district.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 15F.103, Code 2009, is amended by adding the following new subsection:
   NEW SUBSECTION.  5.  Review, evaluate, and approve proposed and amended plans for sales tax bonding districts pursuant to sections 418.4 and 418.5.
    Sec. 2.  NEW SECTION.  418.1  Short title.
   This chapter shall be known and cited as “The Sales Tax Bonding Act”.
    Sec. 3.  NEW SECTION.  418.2  Definitions.
   For purposes of this chapter, unless the context otherwise requires: 

   1.  “Base year” means the fiscal year ending during the calendar year in which an ordinance establishing a sales tax bonding district is adopted pursuant to the provisions of this chapter.
   2.  “Board” means the vision Iowa board created pursuant to section 15F.102.
   3.  “Sales tax” means the sales and services tax imposed pursuant to section 423.2 or a tax imposed by a municipality upon the sales price of the rental of lodging pursuant to chapter 423A or upon the sales price of the sale or rental of personal property and the furnishing of services pursuant to chapter 423B.
   4.  “Designated portion” means the amount of an increment that a municipality has authorized by resolution to be expended for one or more of the purposes described in this chapter.
   5.  “District” means an area within an eligible municipality designated as a sales tax bonding district pursuant to section 418.4.
   6.  “Eligible municipality” means a municipality meeting the requirements of section 418.3.
   7.  “Fund” means the sales tax increment fund created pursuant to section 418.7.
   8.  “Governing body” means the board of supervisors, city council, or other body in which the legislative powers of the municipality are vested.
   9.  “Increment” means the amount of a district’s sales tax receipts that is in excess of the amount of that district’s sales tax receipts for the same quarter in the base year, as calculated by the department of revenue pursuant to section 418.6.
   10.  “Lessor” has the same meaning as defined in section 423A.2.
   11.  “Lodging” has the same meaning as defined in section 423A.2.
   12.  “Municipality” means a county or an incorporated city.
   13.  “Project” means a vertical improvement to be constructed or improved within a district financed pursuant to this chapter.
   14.  “Retail establishment” means a business operated by a retailer as defined in section 423.1.
   15.  “Transportation infrastructure” means structures and other improvements used to convey people or goods from point to point for purposes of commerce or recreation and includes but is not limited to highways, roads, streets, alleys, railways, and bike paths.
   16.  “Vacant land” means land in a proposed district that is not occupied by a vertical improvement.
   17.  “Vertical improvement” means a structure that is wholly or partially above ground. Vertical improvement includes buildings and other appurtenant structures.
   18.  “Waterway” means a navigable body of water and includes but is not limited to streams, rivers, lakes, ponds, and canals.
    Sec. 4.  NEW SECTION.  418.3  Eligible municipalities.
   1.  A municipality meeting the requirements of this section shall be eligible to establish a district pursuant to section 418.4 and to issue bonds pursuant to section 418.9.
   2.  To be eligible, a municipality shall demonstrate the existence of all of the following conditions:
   a.  An area suitable for development exists within the boundaries of the municipality. To be suitable for development, the area shall meet all of the following requirements:
   (1)  The area shall consist of four hundred or more contiguous acres of land that are entirely within the boundaries of the municipality. An area may be bisected by transportation infrastructure or waterways and still be considered contiguous.
   (2)  At least ninety percent of the land in the area shall be vacant land.
   (3)  The area shall consist only of parcels of real property that the governing body determines will be directly and substantially benefited by the proposed district.
   (4)  The area shall not include any part of a quality jobs enterprise zone designated pursuant to section 15A.9 or any part of an economic development enterprise zone created pursuant to section 15E.192.
   b.  A proposed plan for the district has been developed. The proposed plan shall meet the requirements of section 418.4.
    Sec. 5.  NEW SECTION.  418.4  District establishment.
   1.  The governing body of an eligible municipality may by ordinance establish a district for purposes of financing projects pursuant to this chapter.
   2.  a.  A municipality seeking to establish a district shall adopt a resolution finding that an area suitable for development exists within the municipality and stating the governing body’s intent to create a sales tax bonding district and adopt a plan for the district. The resolution shall include a proposed district plan. The proposed district plan shall include all of the following:
   (1)  A legal description of the real estate forming the boundaries of the area to be encompassed by the district along with a map depicting the existing parcels of real estate within the proposed district.
