What do Community Improvement Districts and Angel Investors Have in Common?

Quite a bit. Both are interested in a return on their investment, and both are willing to risk capital to seed good ideas.

Typically, the urban planning and financing space requires you to think like a government…..Know the rules, follow procedures, and mitigate risk. Operating in that mindset is important if you want public funding to come your way.

But CIDs are different. They are essentially the angel investors of infrastructure development.

CIDs enable commercial districts to raise capital. That capital is deployed at the earliest stages of infrastructure development when it's unproven and risky. CIDs seed projects and develop proof of concept, reducing the cost and mitigating risk for their local governments.

The early stage of the process is where CIDs offers two clear value propositions for tax-paying members.

First, CIDs as conveners and advocates

CIDs are often located in cities or counties with geographic similarities but distinctly different perspectives. In some cases, CIDs span multiple jurisdictions. At times, this leads to different priorities.

While this is not an issue when projects are smaller and geographically limited to one city, it becomes more challenging when projects are larger, more technically complex, and span jurisdictional lines. This requires multifaceted collaboration, education, and consensus building.

Albeit more intensive during the earliest stages, advocacy extends through the entire project lifecycle in order to maintain support. The CID’s value proposition in this context is to convene and advocate collective buy-in from the cities for projects that would normally not get their attention.

Second, CIDs as seed funders and early-stage project developers

A CID’s resources are typically more limited in its early years and grow over time. During this time, the CID does not have the financial capacity to fund projects from concept to construction. Even if it did, it should only do so very judiciously.

Instead, resources are better spent to identify, seed, and otherwise prove the need and solution. This reduces the public sector’s up-front risk. Once seeded and scoped, projects may be handed to the cities to ‘own’ the subsequent stages - design through construction - while the CID participates as desired.

As the project evolves through the development pipeline, most CIDs continue to add value by raising even more capital for project development and, ultimately, delivery to market.

So the next time you consider a CID, Business Improvement District (BID), or other special assessment districts, think differently about their value propositions.