A policy report

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MARCH 2006


1. INTRODUCTION……………………………………………………………………..2


3. THE SEEDS OF SENATE BILL 414...………………………………………………..8


5. SENATE BILL 414 VERSION LC 36 0230S………………………………………...25


7. BIBLIOGRAPHY……………………………………………………………………..32

8. APPENDIX……………………………………………………………………………35


Republican State Senator Cecil Staton’s Senate Bill 414 (SB 414), the Rural Georgia Economic Development Act of 2006, presented to rural Georgians may benefit the aging U.S. population more than the population of rural Georgia. A recently apt Atlanta Journal Constitution article reports 3.3 million of 78.2 million baby boomers turn 60 this year,1 and a MetLife market study concludes baby boomers ages 66 – 84 will constitute 20% of the total population by 2030.2 Americans born within 1946 - 1964, with an annual spending power of 2.1 trillion, will be the focus of future market niches, and coupled with their high voter turn-out gives them an influential role in politics.3 This legislative bill captures the opportunity for private developers to create retirement communities with greater return on investments while brandishing the hospitable environments of rural Georgia for economic development. Quoted in Macon.com, Staton states, “This would be particularly useful in developing retirement communities in South Georgia. Florida has been doing this for years.”4 Taking Florida as a model for economic development, Georgia could position itself as an extension to the retirement capital of the nation and share in its revenues from retiring baby boomers.

The original SB 414 provides for the creation of community improvement districts (CIDs) in Georgia counties classified as Tiers 1 through 3, a four tier Department of Community Affairs (DCA) classification system of counties that targets depressed areas for financial assistance. Due to a bill revision,5 every county in the state will be authorized to create a CID, but doing this may divert the intention of the legislation to focus on the development of rural communities in the state. Limiting the creation of CIDs to Tier 1 counties would be the best strategy in centering private endeavors in rural areas, but including Tier 2 counties might help garner additional support from voters and provide for better regional communication and use of resources without completely jeopardizing the original intention of the bill.

The creation of community improvement districts is not a new concept for the state. The Georgia Constitution of 1998, Article IX, Section VII enables the General Assembly the ability to create CIDs for any county or municipality. But the biggest difference between the CIDs already allowed by the state’s constitution and the one presented in the legislation lies in the inclusion of residential properties. The purposes of both CIDs permit for the creation and management of land infrastructures, improvements, and facilities, but Georgia’s Constitution clearly denies the authority of CIDs to “levy taxes, fees, and assessments within the community improvement district…for residential, agricultural, or forestry purposes and specifically excluding tangible personal property and intangible property.”6 To give a background on how CIDs operate and their effectiveness, we will now look at current Commercial Community Improvement Districts (CCIDs) in Georgia. The designation of “commercial” helps delineate the type of CIDs created under the state’s constitution from the broader scoped commercial and residential CIDs that private developers will be empowered to create under the bill currently in legislation. Lacking a standard naming convention for these special districts, Commercial CIDs may also be classified as Special Improvement Districts, Economic Improvement Districts, or Public Improvement Districts.7 Commercial CIDs, however, should not be confused with Business Improvement Districts (BID). The later seem to be smaller in scale and center on the economic redevelopment of downtowns. For an in-depth study on BIDs, refer to a 1999 Baruch College report by Professor Jerry Mitchell called, “Business Improvement Districts and Innovative Service Delivery.”8 Georgia’s DCA summarizes a BID as an approved district by petition of at least 51% of the taxpayers or owners of at least 51% of taxable property subject to taxes in the district, and the adoption of the BID will confer an annual millage from all property owners within the district for “supplemental services.” With a five year renewable term limitation, some of the district’s strategies for improvements “include, but are not limited to, advertising, promotion, sanitation, security, and business recruitment and development.”9 But our emphasis will be on Commercial and Residential CIDs.

Commercial Community Improvement Districts in Georgia

Unless the author is not aware of CCIDs created outside of the Atlanta metropolitan area, the title for this section of the report could actually read as “Commercial Community Improvement Districts in Atlanta.”10 Even though every county throughout the state has the power to implement a CCID, the creation of one depends upon the willingness of commercial property owners, who “constitutes at least 75% by value of all real property within the (special district),” to levy taxes, fees, and assessments on all commercial properties within the proposed area. Thus, rural and suburban areas with moderate commercial activity fail to attract entrepreneurs willing to set up a special district. Residential properties are not taxable by CCIDs. “Any tax, fee, or assessment so levied shall not exceed 2.5% of the assessed value of the real property” and revenues generated within the special district can only be used for the following:

  • Street and road construction and maintenance.

  • Parks and recreational areas and facilities.

  • Storm water and sewage collection and disposal systems.

  • Development, storage, treatment, purification, and distribution of water.

  • Public transportation.

  • Terminal and dock facilities and parking facilities.

