New City America, Inc. (NCA) organizes and empowers communities through the formation and management of business and assessment-based, community-benefit districts (CBD. NCA is the only company that forms districts, consults with district management corporations, and provides maintenance and public spaces on behalf of the community, thus gaining full understanding of the stakeholders’ visions and needs relative to sustainability and cost-efficiency.

 

What is a Community Benefit District (CBD)?

A Community Benefit District (CBD) is a local enabling ordinance which enables “special benefit” districts to create a stable revenue source, subsidized by property owners, to fund special benefit services.

Which “special benefits” services can a CBD fund?
• Cleaning of the public rights-of-way, sidewalks, and gutter
• Pressure-washing of the sidewalks of the district
• Additional removal of trash and bulky material
• Security services over and above the services of the local police force
• Seasonal decoration and hardscape ornamentation
• Landscaping and streetscape beautification, etc.
• Marketing and promotion (in business districts only)
• Public space development and management

 

Why would I pay more money if the City is supposed to be providing these services?
City-sponsored, “general benefit” services are normally delivered “curb to curb”, while “special benefits” are funded through non-public sources and deliver services “curb to property line”. To respond to those special needs, states and localities have adopted special enabling legislation which allows motivated property owners to pay assessments to fund special benefit services.

 

Once established, can the City replace its general benefit services in that district?
Experience has shown that once the assessment district management corporation has been formed, the private property owners in the district can normally leverage a greater amount of general benefit City services than before the establishment of the district. Now that the property owners are organized, they can request additional amenities such as trees, trash cans, lighting, and sidewalk repairs, capital improvements which can all be maintained with assessment revenues derived from the CBD.

 

What allows the CBD to be formed and how is it done?
The district is normally initiated by a group of motivated property owners within a given community or district. Experience tells us that a core of property owners – representing at least 10 – 15% of the potential assessment weight of the district – is necessary to initiate the investigation.

 

A CBD Steering Committee will be formed among various interested parties, including the “weighted property owners” of the potential district. The Steering Committee is expanded to include all interested parties, with emphasis on the weighted property owners.

The Steering Committee must approve the CBD by consensus before submitting to the City Attorney’s office for review. Once the Management District Plan and Engineer’s report have been approved by the City Attorney’s office, a petition drive is circulated to demonstrate support by a minimum of 30% of the property owners, by weight.

The property owners have between 45-60 days in which to return the mail ballots. The mail ballots must be returned by the conclusion of the public hearing;

Once an account has been established, the assessments will then appear as a line item on the property tax bills and the CBD assessments will be transferred to the non-profit for management and delivery of said special benefit services.

How long does this process take?
Depending on the level of need, district formation can take as little as 6 months or as long as 2 – 3 years to be established.

How are the CBD assessments collected?
As provided by local ordinance, the CBD assessments will appear as a separate line item on the annual property tax bills.

Is there a minimum amount that should be generated by the district?
There is no legal requirement for assessment revenue generation; however, experience has demonstrated that a minimum of $150,000 in a business district or neighborhood should be generated in order to make a difference.

Once established, must every parcel in the district pay?
Unless specifically mentioned in the plan, every single parcel owner must pay into the district. This includes local, county, state, and federal properties. In addition, parcels owned by tax-exempt designated organizations may be exempt from paying property taxes but will not necessarily be exempted from the assessment district. The only way to be exempted is to demonstrate by “clear and convincing evidence” that no benefit will be received from the special benefit services funded by the district.

How long can the district last once established?
In San Francisco, the CBD ordinance will have a maximum life of 15 years. This length of time is to allow property owners to determine if they wish to fund long term capital improvement projects that will provide special benefit to their district. The district can be formed for any amount of time, not to exceed 15 years. Once the district term has been completed, the provisions for establishment are repeated to continue to fund special benefit services provided the affected property owners wish to continue.

