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(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to HB450.

SOURCES OF INFORMATION

LFC Files

Economic Development Department

SUMMARY

Synopsis of Bill

The bill amends the Business Improvement Act in order to provide municipalities and businesses a more flexible revitalization tool for down towns 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 not more than 75 percent of the total business improvement benefit fee. 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 assessed to the building.

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. If a BID is created by petition by a majority of business owners, the BID plan would have to include a description of the real property and businesses included in the district and provide a formula used to assess businesses in the district.

Significant Issues

According to comments from the Local Government Division (LGD) of the Department of Finance and Administration on similar provisions in HB 450, 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.

ADMINISTRATIVE IMPLICATIONS

There is 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.

DUPLICATION

The language in this bill generally duplicates the language in HB450.

TECHNICAL ISSUES

Does the language in Lines 18 and 20, page 4 allow for the owners of 26 percent of the real property in the district to establish a BID? (i.e. "a majority of the owners of 51 percent of the real property...")

DH/njw