  • Such other services and facilities as may be provided for by general law.11

Special districts have used the last provision to fund planning and feasibility studies. The inclusion of residential property could be an economic tool for rural and suburban development. As of the latest revision to SB 414,12 36-76-3 (a) specifically authorizes every county in the state the authority of “the county governing authority to create one more residential community improvement districts within the boundaries of the county.” The conversion from commercial to residential improvement districts clarifies and confirms the objective of the Act to focus on rural and suburban development, but the retention of allowing every county its powers fog its future implementation and outcome.

A board of directors, voted in by the special district, executes the plans in a Commercial Community Development District, but the county or municipality maintains representation through an appointed post. The popularity of special districts, CCIDs and RCIDs, lies in the ability of businesses to pool monies (by issuing tax-free bonds13 and short-term loans; levy taxes, fees, and assessments; or lease property), streamline planning, and determine their own course of action for improvements in their district while leveraging for public financial assistance. The first Atlanta improvement district created in 1987, Cumberland CCID, collected “$60 million in local tax collections leveraged against $3 billion in federal and state monies for projects that have either been completed, or have funding identified for future completion;” a leverage ratio of 50:1.14 In 2002, the Cumberland CCID wins the Agency Award from the Georgia Section of the Institute of Transportation Engineers for their role in improving the Cumberland area through quality transportation management. One of their noteworthy projects includes the Kennedy Interchange that resulted in the improvement of traffic conditions along the Galleria/Cumberland Mall corridor.15

The Atlanta Downtown Improvement District, an excellent example of a special district that utilizes the full capability of a CCID, in coordination with the Central Atlanta Progress (CAP), a private, not-for-profit corporation assisting downtown economic development, implements various programs to provide safer pedestrian crossings, street aesthetic improvements, enhanced color-coded signage, Madvac street cleaning vehicles, additional off-duty police support, Wi-Fi for downtown workers, market information for business recruitment, a Downtown Growth and Development map, and feasibility and planning studies for a potential Bioscience District and “an eight-mile streetcar line along Peachtree Street,”16 Other Commercial Community Improvement Districts in Atlanta include the North Fulton CID, Town Center Area CID, Perimeter CID, Gwinnett Place CID, Buckhead CID, Highway 78 CID, South Fulton CID, and the Midtown Improvement District.17

In order to gain a better understanding of the Rural Georgia Economic Development Act of 2006, a Residential Community Improvement District (RCID) initiative, we will now look at the Florida Community Development Districts Statute18 and the Florida Special District Handbook19 provided by the Florida Department of Community Affairs. Florida’s experience with RCIDs dates back to 1967 when its legislature passed an Act for the creation of the Reedy Creek Improvement District.20 All of the information from the next section will be derived from the Florida Statute and special district handbook and website,21 and will be compared to the substitute to SB 414.22

The Seeds of Senate Bill 414

There may be times when governments lack funding for or perceive additional support of a specific area’s economic growth fall short of the benefits returned to the city. Special districts fill this reverse market failure gap by allowing private entities play a role in augmenting public services when the return on investments to an area outweighs its expenditures. Commercial Community Improvement Districts, as illustrated, seem to fare well, but the inclusion of residential property might be of a different account. For the residential aspect of improvement districts, we begin by examining the Florida Statute and handbook which governs the establishment of these districts. Later on, a few fruits of their legislation will be brought out to help determine the quality of the seeds embedded in SB 414.23 Indeed, the majority of the RGEDA 2006’s text appears to have been selectively uprooted from the Florida Statute. Georgia, peering over state boundaries, may have set its sight on an observed greener pastor. But lacking the ability to migrate and dependent upon program goals, Georgia’s soil may lack the necessary elements needed for similar Florida results.

Florida integrates both, commercial and residential, types of districts but separates them according to the county or municipality’s oversight powers. A special district created as a Dependent Special District (DSD) endows the county governing authority with the most control over the district’s activities. The governing authority board members assume the additional role as board members of the DSD and have authority over its budget. Conversely, “an Independent Special District (ISD) does not have any dependent characteristics.”24 On the other hand, an ISD lack comprehensive land-use powers, an important component vaguely defined in SB 414. This stipulation is explicitly mentioned several times in the Florida Statute:

  • 190.002 (2) (c) “It is the policy of (Florida) that the exercise by any independent district … so established does not have any zoning or permitting powers governing development.”

  • 190.002 (3) “It is further the purpose and intent of the Legislature that a district created under this chapter not have or exercise any zoning or development permitting power, that the establishment of the independent community development district as provided in this act not be a development order ....”

  • 190.004 (3) “Community development districts do not have the power of a local government to adopt a comprehensive plan, building code, or land development code, as those terms are defined in the Local Government Comprehensive Planning and Land Development Regulation Act. A district shall take no action which is inconsistent with applicable comprehensive plans, ordinances, or regulations of the applicable local general-purpose government.”

