HOUSE FILE 2178

BY  WATTS, HAGENOW, KAUFMANN, and PEARSON

A BILL FOR

An Act relating to special assessments imposed by cities and counties and including applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 331.488, subsection 3, Code 2011, is amended to read as follows:
   3.  The method of specially assessing and determining benefits
 
and determining individual benefits, district benefits, and community benefits.
    Sec. 2.  Section 384.37, subsection 4, Code 2011, is amended to read as follows:
   4.  “District” means the lots or parts of lots within boundaries
 
of a geographic area established by the council for the purpose of the assessment of
 
all or part of the cost of a public improvement
 
that is intended in whole or in part to provide an individual benefit to such lots or parts of lots.
    Sec. 3.  Section 384.37, Code 2011, is amended by adding the following new subsections:
   NEW SUBSECTION.  2A.  “Community benefit” means that portion of the total benefit derived from a public improvement designed to be used by or serve the general public and community that is in excess of the district benefit, if any, including but not limited to those public improvements or parts of a public improvement specified in section 384.61, subsection 4.
   NEW SUBSECTION.  4A.  “District benefit” means the sum of all individual benefits conferred upon lots within the district.
   NEW SUBSECTION.  8A.  “Individual benefit” means that amount of the total benefit of a public improvement that is proportionate to the lot’s use of the public improvement or the amount of a benefit conferred upon the individual lot by a public improvement that is intended to benefit, serve, or be used only by the lot, including but not limited to those items specified in section 384.61, subsection 3.
    Sec. 4.  Section 384.37, subsection 25, Code 2011, is amended to read as follows:
   25.  “Street improvement” means the construction or repair of a street by grading, paving, curbing, guttering, and surfacing with oil, oil and gravel, or chloride, and street lighting fixtures, connections and facilities, storm water management intakes, sewers, and facilities, and traffic-control devices, fixtures, connections, and facilities.
    Sec. 5.  Section 384.38, subsections 1 and 2, Code 2011, are amended to read as follows:
   1.  A city may, subject to the limitations of this division, assess to private property within the city the cost of construction and repair of public improvements within the city, and main sewers, sewage pumping stations, disposal and treatment plants, waterworks, water mains, extensions, and drainage conduits extending outside the city.
   2.  Upon petition as provided in section 384.41, subsection 1, a city may assess to private property affected by public improvements within three miles of the city’s boundaries the cost of construction and repair of public improvements within that area. The right-of-way of a railway company shall not be assessed unless the company joins as a petitioner for said improvements. In the petition the property owners shall waive the limitation provided in section 384.62 that an assessment shall not exceed twenty-five percent of the value of the lot. The petition shall contain a statement that the owners agree to pay the city an amount equal to five percent of the cost of the improvements, to cover administrative expenses incurred by the city. This amount may be added to the cost of the improvements. Before the council may adopt the
 
ordinance under section 384.42, subsection 1A, the resolution of necessity, the preliminary resolution, preliminary plans and specifications, plat, schedule, and estimate of cost must be submitted to, and receive written approval from, the board of supervisors of any county which contains part of the property, and the city development board established in section 368.9.
    Sec. 6.  Section 384.41, subsection 1, Code 2011, is amended to read as follows:
   1.  Property owners may initiate a plan for a public improvement to be paid for in whole or in part by special assessments, by written contract to be approved by the city and signed by all of the owners of record of all property affected by the proposed assessment. If all owners of record of all the property to be affected by the public improvement petition the council, said owners may, in their petition, waive notice to property owners by publication and mailing, as provided in section 384.50, and the council may proceed to adopt
 
