Community Improvement Districts (CIDs)

Community Improvement Districts (CIDs) are a type of special assessment district. They are legislatively-enabled public-private partnerships (PPPs) between owners of commercial real estate and governments seeking to improve development conditions.

CIDs are geographically defined districts where commercial property owners use self-imposed property tax assessments to improve public rights-of-way.

Through CIDs, property owners and local governments cost-share infrastructure upgrades, beautify public spaces, and keep commercial areas safe. This, in turn, protects real estate performance, grows portfolio investments, and encourages economic development.

CIDs are in urban settings such as downtowns, suburban activity centers, and commercial corridors. Any area with concentrated commercial development is a candidate for a CID, such as:

• Office

• Retail

• Mixed-use

• Industrial

• Entertainment districts

CIDs are scalable to a variety of commercial districts, regardless of real estate product type. However, some of the most successful ones are in dense commercial submarkets.

CIDs are enabled through legislation at the state level and local levels. These legislative frameworks change from state to state, but the spirit and strategies remain the same. Understanding the complexity of the partnerships is key to success.

Contact us to see if a CID, or other special assessment district, is right for your area.

No two commercial districts are the same; therefore, no two CIDs are the same. The types of capital projects and programs vary; however, most generally fall into these categories:

Mobility
Most CIDs focus on mobility and transportation, such as expanding or maintaining roadways, developing transit options, improving traffic flow, and reducing congestion.

Beautification
Many CIDs make their areas more attractive and appealing through landscaping, streetscape enhancements, public art installations, and other initiatives aimed at creating a welcoming and visually appealing environment.

Public Safety
Some CIDs allocate resources to security patrols, surveillance cameras, and other safety enhancements that deter crime and improve the sense of safety among residents, visitors, and business owners.

Advocacy
CIDs represent their commercial real estate owners and investors and communicate those needs when working with government partners to improve their commercial areas.

CIDs allow commercial real estate owners to source additional capital by using their property assessments as “seed money” to attract government grants. This financial strategy is an excellent way to pay for projects that are too costly for the property owners.

Through a CID, commercial property owners first leverage their money among other owners in the district. They do this by pooling money collected through additional property assessments that are determined by their governing structure.

In Georgia, assessments typically range from $3 to $5 for every $1,000 in assessed property value. These funds seed development efforts and attract government grants.

Many government grants pay upwards of 80% of project costs, providing significant ROIs for CIDs. CIDs use grants to pay for planning, engineering, and right-of-way acquisition. Throughout the project development lifecycle, property owners - through CIDs - keep attracting government funds until projects are constructed. The results are healthy ROIs for participating property owners and sustainable financial models for commercial districts.

CIDs adopt organizational structures tailored to their unique commercial areas. Two prominent models include:

• District-centric
  These CIDs advance capital projects and offer services to meet the broader needs of business districts. Organizationally, they are staffed and generally community-facing. The vast majority of commercial centers operate this type of organizational model. District-centric CIDs rely on the financial participation of numerous property owners to be effective district-wide.
  

• Developer-centric
  In this model, CIDs are financing mechanisms for master developers. They pay for roads, sidewalks, and other public improvements for which the developer is responsible. As financing tools, developer-centric CIDs have no need for staff and organizational structures beyond their legal requirements. This CID model is also much more targeted with its stakeholders and usually limited to the property owner and affiliates.

CIDs are authorized by state law, which varies between states. In Georgia, CIDs are authorized under the state constitution and enabled by local governments.

CIDs are comprised of commercial property owners within a defined geographic area (the district) and are formed when a simple majority of eligible owners representing at least 75% of the total assessed property value consent to creating a CID.

CID formation is a deliberative process between the private sector and local government. Although there is rarely a one-size-fits-all approach to CID formation, the process includes three general steps:

Step 1: Early Exploration & Local Act Passage

First, gain an understanding of the potential for a CID by analyzing the commercial area. At this stage, either the local jurisdiction or the commercial property owners take the lead.

In Georgia, CIDs can only be formed in jurisdictions that have local acts. If a local act is not already in place, it must be passed during a state legislative session. Here, the jurisdiction takes the lead.

Step 2: Property Owner Outreach & Formation Campaign

The effort becomes more strategic once there is enough initial support from stakeholders. This may include the development of a formation committee to champion the CID and provide resources to fund the outreach campaign.

Step 3: Legal Formation & Approvals

Once property owners have consented and the proposed district meets the required amount of owners and values, local jurisdictions certify and approve the CID. Once approved, the new CID installs a board of directors and efforts begin.

Both Community Improvement Districts (CIDs) and Business Improvement Districts (BIDs) are special assessment districts.

Although many people use the terms interchangeably, there are differences in state laws. However, both CIDs and BIDs share the same spirit, enabling the business community to play an active role working with governments to address urban development needs.

How are “commercial properties” defined?

In Georgia, property that is used for commercial purposes other than residential, agricultural, or forestry.

Are multifamily properties or apartments eligible to participate in CIDs?

In Georgia, if a property is used for residential purposes, it is not eligible, nor subject to, CID assessments. This includes single-family homes as well as condominiums.

Is there a minimum number of properties needed to form a CID?

There are no minimums nor maximums defined by Georgia state law, but there are likely some practical issues to consider.

How can I learn more?

Easy. Simply Contact us.

Please note that this information contained herein is not intended as legal advice. Please consult with qualified legal counsel and Article IX, Section VII of the Georgia Constitution or other state constitutions.