Friday, May 08, 2009

Involved Springfield Citizen Kick Starts City Council Discussions on Community Improvement Districts

An involved Springfield citizen spoke to the City Council under the auspices of commenting on Council Bill 2009-099. The City Council will vote on that bill at their May 18 Council meeting.

But, Fred Ellison's comments had little to do with the bill he signed up to comment on, instead, Ellison addressed points involved in the philosophical debate surrounding the more general use of Community Improvement Districts (CIDs).

Why is it important?

Well, if I may refresh your memory, back at the Council luncheon on April 28, following some comments on CIDs by Councilmen Nick Ibarra and Doug Burlison, Mayor Jim O'Neal advised City Manager Greg Burris that the Council would like to engage in a philosophical discussion on the issue of CIDs before they vote on many more of them.

"It's (the CID) an interesting political creature and I understand there's some philosophical discussion behind that," O'Neal said at the luncheon. "We'd (the City Council would) like to have that discussion before we vote on many of these."

At the luncheon meeting, a majority of the City Council voted to authorize the Mayor to sign a petition to create the Shoppes at James River (SJR) Community Improvement District. That step is a necessary, preliminary step for the creation of the SJR CID but, it did not actually create the district, that will be considered by Council at a later date. Councilmen Ibarra and Burlison were opposed to the harbinger of the creation of such a district.

Councilman Doug Burlison expressed a concern about the continuing approval of such districts' potential to have a negative effect on passage of any sort of a sales tax, which might be initiated, as a cure for the police and firefighter pension plan (See: "JackeHammer:" CID, TIF, & TDD; Tools in the City's Tool Box).

Councilman Nick Ibarra didn't like the idea that a citizen frequenting a business within a CID receives no notification they are paying a higher sales tax rate at the CID business than what they would pay at a competing business, not located within a CID (See: above noted previous entry).

In light of these future, requested discussions, having a citizen taxpayer define his own philosophical objections to the use of CIDs should be of great interest to the City Council. So, for the sake of future reference, I felt it might be valuable to lock Mr. Ellison's comments into a more accessible and permanent form.

Ellison brought up some interesting points in relation to Community Improvement Districts. He noted that only property owners within any given CID have a say in the creation of the CID; People leasing properties within a proposed CID have no voice in the creation of the district; and a CID creates a competitive advantage for the businesses within it.

"You're allowing a business, another entity, to use the taxpayer to pay for improvements on their properties," Ellison said. "That's an expense that that business no longer has to bear on itself and, therefore, it gives them a competitive advantage over other businesses that may be existing within the same line of business."

Ellison also suggested that businesses within a CID should post notice to their customers that they are paying a higher sales tax rate within the district.

"I think that businesses within a CID should be forced to disclose the fact that they're charging a higher sales tax rate than other businesses within the City of Springfield," Ellison said.

Another suggestion Ellison had was that there should be a minimum number of property owners. He noted, in the case of the CID discussed at the prior City Council luncheon, there was only one property owner, other than the City's own interest in the district.

"I don't think that's what the State statute intended," Ellison noted.

While Ellison did not note it, it could be noted that, generally, a "community" implies more than one or even two involved parties. According to Ellison, the State statute does not define how many participants must be involved in order to form a CID.

When a "community" of business owners wants to initiate a CID, it is generally initiated because it enables the property owners within the CID to ask registered voters within that district to approve an additional sales tax, specifically earmarked for developmental improvements to the property in question. Supposedly, it pertains to improvements which would be beneficial to the entire "community" zoned within the particular district.

As Ellison noted, over 50% of the property owners in both number and assessed value are required to petition to create the CID, however, only the registered voters within the CID are allowed to vote for approval or denial of the imposition of the additional sales tax within their district, though, in most or, at least, many cases, other taxpayers within the City, who did not have a vote on the sales tax rate, but, who might frequent the businesses within it, have had no say in the higher tax rate and are not notified of its existence.

In the case of the Shoppes at James River CID, there was only one property owner besides the City of Springfield, and that is why it was required that the Mayor be authorized to sign the petition calling for the formation of that Community Improvement District.

If the City Council later approves a CID sales tax initiative be placed on the ballot for the Shoppes at James River CID and it succeeds, the SJR district would use the proceeds of the additional sales tax to improve a storm water basin owned by the City, and take over the ongoing maintenance of the basin.

Without an initial 1 percent CID sales tax, Developer Tom Rankin has said he would be unable to pay the $300,000 required by the City for the developments' initial use of the basin, the improvements which would be required to it, and the ongoing maintenance they have agreed to provide for that basin.

"We can't afford to spend that kind of money without getting some return," Rankin said at the luncheon (again, see: "JackeHammer:" CID, TIF, & TDD; Tools in the City's Tool Box


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