   (2)  A list of the names and addresses of the owners of record of the parcels to be included within the district.
   (3)  A list of all projects proposed to be undertaken within the district, a detailed description of those projects, and a project plan for each project. Each project included in the list of projects shall independently meet the requirements of section 418.5.
   (4)  An economic impact study conducted by an independent economist retained by the municipality.
   (5)  The date and time of a public hearing to be conducted by the municipality on the proposed plan and establishment of the proposed district.
   b.  The projects listed in the proposed plan pursuant to paragraph “a”, subparagraph (3), shall, in combination, do all of the following:
   (1)  Total a capital investment of fifty million dollars.
   (2)  Create at least two hundred permanent new jobs.
   (3)  Generate at least twenty-five million dollars in annual gross revenue.
   c.  The economic impact study required in paragraph “a”, subparagraph (4), shall, at a minimum, do all of the following:
   (1)  Contain a detailed analysis of the financial benefit of the proposed district to the economy of the state and the municipality.
   (2)  Identify a projected market area within which the district can reasonably be expected to have an economic impact.
   (3)  Assess the fiscal and financial impact of the proposed district on other economic development projects or businesses within the projected market area.
   3.  Notice of the public hearing, along with a copy of the resolution and a summary of the proposed plan, shall be published pursuant to section 331.305 or 362.3, as applicable. Upon the conclusion of the public hearing, the governing body of the municipality may adopt the initial proposed plan or an amended proposed plan for the district.
   4.  a.  The municipality shall submit a copy of the resolution, proposed plan, and accompanying materials adopted pursuant to this section to the board for review and approval.
   b.  The board shall evaluate the municipality’s proposed plan for the district and shall approve the establishment of the district if the board determines that both of the following conditions are met:
   (1)  The municipality is an eligible municipality pursuant to section 418.3.
   (2)  Projects completed within the district will have a substantial beneficial impact on the economy of the state and the municipality.
   5.  Upon receiving the approval of the board, a municipality seeking to establish a district may adopt an ordinance establishing the district and shall notify the director of revenue of the establishment of the district.
    Sec. 6.  NEW SECTION.  418.5  Project approval.
   1.  A municipality may use the moneys in the special fund created by a municipality pursuant to section 418.8 to fund the development of projects within a district established pursuant to section 418.4 if such projects meet the requirements of this section.
   2.  A municipality may amend the district plan to add additional projects. All such additional projects are subject to approval by the board.
   3.  a.  For each project to be developed within the district, the municipality shall submit a project plan to the board.
   b.  Each project plan shall include a project feasibility study conducted by an independent professional with expertise in economic development and public finance. The feasibility study shall project and analyze the following:
   (1)  The amount of gross revenues expected to be collected in the district as a result of the project for each year of the bond maturation period.
   (2)  A detailed explanation of the manner and extent to which the project will contribute to the economic development of the state and the municipality.
   (3)  An estimate of the number of visitors or customers the project will generate during each year of the bond maturation period.
   (4)  A description of the unique characteristics of the project.
   (5)  An analysis of the project’s economic impact. The analysis shall include the same components and be conducted in the same manner as the economic impact study required under section 418.4.
   c.  Each project plan shall clearly state the cost of the project and the amount of public debt to be incurred for purposes of funding the project.
   4.  The board shall review the municipality’s project plan and evaluate the feasibility of the project. The board shall approve a project plan if the plan demonstrates that the project will contribute significantly to the economy of the state and the municipality and that the project’s proposed funding is feasible.
    Sec. 7.  NEW SECTION.  418.6  Increased revenue calculation.
   1.  The department of revenue shall calculate quarterly the amount of increased tax revenues to be deposited in the sales tax increment fund pursuant to the following provisions:
   a.  Section 423.2, subsection 11, paragraph “a”, subparagraph (2).
   b.  Section 423A.6, subsection 4, paragraph “b”.
   c.  Section 423B.7, subsection 1, paragraph “c”.