Can a district be disestablished if it is not functioning as envisioned?
Each year that the district is in existence, there will be a 30-day period during which the property owners will have the opportunity to request disestablishment of the district. Within that 30-day period, if the owners of real property who pay 50% or more of the assessments levied submit a written petition, the CBD district disestablishment procedure may be initiated. The Board of Supervisors will hold a public hearing on disestablishing the CBD prior to dissolving the corporation.

Due to its long-term nature, this new ordinance allows for the growth of landscaping, its maintenance, as well as economic development strategies related to revitalization that create a more permanent improvement to the area. If there is debt against the district, the district cannot be disestablished. All financial obligations in the form of bonds or loans for capital improvements, must be paid off before the district can be disestablished.

 

Who controls the funds once the CBD is established?
A non-profit corporation is usually designated or established once the CBD has been created. The non-profit corporation Board majority is normally comprised of the property owners paying into the district. The corporation could be an existing corporation, but usually a new one is formed based upon the boundaries of the new district. It could be a mutual benefit or public benefit corporation.

 

The non-profit CBD management corporation would then enter into a contract with the City office to administer the district on behalf of the stakeholders. Bylaws are normally written to ensure that the property owners can be freely nominated and/or elected to the Board. By law, the assessments generated within the district must be allocated to fund special services within the district. The City cannot offload its current baseline level of services with the assessments since the district can only fund “special benefits”.
Once established, can the City increase the assessments?

By law, the only increases in the annual assessment methodology must be pre-determined and placed in the CBD plan for the district. The City cannot arbitrarily increase the assessments because these are not funds created by or controlled by the City. The assessment may be increased only through a pre-designated CPI factor, or changes in land use such as parking lots being converted to commercial buildings or condos.

 

How many districts similar to the CBD exist in the US?
It is estimated that over 2,000 property-based districts are functioning in the US and Canada. In the state of California, over 400 business licensed based and property assessment districts in business districts are functioning. As of December 2018, New City America has formed over 79 districts nationwide.

 

Why would I pay more money if the City is supposed to be providing these services?
Cities in the U.S. tax their citizens through several means (property taxes, sales taxes, hotel taxes, enterprise taxes, special revenues), and allocate those revenues to deliver general benefit services. These services are evolving historically but normally include police, fire, transportation, sewer, water, planning and zoning, streets, lighting, social and cultural affairs, environmental issues, trash and refuse, housing, etc. These services do not and cannot respond to the special, individualized needs of a given neighborhood or business district.

 

Those services can be simplified by understanding that “general benefit” services are normally delivered “curb to curb”, while “special benefits” are funded through non-public sources and deliver services “curb to property line”. Since people normally don’t walk down the middle of a street, what they experience in the public rights of way are to be found in the “curb to property line” zone. It is their experience in this zone that shapes their images, positive or negative, of a specific district or neighborhood.

 

To respond to those special needs, including sidewalk sweeping, steam cleaning, rapid removal of bulky items and graffiti, responding to illegal encampments, additional security, installation of order, states and localities have adopted special enabling legislation which allows motivated property owners to pay assessments to fund special benefit services. These special benefit assessments are probably the most efficient and effective funds to be paid since they must, by law, stay in the district and are managed by a locally-based non-profit corporation comprised of those being assessed.

 

At a time of massive local, state and national expansion, it is expected that general services will be in greater demand. These assessments can provide the services every neighborhood and business district wants that are not funded by the City.

 

Which “special benefits” services can a CBD fund?
• Such special benefit services may include
• Cleaning of the public rights-of-way, sidewalks, and gutter (general vs. special benefit)
• Pressure-washing of the sidewalks of the district
• Additional removal of trash and bulky material
• Security services over and above the services of the local police force
• Installation of security cameras
• Parking services or transportation related services
• Economic development
• Special lighting
• Business attraction and retention and structuring a proper commercial mix;
• Planning, zoning and land use issues
• Graffiti removal;
• Administration and advocacy on behalf of business districts or neighborhoods
• Seasonal decoration and hardscape ornamentation
• Landscaping and streetscape beautification, etc.
• Marketing and promotion (in business districts only)
• Special community or neighborhood fairs, festivals or events
• Public space development and management

 

Once established, can the City replace its general benefit services in that district?
By law, property assessments can only fund special, not general benefits. General benefits are those allocated to all parcels in the City and funded out of public or general fund revenues. Cities throughout the state normally adopt “baseline services agreements”, which forbade the City from withdrawing services once the special benefit district has been formed.