the ordinance under section 384.42, subsection 1A, a preliminary resolution, a plat, schedule and estimate, and resolution of necessity, and order preparation of detailed plans and specifications. Special assessments initiated without notice under this section are liens upon the property to be affected by the assessment, to the same extent as provided in section 384.65, subsection 5, except that they shall be subordinate to any perfected lien unless the holder of such perfected lien consents in writing to the initiation of the public improvement.
    Sec. 7.  Section 384.42, Code 2011, is amended by adding the following new subsection:
   NEW SUBSECTION.  1A.  Prior to the adoption of a preliminary resolution under subsection 2, adopt an ordinance after forty-five days’ notice and twenty days’ notice, each published in accordance with section 362.3, and a public hearing, setting forth the method to be used in determining the amount of individual benefit, district benefit, and community benefit projected to result from the public improvement and a description of the manner in which the cost of the public improvement will be allocated to each category of benefit.
    Sec. 8.  Section 384.42, subsections 2 and 3, Code 2011, are amended to read as follows:
   2.  Adopt a preliminary resolution by the vote of a majority of all the members of the council, after thirty days’ notice of the preliminary resolution published in accordance with section 362.3. The preliminary resolution shall contain the following:
   a.  A description of the types or alternate types of improvement proposed.

   b.  The beginning and terminal points or general location of the proposed improvement.
   c.  An order to the engineer to prepare preliminary plans and specifications, estimated total cost of the work, and a plat and schedule, and to file them with the clerk.
   d.  A general description of the property or a designation of the lots which the council believes will be specially
 
individually benefited by the improvement.
   e.  A detailed description of the method used for determining benefits as adopted by ordinance under subsection 1A, an estimate of the amount of individual benefit, district benefit, and community benefit that will be conferred as a result of the public improvement, and a statement of the proportion of the total cost of the public improvement that the council proposes to assess against all property within the proposed district.
   3.  The preliminary resolution may also contain the following:
   a.  A statement of the proportion of the total cost which the council proposes to assess against specially benefited property.
   b.  A
 
a short and convenient designation for the public improvement by which it may be referred to in all subsequent proceedings.
    Sec. 9.  Section 384.44, Code 2011, is amended to read as follows:
   384.44  Estimated cost.
   The estimated total cost of any public improvement constructed under this part must include all of the items of cost listed in section 384.37, subsection 26, which the council proposes to include as a part of the cost of the public improvement, and may include an item to be known as the default fund amounting to not more than ten percent of the portion of the total cost of the improvement which the council proposes to assess against specially
 
individually benefited property.
    Sec. 10.  Section 384.47, subsections 3 through 5, Code 2011, are amended to read as follows:
   3.  The total amount proposed to be assessed to each lot
 
according to the method described in the preliminary resolution, including the assessment for the default fund, if any.
   4.  The proportion of the estimated total cost of the public improvement which is allocated to each lot
 
as an individual benefit.
   5.  The amount of deficiency, if any, between the amount proposed to be assessed and the proportion of the estimated total cost of the public improvement allocated to each lot
 
as an individual benefit. The amount of deficiency shall be shown as a conditional deficiency assessment as authorized by sections 384.60, 384.62 and 384.63.
    Sec. 11.  Section 384.51, unnumbered paragraph 2, Code 2011, is amended to read as follows:
   An amendment which extends the boundaries of a district, increases the amount to be assessed against a lot, or adds additional public improvements, is not effective until an amended
 
ordinance, plat, schedule, and estimate have been prepared and adopted, a notice published and mailed to all affected property owners, and hearing held in the same manner as the original proceedings, or until all affected property owners agree in writing to the change. The adoption of a resolution of necessity is a legislative determination that the improvement is expedient and proper and that property assessed will be specially
 
individually benefited by the improvement and this determination of the council is conclusive. Ownership of property to be assessed by an improvement does not, except for fraud or bad faith, disqualify a council member from voting on any measure.
    Sec. 12.  Section 384.54, subsection 15, Code 2011, is amended to read as follows:
   15.
  a.  The cost of all court proceedings are a legitimate item of expense in connection with a public improvement, and may be included within the final assessment against any property specially benefited in the assessment district.
   b.  Whenever on a hearing by the court, the amount of any assessment is reduced or canceled so that there is a deficiency in the total amount remaining assessed in the proceeding, the court may assess the deficiency to the city or distribute the deficiency upon the other property abutting upon or adjacent to the improvement or in the district assessed, in a manner the court finds to be just and equitable, not exceeding, however, the amount the property would be specially
 
individually benefited by the improvement, and not exceeding twenty-five percent of the value of the lot as shown by the plat and schedule of assessments or as reduced by the court.
    Sec. 13.  Section 384.61, Code 2011, is amended to read as follows:
   384.61  Assessment of benefits.
   1.  The total cost of a public improvement, except for paving that portion of a street lying between railroad tracks and one foot outside of the tracks, or which is to be otherwise paid, must
 
may be assessed against all lots within the assessment district in accordance with the special
 
individual benefits conferred upon the property, and not in excess of such benefits.