Senate Bill 414 does require, in 36-76-3 (b) (7), the petition for creating an RCID to include “a designation of the future … public and private uses of land proposed for the area within the district as shown on the county land use plan, if one has been adopted” and, under (f) (2), “whether the establishment of the district is inconsistent with … the county comprehensive plan.” Nevertheless, land-use provisions in SB 414 should undeniably reflect the inability of RCIDs to revise government comprehensive plans after the establishment of a district. As shown later, the far-reaching powers of the Reedy Creek Improvement District (Reedy Creek ID), an ISD granted with county comprehensive planning powers, could be seen as an example where a corporation owns and operates the land as it sees fit. Relevant to land-use controls, the substitute to SB 414 took out condemnation and eminent domain powers and poignantly added 36-76-8 (15) (b), which states “the district shall not have or exercise the power of condemnation or eminent domain.” Condemnation and eminent domain were not features that the proposers of SB 414 added when they copied from the Florida Statute on Community Development Districts (CDD); both powers in the statute read like the previous SB 414 versions:

  • “To hold, control, and acquire by donation, purchase, or condemnation, or dispose of, any public easements, dedications to public use, platted reservations for public purposes, or any reservations for these purposes authorized by this act and to make use of such easements, dedications, or reservations for any of the purposes authorized by this act.”25

  • “To exercise within the district, or beyond the district with prior approval by resolution of the governing body of the county if the taking will occur in an unincorporated area or with prior approval by resolution of the governing body of the municipality if the taking will occur within a municipality, the right and power of eminent domain … over any property within the state … solely to water, sewer, district roads, and water management.”26

The power of eminent domain in previous versions of SB 414 was also restricted for infrastructure improvements. But in light of last year’s U.S. Supreme Court ruling on Kelo v. City of New London, a county governing authority has the power to take private property and sell to private developers if economic development constitutes public use.27 A few Georgia lawmakers this year hope to pass legislation that will be in opposition to the U.S. Supreme Court ruling and strengthen homeowner property rights.28

The establishment of Residential Community Improvement Districts under the RGEDA 2006 nearly parallels the creation of Independent Special Districts under Florida Statutes. A petition to the county governing authority for the establishment of an RCID accompanies:

  • A filing fee of $15,000.

  • The proposed name of the district.

  • The boundaries of the proposed district.

  • A map of the proposed district showing current major trunk water mains and sewer interceptors and outfalls, if in existence.

  • The written consent to the establishment of the district by all landowners whose real property is to be included in the district or documentation demonstrating that the petitioner has control by deed, trust agreement, contract, or option of 100 percent of the real property to be included in the district.

  • Any real property within the external boundaries of the district which is to be excluded from the district (and) address the impact of the proposed district on any real property … which is to be excluded from the district.

  • A designation of four persons to be the initial members of the board of supervisors, who shall serve in that office until replaced by elected members.

  • The proposed timetable for construction of the district services and the estimated cost of construction the proposed services. These estimates shall be submitted in good faith but shall not be binding and may be subject to change.

  • And a designation of the future general distribution, location, and extent of public and private uses of land proposed for the area within the district as shown on the county land use plan, if one has been adopted.29

Once filed, the county governing authority determines if the RCID is consistent with the county comprehensive plan and decides on the fate of the petition.30 Upon authorization of the petition, landowners of the district, entitled to one vote per acre of land, elect four directors of the board, and the county governing authority appoints the fifth member of the board. Subsequently, the board appoints their own administrators. In conducting business, “action taken by the district shall be upon a vote of a majority of the members present,”31 but the Florida Statute concludes with “unless general law or rule of the district requires a greater number.”32 We will now look at various important implications and consequences from actions taken by special districts.

In Beyond the Homeowners Association: Blending Community Development Districts, Tax Exempt Organizations and Commercial POAs for Larger Planned Communities, attorney Doris S. Goldstein explains how developers in Florida in the past “funded elaborate recreational facilities such as golf courses and resort-type swimming pool complexes using Community Development District bond revenue, and then limited their use to CDD residents or made nonresidents distinctly unwelcome in other ways. Sometimes, these facilities were within gated communities.” Goldstein continues to explain that Florida Statutes make “no mention of whether these facilities must be open to the public. Instead, the requirement originates with the IRS. In the late 1990’s, in a case that involved a special taxing district similar to a CDD, the IRS ruled that the interest paid to bondholders would not be tax exempt unless district facilities built with the bonds are open to the public. Some developers now avoid the issue by funding ungated streets, common area landscaping and utilities through the CDD while keeping recreational facilities in the Home Owners Association (HOA).”33 In coordinating with the HOA, an RCID, unlike a CDD, has the authority “to adopt rules necessary for the district to enforce certain deed restrictions pertaining to the use and operation of real property within the district.”34 Perhaps the worst effect of RCIDs would be cases where developers sell improvements to the district, which they control, at inflated prices.35 Goldstein presents an excellent opinion of such legal land fraud from The Cyber Citizens for Justice:

