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What is a SID - Special Improvement District?
Through the "Consolidated Local Improvement Law" (Chapter 271 of the Nevada Revised Statutes), counties, cities, and towns are allowed to form Special Improvement Districts (SID) for the purpose of acquiring, improving, equipping, operating, and maintaining specific projects within the municipality. Projects include improvements such as street pavement, curb and gutter, sidewalk, streetlights, driveways, sewer and water facilities, etc.
Why Form a Special Improvement District?
Local improvement districts are generally formed to provide a source of funding for the construction and/or maintenance of eligible improvements within the district. The law allows the sale of bonds to finance the cost of these new facilities with property owners (within the district) being assessed for their benefited share of the improvements.
What Is Required To Create A Special Improvement District?
The specific requirements for creating a SID are contained in Chapter 271 of the Nevada Revised Statutes. These districts may be created by the Board of County Commissioners either at the request of property owners,or when the Board determines that improvements are needed in a particular area.
Step 1: The Board initiates a SID by directing the County Engineer to prepare preliminary plans, assessment plats (determines the boundaries of a district), and cost estimates for the project.
Step 2: Once the documents noted above have been prepared, the Board sets a time, date and place for a public hearing. All property owners to be assessed MUST be noticed of the public hearing by mail. Notice of this meeting is posted at or near the project site and published in the local newspaper. Note: If property owners representing 51% of the assessable footage protest the SID at the public hearing, the project CANNOT be approved unless:
(1) The County is paying over 50% of the project costs
-or-
(2) Not more than 2,640 feet remains unimproved between the improvements already existing
Step 3: If the hearing is successful, the Board may adopt a resolution stating that public convenience and necessity require the creation of the district. An ordinance forming the SID and ordering the proposed project be acquired and improved may then be adopted.
Step 4: After final costs have been determined and construction plans are finalized, the project can be advertised for construction. Once the construction contract is awarded, the Board adopts a resolution fixing the time, date, and place for a second public hearing to determine the final assessment roll. A notice of this public hearing is also mailed to each affected property owner.
Step 5: Following the second public hearing, an ordinance is adopted levying the assessments against the individual properties. Notices indicating the final assessment amounts are sent to each property owner. The notices state each parcels assessment amount and method of payment. Note: A property owner may elect to pay the principal amount during a thirty (30) day cash pay period without interest - or - take advantage of the municipal bond financing that consists of semi-annual payments of principal plus interest.
HARDSHIP DETERMINATION
The County, by ordinance, has established a procedure to allow a person (whose principal residence will be included within the boundaries of the district) to apply for a hardship determination. A property whose hardship determination is approved shall pay interest on the unpaid balance of assessments at the same rate and terms as are established for other assessments. (Note: Hardship determinations must be applied for through the Clark County Department of Social Services for evaluation and approval. Eligibility is based on income and the ability to pay the assessment).
THE SID PAYMENT PROCESS
Improvement districts help defray the costs for the construction of public improvements ( roads, curbs, sidewalks, utilities, etc.) The proceeds from a County issued bond sale provide the revenues for these improvements. Property owners are responsible for paying back this money all at once or in installments over a 10 year - up to a 30 year period of time.
How are costs to the property owner determined?
Assessments are generally calculated on a frontage basis (the cost per linear foot times the propertys frontage abutting the street to be improved or other equitable basis). Assessments must be in proportion to the special benefits derived by each property from the improvements being constructed.
What are the assessment payments used for?
This money is used to repay the principal and interest on County bonds issued to finance the cost of the public improvements. (Initially, the County solicits bids from financial institutions to fund the SID. The property owners payments go toward repaying this debt).
How are assessments paid?
Option 1: After construction bids are opened, final assessments are levied and a 30 day cash pay period established. During this time, assessments (or any portion of them) can be paid without interest being applied.
Option 2: Assessments are paid twice a year for 10 years - up to 30 years, including both principal and interest. The interest rate is set when bonds for the SID are sold. Payments are due on June 1st and December 1st of each year. |
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FOR YOUR INFORMATION
Special Improvement Districts are a tool that can be used by property owners to finance the costs of public improvements over a 10 year - up to a 30 year period at a low rate of interest. Generally, improvement districts are initiated in conjunction with Regional Transportation Commission (RTC) projects and may be requested by either property owners or the Board of County Commissioners.
Residential/commercial developments are sometimes constructed without the benefit of adequate curbs, gutters, sidewalks or other standard improvements. Faced with rising land and construction costs, many builders choose to keep local developments "affordable" by eliminating these features. Others may intentionally omit them in an effort to establish a "rural" environment in an urban setting. In older neighborhoods, these items may have been excluded or minimized due to a lack of stringent development guidelines. Because of these conditions, property owners or the local governing body may opt to build additional improvements through the establishment of a SID.
SIDs are formed using one of the three methods noted below:
Provisional Order Method - is initiated by a governing body and requires that a public protest hearing be conducted. Note: If the County provides more than 50% of the funding for a particular district, it can ultimately be created over the protest of the property owners.
Petition Method- is initiated by property owners and requires that a public protest hearing be conducted. Note: If the County does not provide 50% of the funding for this type of SID, a majority vote of the represented frontage is needed to form the district.
Developer Method - is initiated between a developer and government entity and requires the signing of a contract. A protest public hearing is not required as part of this process.
There are 10 steps in the assessment process from the initial proposal to create a district to the final selling of bonds. This entire procedure can taken up to two years to complete.
Prior to any hearing, Public Works staff will engage in a variety of community outreach meetings to inform impacted property owners of the proposed project and the overall SID process.
DEFINITIONS
Assessable property - refers to tract(s) of land specially benefitted by any project, the cost of which is wholly or partly defrayed by the municipality and the eventual levy of assessments. Assessment- to determine the rate or amount of (as a tax); to impose a tax, charge, or levy; to make an official valuation of a property for the purposes of taxation, charge or levy.(SID assessments are generally calculated on a frontage basis - the cost per linear foot times a propertys frontage). Assessment plat - determines he boundaries of a district Assessment roll - is a tabulation of the parcels with the amount of maximum benefits estimated to be conferred on each parcel Levy - to impose or collect by legal authority Special Benefit - the increase in the market value a property receives as a result of improvements Ordinance a law set forth by a government authority, a municipal regulation
Who is responsible for making payments?
Each assessment constitutes a lien on the property similar to a mortgage and must be paid by the property owner. The lien is prior and superior to all liens, claims, encumbrances and titles other than the liens of assessments and general taxes.
What happens when a property is sold?
The assessment essentially remains with the property. Therefore, should the property be sold during the period which it is being financed, the remaining assessment is transferred to the new owner at the time of sale.
Is there a penalty for prepaying an assessment?
The assessment can be paid in full at anytime with a three percent (3%) prepayment penalty on the unpaid balance.
What happens if a property owner chooses not to pay an assessment?
Delinquent assessment installments are subject to a 2% penalty per month on the unpaid balance plus accrued interest. Failure to pay any installment ( due) shall cause the whole amount of the unpaid principal to become due and payable immediately with an option to also begin foreclosure proceedings.
Why arent County property taxes being used to pay for district improvements?
All property owners pay for the improvements in front of their property either: 1) as a result of development or 2) when purchasing a home in a subdivision where the developer constructed the street improvements as part of the cost of the house. County-wide property tax revenues are not used for the construction or maintenance of local streets. |