17B-1-510 - Resolution approving or rejecting withdrawal -- Criteria for approval or rejection -- Terms and conditions. - Utah Statutes

17B-1-510. Resolution approving or rejecting withdrawal -- Criteria for approvalor rejection -- Terms and conditions.
(1) (a) On or before the date of the board meeting next following the public hearingunder Section 17B-1-508, but in no case later than 90 days after the public hearing or, if nohearing is held, within 90 days after the filing of a petition under Section 17B-1-504, the board oftrustees of the local district in which the area proposed to be withdrawn is located shall adopt aresolution:
(i) approving the withdrawal of some or all of the area from the local district; or
(ii) rejecting the withdrawal.
(b) Each resolution approving a withdrawal shall:
(i) include a legal description of the area proposed to be withdrawn;
(ii) state the effective date of the withdrawal; and
(iii) set forth the terms and conditions under Subsection (5), if any, of the withdrawal.
(c) Each resolution rejecting a withdrawal shall include a detailed explanation of theboard of trustees' reasons for the rejection.
(2) Unless denial of the petition is required under Subsection (3), the board of trusteesshall adopt a resolution approving the withdrawal of some or all of the area from the local districtif the board of trustees determines that:
(a) the area to be withdrawn does not and will not require the service that the localdistrict provides;
(b) the local district will not be able to provide service to the area to be withdrawn for thereasonably foreseeable future; or
(c) the area to be withdrawn has obtained the same service that is provided by the localdistrict or a commitment to provide the same service that is provided by the local district fromanother source.
(3) The board of trustees shall adopt a resolution denying the withdrawal if it determinesthat the proposed withdrawal would:
(a) result in a breach or default by the local district under:
(i) any of its notes, bonds, or other debt or revenue obligations;
(ii) any of its agreements with entities which have insured, guaranteed, or otherwisecredit-enhanced any debt or revenue obligations of the local district; or
(iii) any of its agreements with the United States or any agency of the United States;provided, however, that, if the local district has entered into an agreement with the United Statesthat requires the consent of the United States for a withdrawal of territory from the district, awithdrawal under this part may occur if the written consent of the United States is obtained andfiled with the board of trustees;
(b) adversely affect the ability of the local district to make any payments or perform anyother material obligations under:
(i) any of its agreements with the United States or any agency of the United States;
(ii) any of its notes, bonds, or other debt or revenue obligations; or
(iii) any of its agreements with entities which have insured, guaranteed, or otherwisecredit-enhanced any debt or revenue obligations of the local district;
(c) result in the reduction or withdrawal of any rating on an outstanding note, bond, orother debt or revenue obligation of the local district;
(d) create an island or peninsula of nondistrict territory within the local district or of

district territory within nondistrict territory that has a material adverse affect on the local district'sability to provide service or materially increases the cost of providing service to the remainder ofthe local district;
(e) materially impair the operations of the remaining local district; or
(f) require the local district to materially increase the fees it charges or property taxes orother taxes it levies in order to provide to the remainder of the district the same level and qualityof service that was provided before the withdrawal.
(4) In determining whether the withdrawal would have any of the results described inSubsection (3), the board of trustees may consider the cumulative impact that multiplewithdrawals over a specified period of time would have on the local district.
(5) (a) Despite the presence of one or more of the conditions listed in Subsection (3), theboard of trustees may approve a resolution withdrawing an area from the local district imposingterms or conditions that mitigate or eliminate the conditions listed in Subsection (3), including:
(i) a requirement that the owners of property located within the area proposed to bewithdrawn or residents within that area pay their proportionate share of any outstanding districtbond or other obligation as determined pursuant to Subsection (5)(b);
(ii) a requirement that the owners of property located within the area proposed to bewithdrawn or residents within that area make one or more payments in lieu of taxes, fees, orassessments;
(iii) a requirement that the board of trustees and the receiving entity agree to reasonablepayment and other terms in accordance with Subsections (5)(f) through (g) regarding the transferto the receiving entity of district assets that the district used before withdrawal to provide serviceto the withdrawn area but no longer needs because of the withdrawal; provided that, if thosedistrict assets are allocated in accordance with Subsections (5)(f) through (g), the district shallimmediately transfer to the receiving entity on the effective date of the withdrawal, all title to andpossession of district assets allocated to the receiving entity; or
(iv) any other reasonable requirement considered to be necessary by the board of trustees.
(b) Other than as provided for in Subsection 17B-1-511(2), and except as provided inSubsection (5)(e), in determining the proportionate share of outstanding bonded indebtedness orother obligations under Subsection (5)(a)(i) and for purposes of determining the allocation andtransfer of district assets under Subsection (5)(a)(iii), the board of trustees and the receivingentity, or in cases where there is no receiving entity, the board and the sponsors of the petitionshall:
(i) engage engineering and accounting consultants chosen by the procedure provided inSubsection (5)(d); provided however, that if the withdrawn area is not receiving service, anengineering consultant need not be engaged; and
(ii) require the engineering and accounting consultants engaged under Subsection(5)(b)(i) to communicate in writing to the board of trustees and the receiving entity, or in caseswhere there is no receiving entity, the board and the sponsors of the petition the informationrequired by Subsections (5)(f) through (h).
(c) For purposes of this Subsection (5):
(i) "accounting consultant" means a certified public accountant or a firm of certifiedpublic accountants with the expertise necessary to make the determinations required underSubsection (5)(h); and
(ii) "engineering consultant" means a person or firm that has the expertise in the