“Community Development Districts are getting more and more popular among politicians, developers and the whole connected industry. Local politicians love them, figuring they get all the future property taxes without having to invest anything. Developers can create their own little kingdoms36 without being supervised. They can write their own ticket and make huge profits without any big risks to them. The public bonds will finance all the necessary investments and if financial losses can’t be avoided the homes of the people is the collateral for possible losses. Miscalculation from the developers can be covered with the money from the homeowners.”37

Section 36-76-9 of SB 414 outlines the RCID’s main purpose. The district has almost complete control in instituting water and transportation management functions; installing bridges, street lights, and district roads “equal to or exceeding the specifications of the county;” establishing conservation areas; and the remediation of environmental contamination. The power to install district roads exceeding the specifications of the county may be especially unpopular to no-growth neighborhoods exempt in the district. And the capability of the district to establish a conservation area might be used as a smokescreen for the creation of an urban growth boundary. The selective restriction of development allows the district to manipulate property values, and control of the district could be achieved by a private entity owning most of the land in the district.38 With the relinquishing of absolute autonomy, an RCID requires the approval from the local government when building parks and school facilities; establishing fire control, insect extermination, and waste collection and disposal programs; and increasing security measures in the district. Regarding the security provision, the district “may not exercise any police power but may contract with the appropriate local government agencies for an increased level of such services within the district boundaries.”39 Now we will look into a few fruits from Florida’s long history of special districts.
The Fruits of Florida: Old Money and a Mouse

Two words can, perhaps, describe the backbone to Florida’s economy – tourism and retirement. The State of Florida declares itself as the “top travel destination in the world” with last year’s tourism industry attracting a record breaking 76.8 million tourists. And with an economic impact of $57 billion, the state’s tourism industry nearly parallel’s its 2004 – 2005 state’s budget of $57.3 billion. The 1,370 golf courses (the most in the U.S.), 1,200 miles of sandy beaches, and the state known for its sunshine and retirees testify of Florida’s environment influencing its economic development policies.40 Ironically, it was the need for Florida’s early inhabitants to tackle landscape and atmospheric rigors, beyond the means of public assistance, that led to the advent of special districts shaping the hospitable environments residents and tourists enjoy today. A precursor to special districts, the Road, Highway, and Ferry Act of 1822, even before Florida’s statehood 23 years later, created and maintained public roads by fining men, who failed to report to work, one dollar per day. After statehood, the legislature created the first special district “to drain the ‘Alachua Savannah’,” and was financed through special assessments “on landowners based solely on the number of acres owned and the benefits each derived.”41 The popularity of these private governments in Florida led to creation of special districts for “aviation, beach erosion, downtown development, historic preservation, housing, industrial development, libraries, navigation, transportation, water supply and soil conservation.”42 According to Florida’s Department of Community Affairs, the state currently has a total of 1,379 special districts. No other district, though, rivals the power and autonomy of the Reedy Creek Improvement District. Reedy Creek ID sets precedent by combining every aspect of government services all indirectly43 controlled under a private entity – the Disney Corporation.

Even though Residential Community Improvement Districts (RCID) created under SB 414, lacking condemnation and eminent domain powers, may not parallel the Reedy Creek ID in authority, the far-reaching powers of RCIDs, nevertheless, justify a comparative analysis to Florida’s preeminent special district. In Hidden Kingdom: Disney’s Political Blueprint,” an article for The American Prospect, Joshua Wolf chronicles the story of Walt Disney’s pursuit for a utopian community. “It will be a planned, controlled community … there will be no slum areas because we won’t let them develop,” Disney said of his proposed Experimental Prototype Community of Tomorrow (EPCOT), which will be “a showcase for American industry and research, schools, cultural and educational opportunities.”44 In implementing his plans, Disney and associates acquire over 24,000 acres in rural 1960’s Orlando with a population barely over 20,000, 45 and persuade the Florida Legislature in 1967 to pass an Act that creates the self-governing Reedy Creek Improvement District.

