The Honorable Dean Elliott State Representative 136 Apple Blossom Loop Maumelle, AR 72113-6031
Dear Representative Elliott:
This is in response to your request for an opinion on the following question:
If a municipality annexes an unincorporated area, does state statute require the annexing municipality to pay off any outstanding improvement taxes related to sewer or water improvement districts?1
RESPONSE
I have found no general statute requiring a municipality to pay improvement district assessments following its annexation of an improvement district's operating area.2 It is perhaps conceivable, depending upon the particular facts, that a city could be contractually obligated to pay such assessments following annexation. Having been provided no specific background information for evaluating this question, however, I cannot speculate further as to any potential factual scenarios in this regard.
You have not indicated, for instance, whether the municipality intends to acquire the improvement, nor have you identified the specific improvement district at issue. Depending upon the particular type of district involved and the applicable subchapter of the Arkansas Code, there may be statutory authority for the acquiring municipality to agree to pay off the outstanding assessments. See, e.g., A.C.A. §§ 14-88-501 (authorizing a municipal improvement district to sell or lease its improvement to a city and authorizing the city to purchase or lease and operate the improvement "on such terms" as the commissioners and city may agree.) It seems clear from my research, however, that the mere fact of annexation does not subject the city to assessment, nor does it obligate the city to pay outstanding improvement district assessments. Absent some agreement on the part of the city, these outstanding assessments will presumably remain the obligation of the property owners.
Assistant Attorney General Elisabeth A. Walker prepared the foregoing opinion, which I hereby approve.
Sincerely,
MARK PRYOR Attorney General
MP:EAW/cyh
Enclosure
1 I assume that the term "improvement taxes" refers to assessments for local improvements by a sewer or water improvement district, which of course are distinguishable from general taxes. See generally Rainwaterv. Haynes, 244 Ark. 1191, 428 S.W.2d 254 (1968) (noting that the word "taxes" refers to "exactions laid by the government for purposes of general revenue[,]" whereas the word "assessments" refers to "exactions laid for making local improvements for the benefit of property owners.")
2 A separate question may be presented if the municipality is actually acquiring property located in an improvement district. This question was addressed in Attorney General Opinion 94-149 (copy enclosed), wherein it was concluded that the answer will depend upon the particular statute under which the improvement district assessments are levied, and upon whether the property is being used exclusively for public purposes.