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Special Improvement Districts, or SIDs (also known as a Business Improvement Districts or BIDs), are established by municipal ordinance. A SID, like Urban Enterprise Zones and redevelopment/rehabilitation areas, is boundary-specific. The properties within the District are specified in the ordinance establishing the SID. Once a SID ordinance is adopted, an entity to govern the District must be created. Most of the approximately 30 SIDs in New Jersey are governed by District Management Corporations (DMCs), which are equivalent to the Zone Development Corporations of the Urban Enterprise Zones. However, it is also possible to establish a commission to govern a SID, much like a historic commission might govern a historic district. The main function of the DMC or commission is to run the SID much in the way that an indoor shopping mall is managed, advertised and promoted.
Business districts often have a faint political voice in local government when it comes to prioritizing the expenditure of public tax monies on capital improvements. To address this, the surcharge that is added to the property taxes in a SID is dedicated for use in the District in accordance with a budget developed by the DMC and approved by the local governing body. The amount of the surcharge is based on a formula in the ordinance establishing the SID. The formula is required to provide for a benefit to surcharged properties that will be commensurate with the amount of surcharge paid. This concept has its origin in legislation that enables the levying of special assessments for capital improvements such as curbs and sidewalks or sewer service that directly benefits a finite number of properties rather than all taxpayers as a group. This approach was extended to pedestrian malls during their heyday in the 1970s and ultimately to entire districts that benefit from a comprehensive program of capital improvements, promotion, enhanced police and sanitation services and organized management.
The budget of a SID normally includes funding for operating costs, specifically the salary of a downtown manager and perhaps office personnel, depending on the size of the SID. The downtown manager is like an executive director and prepares the budget, staffs the DMC, coordinates special events and performs all administrative functions assigned by the DMC.
For more information on Special Improvement Districts, call 609.633.6257.