  • “The act clearly outlines the District’s authority to provide essential public services such as drainage and flood control, solid waste collection, wastewater treatment, pest control, fire protection, and the regulation of building codes and land use within the district. It also gives the District authority to issue bonds to finance these improvements and services.”46

The district’s ability to form and execute its own land-use comprehensive plan annuls the governmental representation of its people, and would become the necessary foundation for the building of EPCOT. Disney’s utopian city never came to fruition, but the Disney-ran Reedy Creek ID possesses the ability to create such a city. A planned community that the Disney Corporation did have influence over can be seen in Celebration, Florida. The Reedy Creek ID ceded the town of Celebration to its own special district for fear of losing manageability of the district which governs Walt Disney World and EPCOT.47

Located within Osceola County and 5 miles south of Walt Disney World, the small town of Celebration, with a population of just over 2,700,48 lacks an elected government but instead operates through two improvement districts: the Celebration Community Development District has jurisdiction over the commercial boundaries while the Celebration Residential Owners’ Association has influence over the residential area.49 In “Consuming Community,” Keally McBride, a political science professor at Temple University, presents an in-depth look into Celebration, Florida.50 The Celebration Company, a subsidiary of the Disney Corporation, runs a website that depicts the place as “an innovative, real town that successfully combines architecture, education, health, and technology in ways that promote a strong sense of community.” In her visit to the town and discovering how similar Celebration life is compared to other gated communities around the country, McBride challenges the town’s notion of “promoting a strong sense of community” but concludes that the town “illustrates, above all, that the image of community is more important than the personal experience of community.”51 The town sets an example for New Urbanism by being a self-contained community incorporating mix-use developments with healthy lifestyle amenities to include playgrounds, bicycle paths, tennis courts, swimming pools, and a golf course. HDR, an engineering consulting firm, ran a traffic count in 2004 to examine the benefits of mixed-use in Celebration and compared results to the estimated Institute of Transportation Engineers’ standard trip generation rates. The analysis indicates “a high level of interaction” from the town’s inhabitants between commercial and residential land use; “people who live in Celebration also work there.”52 McBride, watching people instead of cars, contrastingly states, “The only people we saw out in the middle of the day in Celebration were landscapers – a veritable army of them. We only saw one woman out with a stroller. We never met anyone who lived in Celebration. Our waitress couldn’t afford it, nor apparently could the real estate agent who nonetheless urged us to ‘Come and join us’ as we left the sales office.”53 These two views of the community support Celebration’s census demographics where an estimated 93.6% of its residents are white, 57.4% over age 25 hold a bachelor’s degree or higher, and the median household income in 1999 amount to $74,231.54 Celebration clearly fails to represent the average Floridian or U.S. town.

Celebration is one of five cities located within Osceola County, Florida; other cities in the county include Campbell, Poinciana, St. Cloud, and Kissimmee.55 Controlling race and population size as Celebration’s uniqueness, we use the city of Campbell, with a comparable white population of 94.5% (exceeding Florida’s average of 78% and the U.S. average of 75.1%) and its population size of 2,677, to exemplify Celebration’s exclusivity. Campbell, an unincorporated census-designated place, lies only 11 miles south of Celebration56 and more accurately, if not worse, portrays the average economic state of Florida and the nation. The 2000 Census details Campbell’s population 25 years and over possessing a bachelor’s degree or higher to be 13.6% (Florida’s average is 22.3% and the U.S. average is 24.4%) and its population’s median household income in 1999 is $26,373 (Florida’s average is $38,819 and the U.S. average is $41,994).57 The following tables depict the demographics and employment industry gap of Celebration compared to Osceola County, Florida, and the U.S.:

Census 2000, GCT-P13. Occupation, Industry, and Class of Worker of Employed Civilians 16 Years and Over.
Census 2000 Demographics, www.census.gov
With over 50% of its residents working in professional fields and the median value of its homes worth more than $380,000, Celebration’s 27.7 kilometer (10.7 mile) of prosperity conspicuously overshadows the rest of Osceola County’s 3,873.3 kilometer (1,495.3 mile) of scarcity. The Disney Corporation’s initial master planning of the town and inextricable ties to its future development, even after ceding the residential area to its own Homeowners Association, explain this phenomenon. McBride reveals that regulations established by the Disney Corporation cannot be altered by the association unless granted by the company. “Furthermore, a majority of landowners may override any decision that the Association will make, [but] Disney will always be the majority landowner in Celebration.” The corporation accomplishes this by setting “aside half of the property to be preserved for ‘environmental reasons.’”58 This demonstrates the false use of conservation areas for private control of special districts. Alternatively, proponents of such dependence may identify Celebration’s success results from the autonomous actions of a single master planner – the Disney Corporation. The privatization of urban planning, though, accelerates regional imbalances, inequitable distribution of an area’s wealth, and may lead to enormous negative externalities. McBride exposes an instance which questions Celebration’s success benefiting the county. “The Celebration School was built before there was demand for a school, thereby robbing precious resources from other schools in the area badly in need of infrastructural improvements. Although Disney contributed a remarkable $9 million to the teaching academy, the school still cost the district another $10 million – a significant outlay for a school that was not yet needed while other schools in the district suffer from overcrowding and crumbling facilities!”59 Another example of a conflict of interests occurred in 1989 when a Florida law that limits the amount of random tax-free bond issuance in the state caused a controversy between Reedy Creek ID and Orange County; Reedy Creek ID obtained $57 million in tax-free bonds that nearby Orange County had wanted for low-income housing.60 Albeit, as mentioned earlier, SB 414’s intention most likely targets for the creation of residential communities, examples like Reedy Creek ID and Celebration, Florida can still shed light into possible regional outcomes of the bill.

