NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.

The LFC is only preparing FIRs on bills referred to the Senate Finance Committee, the Senate Ways and Means Committee, the House Appropriations and Finance Committee and the House Taxation and Revenue Committee. The chief clerks are responsible for preparing and issuing all other bill analyses.

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(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates/Conflicts with/Companion to/Relates to

SOURCES OF INFORMATION

LFC Files

Local Government Division (LGD), Department of Finance and Administration

No comments were received from the Economic Development Department

SUMMARY

Synopsis of HFl Amendment

The amendment changes requirements to create a business improvement district from a petition of "the owners of 51 percent of the real property within a proposed district, measured by the value of the acreage of real property for property taxation purposes" to "ten or more business owners comprising at least 51% of the total business owners in the proposed district or whenever five or more real property owners comprising at least 51% of the total real property owners in the proposed district, exclusive of any real property owned by the United States or the state or any of its political subdivisions."

Synopsis of HJC Amendment

The amendment corrected a technical error and adds an emergency clause.

Synopsis of HGUAC Amendment

The House Government and Urban Affairs Committee amendment adds commercial districts to the list of areas in which the bill promotes revitalization.

Synopsis of Bill

The bill amends the Business Improvement Act in order to provide municipalities and businesses a more flexible revitalization tool for downtowns and central business districts. The proposed amendment allows creation of a business improvement district (BID) through petition of a majority of business owners within the proposed district or through petition by "a majority of the owners of 51 percent of the real property within a proposed district, measured by the value of the acreage of real property for property taxation purposes." When a BID is created, a benefit fee would be assessed on all real property or businesses located within a district, except government, nonprofit or residential property. The assessed fee would be determined by formula:

* If a district was created by a majority of real property owners, the amount owed by a commercial tenant would be proportion to the square footage of space that the tenant rents but nor more than 75 percent of the total fee assessed on the property. The property owner would pay the remaining 25 percent.

* If a district was created by a majority of businesses, the fee would be collected with the owner's property taxes and businesses would be assessed for 100 percent of the business fee.

Upon creation of a BID, the city council would appoint a management committee to implement the BID plan composed either of an existing downtown community or central business district revitalization nonprofit corporation that operates within the district or of nominees submitted by the owners of businesses and the owners of real property located in the district.

Significant Issues

According to the LGD, currently municipalities pay for improvements to BIDs or they split the costs with the property owners benefitting from the improvements. Property owners are assessed in proportion to the benefit they receive from the improvements. However, this legislation provides for a shift in the total tax burden from the municipality to the business owners and the assessments may be based on valuation of property not benefit of improvements.

FISCAL IMPLICATIONS

LGD anticipates no fiscal impact from this bill.

ADMINISTRATIVE IMPLICATIONS

LGD anticipates a potential administrative impact for county treasurers from this bill to the extent that they are responsible for billing, collecting and accounting for the BID fees.

TECHNICAL ISSUES

LGD inquired whether, if the assessment is billed along with property taxes, will the administrative one percent fee collected by the counties be applicable? Will penalty and interest be applicable to the assessment if not paid by property owners in a timely fashion?

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