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August 9, 2016

Using a Community Improvement District (CID) to Finance Long-Term Improvement Projects

If you’re a commercial real estate developer or investor looking for a financing strategy to fund a large scale development or property improvements, establishing a Community Improvement District could be a great option.  A Community Improvement District (CID) is a political subdivision with the power to impose special assessments and/or real estate taxes to pay for public improvements.  CIDs can be used for a wide variety of projects and improvements as long as the projects are for public use in blighted areas.

The Missouri Department of Economic Development defines a blighted area as a portion of a city that legislative authority determines by reason of age, obsolescence, inadequate or outmoded design or physical deterioration, an economic and social liability conducive to ill health, transmission of disease, crime or inability to pay reasonable taxes.

In recent years, the number of Community Improvement Districts being established has significantly increased, providing additional means of financing for large scale projects in St. Louis and other areas in Missouri.  A CID encompasses the area where improvements are to be constructed and can include areas such as shopping centers, plazas, parks, convention/meeting centers and parking lots.

CIDs can impose additional sales and real estate taxes to finance the districts’ improvements over a long-term period.  For example, a shopping center owner could establish a CID that imposes special assessments to charge an additional 1% sales tax on all purchases made within that district (shopping center) to finance improvements at that shopping center over an extended period of time.

Establishing a Community Improvement District is often a political process, with the need to convince local municipal authorities that the real estate is indeed blighted. This process can require a lot of assistance, and Anders works with a network of advisors that can help. Contact Anders to learn more about how a CID might work for you.

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