H.B. 422 Public Infrastructure Districts Amendments: transcript

I do. I would like to adopt the third sub. Okay. And I'll speak to that. Tell if you like me to tell us what the third sub does and then about the bill. Okay. Thank you so much. Sorry, I ran up the stairs so I could be here on time. Um, this bill is basically a cleanup bill. We had a lot of discussion coming into the session about some concerns from the public about public infrastructure districts or PIDs. Um, I think that there's a place for PIDs. Um, and what this bill aims to do is just put some guardrails around and, and a little more transparency around that infrastructure financing tool. Um, because I wasn't the only one working in this area, Representative Roberts had a bill as well that the third sub basically addresses the two different bills and brings them in line. Um, PIs PIDs appear in a couple of different sections in code. And so we're just trying to make sure that there's no conflict with our two bills. Um, so in the third, third sub as compared to the second sub, the dissolution timing rather than 180 days is 30 days. So it's faster for the notification. Um, there's some cleaner information about the dissolution process itself and, um, we've removed some of the language about convincing under PIs. Um, the annexation is the same as before, requires a hundred percent consent. But what, what my bill did was to say if the authorizing documents authorize an entire area to annex non-contiguous areas within that overarching area is okay, but to annex something that's outside of what, what was authorized by the original document would not be okay. That would require a new p Um, the board, there's some more transparency in terms of board conflicts. Um, so essentially I think those are the big changes in the third sub. Um, the overall scope is just a little cleaned up. Um, there's stronger, stronger protections, faster disillusion removes the potential for special tax finance district around convention centers. But there's a that that's handled in a different part of this code. Um, and I think that's pretty much it. So basically what we're trying to do in the bill is just to ensure that homeowners, when they are purchasing a home in a p, that they're fully aware of how that will impact their property taxes and their monthly payment. And with that, I'm open to any questions.

Uh, that was a great motion you stated chair. So that is my motion.

Senator ml. Thank You. I'd move that we favorably recommend the bill as as substitute.

I appreciate that. Thank you. It's a good bill.

Thank you, Madam Vice Chair. It's a pleasure to be back in clinical subs for a minute. I haven't been here since interim. So, um, just really quickly, hb um, I've got the wrong one up. Give me just a second. HB 4 22 came about after some meetings with our state auditor who brought up some concerns about PIDs. And after meeting with several, um, different stakeholders including, um, Ben Hart, who's the director of in LA Port, um, UAC and many others, we decided that there were some gaps in the PID legislation that we could try to close to improve transparency and accountability for public infrastructure districts. So what the bill does is it define fins, the governance, dissolution, annexation, and withdrawal. It also further refines the disclosure process and transparencies. Um, there's no appropriation in the bill. It does clarify some mandatory dissolution timeframes within 180 days after debts are paid. Um, it clarifies that there is, there needs to be a hundred percent consent of any landowners within the pi. Um, and annexation requires some board resolutions. Um, withdrawals are also done in the same manner in a streamlined manner. Um, properties may remain liable for the bonds and assessments after withdrawal until the debt is paid. Um, there's some information in there about appointed board members. They must file and regular updates, some conflicts of interest. And there's some more, more clearly defined reg or recommendations for sellers disclosures so that people, when they're purchasing a property, they know front, um, whether or not there's, there're in a bid because there is a financial component to that. Overall, the bill responds to developer developers, to local governments, to homeowners concerns about PIDs. I think it provides a really good framework. And again, errs on the side of more transparency for the public. Um, there is an amendment on the bill house amendment one, this is a, after having some conversations actually with Ben Hart with the inland port, a lot of the PIDs don't have a website. We had a, a, a requirement for them to post information on their entity website. Instead, what we've done is changed that to the public disclosures website. And with that, I'm open to questions. Madam Vice chair.

Oh, thank you Madam Vice chair. Could you just talk through the nature of the disclosure to a purchaser of the property? I mean, it is really, some of the fees that are paid in PS are quite high. They are right. Definitely something that a person would weigh before purchasing a property in. There have been at least some instances where people did not realize until afterwards they permanently would have this extra payment, um, as a part of their taxes. How is it disclosed in the bill?

So, a couple of things. Currently it's part of a, a preliminary title report and a final title report. So usually your preliminary report is pulled before, during the disclosure period, and that portion would be disclosed to the buyer. Uh, additionally, the Utah, um, realtors require that this is part of the seller's disclosures, and there's some language in the bill that that does require, that it's part of the seller's disclosures up front. So that would be disclosed during the diligence period as well. Typically during diligence is when a buyer can make that decision, whether they pull out without any kind of financial, um, hit to them while they're making the offer. So the idea was to just to make sure that that disclosure was well upfront of closing so they're not heading to closing and seeing a bunch of fees that they weren't anticipating. Um, the Utah Real Realtors Association actually on Utah realestate.com, I've had some conversations with them. They're looking at making that part of their website a little more bold and obvious so that when, when you're looking at an MLS listing on the, on the UAR website, you can see it right there.