engineering aspects of the type of system by which the withdrawn area is receiving service that isnecessary to make the determination required under Subsections (5)(f) and (g).
(d) (i) Unless the board of trustees and the receiving entity, or in cases where there is noreceiving entity, the board and the sponsors of the petition agree on an engineering consultantand an accounting consultant, each consultant shall be chosen from a list of consultants providedby the Consulting Engineers Council of Utah and the Utah Association of Certified PublicAccountants, respectively, as provided in this Subsection (5)(d).
(ii) A list under Subsection (5)(d)(i) may not include a consultant who has had a contractfor services with the district or the receiving entity during the two-year period immediatelybefore the list is provided to the local district.
(iii) Within 20 days of receiving the lists described in Subsection (5)(d)(i), the board oftrustees shall eliminate the name of one engineering consultant from the list of engineeringconsultants and the name of one accounting consultant from the list of accounting consultantsand shall notify the receiving entity, or in cases where there is no receiving entity, the sponsors ofthe petition in writing of the eliminations.
(iv) Within three days of receiving notification under Subsection (5)(d), the receivingentity, or in cases where there is no receiving entity, the sponsors of the petition shall eliminateanother name of an engineering consultant from the list of engineering consultants and anothername of an accounting consultant from the list of accounting consultants and shall notify theboard of trustees in writing of the eliminations.
(v) The board of trustees and the receiving entity, or in cases where there is no receivingentity, the board and the sponsors of the petition shall continue to alternate between them, eacheliminating the name of one engineering consultant from the list of engineering consultants andthe name of one accounting consultant from the list of accounting consultants and providingwritten notification of the eliminations within three days of receiving notification of the previousnotification, until the name of only one engineering consultant remains on the list of engineeringconsultants and the name of only one accounting consultant remains on the list of accountingconsultants.
(e) The requirement under Subsection (5)(b) to engage engineering and accountingconsultants does not apply if the board of trustees and the receiving entity, or in cases wherethere is no receiving entity, the board and the sponsors of the petition agree on the allocationsthat are the engineering consultant's responsibility under Subsection (5)(f) or the determinationsthat are the accounting consultant's responsibility under Subsection (5)(h); provided however,that if engineering and accounting consultants are engaged, the district and the receiving entity,or in cases where there is no receiving entity, the district and the sponsors of the petition shallequally share the cost of the engineering and accounting consultants.
(f) (i) The engineering consultant shall allocate the district assets between the district andthe receiving entity as provided in this Subsection (5)(f).
(ii) The engineering consultant shall allocate:
(A) to the district those assets reasonably needed by the district to provide to the area ofthe district remaining after withdrawal the kind, level, and quality of service that was providedbefore withdrawal; and
(B) to the receiving entity those assets reasonably needed by the receiving entity toprovide to the withdrawn area the kind and quality of service that was provided beforewithdrawal.

