April 10, 1995
Subject: Community Improvement District Projects
Written by: Gerard Gerhard
Requested by: Hon. J. D. Williams Calloway County Judge/Executive
Syllabus: A jail may be constructed through a community improvement district, but revenues derived from a community improvement district ad valorem tax may be lawfully applied only to the operation of the building in which the jail is housed, and not to the general expenses of "operating of the jail." Additionally, the question to be submitted to the voters in connection with a proposed community improvement district project or projects is whether they approve or disapprove of a project or projects, rather than solely whether they approve of a given tax increase.
OAGs cited: None.
Statutes construed: KRS 107.320; 107.350; 107.360; 107.370(6)
OPINION OF THE ATTORNEY GENERAL
The following questions, in substance, have been presented:
1. Under the provisions of KRS 107.310 to 107.410 can a jail be constructed as a community improvement district project?
2. May a tax imposed under community improvement district provisions be used for "operating of the jail?"
3. Is "any tax increase" (related to a community improvement district project or projects) to be submitted for voter approval?
Responses to these questions are set forth below, accompanied respectively by a discussion of the basis of the views expressed.
1. A Jail May Be Constructed Through a Community Improvement District.
The language of KRS 107.320 current as of this response provides, in part pertinent here:
In counties containing a city of the first, second, third, or fourth class, a community improvement district may be created as provided in KRS 65.182 for the purpose of erecting buildings and related facilities for any governmental unit, or combination of governmental units, in the county. . . .
Given the language quoted above, in our view a jail may be erected through a KRS 107.320 community improvement district.
2. Revenues from a Community Improvement District Ad Valorem Tax May be Lawfully Used Only for the "Benefit and Purposes" of Such District, and Cannot be Used for Actual "Operating of the Jail."
The request to this office asks whether a tax imposed (under community improvement district provisions) may be used for "operating of the jail." In our view the answer is no, to the extent the question includes actual jail operation expenses (e.g. cost of deputy jailers, prisoner food, etc.), as distinguished from expenses of operating the jail building itself.
KRS 107.350 provides, in part pertinent here:
In order to accomplish its purposes the district, through its board, may request the fiscal court of the county in which it is located to levy an ad valorem tax on all property within the district which is assessed for local taxation at a rate which shall not exceed ten (10) cents per $100 of assessed value of said property and which shall not exceed the amount necessary to amortize any bonds (whether revenue or general obligation bonds) issued or proposed to be issued to finance the project or projects proposed by the district, plus operating expenses of the district. All ad valorem taxes authorized by KRS 107.310 to 107.500 shall be collected in the same manner as are county ad valorem taxes and shall be turned over to the board as the governing body of the district. Such ad valorem taxes shall be solely for the benefit and purposes of the district and shall be in addition to all other ad valorem taxes. . . .
KRS 107.320 (see above) provides in part that the purpose of a community improvement district is "erecting buildings and related facilities." KRS 107.370(6) provides that a community improvement district board shall have the power to "operate any such buildings," which we interpret to mean operate any such buildings as a district would be authorized to operate.
In our view it follows from the provisions cited above that a community improvement district has the purposes of (1) erecting buildings and related facilities, and (2) "operating" certain buildings. Such purposes do not, again in our view, include the literal "operation of a jail," the expenses of which would go beyond operation of the "building" in which the jail is housed. Taking the phrase "operating of the jail," as such phrase as used in the request to this office, at face, revenues from a community improvement district ad valorem tax, given KRS 107.350, cannot be applied broadly to "operating of the jail" housed in a building erected by a community improvement district. Such revenues cannot be lawfully applied, for example, to the salaries of the jailer or deputies, to prisoner food, medical, or transportation, expenses, or other expenses that would be reasonably be said to be for "operation of the jail," as distinguished from operation of the building in which the jail is housed.
3. While Proposed Community Improvement District Project is to be Submitted to Voters, Ad Valorem Tax for District Projects, as a Separate Question, is Not.
KRS 107.360 provides, in part pertinent here:
(1) Prior to or concurrently with the adoption by the board of a resolution request- ing the fiscal court to levy an ad valorem tax, the board shall have determined the nature and approximate cost of the project or projects to be financed through the issuance of bonds (whether revenue or general obligation bonds) to be retired through the levy of the tax. In determining the nature of a project the board may include more than one (1) improvement item in a single project. The resolution designating the project or projects and the estimated and approximate cost of each, shall be forwarded to the fiscal court, which shall thereafter, on behalf of the dis- trict, cause said resolution to be published in the newspaper of bona fide circulation as provided in KRS 424.130. Thereafter the fiscal court shall cause to be prepared a question for submission to the voters of the district at the next regularly scheduled November election as to whether or not the project, or any one (1) or more projects if there be more than one (1), shall be disapproved. The question shall be so framed that any voter who wishes to vote for the project, or for any project designated as a single project if there be more than one (1) project, may signify his approval by voting "yes," and any voter who wishes to vote against any project so designated may do so by voting "no" on the question of that project. If a majority of those voting on the question of any project shall approve the particular project, that project shall be adopted, and the board shall proceed to initiate issuance of the authorized bonds as provided in KRS 107.310 to 107.500. The county clerk shall cause such question to be prepared for presentation to the voters, and the election results shall be canvassed and certified by the county board of election commissioners.
(2) If the project is approved as herein provided, the tax necessary to finance the approved project shall be computed by the board and transmitted to the fiscal court, which shall levy the tax as provided in KRS 107.350. Nothing in KRS 107.310 to 107.500 shall be deemed to require the fiscal court to levy a tax in any year unless general obligation bonds have been issued as provided in KRS 107.460, and then only to the extent of requirements for amortization of such bonds.
It will be observed from a reading of KRS 107.360 (above), with particular attention paid to the emphasized (underlined) text, that the question to be presented to the voters is whether or not they approve or disapprove of a project or projects, not whether they approve or disapprove solely of a tax increase. While the question presented for voter approval in connection with a community improvement district project could, and presumably should, include mention of imposition of the separate and additional tax to support such project or projects, there is no statutory authorization for presenting, in connection with a community improvement district project, solely the question of whether the voters approve of a tax increase for such project.
Gerard R. Gerhard
Assistant Attorney General