posted June 29, 2017
Adjacent Ways - The "Other" Levy Fund
by Jared J. Young, CPA, Staff Associate II
School districts in Arizona levy property taxes for general operational and capital needs. Districts can also levy property taxes for additional needs pending voter approval. Additional needs include bonded debt repayments and operational or capital overrides. However, districts have access to an additional levy for adjacent ways that does not require voter approval. While the adjacent ways levy is less frequently used than the other levies, it requires a deeper understanding to remain compliant with state statutes.
What exactly would a District do with monies levied for adjacent ways? As defined by ARS §15-995, the adjacent ways levy can finance a narrow set of construction improvements to public ways on district or neighboring property. Statute specifically identifies the following improvements or construction projects listed below as allowable:
- Improve, maintain, or construct any public road adjacent to any leased or owned District property
- Improve, maintain, or construct an intersection of a public road adjoining any leased or owned District property within a quarter block
- Construct sidewalks, sewers, utility lines, roadways and other related improvements in or along the streets or intersections referenced in the two bullet points above
- Improve, maintain, or construct items on District property to assure safe entry and exit from the District property directly adjacent to the public road for buses and fire equipment
It is interesting to note that improvements or construction covered by the first three situations above occur off of District-leased or owned property. Compare that to the last situation above where the improvements or construction occur on District-leased or owned property but under very explicit circumstances. Adjacent ways levies can fund much needed improvements or new construction to enhance safety and the overall flow of people and vehicles in and around District property.
During the 2016 legislative session, the Arizona State Legislature amended §15-995 to add a provision to statute requiring Districts to submit adjacent ways projects to the School Facilities Board (SFB) for validation of allowability. All projects, no matter the dollar value, must be submitted to the SFB for validation. However, projects costing over $50,000 must be validated by the SFB before a District can expend adjacent ways monies on the project. Legislators felt the additional SFB validation was necessary to prevent abuses of adjacent ways funding, especially given adjacent ways levies are not approved by voters within the District. Happy levying!
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