Community Improvement Districts ("CIDs") in Missouri can provide business and residential areas with an innovative way to fund and enhance services and capital improvements while simultaneously spurring economic development. CIDs have many characteristics of homeowners' or merchants' associations. The establishment of a CID allows the owners of real property within the CID to collectively organize and coordinate efforts to beautify and improve their community in an effective and reliable manner.

CIDs can utilize several financing options to fund improvements and services. CIDs can impose special assessments, real property taxes, and fees. CIDs can also be combined with other funding methods to pay for the additional services and improvements.

1. ESTABLISHMENT OF DISTRICT
   1. Initial Petition

      In accordance with the Community Improvement District Act Section 67.1400 et.seq. of the Revised Statutes of Missouri ("RSMo"), as amended by House Bill 1636 of the 89th General Assembly (the "Act"), a municipality may commence proceedings to create a CID after a proper petition has been filed with the municipal clerk. The petition must be signed by:

      1. property owners collectively owning real property representing more than 50 percent of the assessed value of the real property located within the CID; and
      2. more than 50 percent per capita of all owners of the real property located within the CID.

      The petition is analogous to articles of incorporation and articles of association. It is the document which sets forth the purpose and duration of and limitation of powers on the CID. The petition must set forth an initial five-year plan specifying the type and estimated costs of the improvements and services to be provided by the CID. It must specify the size, area, duration and type of the CID, and the maximum rates of real property taxes and special assessments that may be imposed by the CID. The petition may set forth any limitations on the powers of the CID.

   2. Public Hearing

      After the initial petition has been filed and received by the municipal clerk, the municipal clerk is required to verify whether the petition meets all requirements of the Act. The municipal clerk must complete the verification within a reasonable time not to exceed 90 days. If the petition does not meet the requirements of the Act, the municipal clerk must notify the party which filed the petition of its specific deficiencies.

   3. Public Hearing

      Within 45 days after the petition has been verified, the governing body of the municipality in which the proposed CID is located must hold a public hearing on the establishment of the proposed CID. The municipality must give proper notice by publication and mailing in compliance with the requirements set forth in the Act.

   4. Establishment by Ordinance

      After the public hearing has been held, the governing body of the municipality may establish a CID by adopting an ordinance approving the proposed petition and establishing the CID as set forth in the petition.

   5. Amendments to Petition

      Amendments may be made to the petition without an additional public hearing if such amendments do not change the boundaries of the proposed CID and are made prior to the adoption of an ordinance approving the petition. If the amendments are made prior to the close of the public hearing, notice of the amendments may be given at the public hearing, otherwise notice must be given by mail and publication not less than 10 days prior to the adoption of an ordinance establishing the proposed CID and approving the amended petition. After the adoption of an ordinance establishing the CID and approving the petition, the petition may be amended only after a public hearing is held and proper notice is given regarding the proposed amendments.

2. GOVERNANCE OF DISTRICT

   CIDs are unique in that they can be either political subdivisions with the power to impose special assessments and real property taxes, or not-for-profit corporations, with the power to impose special assessments. Both political subdivision CIDs and not-for-profit CIDs are governed by a board of directors.

   1. Political Subdivisions

      A CID which is a political subdivision is governed by a board of directors that is either elected by the "qualified voters" or appointed by the municipality. The petition must specify which method will be applicable. The board must consist of at least five but not more that 30 directors, each of whom must be at least 18 years of age and either:

      1. an owner of real property or a business within the CID; or
      2. a registered voter residing within the CID.
         1. Election of Directors
            If the petition provides that the directors are to be elected, the directors are elected at large by the "qualified voters" of the CID pursuant to a mail-in ballot procedure. "Qualified voters" for the purpose of electing directors is defined by the Act as registered voters residing within the CID and owners of real property within the CID. The terms of the directors shall be equally divided between two and four-year terms based on the number of votes received; if an odd number of directors is elected, the director receiving the least number of votes serves a two-year term. Successor directors serve four-year terms. The procedural requirements of the election are set forth in the Act. If the petition provides for the election of directors, then the persons to serve on the initial board of directors may be stated in the petition instead of holding an election, which takes approximately 16 weeks to complete.

         2. Appointment of Directors
            If the petition provides that the directors are to be appointed by the municipality, the appointments are made by the chief elected officer with the consent of the governing body of the municipality. One-half of the directors appointed serve a four-year term, one-half serve a two-year tern, and if there is an odd number of directors, the last person appointed serves a two-year term. Successor directors serve four-year terms.

   2. Not-for-Profit Corporations

      A CID which is a not-for-profit corporation is governed by a board of directors selected in accordance with Chapter 355, RSMo.