Another recent article from Macon.com further confirms SB 414’s indicated purpose. Republican State Representative Larry O’Neal introduces House Bill 1323 (HB 1323), the Georgia Smart Infrastructure Growth Act of 2006,61 a legislation which authorizes the creation of Infrastructure Development Districts (IDD). The article informs its readers of construction companies sponsoring trips for legislatures to retirement communities in Florida.62 Both SB 414 and HB 1323 are highly similar and can be seen as outgrowths of those construction company’s efforts. The naming of special districts created under HB 1323 as “Infrastructure,” though, gives a false impression of its powers limited to the building of roads, bridges, and sewage and water networks and maintenance facilities. On the contrary, “infrastructure” improvements in the Georgia Smart Infrastructure Growth Act of 2006 closely mirror economic development projects mentioned in the Rural Georgia Economic Development Act of 2006. House Bill 1323 permits an infrastructure district to build roads, bridges, street lights, school buildings, and indoor and outdoor recreational facilities; establish and manage water, transportation, security, waste disposal, and pest and fire control systems; and set up conservation areas.63

The powers given to Infrastructure Improvement Districts under House Bill 1323 actually surpass that of Residential Community Improvement Districts under Senate Bill 414. Many governmental affairs remain akin in both legislations:

  • A board of five members exercise the powers granted to the district.64

  • It is not a conflict of interest for board members or employees of the district to be landowners in the district.65

  • Action taken by the district shall be upon a vote of a majority of board members present.66

  • The board elects or appoints its own staff.67

  • The board determines the district’s budget and submits it to the local government for purposes of disclosure and information only.68

  • The board can sue and be sued in the name of the district.69

  • The district can borrow money, issue bonds, charge user fees, and levy taxes and special assessments for contract services, to finance improvement projects, and to fund district activities.70

But, unlike SB 414, HB 1323 does not require a petitioner to pay a $15,000 filing fee. And different from the formation of RCIDs, the petition for an IDD does not require the written consent of all landowners whose real property is to be included in the establishment of the district.71 The elections of district board members also differ between both bills. To achieve greater petitioners’ control of the district, HB 1323 entitles each elector, as opposed to each landowner under SB 414, one vote per acre of land for each board member to be elected. All electors originate from government members and mainly from petitioners.72 The absolute representation of the district by petitioners guarantees developers’ control of the district regardless of increases in private landownership within the district. Where SB 414 may enforce deed restrictions, HB 1323 allows infrastructure districts to establish and enforce deed restrictions liken to a Homeowner’s Association when one does not exist:

  • “To impose and enforce certain deed restrictions pertaining to the use and operation of real property within the district. The district may impose all or certain portions of the deed restrictions…”73

Contract conditions for both types of districts nearly parallel each other except for their delivery requirements: Residential Community Improvement Districts require a contract for “the initial sale of a parcel [or] residential unit,” but since no one can opt out of an Infrastructure Improvement District, anyone selling or conveying their property within the IDD must have the new owner sign the district contract.74 And a clause in HB 1323 covers lawsuits against the district taxing residents for improvements that may derive no benefits to those residents:

  • “A district that is composed of at least 1,500 acres may define areas or designate certain property of the district to pay for improvements, facilities, or services that primarily benefit that designated area or property and do not generally and directly benefit the district as a whole.”75

Some repercussions of this provision may come in the form of golf courses, fire and security services, and recreation and school facilities taxed to residents for “infrastructure” improvements in the district without any due process, representation, or benefits derived.

We now come full circle back to the topic of retirement communities as a market niche for the economic development of rural Georgia. Although retirement communities can be self existing entities, the need for goods and services, a health-care staff, a low-wage support staff, and cost advantages developing near urban infrastructures will most likely compel new developments to locate in towns or near cities. Furthermore, location decisions for retirement communities and general developments will most likely be influenced by its close proximity to land features (forests, mountains, lakes, coastlines, beaches, etc.) and social amenities (airport access, universities, golf courses, shops, restaurants, museums, theatres, etc.). Opponents to Georgia’s population growth will elicit environmental damage and potable water depletion as factors that legislatures should particularly consider in the passage of either SB 414 or HB 1323.76 Concerning the intent of both bills targeting retirement communities, outcomes of legislations, however and oftentimes, differ from intentions. But we will look to economist Richard J. Reeder’s “Retiree-Attraction Policies for Rural Development” in the discussion of this topic.77 Information from his research has been condensed to fit this report; the entire study should be read for a better understanding on retiree-attraction.

