A Layman’s Guide for Establishing

a Utility Special Assessment District (USAD)

 

The following is meant to be a general outline of the steps that need to be taken to implement a Utility Special Assessment District (USAD).  It does not cover all the aspects of the borough code or associated ordinances.  For more in depth detail, please contact the Special Assessment Coordinator at the Kenai Peninsula Borough Assessor’s office.

What is a USAD?

A USAD is a means to finance the extension of the lines of service of those public utilities regulated by the Alaska Public Utilities Commission, or of city-owned utilities to areas outside the boundaries of the city.  Generally these relate to electric, gas, water and sewer lines.

 

How do you get a USAD started?

The following information will attempt to outline the steps that need to be taken to implement a USAD. 

 

Phase 1:

1)            Project Coordinator or Petition Sponsor:

Someone, typically the person(s) pursuing the utility being brought to their respective property, needs to coordinate the project on behalf of the property owners that would receive benefit from extension of the service being pursued.

 

2)         Take the Project Proposal to the Utility:

The best way to start defining the area of improvement is to get with the utility company that you want service from.  They will have the information about where the utility currently exists and the feasibility of extending the service to the respective property.  They can also provide you a ball park estimate of the cost to extend the service. 

 

3)         Bring the Project Proposal to the Assessor’s Office:

The Special Assessment Coordinator, located at the Assessor’s office, has the responsibility of approving the proposed USAD boundary and assuring that all appropriate parcels are included in the proposed assessment district.  In order to create a USAD, the Kenai Peninsula Borough Code specifically states that:

A)   In no case may a benefited property be assessed an amount in excess of twenty-one (21%) percent of the adjusted value of the property.  The adjusted value is currently calculated by adding the allocated cost of the benefit to the assessed value of each benefited parcel.  Should the estimated assessment for a parcel be greater than the allowed amount, the estimated assessment will be reduced the appropriate amount by a prepayment of the assessment prior to the assembly hearing the resolution to proceed with the project.   If the assembly does not approve the resolution to proceed, the prepayment will be refunded.  

B)    In no case shall a special assessment district be approved where properties which will bear more than ten (10%) percent of the estimated costs of the improvement are delinquent in payment of borough property taxes from the immediately preceding tax year. 

 

Note: once the boundaries have been determined for the proposed district the Special Assessment Coordinator will obtain a more defined cost from the company providing the utility.  The estimated cost per parcel will include the utility company’s construction cost estimate plus the Kenai Peninsula Borough administrative overhead cost of $6,000 (fixed) plus $70 per lot.

 

Phase 2:

Once the boundaries of the proposed district are identified it is very crucial for the project coordinator, or petition sponsor, to communicate with the owners of the benefited parcels.  If a majority of the owners are not in favor of the project, the project is probably dead.  If, after visiting with the owners of the benefited parcels, you feel a majority (greater than 70%) are in favor of the project the petition process can begin.

The petition packet for each benefited parcel will be provided by the Special Assessment Coordinator and will include the following information and/or documents:

1)               A petition information sheet that provides an overall description of the project.

2)               Map detailing the boundaries of the proposed USAD.

3)               Letter-statement from utility company indicating their cost to construct.

4)               Estimated assessment roll.

5)               Notice to petition signature page.

 

It is the responsibility of the project coordinator, or petition sponsor, to deliver this package of information to each owner.  In order to be considered as part of the formal petition, the signature page must be properly signed and dated by the owner(s) of record and returned to the project coordinator.

The petition shall contain the signatures of:

A)             the owners of record of more than seventy percent of the total number of parcels subject to assessment within the proposed district; and

B)              the owners of record of properties within the district which would be subject to greater than seventy percent of the total assessment under the petitioner’s proposal.

All signatures must be dated and the petition filed within 30 days of the first signature. Special care must be given to meet this 30 day requirement, especially if there are numerous owners, or owners that live out of state.

If sufficient signatures are secured within the allotted time frame and the required $1,000 non-refundable filing fee submitted with the signatures the project proceeds to phase 3.

 

Phase 3:

Once the petition has been property filed with, and certified by, the Borough Clerk, and the tax compliance requirements are met, a “Resolution of Necessity” will be prepared for consideration by the Assembly.  This must happen within 90 days of the petition filing.  If the Assembly approves the Resolution of Necessity, there is a 30-day period whereby the property owners of record may file written objections.  If objections have not been received from owners of parcels bearing one half or more of the estimated costs the project may proceed to phase 4.  

 

Phase 4:

Within 30 days, following the expiration of the 30-day objection period, the Assembly shall consider a “Resolution to Proceed” with the proposed utility special assessment project.  Approval of the “Resolution to Proceed” authorizes the Mayor to proceed with the construction of the project and to record liens based on the estimated assessments.  In the event the lowest and best bid for labor and material exceeds the estimated cost, then no contract will be entered into without further assembly approval.  Prior to such approval all affected property owners will be notified.  Following passage of the resolution the project proceeds to phase 5.

 

Phase 5:

Once the project is completed and the final costs have been established the Assembly will consider an “Ordinance of Assessment” that assesses each parcel for its share of the cost.  A notice of the assessment hearing will be sent each owner of record, as well as published in a newspaper of general circulation, so that all owners are provided an opportunity to have their comments heard.  Once the Ordinance of Assessment has been passed the assessment notices are mailed out to the owner(s) of record. 

The general repayment terms are annual payments, due in March, over a tenyear period.  Interest will be charged at the prime rate in effect at the time plus 2%.  The balance can be paid at any time with no prepayment penalty.

This is the general process for initiating and completing a Utility Special Assessment District.  This brochure is not intended to cover every aspect of the Code, but is merely a guide to cover the basics along the way. 

For more information on the process please contact the Special Assessment Coordinator at (907) 714 – 2230 ext. 2246 at the Kenai Peninsula Borough Assessor’s Office.