COMMUNITY IMPROVEMENT DISTRICTS
Community Improvement Districts (CIDs) are similar to homeowners or business associations. Establishing a CID allows property owners to organize and coordinate efforts to beautify, improve and develop their neighborhood in an effective manner.
CIDs provide several options to pay for desired improvements and services. CIDs may impose special assessments, property taxes, fees, and/or a sales tax, depending upon how the CID is organized. A CID can also leverage other funding sources to pay for the additional services and improvements.
ESTABLISHMENT OF DISTRICT
The City may begin the CID creation process once a petition from a business district or residential neighborhood is filed. The CID petition must be signed by: (1) property owners collectively owning more than 50 percent of the assessed value within the CID; and (2) more than 50 percent of all property owners within the CID. The CID petition describes the purpose, size, area, duration, organizational form and the powers of the CID, as well as an initial five-year plan describing the type and estimated costs of the improvements and services to be provided. The CID petition must specify the maximum property tax and special assessment rates that may be charged by the CID, as well as other requirements required by the law. The petition may also identify any limitations on the CID.
After the CID petition has been received by the City, the City must determine if the petition meets the legal requirements. The City must complete this verification within 90 days.
Within 45 days of the date the petition is verified, the City must hold a public hearing about the proposed CID. The City must give proper notice of the public hearing.
After the public hearing, the City may create a CID by adopting an ordinance approving the CID petition and establishing the CID.
Amendments may be made to the CID petition, without an additional public hearing, if the amendments do not change the boundaries and are made before approval of the CID ordinance. If amendments are made prior to the close of the public hearing, notice of the amendments may be given at that public hearing; otherwise, proper notice must be given at least 10 days before approval of the CID ordinance. After approval of the CID ordinance, the CID petition may be amended only after a public hearing and proper notice is given.
CIDs can be either: (1) “political subdivisions,” with the power to impose sales taxes, special assessments, property taxes, and business license taxes; or (2) not-for-profit corporations, with the power to impose special assessments. Both types are governed by a board of directors.
A “political subdivision” CID has a board of directors, which is either elected by the “qualified voters” or appointed by the municipality. The CID petition must specify which method will be used. The CID’s board must have between 5 and 30 directors. Each director must be at least 18 years of age and either: (1) an owner of property or of a business within the CID; or (2) a registered voter residing within the CID.
If the CID directors are to be elected, they are elected at-large by the “qualified voters” of the CID. “Qualified voters” are registered voters residing within the CID and the owners of taxable property within the CID. The initial directors’ terms shall be equally divided between two and four-year terms, based on the number of votes received; if an odd number of directors is elected, the director receiving the least votes serves a two-year term. Future directors serve four-year terms. If the CID petition includes the election of directors, then the persons serving as the initial board of directors may be listed in the petition, instead of holding an election.
If the CID directors are to be appointed, the appointments are made by the chief elected officer with the consent of the municipality’s governing body. One-half of the directors appointed serve a four-year term, one-half serve a two-year term; however, if there is an odd number of directors, the last person appointed serves a two-year term. Future directors serve four-year terms.
A not-for-profit corporation CID is governed by a board of directors selected in accordance with State law (Chapter 355, R.S.Mo.).
A CID board can levy one or more special assessments on property within its boundaries. A special assessment petition must be signed by: (1) owners of property collectively representing more than 50 percent of the assessed property value within the CID; and (2) more than 50 percent of the property owners within the CID. The special assessment petition must include the purpose, method of assessment, amount and expiration date of the special assessment, and the property benefited by the service and/or improvements.
Different types of property may receive different benefits from the improvements and services funded by the CID. The special assessment levy rate may vary for type of property based on the benefit level to each class of property.
Community Improvement Districts may make multiple special assessments for eligible purposes. The funds from each special assessment must be placed in separate accounts.
Tax-exempt property is also exempt from CID special assessments, unless the owners of such property elect to participate in the CID.
Only a “political subdivision” CID may levy property taxes within the CID. A resolution levying a property tax is not effective until it is approved by a majority of the votes cast by the “qualified voters.” “Qualified voters” are either: (1) registered voters residing within the CID; and (2) the owners of taxable property within the CID.
Tax-exempt property is exempt from CID property taxes.
A “political subdivision” CID may impose a sales and use tax on all eligible taxable retail sales within the CID. The sales and use tax may be at a rate of one-eighth of one percent, one-fourth of one percent, three-eighths of one percent, one-half of one percent or one percent. The CID’s sales and use tax revenues may be used for any eligible purpose. The CID’s board must submit a proposal to authorize the proposed sales and use tax to the CID’s qualified voters. If a majority of the votes cast are in favor of the sales tax, then the sales and use tax is adopted.
