Attempt To Rein In Kansas City Community Improvement Districts Goes To Council Next Week
One of my favorite topics might be on its way to being solved. I’ve written several times here and here about Community Improvement Districts and the ongoing debate about their use and abuse.
The City Auditor recently completed an audit, Community Improvement Districts: Strong Oversight Needed to Ensure Public Benefit, Transparency, and Accountability, and included recommendations on how to improve the process.
6th District Councilperson Andrea Bough has taken many of those recommendations and input from the community to craft a new ordinance 210565 codifying and improving the Community Improvement District approval, review, and accountability process. The ordinance will be heard next Wednesday, July 14th at the Neighborhood Planning and Development committee hearing at 1:30.
But let’s dive into the problem and what the ordinance will do if passed as is.
What Are Community Improvement Districts?
CIDs are a political subdivision that “may use collected revenues [such as sales taxes] and borrowed funds for a variety of purposes including, but not limited to, security, maintenance, refuse collection and disposal, landscaping, property acquisitions, and promoting tourism and business activities.”
Simply put, a group of businesses can join together, vote, and create a legal group to assess a sales tax to help their “community.”
Problem
In theory, Community Improvement Districts can serve a valuable purpose improving and maintaining commercial districts and many currently are.
But the lack of a process, accountability measures, and criteria for “public benefit” have left many of these CIDs operating in the dark and some property owners have abused the system to fund improvements they should probably be paying for themselves.
Additionally, there has been an explosion of single property Community Improvement Districts where only one property somehow is considered a “community” and can assess a sales tax to do improvements.
The City Auditor found:
that the “public does not support single owner CIDs”
“there is a risk that single beneficiary CIDs may not provide sufficient public benefits and that single beneficiary CIDs could subsidize prior poor maintenance practices.”
What Is Currently In Place?
One of the more shocking things is that Kansas City doesn’t really have anything on the books when it comes to Community Improvement District.
There is only one resolution, 130844 from 2013, where the city council roughly sketches out guidelines for CIDs but it lacks detail, is outdated, and doesn’t have the same teeth as an ordinance.
What Does The New Ordinance Do?
Puts the CID Requirements in Code of Ordinances. This makes the requirements law rather than mere guidelines that align with state law.
Tries to close the Blight Study loophole. One of the issues with “fixing blight” in the city determining whether an owner let the property become blighted to get public financial support.
“shall identify, to the extent reasonably deemed possible by the consultant doing the blight study, the owner(s) of the property at such time as the blighting factors and conditions might reasonably have been determined to first occur and remain unabated”
“The City Council shall not approve any CID requesting a finding of blight…with respect to any parcel within a proposed CID’s boundaries still owned by the owner(s) of the property at such time as the blighting factors and conditions might reasonably have been determined to first occur and remain unabated.”
Makes overlapping CIDs work together or get the votes. In some spots in the city, you might run into overlapping CIDs with additional sales taxes.
Under the proposed ordinance, if you want to have overlapping CIDs:
the sales taxes can’t exceed 1% and
the newer CID would have to receive support from the existing CID
or, you need a supermajority support on city council
Boards need to have 1 community member. Some of these CIDs just stack the board who governs the CID with business owners or people who are directly benefitting from the sales tax.
The new ordinance requires:
“No CID shall be approved unless at least one (1) board member is a member or representative of a neighborhood association or other community group existing within or adjacent to the boundaries of the proposed CID. Such board member shall have no financial interest in any real property or business operating within the CID.”
Single owner/parcel CIDs are really reined in.
Currently, single owner/parcel CIDs can receive approval for 20 years like any other CID but the new ordinance stipulates:
{Single parcel CIDs] limited to an initial term of five years with options for up to three (3) subsequent 5-year renewals upon Council approval based on performance and demonstration of on-gong financial need.
It seems many single owner/parcel CIDs but not limited to them use some of the revenues to remediate “interior blight.” This use will be limited to 25% of the CID revenues.
10% will go directly to Community Benefits. I believe this goes beyond the potential services the CID provides like cleaning, security, etc. It’ll be more like a Community Benefits Agreement.
Reporting and fines are included. This is a major recommendation from the City Auditor.
Many CIDs did not submit a report or budget as required by state law. This makes it crystal clear and establishes fines for lack of compliance.
What Can It Do Better?
Overall, this is a great step in the right direction. A few things I’d improve:
Define potential baseline uses of the CID funds beyond remediation of blight and construction.
Right now it’s not clear and I’m in favor of more guidance rather than less when it comes CIDs. There are some good examples currently in use that we could use.
I’d like to hear more about how the single property CIDs will be evaluated for public benefit. Right now it will still take some heavy public pressure and city council aversion in keeping unworthy single parcel/owner CIDs (which should probably be about 98% of them) unapproved.
What Does It Matter?
Even the best Community Improvement Districts represent taxation with very distant representation.
The dollars these CIDs raise is technically our dollars.
CIDs should be transparent, contribute to the public good, and be held accountable.
A patchwork of different sales taxing jurisdictions with questionable public benefit is simply bad governance and hurts everyday citizens.
We need CIDs to be reined in and the process reoriented to best benefit Kansas Citians.
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