Would it be an actual amount that had to be paid or is it just noticed that there is an amount that has to be paid?

But the amount is, I don't think that we specify that they need to just, um, disclose exactly what the amount is, but that it, the property isn't a pi. And then there would be some, some more steps as a buyer that you would need to take to identify what that financial piece of that looks like. So just, just making it part of the regular upfront diligence period is what the goal was.

Thank you.

Hi. I have a question about the disillusion, uh, dissolution part. Um, and it was quite more of a general question, I guess, in understanding it, because I think we've seen a lot of these stand up, but we haven't gotten to the point where they're starting to dissolve yet. Right, right. And so, um, so my question is actually relates to kind of, um, the conversation we've been having as a state around HOAs, um, because we've seen, um, you know, sometimes the developer comes in, they build their development, but they retain so much of the properties so they can maintain control of the HOA. When I was reading this part about, uh, the special district dissolution, and it was talking about when you dissolve, I guess my question is, you know, the idea is fundamentally that this is the way we're getting infrastructure to places that we couldn't have otherwise. Um, but we have also given them ability to, you know, levy taxes and, and do some things. And, and I guess what I'm curious about is, do you feel like there's enough protections in here so when they really have served their purpose, that they will dissolve? Because I, it's easy to hang on to debt if you want to.

That's a really good question. I think the intent is to make sure that once that debt is paid off, they have 180 days and then it must be dissolved, right? Mm-hmm. And that's the notice period. Yes, it's easy to hang onto debt, but if you're looking at a bond, there's specific payments that have to be made on a deadline. You there, it's usually time certain when that payment, when that final payment is being made.

Yeah. So I guess we're, we're trusting that they're going to pay it off on time and on schedule and follow that commitment of the, of the underlying bond that's been issued to pay off. Right? I don't know.

I think it's just something we're getting to watch. I mean, I don't know that your bill can solve it for today, but I'm not sure either, because these are long term, you know, financing instruments.

They, they, they, right.

Because it's usually a 30 year bond that's been taken out. So it's definitely something worth watching and, and, and monitoring. And I think that's part of, of what we're trying to do, is to make sure that there's some oversight.

Yeah. Thank you.

Madam Chair and committee. I just wanna say a huge thank you to the sponsor of this bill. Um, my name's Ben Hart. I'm the Executive director of the Utah Island Port Authority. Thank you, Nathan. Um, no, I, we just wanted to say a huge thank you to the sponsor of this bill. We recognize these are really important financing tools. They should not be used lightly. Uh, we feel like the pid, uh, that has gotten a lot of attention over the last six or seven months. Um, in addition to the other financing tools that we've been given by the state legislature, there's always this balance of get out and deploy 'em, make sure that we're helping communities across the state, but do it in a responsible way. And we really feel like what Representative Koford is doing here creates a better balance in terms of accountability, in terms of how these, uh, these, uh, entities actually function. Um, they do have a, a time and a place where their deployment really is beneficial, but I, I think the issues that this bill address and the sub in particular helps to bring them back in, reign them back into a, a place that is more reasonable and acceptable for their use. So we just want to, again, say a huge thank you to the sponsor of this bill, um, and support this moving forward.

Good morning, Madam Chair Committee. My name is Chris Sloan. I'm a realtor out of Twila County. I'm not here to comment for or against the bills. We haven't taken a position on it, but just to, to the questions of, of some of the disclosure, uh, and, and the timeliness of the disclosure from, from our side, from the seller's side, um, existence of the PI is available in the preliminary type title report, which was mentioned. It's also on the MLS, it's on the south, the Southern Property Condition disclosure form as well. So all of that disclosure is done very early in the, in the process. Uh, we're not necessarily averse to, we're never averse to disclosure, but we're not, uh, averse to taking a look at, uh, ways to improve that, um, disclosure if, if the committee feels that that's appropriate as well.

Thank you. Um, I'm getting to the amendment. Just one second. The, the sub was moved Yeah. In rules. The sub was adopted in rules. Thank you. So, um, my motion is to adopt the first amendment to house bill 4 22, And the motion is to adopt the first amendment to house bill 4 22.

I'll Okay. To the sponsor. I'll waive. Thanks. Okay.

Thank you, Madam Chair. And I realize we've just amended the bill, but, uh, I also wanna do a voice amendment. My motion would be to, uh, strike lines nine 18 through 9 36.

