City Recorder Charmaine Childs has decided to walk tall and carry a big stick as far as delinquent payments in special improvement districts are concerned.
That tough attitude has paid off. During the past year, Childs has collected approximately $75,000 in delinquent payments owed to the city."I guess that's human nature - `if no one is going to make me, I won't pay,' " Childs said. "There were districts that should have been paid off but hadn't.
"The city had paid them off, which meant that all residents had advanced the money. With as many as there were on the books, I wanted to clear them up. There's money out there that belongs to the city, and that could be used for capital improvements benefiting all residents."
In theory, residents living outside a special improvement district should not have to pay for those improvements. Pleasant Grove officials found out that it rarely worked that way. When members of a district defaulted on their payments, the city made the payment, which meant tax revenue was subsidizing the improvement district.
Special improvement districts are created to help residents and landowners in an area put in structures such as sidewalks, curbs, gutters, sewers and streets without having to pay for them up front. A number of situations may create the need for a district - a subdivision developer goes bankrupt, a business faces significant construction costs or residents of a neighborhood may decide they'd like to have sidewalks or hook up to a sewer system.
A request is made to the city for help, and a public hearing is held to provide in formation about the proposed district to those who will be affected by it. Potential members of the district then must approve creation of the district by a majority vote.
If approved, the city borrows money to pay for the improvements, usually at low interest rates. The city also pays associated legal and engineering fees, and arranges for the work to be done. Members of the district repay the city over a 10-year period in monthly or yearly installments.
A typical yearly assessment in a special improvement district is about $700, although this figure varies depending on the nature of the improvements made. Non-payment by some members of a district does not affect the rate paid by other members. However, when the loan becomes due, if collection has not been 100 percent, the city is required to pay it off. Childs said that money comes out of the city's savings.
Due to Childs' efforts, it has become much more difficult - and more costly - for residents to default on payments.
Childs' method of pursuing payment starts out tamely and becomes progressively tougher. First, delinquent members get a "gentle reminder" letter from Childs requesting payment. If there is no response, Childs sends a second letter requesting payment within 10 days. If that fails to get a response, they are sent a letter from the city's attorney, which Childs characterized as "less friendly," and which she credits with helping her to clear two delinquent districts last year.
If the attorney's letter does not do the trick, Childs does not hesitate to place a lien on the property and begin foreclosure proceedings, which the city has the right to do. Some Pleasant Grove properties that have had liens placed on them have been vacant lots; others have had homes on them.
"Basically the mayor and council want to be able to work with people," Childs said. "We try to work with people by sending them letters, calling and trying to arrange a payment schedule. But the further behind they get, the worse it is for me as well as them."
At present, Pleasant Grove waits two years before beginning legal proceedings against a delinquent member of a special improvement district; some cities, such as American Fork, wait five years before taking legal action. However, Provo, which had a significant collection problem seven to eight years ago, begins legal action after only one year, as allowed by state code.
"We send out attorney's letters and second notices, and if we don't get a response we wait for a tax sale (usually held in spring)," said Charlene Behunin, special assessments clerk for Provo. "That has kept our collection problem at a very minimum."