   2.  The department of revenue shall calculate the amount of the increase for purposes of subsection 1 as follows:
   a.  Determine the amount of sales tax revenue collected in the area comprising the district during the corresponding quarter in the base year by adding together the following:
   (1)  The amount of state sales and use tax revenue collected by the department from retail establishments located in the district.
   (2)  The amount of local sales and services tax revenue collected by the department from retail establishments located in the district which are distributed to the municipality pursuant to section 423B.7.
   (3)  The amount of local hotel and motel tax revenue collected by the department from lessors of lodging located in the district.
   b.  Determine the amount of sales tax revenue collected in the area comprising the district during the corresponding quarter in each subsequent calendar year by adding together the revenues from the same sources specified in paragraph “a”.
   c.  Subtract the base year quarterly amount determined in paragraph “a” from the subsequent calendar year quarterly amount determined in paragraph “b”.
   d.  The result of the calculation in paragraph “c”, to the extent that the total amount of revenue in all quarters of each subsequent year exceeds the total amount of revenue in all quarters of the base year, shall constitute the total yearly amount of increased revenues for purposes of subsection 1.
    Sec. 8.  NEW SECTION.  418.7  Sales tax increment fund.
   1.  A sales tax increment fund is established in the state treasury under the control of the department of revenue consisting of the following moneys:
   a.  The amount of the increased state sales and services tax revenues collected by the department of revenue within the district and deposited in the fund pursuant to section 423.2, subsection 11, paragraph “a”, subparagraph (2).
   b.  The amount of the increased local hotel and motel tax revenues collected by the department of revenue within the district and deposited in the fund pursuant to section 423A.6, subsection 4, paragraph “b”.
   c.  The amount of the increased local option sales and services tax revenues collected by the department of revenue within the district and deposited in the fund pursuant to section 423B.7, subsection 1, paragraph “c”.
   2.  The department of revenue shall credit to the fund the moneys described in subsection 1 beginning the first day of the quarter following adoption of an ordinance pursuant to section 418.4.
   3.  An account is created within the fund for each municipality that has established a district pursuant to section 418.4.
   4.  a.  All moneys in the accounts of the fund shall be remitted quarterly by the department of revenue to each municipality in the amount collected within the district. 
   b.  The department of revenue shall adopt rules for the remittance of moneys to municipalities.
    Sec. 9.  NEW SECTION.  418.8  Special fund of municipality.
   1.  Sales tax revenue received by a municipality pursuant to this chapter shall be deposited in a special fund of the municipality created for purposes of this chapter and shall be used to fund projects within the district and to pay principal and interest on bonds issued pursuant to section 418.9. If the municipality determines that the revenue accruing to the fund exceeds the amount necessary for these purposes, then moneys derived from a locally imposed tax not necessary for reserves or pledged to fund additional projects in the district shall be applied by the municipality in reduction of property taxes, and moneys derived from a state imposed tax shall be remitted by the municipality to the department of revenue for deposit in the general fund of the state.
   2.  In addition to the moneys received pursuant to section 418.7, subsection 1, a municipality may deposit in the special fund any other sales tax revenues received by it pursuant to the distribution formula in section 423B.7, subsections 3, 4, and 5, and any other moneys lawfully at the municipality’s disposal.
    Sec. 10.  NEW SECTION.  418.9  Bond issuance.
   1.  a.  A municipality receiving sales tax revenues pursuant to this chapter shall have the authority to issue bonds that are payable from revenues deposited in the municipality’s special fund created pursuant to section 418.8.
   b.  A municipality shall have the authority to pledge irrevocably to the payment of the bonds an amount of revenue derived from the designated portions for each of the years the bonds remain outstanding.
   c.  A municipality shall have the authority to issue bonds only for purposes of funding projects in the district.
   2.  a.  If a municipality elects to authorize the issuance of bonds payable as provided in this section, the governing body of the municipality shall follow the authorization procedures set forth in section 384.83.
   b.  A municipality shall have the authority to issue bonds for the purpose of refunding outstanding and previously issued bonds under this subsection without otherwise complying with the notice and hearing provisions of this subsection.
   3.  If sales taxes have been in effect for less than four calendar quarters, the tax collected within the shorter period may be adjusted to project the collections of the designated portion for the full year for the purpose of determining the amount of the bonds which may be issued.