3. REVENUE SOURCES
   1. Special Assessments

      The board of any CID, whether a political subdivision or not-for-profit corporation, can levy by resolution one or more special assessments against real property within its boundaries after a petition to the board requesting such an assessment has been properly submitted. The special assessment petition must be signed by:

      1. owners of real property collectively owning real property representing more than 50 percent of the assessed value of real property within the CID; and
      2. more than 50 percent per capita of the owners of all real property within the CID. The special assessment petition must also state the purpose, method of assessment, amount and expiration date of the special assessment, and the tracts of real property benefited by the service an/or improvements to be paid within the special assessment.

      In some cases there maybe various levels of benefits to be derived from the improvements and services funded with the special assessment by various types of property in the CID. To assure that the rate of the assessment will reflect the benefit received, the levy rate of the special assessment may vary for each class of real property established by the CID based on the level of benefit derived by each class of real property from services or improvements to be paid with the special assessment.

      CIDs may make multiple assessments based on appropriate petitions for proper purposes. The funds received from each special assessment must be placed in separate accounts and may not be commingled.

      Real property that is exempt from taxation pursuant to Section 137.100(5), RSMo, is exempt from CID special assessments, unless the owners of such property elect to participate in the CID. Such property includes that which is actually and regularly used exclusively for religious worship, for schools and colleges, or for purposes purely charitable and not held for private or corporate profit.

   2. Real Property Taxes

      Only CIDs which are political subdivisions have the power to levy real property taxes. A political subdivision CID may levy by resolution a tax on real property within the CID. A resolution levying a real property tax is not effective until it is approved by a majority of the votes cast by the "qualified voters' by mail-in ballots. For purposes of approving real property tax levies, "qualified voters" is defined as:

      1. registered voters residing within the CID; or
      2. if there are no registered voters residing within the CID, the owners of real property within the CID.

      Real property exempt form taxation pursuant to Section 137.100(2) and (5), RSMo, is exempt from CID real property taxes. Such property includes that owned by a city, county, or other political subdivision, as well as that which is actually and regularly used exclusively for religious worship, for schools and colleges, or for purposes purely charitable and not held for private or corporate profit.

   3. C. Other Sources

      In addition to special assessments and real property taxes, a CID is empowered to generate revenue by a number of alternative means. A CID can accept grants, gifts and donations of property, labor, services, or other contributions from any public or private source. It can also charge and collect fees and rents for the use of its real and personal property, as well as enter into agreements to provide services for a fee.

4. POWERS OF THE DISTRICT

   In order to achieve the goal to provide enhanced services and improvements to various types of communities with various needs, the powers of a CID as enumerated in the Act are very broad. Any one of the statutorily enumerated powers, however, may be restricted by an express statement of limitation contained in the petition to establish the CID.

   A CID has the power to make and enter into contracts with both public and private entities; enter into agreements with the municipality to eliminate any public nuisance within the CID; acquire and sell real and personal property; borrow money, issue bonds and other obligations, and loan money, employ or contract for services, including managerial engineering, legal, technical, clerical, accounting, security, cleaning, waste removal, and maintenance; and provide assistance and funding to construct, reconstruct, install, repair, maintain, and equip numerous improvements including, but not limited to the following; shopping malls, landscape, streetscape, convention centers, sidewalks, streets, water and sewer systems, parking lots and garages, waterways bus stops and other shelters, sculptures and fountains, and any other useful, necessary or desired improvement.

   A CID can assist the growth and development of business within the CID by utilizing its power to contract for or conduct economic, planning and marketing studies, as well as its power to provide advertising and marketing for the CID. If a CID is located in a blighted area, it may expend its revenues or loan funds to correct blighted conditions on private property within the CID; provided that the municipality has determined that such expenditure will remediate blighting conditions and serve a public purpose.

5. OVERSIGHT BY MUNICIPALITY

   Although the CID may only be established with the approval of the municipality by ordinance, once formed the CID will operate autonomously in accordance with its purpose and limitations, if any, on powers as set forth in the petition and the Act. The petition may only be amended after a public hearing and approval of the municipality by ordinance.

   A CID does not have its own police powers. For instance, if a CID desires to prohibit or restrict vehicular and pedestrian traffic on public property within the CID, it can do so only upon the consent of the municipality.

   Furthermore, the CID must submit to the governing board of the municipality a proposed annual budget for the municipality to make recommendations. However, the recommendations are advisory only, and no not constitute requirements to which the board must adhere.

   In the vent the municipality wants to maintain some control or oversight over the CID, mechanisms for such control or oversight can be set forth in the petition to establish the CID.

6. LEVEL OF MUNICIPAL SERVICES

   The municipality is obligated to provide the same level of publicly funded services to the CID that existed prior to its creation. The municipality must continue to bear the same financial burden of proving those services to the CID, unless the services are decreased throughout the entire municipality, and it must offer the same level of services to the CID as it does to areas that are not within the CID.