Experience has shown that once the assessment district management corporation has been formed, the private property owners in the district can normally leverage a greater amount of general benefit City services than before the establishment of the district. Now that the property owners are organized, they can request additional amenities such as trees, trash cans, lighting, and sidewalk repairs, capital improvements which can all be maintained with assessment revenues derived from the CBD.

 

What allows the CBD to be formed and how is it done?

The district is normally initiated by a group of motivated property owners within a given community or district. Experience tells us that a core of property owners – representing at least 10 – 15% of the potential assessment weight of the district – is necessary to initiate the investigation.

 

A CBD Steering Committee will be formed among various interested parties, including the “weighted property owners” of the potential district. Assuming roughly 20 – 25% of the weighted property owners express support for the concept of the district, the CBD Steering Committee will then enter into the formation stage of the CBD. The formation stage includes the following:

 

The Steering Committee is expanded to include all interested parties, with emphasis on the weighted property owners. State law mandates that property assessment districts can only be formed by an assessment ballot proceeding supported by the majority of weighted property owners within a given district. The weight of a property owner is not determined by the assessed valuation of the property, but rather by the amount that property owner will contribute to the overall budget of the district. There are times when a few major property owners represent a significant amount of weight in the district. Early knowledge of their support or opposition to the district’s formation is critical in the successful formation of the district.

The Steering Committee endorses a CBD plan for the area, which outlines the special benefit services to be funded, the term of the district, the boundaries, the assessment methodology (which identifies the formula for determining the costs to each property owner), benefit zones, if any, special provisions for discounted assessments, as well as the management structure of the district.

 

The Steering Committee must approve the CBD by consensus before submitting to the City Attorney’s office for review, at which point a certified Assessment Engineer will determine if that the plan is compliant with the state constitution. The proposed assessments must be proportional to the benefits to be provided and they must “confer a special benefit to each parcel in the district”. Once the Management District Plan and Engineer’s report have been approved by the City Attorney’s office, a petition drive is circulated to demonstrate support by a minimum of 30% of the property owners, by weight. For example, if the annual first year budget is $150,000 for a CBD, petitions endorsing the CBD must be signed by $45,000 worth of assessments in the proposed district. Once the 30% weighted threshold has been reached, the petitions are then submitted to the Mayor’s Office of Economic and Workforce Development (MOEWD) for processing.

 

The Mayor’s Office of Economic and Workforce Development (MOEWD) dockets a “Resolution of Intention” for consideration by the Board of Supervisors. According to the State Constitution, property owners must be allowed to vote on the formation of the district through an “assessment ballot proceeding”/public hearing process. By adopting the Resolution of Intention, the Board is instructing the City Clerk to mail out the ballots to every affected property owner. The property owners have between 45-60 days in which to return the mail ballots. The mail ballots must be returned by the conclusion of the public hearing.

 

At the conclusion of the public hearing, if the weighted returned ballots of support exceed those returned in opposition, the Board of Supervisors can then adopt an ordinance that levies the assessments on the benefiting parcels.

 

The assessments will then appear as a line item on the property tax bills and will be separated and sent to MOEWD for processing. Once an account has been established, the CBD assessments will be transferred to the non-profit for management of the delivery of special benefit services to the CBD.

 

How long does this process take?
Depending on the level of need, district formation can take as little as 6 months or as long as 2 – 3 years to be established. What is most important is that the affected community understands the proposal and the boundaries are set around a weighted majority of property owners who desire the services to be funded by the district.

 

How are the CBD assessments collected?
As provided by local ordinance, the CBD assessments will appear as a separate line item on the annual property tax bills prepared by the County of San Francisco. Property tax bills are distributed in the Fall and payment is expected by lump sum or in two installments. Existing laws for enforcement and appeal of property taxes apply to the CBD assessments.