A CID may generate revenue by a number of alternative means. A CID can accept grants, gifts, and donations of property, labor, services or other contributions from any public or private source. It can also charge and collect fees and rents for the use of its real and personal property, as well as provide services for a fee.
POWERS OF THE DISTRICT
The powers of a CID are very broad. Any of the statutory powers may, however, be restricted by a statement of limitation in the petition to establish the CID.
A CID has the power to: make and enter into contracts with both public and private entities; enter into agreements with the municipality to eliminate any public nuisance within the CID; acquire and sell real and personal property; borrow money, issue bonds and other obligations, and loan money; employ or contract for services, including managerial, engineering, legal, technical, clerical, accounting, security, cleaning, waste removal, and maintenance; and provide assistance and funding to construct, reconstruct, install, repair, maintain, and equip numerous improvements, including, but not limited to, the following: shopping malls, landscape, streetscape, convention centers, sidewalks, streets, water and sewer systems, parking lots and garages, waterways, bus stops and other shelters, sculptures and fountains, and any other useful, necessary or desired improvement.
A CID can assist the growth and development of business by conducting economic, planning and marketing studies, as well as providing advertising and marketing for the CID. If a CID is located in a blighted area, it may use its revenues or loan funds to correct blighted conditions on private property within the CID, provided that the City has determined that it would remediate blighting conditions and serve a public purpose.
OVERSIGHT BY MUNICIPALITY
Although the CID is created by the City, once it is formed, the CID will operate independently of the City. The CID petition may only be amended after a public hearing and approval of an ordinance by the City.
A CID does not have its own “police powers.” For instance, if a CID wants to prohibit or restrict traffic on public property within the CID, it can do so only with the consent of the City.
The CID must submit a proposed annual budget to the City to allow the City to make recommendations. The City’s budget recommendations are advisory only. If the municipality wants to maintain some control or oversight over the CID, mechanisms for such control or oversight may be contained in the petition to establish the CID.
LEVEL OF MUNICIPAL SERVICES
The City must continue to provide the same level of services that existed before to the CID’s creation. Unless the services are decreased throughout the entire community, the City must offer the same service level available in other neighborhoods.
VII. TERMINATION OF CID
If a CID no longer has any outstanding obligations, the CID may be terminated by the City after receiving a proper petition and giving notice of and conducting a public hearing. The CID termination petition must be filed by: (1) owners of property collectively owning property representing more than 50 percent of the assessed value of property within the CID; and (2) more than 50 percent per capita or owners of property within the CID. A CID termination petition must include a plan for dissolution and distribution of the CID’s assets.
VIII. ADVANTAGES OF CIDS
- Enhanced Services and Improvement, public capital improvements, security, cleaning and maintenance, marketing and promotion, special events, shuttle services, parking lots/garages, landscaping, public art and historical exhibits.
- Legal Powers include the ability to enter into contracts with both public and private entities; acquire and sell real and personal property, borrow money, issue bonds and other obligations, loan money, employ or contract for services, and provide assistance and funding for improvements.
- Major Decisions and Limitations Made by Affected Partners include the area and size of the district, method of assessment, maximum tax or assessment rates, eligible use of collected revenues, duration of the district, number, qualifications and selection of the board of directors.
- Increased Flexibility in the sense of either assessments or taxes (or both), any assessment formula that allocates costs to properties in relation to the benefits received, allows for different levels of assessment in different areas of the district to provide a “package” of service/improvements appropriate to each sub area, and may fund private capital improvements if located in a blighted area if is serves a public purpose approved by the City.
WHY ESTABLISH A COMMUNITY IMPROVEMENT DISTRICT (CID)?
As entrepreneurial enterprises, CIDs are expected to “channel private sector energy towards the solution of public problems”. CIDs have the opportunity to make changes to the public image of commercial areas by putting up colorful signs, public plantings, better snow removal, increasing trash pick-ups, increasing security in an area and making façade improvements. In other cases, the joint marketing of an area can draw new and increased visitors, aid in the creation of new businesses by supplying low-interest loans, or acting as a concerted voice in the local political process for improved services and resources.
By applying these initiatives, and a variety of other economic revitalization techniques, CIDs have been credited with drawing from a common set of private resources for the improvement of distressed areas, improving the common real estate climate and injecting a sense of pride by the owners of property and businesses in the area.
A CID is a valuable tool to enhance residential and commercial neighborhoods. A CID can organize property owners to turn an underdeveloped or under-serviced area into a vibrant and growing neighborhood. This flexibility allows a CID to be custom designed for the improvements, maintenance, and services based on the needs and resources of each neighborhood.