LEGAL Q&A: Village Districts: A Commonly Misunderstood Municipal Entity

The information contained in this article is not intended as legal advice and may no longer be accurate due to changes in the law. Consult NHMA's legal services or your municipal attorney.

Village districts have a long history in New Hampshire. Many of village districts were created by special legislative act – i.e. the legislature passed a bill creating each of those districts and giving them certain powers – at a time before RSA chapter 52, governing village districts, was enacted.

Yet, despite that long history, there are probably no municipal entities more misunderstood than village districts. Often, they are thought of as subservient to a town or city, rather than as independent municipal entities. That can have big consequences, as we witnessed with the disbursement of CARES Act Funds. So, it’s important to get a firm understanding of village districts: how they operate and what they do.

What are Village Districts?

A:  RSA 52:3 specifies that a village districts is a “body corporate and politic, and shall have all the powers in relation to the objects for which it was established that towns have or may have in relation to like objects, and all that are necessary for the accomplishment of its purposes.” In other words, a village district is a political unit organized for a specific purpose. For example, to provide firefighting services to a certain area or to provide water or sewer service to a certain area.

This can make things complicated when the state or federal government provides funds as towns and cities don’t double dip on services, nor do the towns or cities have power over the districts. As such, it is important for village district officials to keep abreast of funding legislation and advocate for inclusion of village districts.

How are Village Districts Created?

A:  While it’s true that many village districts were created by special legislative act, many have also been organized (or reorganized) under the provisions of RSA chapter 52. In either case, the village district is created for a specific purpose. Often, these include firefighting or providing water and/or sewer to a certain area.

It’s important to know that village districts aren’t restricted to one municipality. They can – and many do – cross town and city boundaries. So, it may be the case that a water or sewer district provides water or sewer to more than one town. RSA 52:5 provides a mechanism to change the districts boundaries if, for instance, there is reason to enlarge the district as may occur during a regional water or sewer project.

Similarly, districts may serve only a small part of a town. This has the same monetary effect as crossing town boundaries – it allows those who avail themselves of the services to be the ones to pay for it, rather than the populace of an entire municipality, not all of whom may benefit from the service.

For What Purposes May Village Districts be Created?

A:  RSA 52:1 lists the permissible purposes for which a village district may be created. Note, however, that the legislature can, via special legislative act, create village districts for other purposes. Often, older districts that were created prior to the enactment of RSA chapter 52 have one of the listed purposes, and some have seen their special legislative acts amended to cause RSA chapter 52 to apply (thus lessening the burden on the legislature).

The permissible purposes listed in RSA 52:1 include: (a) The extinguishment of fires; (b) The lighting or sprinkling of streets; (c) The planting and care for shade and ornamental trees; (d) The supply of water for domestic and fire purposes, which may include the protection of sources of supply; (e) The construction and maintenance of sidewalks and main drains or common sewers; (f) The construction, operation, and maintenance of sewage and waste treatment plants; (g) The construction, maintenance, and care of parks or commons; (h) The maintenance of activities for recreational promotion; (i) The construction or purchase and maintenance of a municipal lighting plant; (j) The control of pollen, insects, and pests; (k) The impoundment of water; (l) The appointing and employment of watchmen and police officers; (m) The layout, acceptance, construction, and maintenance of roads; and (n) The maintenance of ambulance services.

What Happens After a Village District is Created?

A:  At the meeting to create the district, the voters can establish its name and select its officers. RSA 52:3. Those officers include a moderator, a clerk, three commissioners, a treasurer, and such other officers as may be directed by law or as the voters thereof may judge necessary for managing the district’s affairs. RSA 670:2. The moderator, clerk, treasurer and commissioners possess the same powers and perform the same duties in respect to the district’s meetings and business affairs that the moderator, clerk, treasurer and selectmen of towns respectively possess and perform in respect to like matters in towns. RSA 52:8. Those officials use those powers to perform whatever work falls within the scope of the reason for which the district was created utilizing the funds available to the district.

What Funds are Available to a Village District?

A:  The voters of the district vote to raise and appropriate funds at their annual meeting, just like towns. RSA 52:3. And just like towns, special meetings can only raise and appropriate funds if the meeting either attracts half of the registered voters or gets authorization from the Superior Court. RSA 52:4.

In addition to those funds raised by general property taxation, a village district may also raise additional funds via establishing a contingency fund. RSA 52:4-a. That fund is limited to a maximum of one percent of the amount appropriated exclusive of capital expenditures and amortization of debt by such village district during the preceding year. RSA 52:4-a.

Of course, districts may also accept and receive other funds as they are made available by the state and/or federal government.

How are Village Districts Dissolved?

A:  In time, development often leads to the exhaustion of the purpose of the village district. For example, modern LED streetlights are much cheaper to construct, maintain, and utilize than the gas streetlamps lit and maintained by lamplighters back in the early 1900s. No one need go around daily turning on the gas and igniting it, nor is there expensive gas plumbing that need be maintained. As a consequence, the cost to the town(s) in which the village district exists is so much lower and the work involved so much less that it may make sense to dissolve the district.

RSA 52:21 provides such a mechanism. It provides that any district operating under RSA chapter 52, may, at an annual meeting, by a 2/3 vote of its legal voters, terminate its existence and dispose of its corporate property.

Upon the dissolution of any such district, the property, real and personal, which is contained within the former boundaries of the dissolved district shall continue to be subject to taxation and betterment assessments for the purpose of paying any unpaid bonds, notes, bills or other obligations incurred while the district was in existence, in the same manner as if the said district had not been dissolved. The selectmen of the town or towns in which the district was situated shall assess the taxes and betterment assessments in the same manner as if the district had not been dissolved and shall have the duty, authority, and power to pay such bonds, notes, bills or other obligations after the moneys received from such taxes and assessments.

“Clarification Aug. 26, 2021: The required 2/3 vote of a village district’s legal voters to dissolve the district means only that 2/3 of those present and voting must vote to dissolve the district, not that 2/3 of the total number of legal voters in the district must vote to dissolve the district. Sugar Hill Improvement Ass'n v. Lisbon, 104 N.H. 40 (1962).”

Natch Greyes is the Municipal Services Counsel with the New Hampshire Municipal Association.  He may be contacted at 603.224.7447 or at legalinquiries@nhmunicipal.org.