The following table reveals Georgia’s low percentage of the aging population:

Census 2000, TM-P020. Percent of Persons 65 Years and Over: 2000. Data Sets with Thematic Maps

Increasing the baby boomer population in the state could have significant impacts on its economy. The positive consequences of retirees’ consumption of goods and services, which leads to job creation and local businesses sustainment, juxtaposes against negative impacts from their public service demands and opposition to tax increases for public schools and economic developments. Combined with the uncertain future of Medicaid, Medicare, and Social Security, the principal characteristic to positive retiree attraction outcomes, therefore, is the retirees’ class. Planned retirement communities, promoted by SB 414 and HB 1323, could be the linchpin to the initiation of a successful Georgia retiree attraction program. Developing in a rural community which lacks all the goods and services that they demand, though, will cause economic activity leakages to surrounding communities. Conversely, Reeder states that areas with rapid population growth like northern Georgia “have little need for attracting more people and may even be hurt by a retiree-attraction policy,” and “places with good potential to attract high-wage, high-tech firms…might benefit more from non-retirement development [like] high-tech industrial parks.78

Due to the nature of writing a report on a legislative bill still open for revisions, we will have a look at the latest revision of Senate Bill 414, version LC 36 0230S, before making recommendations.
Senate Bill 414 Version LC 36 0230S

The many changes with the latest version of Senate Bill 414 elevate the bill’s authority close to par with House Bill 1323. Deed restrictions remain to be the major land issue difference between both bills. But SB 414 has included many new disclosure provisions that HB 1323 lack (version LC 18 5183ER).79 The comparison between Senate Bill 414 version LC 36 0230S with the older version LC 28 2753S below is not all-inclusive, but the following points of interests demonstrate its close relation with HB1323:

The positive changes to SB 414

  • Allowing local governments instead of counties in the state to create Residential Community Improvement Districts. Local governments can object to the creation of a district.80

  • Improvement districts “may extend into an adjoining county, provided that the governing authority of such county consents in writing to” its establishment.81

  • The annual audit of the district’s financial records “shall be submitted to the State Department of Audits for review.”82

  • Included a provision to cover service delivery agreements between the district and the county and/or municipality for services and facilities.83

  • “In the event that a district defaults on its obligations, landowners within the district shall only be responsible for obligations related to the district that are associated with their property and not the obligations of the district as a whole or the obligations of any other landowner.”84 Take this “positive” provision with a grain of salt, because analogous to credit card protection plans, delivery and execution of contract terms may significantly differ from the expectation of those terms.

  • “The county shall be reimbursed for the actual and reasonable expenses of collecting taxes and assessments on behalf of the district.”85

  • The district now must obtain “the consent of the local government” before employing water supply, sewer, and waste-water management.86

The neutral or negative changes to SB 414

  • The Department of Community Affairs has a bigger role in reviewing all improvement districts, but no authoritative oversight powers are granted to the agency.87

  • The petition removed the ability of properties within the district to opt out and, liken to HB 1323, every sale of property within the district will be held to the district’s contracts.88

  • The petition filing fee dropped to $5,000 because even though each landowner is entitled to one vote per acre of land, electors for the board will consists of petitioner members liken to House Bill 1323.89

  • An addition to the bill requests the local government to consider two new conditions before approving the creation of the district lack substantive power: “Whether the district is compatible with the appropriate local government in general and will supplement rather than be a detriment to the general population and existing taxpayers; and Whether the district will result in an increase in taxation to existing taxpayers in the county or municipality.”90

  • “If the district…extends into an adjoining (municipality) or county…the governing authority shall be entitled to appoint an additional member to the board,” but ensuring petitioner rule, lawmakers insert “and the petitioner shall be entitled to designate one additional member for each such member appointed by such county or municipality.”91

  • 36-76-4 (k) and 36-76-22 can be seen as grand manifestos of the bill’s stance on disclosure, but disclosure proves futile if “the district shall have the same immunity and exemption from liability for torts and negligence as the State of Georgia; and the officers, agents, and employees of the district, when in performance of work of the district, shall have the same immunity and exemption from liability for torts and negligence as officers, agents, and employees of the State of Georgia.”92

  • Identical to HB 1323’s 36-93-25 (a), SB 414, 36-76-8 (a) (14) safeguards the district from lawsuits against the district taxing residents for improvements that may derive no benefits to those residents.93

Recommendations for Senate Bill 414 and House Bill 1323

In “Special District Governments: examining the questions of control,” Kari Hudson points out that after numerous stories of “bankrupt special districts, illegal tax levies and misdirected bond proceeds,” the Florida Legislature “in 1979,...enacted the Special Districts Disclosure Act to ensure that independent special districts met minimum requirements in accounting, creation, dissolution, bond issues, registered agents, elections, retirement benefits and other matters.” Also, “an in-depth report about special districts…completed in 1987 by the Advisory Council on Intergovernmental Relations (ACIR)…recommended greater accountability and uniformity in special districts and operations, including taxation, bond issues, elections, required reports and planning.”94 A look at a Florida study done on Independent Special Districts will help us most in making recommendations for both bills.

