Funding Capital Projects in a BID (Business Improvement District)

<p>Kara Millonzi is a School of Government faculty member.</p> <p>As discussed in a previous post, a North Carolina municipality may establish a special tax district that encompasses its central downtown area to raise money to fund “downtown revitalization.” See G.S. 160A-536(a)(2). The special tax district is commonly referred to as a Business Improvement District or BID. Many municipalities create and maintain BIDs to provide targeted services in their downtown areas—such as marketing, additional security, supplementary trash collection, and community activities to enhance the downtown area and promote and benefit its commercial entities. Questions often arise as to whether a unit may engage in capital projects in the BID and, if so, what type and how are the projects funded?</p> <p>Funding Capital Projects in BID with General Municipal Revenue</p> <p>The answer to the first question is “yes.” A municipality may undertake capital projects in a BID to the same extent that it undertakes them in the rest of its territory. And it may finance the projects with General Fund dollars, which include property tax proceeds, local sales and use tax proceeds, and other unrestricted revenue sources. It also may fund certain, authorized capital projects by imposing special assessments on the real properties in the BID that benefit from the projects. (For more information on imposing special assessments, including a list of authorized projects, click here.) And, if the capital projects relate to one or more of the municipality’s public enterprises (for example, water or sewer services) the unit may finance the projects with Enterprise Fund monies, which include periodic user [...]</p>