7. TERMINATION OF CID

   So long as a CID has no outstanding obligations, a CID may be terminated before the expiration of its stated term by the adoption of an ordinance by the municipality upon receipt of a proper petition and after notice and a public hearing. A petition is proper if it is filed by:

   1. owners of the real property collectively owning real property representing more than 50 percent of the assessed value of real property within the CID; and
   2. more than 50 percent per capita or owners of real property within the CID. The petition must also provide for a plan for dissolution and distribution of the CID's assets upon termination.

8. CONCLUSION

   A CID is clearly an excellent vehicle to enhance residential and commercial communities. Through its available funding options, a CID can organize multiple property owners to turn an unattractive economically underdeveloped or under serviced area into a restored and improved community that will attract shoppers, tourists, business owners and homeowners. The flexibility of the Act allows each CID to be custom designed with the municipality's approval to finance improvements, maintenance and services based on the needs and resources of each CID.

    

   COMMUNITY IMPROVEMENT DISTRICTS
   PROCEDURAL STEPS AND TIMELINE

   The following sets forth the steps to be taken and the time line to form a community improvement district and to levy real property taxes and/or special assessments. The fast track time line simply assumes that every step will be taken as quickly as possible. Available shortcuts have been noted.

   Fast Track	Slow Track
   Day 1	Day 1	FILE PETITION File with the municipality's clerk a proper petition signed by: property owners collectively owning more than fifty percent by assessed value of the real property within the boundaries of the proposed district; and more than fifty percent per capita of all owners of real property within the boundaries of the proposed district.
   Day 2-3	Day 2-90	VERIFICATION OF PETITION Municipal clerk must verify whether petition meets the requirements of the Act within the reasonable period of time, not to exceed 90 days after receipt of petition.
   Day 4-47	Day 91-134	NOTICE OF PUBLIC HEARING Mail Notice. Notice by mail must be given not less than fifteen days prior to the public hearing by sending the notice via registered or certified United States mail with return receipt to the address of record of each owner of record of real property within the boundaries of the proposed district. Publication Notice. Notice by publication must be given by publication in a newspaper of general circulation within the municipality once a week for two consecutive weeks prior to the week of the public hearing.
   Day 48	Day 135	PUBLIC HEARING Within a reasonable time, not to exceed forty-five days, after the receipt of the verified petition from the municipal clerk, the governing body must hold or cause to be held a public hearing on the establishment of the proposed district.
   Day 48	Day 136+	ESTABLISHMENT OF DISTRICT After the close of the public hearing, the governing body my adopt an ordinance to establish the proposed district.
   Day 48	Day 136-248	APPOINTMENT OR ELECTION OF THE BOARD OF DIRECTORS Political Subdivisions. If the district is a political subdivision, a board of directors must be appointed or elected to manage the district. The petition must specify appointment or election. Appointment. The board may be appointed by the chief elected officer of the municipality. This can be completed at the time the petition is approved. Election. The board is elected by the qualified voters of the district. The election procedure shall be as follows: The municipal clerk must specify a date on which the election shall occur which date shall be a Tuesday and shall not be earlier that the tenth Tuesday, and shall not b later than the fifteenth Tuesday, after the effective date of the ordinance adopted to establish the district. Candidates must file with the municipal clerk no later than the second Tuesday after the effective date of the ordinance establishing the district. The municipal clerk must publish notice of the election in a newspaper or general circulation within the municipality two times. The first publication date must be more than sixty days prior to the date of the election and the second publication date must be not more that thirty days and not less than ten days prior to the date of the election. NOTE: The initial board of directors may be stated in the petition in lieu of holding an election. This will save 10 to 15 weeks. Not-for-profit Corporations. If the district is a not-for-profit corporation, the election of its board shall be in accordance with Chapter 355 of the Revised States of Missouri. This will have occurred by the time the petition is approved. SPECIAL ASSESSMENTS & REAL PROPERTY TAXES The procedure for adopting resolutions for these funding methods are as follows:
   Day 49	Day 249	Special Assessments. Board of directors receives a petition authorizing a special assessment. The petition must be signed by: owners of real property collectively owing more than fifty percent by assessed value of real property within the boundaries of the district, and more than fifty percent per capita of the owners of all real property within the boundaries of the district, then, the Board of Directors must adopt a resolution imposing the special assessment.
   Day 49 To 161	Day 249 to 360	Real Property Taxes. Board of Directors adopts a resolution to levy tax upon real property located within the district and delivers notice of resolution to the election authority. Resolution is not final until the qualified voters approve, by mail-in ballot, the tax. The election procedure is as follows: Upon receipt of written notice of a district's resolution, the election authority shall specify a date upon which the election shall occur which date shall be a Tuesday, and shall be not earlier than the tenth Tuesday, and not later than the fifteenth Tuesday, after the date of the board's passage of the resolution and shall not be on the same as an election conducted pursuant to the provisions of Chapter 115, RSMo. The election authority shall publish notice of the election in a newspaper or general circulation within the municipality two times. The first publication date shall be more than sixty days prior to the date of the election and the second publication date shall be not more than thirty days prior to the date of the election.