   4.  a.  The provisions of this section constitute separate authorization for the issuance of bonds and shall prevail in the event of conflict with any other provision of the Code limiting the amount of bonds which may be issued or the source of payment of the bonds.
   b.  Bonds issued under this section shall not limit or restrict the authority of the municipality to issue bonds under other provisions of the Code.
   5.  a.  Bonds issued pursuant to this section shall not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction, and, except as otherwise provided in this section, shall not be subject to the provisions of any other law or charter relating to the authorization, issuance, or sale of bonds.
   b.  Bonds issued pursuant to this section are declared to be issued for an essential public and governmental purpose.
   c.  The bonds may be issued in one or more series and shall comply with all of the following:
   (1)  The bonds shall bear the date of issuance.
   (2)  The bonds shall specify one of the following:
   (a)  Whether they are payable on demand.
   (b)  The time of maturity.
   (3)  The bonds shall bear interest at a rate not exceeding that permitted by chapter 74A.
   (4)  The bonds shall be in a denomination or denominations, be in the form, have the rank or priority, be executed in the manner, be payable in the medium of payment, at the place or places, be subject to the terms of redemption, with or without premium, be secured in the manner, and have the other characteristics, as may be provided by the resolution authorizing their issuance.
   d.  The bonds may be sold at public or private sale at a price as may be determined by the governing body.
    Sec. 11.  NEW SECTION.  418.10  District dissolution.
   1. a.  A municipality may by ordinance provide for the dissolution of a district. However, a municipality shall not dissolve a district until the debt incurred through the issuance of bonds pursuant to this chapter has been retired.
   b.  A district established pursuant to this chapter is dissolved twenty years from the date of its establishment under section 418.4.
   2.  Upon the adoption of an ordinance pursuant to this section, the municipality shall notify the director of revenue of the dissolution of the district.
   3.  Upon the receipt of notification pursuant to subsection 2, the department of revenue shall cease to credit municipal sales tax revenues to the fund.
   4.  Upon the dissolution of a district, the sales taxes collected under chapter 423A or chapter 423B within the area formerly comprising the district shall be thereafter administered, and the tax revenues distributed to municipalities, in the same manner as if the district had not been established.
    Sec. 12.  Section 423.2, subsection 11, Code 2009, is amended to read as follows:
   11.  a.  (1)  All revenues arising under the operation of the provisions of this section shall be deposited into the general fund of the state.
   (2)  Subsequent to the deposit into the general fund of the state, the director shall credit an amount equal to four cents of every dollar of the amount of the increase in sales subject to the tax imposed under this section and made in a sales tax bonding district established pursuant to section 418.4, into an account created for that city or county in the sales tax increment fund created in section 418.7. The director shall credit the moneys beginning the first day of the quarter following adoption of an ordinance pursuant to section 418.4.
   b.  Subsequent to the deposit into the general fund of the state and after the transfer of such pursuant to paragraph “a”, the department shall do the following in the order prescribed:
   (1)  Transfer the revenues collected under chapter 423B, the department shall transfer.
   (2)  Transfer one-sixth of such the remaining revenues to the secure an advanced vision for education fund created in section 423F.2. This paragraph subparagraph is repealed December 31, 2029.
   (3)  Credit that portion of the sales tax receipts described in paragraph “a”, subparagraph (2).
    Sec. 13.  Section 423A.6, Code 2009, is amended to read as follows:
   423A.6  Administration by director.
   1.  The director of revenue shall administer the state and local hotel and motel tax as nearly as possible in conjunction with the administration of the state sales tax law, except that portion of the law which implements the streamlined sales and use tax agreement. 
   2.  The director shall provide appropriate forms, or provide on the regular state tax forms, for reporting state and local hotel and motel tax liability. 
   3.  All moneys received or refunded one hundred eighty days after the date on which a city or county terminates its local hotel and motel tax and all moneys received from the state hotel and motel tax shall be deposited in or withdrawn from the general fund of the state.
