Request By:
Mr. Brent Yonts
Attorney at Law
112 Court Street
Greenville, Kentucky 42345
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
You represent the East Fork Pond River Conservancy District, covering parts of Muhlenberg and Christian Counties. The district desires to levy a 25 year special assessment for maintenance on the property within the district pursuant to KRS 262.777. Maintenance of the dams and waterways would include mowing, spraying, keeping channels clear, etc. We assume that the annual tax on real property levied under KRS 262.745(1) and 262.760 is inadequate to carry out the approved program of the district, and constitutional limitations on indebtedness will not permit borrowing [without a vote of the people] as authorized under KRS 262.745(4) and KRS 262.750. The district has a budget which produces the maximum amount of income allowed by KRS 262.760.
Question No. 1: Under KRS 262.777, can the district levy the special assessment in whatever amount needed up to the amount authorized and merely collect the assessment and pay its maintenance bills on a yearly basis?
If the special assessment is voted, the issuance of bonds is mandatory. The statute reads in part "a special assessment may be voted and bonds issued which shall be payable solely from the collection of such assessments, as provided in KRS 262.778 and 262.779." Such language and the language of KRS 262.778(1) indicate that once the project cost is determined, a bond issue will be voted on by benefited landowners which bond issue will be payable solely from the annual special assessments. The assessments were designed only for the funding of a bond issue.
Secondly, as to whether the district can create surpluses, the statutes do not contemplate that an assessment will be used to build up substantial surpluses. The assessment must be such that it will, over the years specified, retire the bond issue. No provisions are made in KRS 262.777, 262.778, and 262.779 for surpluses.
Question No. 3: Can the district borrow on an annual basis only that amount of money necessary for maintaining the district for a year and then pay the money back through an annual assessment?
Here again, we believe the assessment of KRS 262.777 is mandatorily tied in with a bond issue. Of course the district can borrow money, without a vote of the people, and where revenue bonds, or special assessments are not involved, if the obligation, together with other current obligations of the district, do not exceed the available income and revenue for such year. Section 157, Kentucky Constitution. The phrase "income and revenue" has been interpreted as meaning "that which the particular taxing district has actually provided for in reasonable and good faith anticipation of collecting." Bell v. Board of Education of Barren County Sch. Dist., Ky., 343 S.W.2d 804 (1961) 806.
Where the assessment is properly used [with bond issue] under KRS 262.778, the assessment is imposed only on the benefited lands located in the flood plain.
You should consult bond counsel about any proposed bond issue. They will point out to you that bond issues for a relatively small amount of money are not economic.