That portion of the total cost of a public improvement that is not assessed to individual lots in the district as the result of individual benefits shall be attributable to the community benefit and shall be paid by the city.
   2.  A property owner may divide property that is subject to a special assessment into two or more lots for the purpose of separating improved portions of the land from those portions of the land which are unimproved or used for agricultural purposes.
 
If an owner of property subject to special assessment divides the property into two or more lots, and if the plan of division is approved by the council, the owner may discharge the lien upon any of the lots by payment of the amount unpaid, calculated as determined by the council.
   3.  All of the following public improvements are presumed to confer an individual benefit on a lot within a district:
   a.  A public improvement that benefits, serves, or that is intended for use by only one lot, unless such public improvement is replacing an existing public improvement of acceptable or working quality and is required as a result of work on or repair of another public improvement that does not benefit, serve, or that is not intended for use by only that lot.
   b.  A sidewalk upon a lot that is single-family residential property located along the frontage of the lot not to exceed four feet in width at a standard thickness.
   c.  A sidewalk on a lot that is commercial property or multifamily residential property located along the street frontage of the lot not to exceed six feet in width at a standard thickness.
   d.  Underground gas, water, heating, sanitary sewer, storm sewer, and electrical connections and accessories located in a public street right-of-way and that serve only the lot.
   4.  All of the following public improvements are presumed to confer a community benefit:
   a.  A public improvement or part of a public improvement that is intended for use by or intended to serve lots outside the district.
   b.  A sidewalk or recreational trail, or part thereof, that is part of a community-wide public recreational trail system.
   c.  The portion of a sidewalk that exceeds the portion of the sidewalk presumed to be an individual benefit under subsection 3, paragraph “b” or “c”.
   d.  Notwithstanding any provision of this division to the contrary, the planning, legal, administrative, and inspection costs, including city employee salary costs, associated with a public improvement that is paid for in part by special assessments.

   5.
  a.  Notwithstanding any other provision in this division to the contrary, each city undertaking the repair or construction of a public improvement that includes a street improvement paid for in whole or in part by a special assessment shall, prior to the preparation of the schedule under section 384.47, complete a vehicle traffic analysis and forecast for the location of the proposed street improvement that includes but is not limited to a determination of the current amount of vehicle traffic generated by each lot within the proposed district, a determination of the current amount of vehicle traffic generated by sources other than the lots within the district, and a determination of the amount of vehicle traffic forecasted to be generated from each such source in the future based on the type of street being analyzed, completion of the public improvement, full development of the district, and future planned land use within the district. In conjunction with actual vehicle traffic data available to the city, the vehicle traffic analysis and forecast shall be completed using the most current trip generation data from the institute of transportation engineers for planned land uses.
   b.  The individual benefit accruing to each lot within the district as the result of the street improvement shall not exceed the percentage of the total benefit from the street improvement that is proportionate to the lot’s forecasted amount of traffic generated as it bears to the total forecasted amount of vehicle traffic.
    Sec. 14.  Section 384.63, subsection 2, Code 2011, is amended to read as follows:
   2.  The council shall, by resolution, provide that the deficiencies for the lots specially
 