   4.  a.  The director, in consultation with local officials, shall collect and account for a local hotel and motel tax and. Except as provided in paragraph “b”, the director shall credit all revenues collected under this paragraph “a” to the local transient guest tax fund created in section 423A.7.
   b.  Notwithstanding paragraph “a”, the director shall credit the amount of the increase in local hotel and motel tax receipts, as computed in section 418.6, collected in a sales tax bonding district established pursuant to section 418.4, into an account created for that city or county in the sales tax increment fund created in section 418.7. The director shall deposit the tax receipts beginning the first day of the quarter following adoption of an ordinance pursuant to section 418.4.
   5.   Local authorities shall not require any tax permit not required by the director of revenue.
   6.  a.  Section 422.25, subsection 4, sections 422.30, 422.67, and 422.68, section 422.69, subsection 1, sections 422.70, 422.71, 422.72, 422.74, and 422.75, section 423.14, subsection 1, and sections 423.23, 423.24, 423.25, 423.31, 423.33, 423.35, 423.37 through 423.42, and 423.47, consistent with the provisions of this chapter, apply with respect to the taxes authorized under this chapter, in the same manner and with the same effect as if the state and local hotel and motel taxes were retail sales taxes within the meaning of those statutes. 
   b.  Notwithstanding this paragraph, the director shall provide for quarterly filing of returns and for other than quarterly filing of returns both as prescribed in section 423.31. 
   7.  The director may require all persons who are engaged in the business of deriving any sales price subject to tax under this chapter to register with the department. 
   8.   All taxes collected under this chapter by a retailer or any individual are deemed to be held in trust for the state of Iowa and the local jurisdictions imposing the taxes.
    Sec. 14.  Section 423A.7, subsection 1, Code 2009, is amended to read as follows:
   1.  A local transient guest tax fund is created in the department which shall consist of all moneys credited to such fund under section 423A.6, subsection 4, paragraph “a”.
    Sec. 15.  Section 423B.6, subsection 3, Code 2009, is amended to read as follows:
   3.  a.  The director, in consultation with local officials, shall collect and account for a local sales and services tax. The director shall certify each quarter the amount of local sales and services tax receipts and any interest and penalties to be credited to the “local sales and services tax fund” established in the office of the treasurer of state. The revenues from the taxes collected pursuant to this section shall be credited and paid to cities and counties pursuant to section 423B.7.
   b.  All taxes collected under this chapter by a retailer or any individual are deemed to be held in trust for the state of Iowa and the local jurisdictions imposing the taxes.
   b.  c.  All local tax moneys and interest and penalties received or refunded one hundred eighty days or more after the date on which the county repeals its local sales and services tax shall be deposited in or withdrawn from the state general fund.
    Sec. 16.  Section 423B.7, subsection 1, Code 2009, is amended to read as follows:
   1.  a.  Except as provided in paragraph paragraphs “b” and “c”, the director shall credit the local sales and services tax receipts and interest and penalties from a county-imposed tax to the county’s account in the local sales and services tax fund and from a city-imposed tax under section 423B.1, subsection 2, to the city’s account in the local sales and services tax fund. If the director is unable to determine from which county any of the receipts were collected, those receipts shall be allocated among the possible counties based on allocation rules adopted by the director.
   b.  Notwithstanding paragraph “a”, the director shall credit the designated amount of the increase in local sales and services tax receipts, as computed in section 423B.10, collected in an urban renewal area of an eligible city that has adopted an ordinance pursuant to section 423B.10, subsection 2, into a special city account in the local sales and services tax fund.
   c.  Notwithstanding paragraph “a”, the director shall credit the amount of the increase in local sales and services tax receipts, as computed in section 418.6, collected in a sales tax bonding district established pursuant to section 418.4, which are distributed to the city or county pursuant to 423B.7, into an account created for that city or county in the sales tax increment fund created in section 418.7. The director shall deposit the tax receipts beginning the first day of the quarter following adoption of an ordinance pursuant to section 418.4. 
EXPLANATION
   This bill allows cities and counties to use increased revenues from certain taxes for purposes of funding the development of projects within specially created districts.
   The bill provides for the creation of sales tax bonding districts within which municipalities may issue bonds to fund economic development projects. The bonds may be secured by a portion of the increased state sales and services tax revenues collected in the district, the increased local option sales and services tax revenues, and the increased local hotel and motel tax revenues within the district.
