Why Special Districts
Exactly, what is so special about special districts?
In short, the answer is focused service with stable funding. When people want new services or a higher level of an existing service, they can form a district to fund them.
Generally, special districts are considered a form of government that provides a service to a defined geographic area.
In Oregon, special districts are called local service districts and are defined under ORS 174 as “(A) An entity created by statute, ordinance or resolution for the purpose of giving advice only to a local government; (B) An entity created by local government for the purpose of giving advice to local government and that is not created by ordinance or resolution, if the document creating the entity indicates that the entity is a public body; and (C) Any entity created by local government other than an entity described in subparagraph (B) of this paragraph, unless the ordinance, resolution or other document creating the entity indicates that the entity is not a governmental entity or the entity is not subject to any substantial control by local government.
The state has a separate chapter dedicated to parks and recreation districts.
Special districts have a well-defined area where the focused service is delivered. Such districts localize costs and services by allowing citizens to get the service they want at a price they are willing to pay. By pooling resources, different entities that provide a similar service on their own can join forces to deliver the same service – or an even better service – for less cost.
To fund the service or services those within a special district want, the district can impose debt, taxes, levy assessments or charge fees for their services. They can enter into contracts and employ workers.
And they accomplish a lot. They can build public facilities, whether it’s a sewage plant or a community center, and they can provide in-demand services, ranging from recreation programs to mosquito control.
Because special districts are autonomous entities, they are accountable only to the voters and landowners they serve within the district. However, states do oversee special districts to ensure they follow state laws related to public meetings, bonded debt and elections.
Exactly how a district is funded is up to the citizens within its boundaries.
Before a special district can be formed, a feasibility study is needed to determine the viability of the concept behind the district before it can move forward. Everything from financial implications to community support could be determined in such a study. For example, the study on The Springwater District could delve into whether a tax on sugary drinks, modeled after one recently passed in Berkley, Calif., could help fund the Springwater District. *
In 2010, the city of Gresham contracted with The Trust for Public Land
to conduct a parks feasibility study of various ways to fund the city’s parks services, and recommended polling residents on four methods, including a park district. In the end, the study recommended that Gresham “organize an intensive public education and awareness campaign within the city to raise support for the concept of a park and recreation district that would potentially include the other cities within East County. … the concept of a park and recreation district garnered more support than the others, and it is our recommendation that the City focus on educating voters on the details and merits of a park and recreation district.”
In addition, the study “recommends that the City continue -- and increase -- work with leaders in Troutdale, Fairview, and Wood Village to coordinate efforts on public education and awareness of the needs and the ability of a park and recreation district to begin to satisfy those needs.”
According to Gresham’s parks feasibility study, the most common funding options in Oregon are as follows:
1. Property Tax, or Local Option Levy, for either operation and maintenance or capital projects. An operation levy may be imposed for a maximum of five years, while a capital project levy may be imposed for the lesser of the useful life or ten years. A simple majority of voters must approve the local option levy at either a general or primary election. Additionally, in the recent May, 2010 primary election, Measure 68, which allows school districts to issue bonds for capital improvements, was passed by voters. This has the potential for collaboration between the City and the School District in that school districts will now have the capability of bonding to purchase lands for recreation and athletics. It’s becoming increasingly common for cities and school districts to share fields.
2. General Obligation Bond proceeds that may be used for land acquisition or park and open space capital projects, but not for operation and maintenance purposes. A general obligation bond must be approved by a simple majority of voters at either a general or primary election.
More Complex Funding Options to Implement in Oregon
3. Park and Recreation Districts may levy property taxes and issue general obligation bonds. Formation of a park and recreation district requires petition to the County Commissioners by 15% of registered voters within the proposed district. A simple majority of voters must approve district bonds, but the district can authorize an annual property tax levy without a vote, based on the permanent rate established at the district’s formation.
Council-Mandated Funding Options (without a public vote)
4. Park Utility Fees are usually assessed on raterpayers’ utility bills, for parks, open space and maintenance. Currently, Medford is the only city in Oregon to use this fee.
City Park and Recreation Fees could be assessed or increased to generate more revenue for parks, trails and open space. However, any new assessment or increase to the fees must be balanced against the affordable provision of park and recreation services to Gresham residents, and the cost of establishing a collection system.
5. System Development Charges (or SDCs) are used to construct new public facilities that allow for community growth, and to pay for debt on previously constructed growth-related facilities. The City has a Parks Fund that accounts for projects to expand or improve Gresham’s public parks funded with revenues from SDCs, grants, and two previous bond measures. Expenditures are for capital improvements to existing parks, the Springwater Trail and other hiking trail projects, and acquisition of land for open spaces. SDCs are applied to all new development, but the fees can only fund capacity enhancement projects that are needed as a result of the development. Gresham currently charges a $3,837 Park SDC per dwelling unit within the City, and additionally there are Parks SDCs for Pleasant Valley ($8,137) and Springwater ($9,039).
7. Urban Renewal Agencies raise funds through tax increment financing for blighted area revitalization (property taxes and bonds) but those funds have not been dedicated specifically for parks purposes (though park and recreation facilities are often part of the urban renewal plan).
Unproven Funding Options
8. Restaurant and Prepared Foods Tax is within the discretion of the City to enact. Typically the tax is a set percentage of gross sales. Currently only Ashland and Yachats (both destination communities that produce revenue based on tourism) have one.
9. Specific Tax, or a tax imposed as a fixed sum on residential and/or commercial units for park, trail and open space purposes. A charter amendment approved by a simple majority of city voters is required.
Not all 9 types of funding options are realistic …, but merely show the breadth of legally available funding mechanisms.”
In terms of viability, there are several options that are less viable due to the politics either in the City, during a potential campaign, or because of complexity. These options, listed below, should be considered to be “off the table”, as they most likely bring more trouble than the revenue generated would be worth.
City Economics Viability
-Utility license fees are not viable simply because of the other vital City services that would be impacted.
-City park and recreation fees are less viable because while they place the burden on those who use the system, that burden quickly becomes burdensome to the average user while not delivering a lot of revenue.
-Restaurant taxes immediately draw well-funded, organized opposition from The Oregon Restaurant Association, which opposes all restaurant taxes, and therefore are not recommended.
-Specific taxes tend to draw well-funded, organized opposition from realtors’ associations, land developers and homebuilders, who feel that such unfairly burden the sale of real property in perpetuity (as opposed to operating levies, which exist only for 5 years at a time). This is also a consideration for City Council, as a Gresham-only specific tax on real property gives surrounding areas a competitive advantage.
-Urban Renewal Agencies are less viable because not only have they never been used in Oregon for dedication strictly for parks and recreation purposes, they are complex in designating the boundaries.
Realistically to achieve the City’s goal of funding the Parks system, the entire City would need be considered an urban renewal agency, but only 15% of property area within the city (and it has to be designated a blighted area) can legally be defined as undergoing urban renewal; in order to meet the City’s needs, there would have to be consecutive agencies set up throughout the City over many years.
Other viability concerns
-Revenue Bonds should be outside our discussion as they are completely up to the discretion of Council. Elected officials tend not to favor the issuance of revenue bonds, as they’re often viewed by voters as unfair. More importantly, there currently is no available sustainable revenue for repayment.
-SDCs should be outside our discussion for several reasons. Their fluctuating nature (based on housing and the economy) make them unreliable, they can only be used for growth-related capital projects, and by themselves don’t generate enough revenue. That being said, SDC increases should always be considered as part of the overall funding package.
* See related materials titled Kick the Can campaigns in our resources section.