Community Improvement Districts (CID) A Tool for Local Business Investment

on October 12, 2012

In 2009, when the state approved legislation creating Community Improvement Districts (CIDs), it was with the intention to provide an additional tool for communities to assist in economic development. CIDs allow the creation of special retail districts where up to an additional 2% sales tax could be charged. The additional sales tax revenue is then transferred back into the project to cover specific categories of public, semi-public and private development costs. The maximum term for a CID is 22 years.

For years, communities like Liberal have struggled to find a tool to help retailers establish or expand their businesses. CIDs are good economic development tools for communities like Liberal because it encourages business investment in a way that does not add to the burden of property taxpayers.. For example, CIDs:

• Shift financial incentives for development to the customers of the businesses through special taxing districts that pay for public, semi-public and private improvements. These districts offer a better financial incentive program for business development and move some of the burden to customers, but do not spread the financial incentive costs to all taxpayers.

• Help ease budgetary concerns by generating new state and local sales taxes and increasing the commercial tax base. These projects likely will include “infill” development that may revitalize aging areas of the city.

• Do not involve public capital. Owners or developers borrow from private sources, such as banks, or use private equities.

• Are available to any business located within the Liberal city limits if they collect sales tax. Projects must have a minimum of $200,000 of eligible expenses to qualify for Community Improvement District financing.

CIDs have a place in Liberal’s economic development policy. We will use them where appropriate to encourage retail business development. Liberal has a long history of strong retail sales and profitable businesses. CIDs will help this already strong sector of our economy expand and become more diverse.

If you have specific questions about the City’s CID Policy or if you are interested in establishing or expanding your business in Liberal I encourage you to give me a call at (620)626-2255.