Stacey Kellenbeck Consulting

AFD and LID

06/14/08

Making common sense of common acronyms.

City of Grants Pass acronyms can start to sound like secret code language but a few short explanations can help keep you in the loop.

AFD: Advance Finance District

A term that has recently received major publicity, however, it is not a new concept.  Originally adopted by the City of Grants Pass in 1979, Advance Finance Districts were intended to “reimburse” part of the cost of installing public infrastructure (storm drain, sewer and water lines, public streets).

For example, either the City of Grants Pass or a private developer installed (and fully paid for) a water line for a distance greater than required by the Development Code.  An Advance Finance District could be formed (only with the approval of the City Council)… and then NOTHING happens.

Yes, that’s right… just because an AFD is placed on a property, doesn’t mean existing property owners, happily using an old well, will have to pay anything.  However, IF a property owner decided of their own free will to disconnect from the well and connect to City water, the AFD would then require a “proportionate” share of the cost be “reimbursed.”

New development would also be required to pay a proportionate reimbursement at the time of connection to the water line.  This is a good time to point out that although a small amount of interest is added to the original cost, and people have loudly complained about the price tag, I speak from experience when I say, “proportionate” cost is almost always less than the cost of installing the improvement for oneself.

So here are the basic facts:

• AFDs can be initiated by the City of Grants or a private developer
• AFDs can ONLY be approved by the City Council
• AFDs only cost people who directly benefit from the improvement
• AFDs typically have a 10-15 year expiration after which time everyone still potentially owing money is off the hook and may benefit for free
• AFDs initiated by the City of Grants Pass do NOT expire
• AFDs have a small amount of interest that accumulates annually
• AFDs CAN NO LONGER BE CREATED

Yes, you read that correctly.  They are a thing of the past.  On April 2, 2008, the City Council adopted an ordinance that amended the Municipal Code and changed the name of Advance Finance District to the more appropriate, “Reimbursement District.” Check back for future blogs about the difference between AFDs and RDs.  Oh great… another new acronym.

LID: Local Improvement District

Local Improvement Districts are a method of equitably dividing cost of public improvements (storm drain, sewer, water lines, public streets and sidewalks), much like AFDs.  The difference is that LID money is immediately due.  The City of Grants Pass offers financing at reasonable interest rates to those choosing to make payments for up to ten years.  Everyone immediately benefiting from the improvement, regardless of whether or not an individual wanted the improvement, is responsible for sharing the cost.

LIDs have an extensive review process by City Staff and City Council prior to creation.  They can be initiated by a single property owner, a group of property owners or the City.  The Staff then creates a preliminary boundary around the area of the proposed improvement and if 33% or more the property owners within the boundary agree, a public hearing is scheduled with the City Council.  ALL property owners within the boundary are notified and LIDs only receive approval from the City Council when 50% or more of the property owners within the improvement area agree.

Sure, it sounds like a lot of agreement has to occur before a LID is approved, but if 49% of the property owners within a boundary are opposed to the idea, the LID may still be created and that leaves a lot of contention.  The reality is, even if only 1% are opposed to the improvement and are forced to pay, the process may seem a little unfair… However, in this case, fairness is measured by true majority and I always pity the Staff and Council for the difficult position they are put in for the greater good.

So, for example, a group of property owners decide they would like their neighborhood to have sidewalks.  They contact City Staff.  A preliminary outline is drawn around the properties that would immediately benefit from sidewalks.  A minimum of 33% of the property owners within the boundary agree to help pay for sidewalks so a City Council hearing is scheduled.  All property owners within the boundary are notified of the proposal and given the opportunity to provide comments to the City Council.  If the Council determines the project is feasible, and if 50% or more of the property owners within the boundary agree, the improvement is constructed.  The final cost is given to the City Council and is equitably divided across all properties within the boundary.  Each property owner then has the option to make a single payment or finance their share over a limited time.

The basic facts:

• LIDs can be initiated by a single property owner, group of property owners or the City of Grants Pass
• LIDs can only be approved by the City Council with a 50% or greater property owner agreement
• LIDs are applied to everyone within an approved boundary set by the City Council
• LIDs are immediately due but can be financed
• LIDs put real improvements in the ground in a timely manner

Sometimes property owners do NOT agree to the improvement but are counted as a “Yes” vote anyway.  And of course the answer to this anomaly is another acronym!  It’s called a DDA… and we’ll discuss that later as well.

What are your thoughts?

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