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(iii) If the engineering consultant determines that both the local district and the receivingentity reasonably need a district asset to provide to their respective areas the kind and quality ofservice provided before withdrawal, the engineering consultant shall:
(A) allocate the asset between the local district and the receiving entity according to theirrelative needs, if the asset is reasonably susceptible of division; or
(B) allocate the asset to the local district, if the asset is not reasonably susceptible ofdivision.
(g) All district assets remaining after application of Subsection (5)(f) shall be allocated tothe local district.
(h) (i) The accounting consultant shall determine the withdrawn area's proportionateshare of any redemption premium and the principal of and interest on:
(A) the local district's revenue bonds that were outstanding at the time the petition wasfiled;
(B) the local district's general obligation bonds that were outstanding at the time thepetition was filed; and
(C) the local district's general obligation bonds that:
(I) were outstanding at the time the petition was filed; and
(II) are treated as revenue bonds under Subsection (5)(i); and
(D) the district's bonds that were issued prior to the date the petition was filed to refundthe district's revenue bonds, general obligation bonds, or general obligation bonds treated asrevenue bonds.
(ii) For purposes of Subsection (5)(h)(i), the withdrawn area's proportionate share ofredemption premium, principal, and interest shall be the amount that bears the same relationshipto the total redemption premium, principal, and interest for the entire district that the averageannual gross revenues from the withdrawn area during the three most recent complete fiscal yearsbefore the filing of the petition bears to the average annual gross revenues from the entire districtfor the same period.
(i) For purposes of Subsection (5)(h)(i), a district general obligation bond shall be treatedas a revenue bond if:
(i) the bond is outstanding on the date the petition was filed; and
(ii) the principal of and interest on the bond, as of the date the petition was filed, hadbeen paid entirely from local district revenues and not from a levy of ad valorem tax.
(j) (i) Before the board of trustees of the local district files a resolution approving awithdrawal, the receiving entity, or in cases where there is no receiving entity, the sponsors of thepetition shall irrevocably deposit government obligations, as defined in Subsection 11-27-2(6),into an escrow trust fund the principal of and interest on which are sufficient to provide for thetimely payment of the amount determined by the accounting consultant under Subsection (5)(h)or in an amount mutually agreeable to the board of trustees of the local district and the receivingentity, or in cases where there is no receiving entity, the board and the sponsors of the petition. Notwithstanding Subsection 17B-1-512(1), the board of trustees shall not be required to file aresolution approving a withdrawal until the requirements for establishing and funding an escrowtrust fund in this Subsection (5)(j)(i) have been met; provided that, if the escrow trust fund hasnot been established and funded within 180 days after the board of trustees passes a resolutionapproving a withdrawal, the resolution approving the withdrawal shall be void.
(ii) Concurrently with the creation of the escrow, the receiving entity, or in cases where

there is no receiving entity, the sponsors of the petition shall provide to the board of trustees ofthe local district:
(A) a written opinion of an attorney experienced in the tax-exempt status of municipalbonds stating that the establishment and use of the escrow to pay the proportionate share of thedistrict's outstanding revenue bonds and general obligation bonds that are treated as revenuebonds will not adversely affect the tax-exempt status of the bonds; and
(B) a written opinion of an independent certified public accountant verifying that theprincipal of and interest on the deposited government obligations are sufficient to provide for thepayment of the withdrawn area's proportionate share of the bonds as provided in Subsection(5)(h).
(iii) The receiving entity, or in cases where there is no receiving entity, the sponsors ofthe petition shall bear all expenses of the escrow and the redemption of the bonds.
(iv) The receiving entity may issue bonds under Title 11, Chapter 14, Local GovernmentBonding Act, and Title 11, Chapter 27, Utah Refunding Bond Act, to fund the escrow.
(6) A requirement imposed by the board of trustees as a condition to withdrawal underSubsection (5) shall, in addition to being expressed in the resolution, be reduced to a dulyauthorized and executed written agreement between the parties to the withdrawal.
(7) An area that is the subject of a withdrawal petition under Section 17B-1-504 thatresults in a board of trustees resolution denying the proposed withdrawal may not be the subjectof another withdrawal petition under Section 17B-1-504 for two years after the date of the boardof trustees resolution denying the withdrawal.

Renumbered and Amended by Chapter 329, 2007 General Session