§ 92007 District Debt After Dissolution

• •If a special district (like a small local government area) is shut down but still owes money, the city or county must take over to pay off that debt.
• •The city council (if the district is inside a city) or the county supervisors (if the district is mostly in a county) become the bosses of paying off the debt.
• •They can raise taxes to collect the money needed to pay back what the district owes, including any extra money for interest.
• •This only happens if the district is being closed down but still has bills to pay.

A small local water district is shut down because it’s no longer needed, but it still owes $100,000 for a loan it took to fix old pipes.

Since the district is inside a city, the city council must now act like the bosses of the old water district. They can raise taxes to collect the $100,000 (plus any extra for interest) to pay off the loan. They can’t use the money for anything else—just to pay the debt.