   To be eligible to create such a district and issue such bonds, a municipality must have an area suitable for development within its boundaries. An area suitable for development must meet the following requirements: (1) the area must be 400 or more contiguous acres in size and be entirely within the boundaries of the municipality; (2) at least 90 percent of the land in the area must be vacant land; (3) the area consists only of parcels that will be directly and substantially benefited by the creation of the district; and (4) no portion of the area suitable for development can also be part of an enterprise zone. In addition, the proposed district must include a projected capital investment of at least $50 million, the projects to be developed within the proposed district must generate at least $25 million in annual revenue, and the projects to be developed within the proposed district must create at least 200 permanent new jobs.
   The governing body of a municipality seeking to establish a district and issue bonds must adopt a resolution stating its intent to do so. The resolution must include a proposed district plan. The proposed district plan must include the area for the district, the names of the owners of the parcels to be included within it, a list of the projects proposed for the district and a plan for each project. The resolution must also: (1) include a map of the area being proposed for the district; (2) include an economic impact study conducted by an independent economist; (3) make findings that an area suitable for development exists in the municipality; and (4) set the date and time of a public hearing on the establishment of the proposed district. After holding a public hearing on the proposed district plan, the municipality must submit a copy of the resolution, the proposed plan, and accompanying materials to the vision Iowa board for review and approval. A municipality may develop subsequent projects within the district, but each project requires a project plan and is subject to approval by the board. Each project plan must include a project feasibility study conducted by an independent professional with expertise in economic development and public finance. The feasibility study must project and analyze the following: (1) the amount of gross revenues expected to be collected in the district as a result of the project for each year of the bond maturation period; (2) a detailed explanation of the manner and extent to which the project will contribute to the economic development of the state and the municipality; (3) an estimate of the number of visitors or customers the project will generate during each year of the bond maturation period; (4) a description of the project’s unique characteristics; and (5) an analysis of the project’s economic impact. The analysis must include the same components and be conducted in the same manner as the economic impact study required upon initial establishment. Each project plan must also clearly state the cost of the project and the amount of public debt to be incurred for purposes of funding the project.
   Once a municipality has established a district, it may bond against the increased tax revenues within the district. To determine the amount of the increase, the department of revenue calculates the amount of tax revenues in the district during the corresponding quarter of the fiscal year ending during the calendar year the district was first established (the “base year”) and the amount of tax revenues during the corresponding quarter in subsequent years. The department then subtracts the base year amount from the amounts in the subsequent years to arrive at the amount of the increase.
   The bill creates a sales tax increment fund within the department of revenue and an account in the fund for each municipality that has created a district. The department credits monthly the amount of the district’s increased revenues to the municipality’s account. Revenue received by a municipality from the fund must be deposited in a special fund of the municipality and used for funding projects or for the payment of principal and interest on bonds issued to fund the projects. If there are funds in excess of the amount needed, moneys from locally imposed taxes are to be applied toward property tax relief and moneys deriving from a state imposed tax are to be deposited in the general fund.
   The bill provides for the issuance of bonds by an eligible municipality. In issuing the bonds, the municipality must comply with the revenue bond authorization procedures applicable to cities pursuant to Code section 384.83.
   Bonds issued pursuant to the provisions of the bill constitute separate authorization for the issuance of bonds and will prevail in the event of conflict with any other provision of the Code limiting the amount of bonds which may be issued or the source of payment of the bonds. Also, bonds issued pursuant to the provisions of the bill do not limit or restrict the authority of the municipality to issue bonds under other provisions of the Code.
   Bonds issued pursuant to the provisions of the bill do not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction, and are not subject to the provisions of any other law or charter relating to the authorization, issuance, or sale of bonds. Bonds issued pursuant to the provisions of the bill are declared to be issued for an essential public and governmental purpose.
   The bill directs the director of revenue to calculate the amount of increased state sales and services taxes, increased local sales and services taxes, and increased local hotel and motel taxes and to credit the increased amounts to the municipality’s account in the sales tax increment fund. These amounts are to be credited beginning the quarter following the creation of a district by a municipality.
   A district is dissolved 20 years from the date of its establishment. Upon the dissolution of a district, the consumption taxes collected within the area formerly comprising the district shall be thereafter administered, and the local tax revenues distributed to municipalities, in the same manner as if the district had not been established.