Community improvement districts in the City of Bel Aire.

• Author: Lasher, Ty
• Position: Solutions

A newly authorized option provides one city with answers to a financing challenge.

Following the housing crisis of 2008, the City of Bel Aire, Kansas, was struggling to increase both residential and commercial development. At the same time, the city needed to address cost and financing issues from two development projects. In the past, these concerns would have impeded the success of those projects, or blocked it altogether. But in 2009, the Kansas Legislature approved the Community Improvement District Act, authorizing municipalities to impose and collect a sales tax on transactions within a defined district, and use the funds generated to finance a project within the district. It also created the ability for jurisdictions to levy and collect special assessments. Bel Aire found ways to use its new financing flexibility to create community improvement districts that would bring the development projects to successful conclusions.

THE COMMERCE PARK

Bel Aire created its first CID to manage the infrastructure needed for the Sunflower Commerce Park, an 800-acre industrial park that was owned and developed by the city. Phase 1 of the city's plan, created in 2012, involved making 155 acres into "shovel ready" sites with access to streets; water, wastewater, gas, and electric services; signage; and a railroad. The developer typically bears the cost of bringing utilities, amenities, and infra structure to a development by petitioning the municipality to install them and levying the costs as special assessments that will be paid by the owners of the lots. That wouldn't work for Sunflower Commerce Park, however, since the city was the landowner and developer.

After reviewing options with its financial advisor and bond counsel, the city chose to establish a CID to conform to the boundaries of the Sunflower Commerce Park. The district was created at the beginning of the development process, when the land was still held by a single owner, making the CID creation process less complex than it would have been later, when the properties were in the hands of multiple owners. The CID petition stated that the goal of the district was to construct identified projects, including streets, gas, electric, signs, and rail system improvements, and that the costs of all such projects would be spread as special assessments. To avoid business owners' concerns about an unanticipated tax, the petition clearly stated that no CID sales tax was proposed for the district.

The ability to spread all infrastructure costs as special assessments has made rapid development possible within the park. Less than two years after creating the CID, Phase 1 boasts four new businesses and has 50 acres...