individually benefited by a public improvement shall be certified to the county treasurer, who shall record them in the county system as “special assessment deficiencies”, and to the appropriate city official charged with the responsibility of issuing building permits, who shall notify the council when a private improvement is subsequently constructed on any lot subject to a deficiency. Certification to the county treasurer shall include a legal description of each lot. The period of amortization for a public improvement for which there are deficiencies shall commence with the adoption of the resolution of necessity and extend for the same period for which installments of assessments for the project are made payable. Deficiencies may be assessed only during the period of amortization, which shall also be certified to the county treasurer and the city official charged with the responsibility of issuing building permits. Certification to the county treasurer shall include a legal description of each lot.
    Sec. 15.  APPLICABILITY.  This Act applies to public improvements undertaken on or after July 1, 2012.
EXPLANATION
   This bill relates to special assessments imposed by cities and counties on private property for the cost of a public improvement.
   The bill establishes definitions of “community benefit”, “district benefit”, and “individual benefit” under Code chapter 384, division IV. The bill also adds storm water management intakes, sewers, and facilities and traffic-control devices, fixtures, connections, and facilities to the definition of “street improvement” under Code section 384.37.
   The bill amends the definition of “district” in Code section 384.37 to mean the lots or parts of lots within boundaries of a geographic area established by the council for the purpose of the assessment of all or part of the cost of a public improvement that is intended in whole or in part to provide an individual benefit to such lots or parts of lots.
   The bill requires that prior to the adoption of a preliminary resolution related to a public improvement, a city must adopt an ordinance, after specified notices and a hearing, setting forth the method to be used in determining the amount of individual benefit, district benefit, and community benefit projected to result from the public improvement and a description of the manner in which the cost of the public improvement will be allocated to each category of benefit.
   The bill requires that 30 days’ notice of a resolution be published prior to adoption of the preliminary resolution related to a public improvement. The bill requires the preliminary resolution to contain a detailed description of the method used for determining benefits as previously adopted by ordinance, an estimate of the amount of individual benefit, district benefit, and community benefit that will be conferred as a result of the public improvement, and a statement of the proportion of the total cost of the public improvement which the council proposes to assess against property within the proposed special assessment district.
   The bill specifies that the total cost of a public improvement, except for certain paving near railroad tracks or improvements to be otherwise paid, may be assessed against all lots within the assessment district in accordance with the individual benefits conferred upon the property, and not in excess of such benefits. The bill provides that the portion of the total cost of a public improvement that is not assessed to individual lots as the result of individual benefits is attributable to the community benefit and shall be paid by the city.
   The bill strikes the provision of Code section 384.54 that designated the cost of all court proceedings to be a legitimate item of expense in connection with a public improvement and allowed such costs to be included within the final assessment against any property specially benefited in the assessment district.
   The bill allows a property owner to divide property that is subject to a special assessment into two or more lots for the purpose of separating improved portions of the land from those portions of the land which are unimproved or used for agricultural purposes. 
   The bill designates certain public improvements that are presumed to confer an individual benefit and designates certain public improvements that are presumed to confer a community benefit. Under the bill, the planning, legal, administrative, and inspection costs, including city employee salary costs, associated with a public improvement that is paid for in part by special assessments may not be assessed to individual lots within a district and shall instead be paid by the city as a community benefit.
   The bill requires each city undertaking the repair or construction of a public improvement that includes a street improvement, as defined in the bill, paid for in whole or in part by a special assessment to complete a vehicle traffic analysis and forecast for the location of the proposed street improvement that includes but is not limited to a determination of the current amount of vehicle traffic generated by each lot within the proposed special assessment district, a determination of the current amount of vehicle traffic generated by sources other than the lots within the district, and a determination of the amount of vehicle traffic forecasted to be generated from each such source in the future based on the type of street being analyzed, completion of the public improvement, full development of the district, and future planned land use within the district. In conjunction with actual vehicle traffic data available to the city, the vehicle traffic analysis and forecast must be completed using the most current trip generation data from the institute of transportation engineers for planned land uses. The bill specifies that the individual benefit accruing to each lot within the district as the result of the street improvement shall not exceed the percentage of the total benefit from the street improvement that is proportionate to the lot’s forecasted amount of traffic generated as it bears to the total forecasted amount of vehicle traffic.
   By operation of law, the bill modifies similar provisions relating to the authority of a county to assess to property the costs of a public improvement under Code chapter 331 and the authority of a sanitary district under Code chapter 358.
   This Act applies to public improvements undertaken on or after July 1, 2012.