I would. I, I understand what we're trying to do here, um, with the, uh, disclosure piece, um, to be, uh, I, I, I'm supportive of what we're doing with the bill in general, but this disclosure provision isn't structured. Uh, you know, it's not structured correctly. Um, and I think we can move the bill forward and, um, uh, continue to work on the main policy proposals. Um, I spent a lot of time looking specifically about PIs and PI disclosures. Right now, you cannot buy a pers you cannot buy a property without getting a preliminary title report. I don't, I, that's just the way that works. Doesn't matter if it's commercial, residential, um, land. And, and in that preliminary title report, it, it says whether or not there is a p if there is a tax provision. Um, if there is a property tax obligation that's already been assessed, then that's also printed on that preliminary title report. Um, it's already accessible. Um, there is another disclosure that I think would probably be helpful, but it, it fits outside of this context where if there's a special assessment from the, um, a first time special assessment when it's being transferred from the, uh, owner to the actual, um, uh, perspective buyer there, there's some clarity that would be helpful on that document. But, but that document is the one that identifies all of the issues that might be related to the title. And so the, um, uh, the, the, the disclosure that we're looking for it, it already frankly, exists on the preliminary title report. There might be one additional there, there's probably one really additional, one good additional thing we can do. But that's the reason why I would support striking this in working, um, through the existing disclosure mechanism.

I'm actually, um, open to that. We were, I, I had a conversation last night with some of the, um, some of our stakeholders in the real estate world and understand that this is a little heavy handed and that there, like I said, when it shows up in the preliminary tile report, as the good representative said, and with some of the commitments from the Utah Real Estate Association, the MLS listing to highlight that the disclosures to even make it more visible, I'm okay with making this change and working through to see if there are maybe some smaller changes we can make to clarify the disclosures.

Thank you Madam Chair. I offer a substitute motion to amend substitute motion. Will strike lines 9 22 to 9 36.

Yeah. So our rules say if we strike an entire section, it requires a substitute. We're unable to do that in committee I, so I like to leave the definition there. Strike the rest of it, is my proposal.

Thank you to the good sponsor of the substitute motion for making sure we followed the rule.

Always good to have a parliamentarian in the room to correct us. I appreciate it.

Well, uh, I guess my discussion to that motion is that if it really does need a substitute to it, if there's agreement, then just do a substitute on the floor. If we're not able to take care of it here, I don't know that it makes sense to leave one definition dangling in a section, but either way.

Oh, thank you. So I would suggest that we go forward with the amendment that I'm proposing. I'm not comfortable passing the bill out, even if we have a wink and a nod that's gonna be changed, I want to take this part out of the bill. I know it'll have to be fixed and we're leaving you two lines to start with.

I'm, I'm good with that. I, you have my full commitment to work on that and I'd rather do, I'd rather have it in a place that we're comfortable with to move it out.

I'll waive.

Thank you Madam Chair. I move that we recommend favorably house bill 4 22 as amended first substitute as amended.

A motion to adjourn.

Thank you Mr. Speaker Pro motion to adopt. Second sub Motion is to adopt second sub house bill 4 22. That's in order. Would you like to speak to it? Uh, the second sub just makes some changes that were discussed in committee about disclosures and, um, it was a little burdensome for some of our partners in the community, so we struck that, that part of it, and it's being done earlier in the process. So it was, it's a good change.

I'll waive Summation is waived.

Thank you Mr. Speaker Pro temp colleagues. This bill is about transparency in our public infrastructure districts. Earlier, earlier, earlier this year, I was approached by a number of constituents who had some concerns about our public infrastructure district funding. And, um, working with many stakeholders, we found that there were some gaps. And so what this bill does is it refines some of the government governance of PIs, um, the dissolution process and annexation and withdrawal process. It tightens up disclosures and some transparency issues. Um, fundamentally we feel like people who are purchasing a home in a PI should know about that. And this bill ensures that they know early on in the process as they're purchasing a home. And without Mr. Speaker Pro temp, I'm open to questions.

for summation I'll waive summation is waived.

Uh, the second sub just makes some changes that were discussed in committee about disclosures and, um, it was a little burdensome for some of our partners in the community, so we struck that, that part of it, and it's being done earlier in the process. So it was, it's a good change.

Thank you Mr. Speaker Pro temp colleagues. This bill is about transparency in our public infrastructure districts. Earlier, earlier, earlier this year, I was approached by a number of constituents who had some concerns about our public infrastructure district funding. And, um, working with many stakeholders, we found that there were some gaps. And so what this bill does is it refines some of the government governance of PIs, um, the dissolution process and annexation and withdrawal process. It tightens up disclosures and some transparency issues. Um, fundamentally we feel like people who are purchasing a home in a PI should know about that. And this bill ensures that they know early on in the process as they're purchasing a home. And without Mr. Speaker Pro temp, I'm open to questions.