 

Is there a minimum amount that should be generated by the district?
Though there is no legal requirement for assessment revenue generation; however, experience has demonstrated that a minimum of $150,000 in a business district or neighborhood should be generated in order to make a difference. The idea of the special benefits district is to have the special benefit services make an impact in the problem that the district or neighborhood may face. The district must have adequate revenues to fund the special benefit services that gave rise to the concept of an enhanced services district in the first place.

 

Once established, must every parcel in the district pay?
Unless specifically mentioned in the plan, every single parcel owner must pay into the district. This includes local, county, state, and federal properties. In addition, parcels owned by tax-exempt designated organizations may be exempt from paying property taxes but will not necessarily be exempted from the assessment district. The only way to be exempted is to demonstrate by “clear and convincing evidence” that no benefit will be received from the special benefit services funded by the district.

 

How long can the district last once established?
In San Francisco, the CBD ordinance will have a maximum life of 15 years. This length of time is to allow property owners to determine if they wish to fund long term capital improvement projects that will provide special benefit to their district. The district can be formed for any amount of time, not to exceed 15 years. Once the district term has been completed, the provisions for establishment are repeated to continue to fund special benefit services provided the affected property owners wish to continue.

 

Can a district be disestablished if it is not functioning as envisioned?
Each year that the district is in existence, there will be a 30-day period during which the property owners will have the opportunity to request disestablishment of the district. Within that 30-day period, if the owners of real property who pay 50% or more of the assessments levied submit a written petition, the CBD district disestablishment procedure may be initiated. The Board of Supervisors will hold a public hearing on disestablishing the CBD prior to dissolving the corporation.

 

Due to its long-term nature, this new ordinance allows for the growth of landscaping, its maintenance, as well as economic development strategies related to revitalization that create a more permanent improvement to the area. If there is debt against the district, the district cannot be disestablished. All financial obligations in the form of bonds or loans for capital improvements, must be paid off before the district can be disestablished.

 

Who controls the funds once the CBD is established?
A non-profit corporation is usually designated or established once the CBD has been created. The non-profit corporation Board majority is normally comprised of the property owners paying into the district. The corporation could be an existing corporation, but usually a new one is formed based upon the boundaries of the new district. It could be a mutual benefit or public benefit corporation.

 

The non-profit CBD management corporation would then enter into a contract with the City office to administer the district on behalf of the stakeholders. Bylaws are normally written to ensure that the property owners can be freely nominated and/or elected to the Board. By law, the assessments generated within the district must be allocated to fund special services within the district. The City cannot offload its current baseline level of services with the assessments since the district can only fund “special benefits”.
Once established, can the City increase the assessments?

By law, the only increases in the annual assessment methodology must be pre-determined and placed in the CBD plan for the district. The City cannot arbitrarily increase the assessments because these are not funds created by or controlled by the City. The assessment may be increased only through a pre-designated CPI factor, or changes in land use such as parking lots being converted to commercial buildings or condos.

 

How many districts similar to the CBD exist in the US?
It is estimated that over 2,000 property-based districts are functioning in the US and Canada. In the state of California, over 400 business licensed based and property assessment districts in business districts are functioning. As of December 2018, New City America has formed over 79 districts nationwide.

 

What “special benefits” can the district fund?
The special services to be funded are spelled out in the enabling Legislation. They can only legally include those services over and above what a City will normally provide through the general fund. Such special benefit services may include:
Cleaning of the public rights of way, sidewalks and gutter (general vs. special benefit);
Steam cleaning of the sidewalks of the district;
Removal of trash and bulky material;
Security services over and above the services of the local police force;
Parking services or transportation related services;
Economic development;
Special lighting;
Business attraction and retention and structuring a proper commercial mix;
Planning, zoning and land use issues;
Graffiti removal;
Advocacy;
Administration and advocacy on behalf of business districts or neighborhoods
Beautification and decorations;
Tree maintenance, planting, watering, etc.;
Marketing and promotion (in business districts only);
Community-oriented events;