District Development Strategy: An Instrument for Attracting Financial Resources in Specific Areas
A Fresh Take on Special Improvement Districts (SIDs)
When a community, neighborhood, or business district desires more public services and improvements than what’s currently offered, it’s time to explore a Special Improvement District (SID). Most states started embracing SIDs legislation in the 1990s, following Canada's lead from 1970. In Ohio, state law explicitly allows SIDs creation since June 27, 2000, as laid out in the Ohio Revised Code (ORC) 1710.02.
What Exactly is an SID?
An SID is essentially a designated area where property owners pay extra taxes or fees for specific district services or improvements. Government-owned or church properties are exempt unless they expressly opt-in. SIDs can exist within municipalities, townships, or a mix of both.
Creating an SID
To establish an SID, real property owners within the proposed area or an existing qualified nonprofit corporation must petition the local legislative authority. Two main paths exist for starting an SID:
- Gather signatures from at least 60% of the property frontage (excluding church or government properties).
- Obtain consensus from at least 75% of the land area within the proposed SID.
For energy improvement projects, all property owners within the district must sign the petition. Upon receiving the petition, the legislative authority approves or denies it within 60 days. If a nonprofit corporation doesn't exist already, one must be created, and its articles of incorporation must be approved by each participating political subdivision.
Working an SID
A board of trustees or directors oversees the SID. In a municipal SID, the mayor and a municipal appointee serve as directors, along with at least three additional directors who own property within the SID.
These directors orchestrate the implementation of a district-benefitting service and improvement plan. Proposed plans, submitted with the petition, detail the district's initial formation, operation, and governance. The plan may outline:
- Employment and professional services hiring
- Insurance contracts
- Office space and equipment procurement
- Other actions for initial district organization
Improvements and services can range from lighting, signage, and parking lots, to holiday lighting, landscaping, and snow removal. Funding for these enhancements comes from special assessments added to existing property taxes collected by participating municipalities and townships.
The SID Advantage
SIDs empower motivated property owners to shape their community with no extra burden on local government funds. SIDs offer benefits to the community at large while enabling the community to tax itself for specific improvements and services within its boundaries.
Digging Deeper
For more information about SIDs, check out the Ohio Revised Code (ORC) [1] or delve into scholarly works like Jerry Mitchell's 2008 book, Business Improvement Districts and the Shape of American Cities [2]. Guidance on SID-specific processes in Ohio localities can be found in various resources, such as Squire Sanders’ Ohio Public Law Update [3].
[1] https://codes.ohio.gov/about[2] https://doi.org/10.1177/0891242409347101[3] Squire Sanders Legal Counsel Worldwide Network. n.d. "Ohio Public Law Update, Special Improvement Districts."
The Special Improvement District (SID) is primarily financed through special assessments added to existing property taxes in participating municipalities and townships, signifying a significant role for the finance industry in its operations.
These SIDs can bring about various business improvements, such as lighting, signage, and parking lots, creating opportunities for local businesses within the district.
