SSDs are generally initiated by benefitting property owners within a self-designated geographical area. Once an improvement district is created, special fees are collected by property owners within the district to make, and pay for, improvements and services that go above-and-beyond the activities those normally paid for out of a municipality’s general-fund revenues. The fees are collected in the same manner as property taxes. SSDs are ultimately governed by the establishing municipality. Some municipalities create and appoint an advisory board to provide advice in connection with the construction, maintenance, and operation of improvements, and the furnishing of special services in the district.
There are roughly 1,000 SSD-type improvement districts in the United States. Some municipalities have multiple improvement districts. In the city of New York, for example, there are 46 districts. The operating budgets of these districts range from a few thousand dollars to tens of millions of dollars. The Minneapolis Downtown Improvement District, which is a SSD, operated on a roughly $6.5 million budget in 2014. The districts in New York collectively provided $77 million in supplemental services.
In summary, improvement districts provide communities with a unique economic development tool to provide concentrated services, such as cleaning streets, security, and streetscape enhancements, in a designated area.
Click here for a handy guide to learn more about SSDs in Minnesota.