How To Be A Successful Special Taxing District

Posted on January 22, 2021

Two people walking down a busy main street

This article was written by Rachel Witt, Executive Director of the South Grand Community Improvement District. Read all the articles in Rachel’s Lessons & Partnerships in Community & Economic Development series.

Special taxing districts designated for a main street all serve the same purpose, to provide communities resources that their city, town, village, or county cannot afford. Taxing districts’ goal for a main street is to assist with cleanliness, safety, capital improvements, events, marketing, and branding of a community. A special taxing district comes in many forms: Community Improvement District, Business Improvement District, or a Special Business District. A successful taxing district is determined by the structure of the district.

Many communities decide to establish a taxing district without determining its structure first, a serious mistake. Knowing the needs and wants of the community is important and crucial to be successful because you will build your district based on what the community perceives as important and necessary.

All main street and/or neighborhood needs are complex and unique as far as the services that are required to be successful, so your first step is to communicate with your stakeholders to determine their goals, and ultimately, the district’s goals. Determine also how success would be measured since success is determined by the community, especially those who are paying into the taxing district.

If goals become too lofty, burnout can occur within your board and a downward spiral can happen. Today, board development and engagement are difficult due to additional commitments with other committees and additional board positions, as well as work-life balance. Thus, determining the structure of your taxing district and setting goals early on will help define success.

A successful taxing district is created for the business and property owners within the determined boundary. They must create a strategic plan for the taxing district that will help determine the expenses of the district. Collecting bids will help determine the district’s expense and thus the creation of a budget. The budget will determine the rate that your stakeholders are willing to pay.

After the budget is finalized, a lawyer with a background in special taxing districts will write the document that will become an ordinance. After the document is completed and passed by your local government, you will next establish internal controls and conflict of interest documents.

Creating internal controls and a conflict-of-interest form will provide a needed structure of your taxing district as well as keep your board of directors ethical, especially when it comes to hired vendors. One such structure and the most cost-effective route is to go out to bid (every three years) to hire vendors to manage the district’s priorities such as maintenance, security, graphic design, event planning, and social media support. Internal controls will establish your bidding process to collect requests for proposals based on what your district’s ordinance lays out. They also help hold your administrator and/or board of directors accountable on procedures and reporting.

The best way to manage the district is to hire an administrator to oversee the vendors and bidding and financial needs of the district. A background in local government, nonprofit management, planning, and/or finance makes the perfect background for the administrator. If the taxing district is unable to hire someone, make sure these skills are on the board. A well-rounded board of directors will instill success and trust for your taxing district.

Many districts get in trouble every year for not being transparent. Transparency places a key role in your structure of your taxing district. Informing the public of your agenda, meeting minutes and financial statements helps create harmony amongst your stakeholders and the community as well as including them in the process. Community involvement in setting goals, developing the strategic plan, volunteering on a committee, or helping curate events instills trust and support.

Trust and support of a community should be your district’s top priority. If you lose the community’s trust and support, flight can occur, thus affecting the value of commercial and residential properties.  The decrease can cause a ripple effect of blight and loss of revenue to not just the taxing district but to the local government. By engaging with the community to determine the taxing district’s structure, you will make your taxing district a great success.

Dewiit headshotRachel Witt is the Executive Director of the South Grand Community Improvement District. Graduate from Southern Illinois University Edwardsville with a Bachelor of Science Degree in Geography, minor in Sociology and certification in Nonprofit Management. Master’s in public administration from Widener University emphasis in local government and economic development. Connect with Rachel on Linkedin or Email.

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