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Minutes for HB2518 - Committee on Local Government
Short Title
Amending the city general improvement and assessment law dealing with the creation of improvement districts; requiring mailed notice by first class mail to all property owners proposed to be included in an improvement district; eliminating the ability of resident property owners of more than one-half the area proposed to be included in an improvement district to petition to form a district; and requiring disclosure in real estate contracts that the property is subject to special assessments and making such contracts voidable by the buyer if such notice is not included in the contract.
Minutes Content for Wed, Feb 9, 2022
The Chair opened the hearing on HB2518.
Revisor Long briefed the Committee on the bill (Attachment 2). He explained that the bill would amend the municipal general improvement and assessment law to require a first-class notice be mailed to all owners of record before forming a benefit district and likewise require a first-class notice of any resolution by a governing body before the resolution could become effective. Further, any seller of real estate must disclose in the contract any special assessment assessed against the property.
Mr. Long responded to members' questions:
- Benefit/special-assessment districts are used to pay for infrastructure projects in specific areas.
- There is almost always a public hearing to alert citizens about the formation of a benefit district.
- The bill does not change current law; it only adds certain requirements.
Anh Vu Rongish, Citizen, Olathe, testified via Web-Ex in support of the bill (Attachment 3). She related that her purchase of a house in 2018 did not disclose a significant assessment (an additional [average] $15,000 in tax) due to a benefit district formed in 2008. She stated that, had she been aware of the surcharge, she would have sought housing elsewhere. She called the hidden fee unethical and urged members to pass the bill.
Denise Holm, Citizen, Olathe, recounted a similar story of purchasing a house in 2020 without realizing a special assessment totaling $!4,300 would be added to the tax bill over a period of years, an undisclosed addition that being known would have obviated the purchase of the house. She said that the bill would alert those purchasing a house regarding this hidden assessment (Attachment 4). Responding to questions, Ms. Holm replied that the special assessment did not originally show on the tax statement, and information about the assessment was disclosed only on the title insurance at the day of closing on the property. She stated that she did not mind paying for assessments that directly benefited her, but paying for a road that she never uses did not seem appropriate. To another question, she replied that the assessment devalued her property; the only one to make money on the infrastructure project was the developer.
Nicholas Payne, Citizen, Olathe, as a proponent told stories of neighbors who had unexpectedly discovered the special assessments and the financial burden it had placed on them; their house payments were higher than they had originally anticipated. Mr. Payne traced the process for developing a benefit district, cited his experience of paying for a road that lay outside his usage area, and concluded that the process of creating benefit districts in Kansas is flawed and needs changing. He recommended an amendment to the bill that would eliminate residential benefit districts for road improvement (Attachment 5).
The following individuals, all citizens of Olathe, submitted written-only testimony in support of the bill:
- William Ceccoli (Attachment 6)
- Dean Vakas (Attachment 7)
- Julie Lair (Attachment 8)
- Casey and Jana Jensen (Attachment 9)
- Jeff Younger (Attachment 10)
- Arthur Gilson (Attachment 11)
- Brian Haug (Attachment 12)
- John and Ann Martin (Attachment 13)
- Mary Jo Sedlacek (Attachment 14)
- Lisa Studtmann (Attachment 15)
- Steve and Melissa Daniels (Attachment 16)
Eric Sartorius, Executive Director, Kansas League of Municipalities, testified in opposition to the bill (Attachment 17). He said the changes in Section 1 of the bill eliminate one step in the formation of a benefit district by removing an option for residents to protect themselves from financial harm. In Section 2 he noted that a requirement new to Kansas statutes stipulates a first-class notice to all affected residents, an unnecessary redundancy. He offered amendments to the bill, stating that concerns raised by the proponents could be adequately addressed.
Mr. Sartorius joined members in discussing a variety of options and related issues raised by the bill. He commented that eliminating road construction from benefit districts is not a solution to the problem. He noted that present law requires a seller to disclose any special assessments and that (page 5) the seller must receive a written acknowledgement from a buyer that the buyer is aware of the assessment.
Mark Tomb, Vice President of Governmental Affairs, Kansas Association of Realtors, provided opponent testimony regarding the bill (Attachment 18). He agreed that providing disclosure to a buyer is important, but noted that voiding a real-estate contract for nondisclosure creates significant problems for his agency. Responding to questions, he replied that a developer using a benefit district to create infrastructure is a tool used throughout the state; he allowed, however, that the delay of 12 years before an assessment is made could be problematic for buyers.
The Chair urged members to consider how to make the bill effective for citizens and government entities.
The Chair closed the hearing on HB2518.
The meeting was adjourned at 10:18 a.m. The next meeting is scheduled for Wednesday, February 16, 2022.
