THE PATH TO SPECIAL TAXING DISTRICTS BEGINS ON PRIVATE ROADS
© 2001 By Eugene Cederbaum
Those who live on private roads (there were 434 in Westport according to a 1996 town compilation) can take steps to reduce the pain of maintaining or improving their lanes and avoiding the angst often present when unanimous consent is needed before badly needed repairs can be undertaken and paid fairly and equitably by all homeowners.
State law permits those who reside on private ways located in Connecticut towns to form special taxing districts and thus be imbued with the same power to levy and collect taxes for road maintenance and repair as enjoyed by municipal tax assessors and collectors. Moreover, if the requirements of the law are met, the board of selectmen receiving petitions to form taxing districts have no discretion but to grant the request. Inexplicably, although the law has been on the books since at least 1801, relatively few districts have been formed by property owners on private roads.
If a petition is received by a board of selectmen setting forth the geographic boundaries and purposes of the proposed district and is signed by at least 15 registered voters, the board must schedule a meeting to approve the petition within 30 days. At the selectmen’s meeting, there must be a minimum of 15 voters residing in the proposed district present and prepared to vote on the petition. At least two-thirds of these voters must vote in favor of the district’s formation. This is the only prerequisite for approval by a board of selectmen.
Once formed, the district meets to elect officers, set a date for an annual meeting, pass by-laws, adopt a budget and fix the tax rate. Just like municipalities, it assesses taxes, which are due on July 1 of each year. The property tax for each home is determined by apportioning to each property owner his proportionate share of the budget by reference to the grand list of the district and each individual property assessment.
Unlike road associations where "assessments" are more often than not voluntary and thus cause enforcement problems (if they are collectible at all), taxes laid on property by special taxing districts are liens upon the property immediately by operation of law in the same manner as town taxes. If not timely paid, liens may be extended by a certificate recorded on the land records. If necessary, the district can foreclose upon the tax lien in the same manner as a town. Moreover, the clerk of a special taxing district has the same powers as town tax collector to collect and enforce the payment of any tax. Interest on unpaid taxes accrues at the rate of 18 percent per annum if not paid by Aug. 1 of each year.
Anyone who has experienced the frustration of attempting to focus neighbors on the need for road maintenance and repair or has pondered possible liability for injuries occurring on a private road in need of repair must certainly see the practical advantages of forming special taxing districts. Unanimity is not required either to form a district, to pass a budget or to levy and collect taxes. Very effective procedures exist for the collection of unpaid taxes.
The issue of liability for injuries on a private road is always of importance. This writer recommends that each homeowner insure against such a claim either by coverage under a homeowner’s policy, umbrella coverage or both. In addition, districts which this writer has formed have subsequently obtained liability insurance in the district’s name.
Lastly, almost as icing on the cake, since payments for road maintenance and repair constitute a tax, they are currently deductible as real property taxes on income tax returns, to the extent permitted by law for such taxes. Even the costs of forming the district may be incorporated into the first budget of the district and paid from tax collections. It should be noted that the IRS periodically and critically reviews the tax deductibility of special district taxes.
There are no "down side" risks to the formation of special taxing districts apparent to this writer, who has worked with property owners to form district for many years. The state legislature has simply done a good deed for those living on private ways. The formation of a district usually can be accomplished within 90 days.
If you have any questions about this article, please email to ecederbaum@wsdb.com .
