I. Creation of a Service District.
A. A service district is created by ordinance following a public hearing.
B. The notice of the public hearing must be published once a week for three consecutive weeks (with the hearing occurring no sooner than ten days after the second notice).
C. The ordinance creating a service district shall:
1. Set forth the name and describe the boundaries of the proposed district and specify any areas within the district that are to be excluded;
2. Describe the purposes of the district and the facilities and services proposed within the district;
3. Describe a proposed plan for providing such facilities and services within the district; and
4. Describe the benefits which can be expected from the provision of such facilities and services within the district.
II. Powers of a Service District.
A. A service district can construct, maintain and operate such facilities, and equipment as may be necessary or desirable to provide additional, more complete or more timely governmental services within a service district, including but not limited to:
· water supply, sewerage, garbage removal and disposal, heat, light, fire-fighting equipment and power and gas systems and sidewalks; economic development services; promotion of business and retail development services; beautification and landscaping; beach and shoreline management and restoration; control of infestations of insects; public parking; extra security, street cleaning, snow removal and refuse collection services; sponsorship and promotion of recreational and cultural activities; upon petition of over 50 percent of the property owners who own not less than 50 percent of the property to be served, construction, maintenance and general upkeep of streets and roads that are not under the operation and jurisdiction of the Virginia Department of Transportation; and other services, events, or activities which will enhance the public use and enjoyment of and the public safety, public convenience, and public well-being within a service district.
B. A service district can provide transportation and transportation services within a service district, including, but not limited to public transportation systems serving the district; transportation management services; road construction, rehabilitation and replacement of existing transportation facilities or systems; and sound walls or sound barriers.
C. A service district can levy and collect an annual tax upon any property in such service district subject to local taxation to pay, either in whole or in part, the expenses and charges for providing the governmental services and for constructing, maintaining and operating such facilities and equipment as may be necessary and desirable in connection therewith.
1. The annual tax shall not be levied for or used to pay for schools, police or general government services that are not specifically authorized;
2. Proceeds from such annual tax shall be so segregated as to enable the same to be expended in the district in which raised; and
3. Any tax must be based on the full assessed value of the taxable property within the service district.
D. A service district is not a separate political subdivision and cannot issue bonds. Any debt secured by the special tax would be considered a debt of the county.
E. A service district cannot levy special assessments to fund improvements.
F. The services or improvements undertaken by a service district must be for the primary benefit of the landowners and residents within the district and may not be for the “sole or dominant” benefit of any individual, business or other private entity.
G. There is uncertainty as to whether a county can issue “revenue” bonds secured by the special tax imposed on a service district pursuant to the “special fund” doctrine. It is likely that such obligations of the county will be subject to an annual appropriation. “Subject to appropriation” obligations are more risky than those secured by the full faith and credit of a locality or those secured by a specific pledge of a revenue-generating enterprise. This risk, and the fact that the special tax generates a limited source of revenue, usually results in bonds that carry a higher interest rate, are relatively expensive to issue, and are less marketable.
III. Application to Hollymead Town Center and Albemarle Place
A. There is no legal impediment to the creation of a service district to finance transportation improvements needed to accommodate increased traffic generated in part by each proposed development, provided that the requisite statutory procedures are followed to create a service district.
B. The service district statute specifically provides that a service district may provide transportation services and road construction within a service district. No services or improvements could be funded outside of the service district boundaries.
C. It is theoretically possible to consolidate the two developments into one single service district that includes Route 29.
D. There must be a reasonable basis to include or exclude property from a service district.
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