In 1995, the Office of Program Policy Analysis & Government Accountability for the State of Florida reviews Independent Special Districts and concludes:

The Positives

  • It is uncertain whether the fragmentation of local government services by ISDs cost or benefits more to the community. ISDs may promote “greater efficiency through competition and better responsiveness to the public” or “increases administrative costs, promotes duplication of delivery systems, and reduces accountability for delivery of services.”95

  • The review “could not identify any trends (in Florida) that substantiate that ISDs are used to circumvent millage caps.”96

  • “ISDs (have) tax and fee assessment authority separate from city and county operating millages, (and allows) needed services and infrastructure to be provided when local governments cannot or will not provide them; providing and charging for services to only those citizens that need them; and being the fastest means of providing needed services.”97

The Negatives

  • “Water Management Districts noted concerns that independent special water control districts activities may not further district watershed protection and pollution reduction goals.”98

  • “Deteriorating financial condition of some ISDs may go undetected.”99

  • “ISDs not meeting financial reporting requirements and limited corrective action taken to obtain (the following) required financial reports:”

  • “Financial reports to the Department of Banking and Finance;

  • Annual financial audit reports to the Office of the Auditor General; and

  • Retirement actuarial reports to the Division of Retirement in the Department of Management Services.”100

  • And an incomplete Florida DCA special district data base.101

The Recommendations

  • A county review of ISDs, a merger and transfer of ISD services, or take no action. “Given that our review did not identify any conclusive or widespread problems with ISDs, the Legislature may wish to make no changes.”102

  • The Office of the Auditor General recommends “the use of financial indicators and trend analysis as oppose to ineffective local government financial statement reviews to achieve better detection of ISD financial emergencies.103

  • Increase accountability of ISDs by ensuring:

  • “Meetings of a special district’s governing board are open to the public;

  • Special district activities must be consistent with local comprehensive plans;

  • Taxes associated with independent special districts should be disclosed on the notice of proposed taxes delivered to each taxpayer listed on the tax roll; and

  • Financial disclosures are required by members of a special district’s governing board.”104

  • Concerning the failure of ISDs in reporting financial reports:

  • “DCA staff acknowledges that noncompliance is problematic, but pointed out that there is no penalty available when special districts do not report. Without some form of penalty other than dissolution, staff believes enforcement efforts would have little effect on noncompliance rates.”105

  • And incomplete DCA database was due to “(1) not requesting all needed information and (2) some special districts not submitting requested data.”106

Recommendations for SB 414 and HB1323

Commercial Community Improvement Districts have been successful in revitalizing or contributing to the success of many business districts around Atlanta. Unlike the agreeable goal of customer attraction, the creation of private governments to tax a community for improvements beyond infrastructures and for the collective interests of all its residents cannot be made, in our democratic society, rationally sound. And the term “infrastructure” in this report differs from House Bill 1323’s unsavory definition of infrastructures to imply everything under the sun. On the other hand, encouraging the development of planned retirement communities within its own boundary for an improvement district could be a positive economic initiative for Georgia to exploit as the baby boomer generation retires. The problem of intent-outcome disconnect exists when both bills can be used to create improvement districts for residential communities anywhere in the state. To protect against private government corruption and uphold community preservation, oversight and accountability stipulations should be included alongside disclosure requirements. First off, HB 1323 should follow in the footsteps of SB 414 and include full disclosure conditions. And, the following recommendations apply to both legislative bills:

  • Set minimum requirements for all aspects and phases of an improvement district.

  • Include a provision that clearly states improvement districts cannot ignore, altar, or establish State and Local Zoning and Land Use laws.

  • Ensure better detection of improvement district financial fall-outs by using financial indicators and trend analysis.

  • Include monetary reprisals above the cost of administrative inquiries for a district’s failure to disclose obligated information or financial statements.

  • Ensure a fair system of sealed competitive bidding for contract services.

Baca, Aaron. “Eminent Domain Restructuring Could Restrict Local Governments.” Marietta Daily Journal’s Online Edition, 10 January 2006. http://www.mdjonline.com/articles/2006/01/10/89/10206851.txt
Billips, Mike. “Bill Would Allow Bonds to Fund Residential Infrastructure.” Macon Telegraph and Wire Service, 06 January 2006. www.macon.com/mld/macon/13560566.htm
___________. “WR’s O’Neal Proposes Own Private Towns Bill.” Macon Telegraph and Wire Service, 15 February 2006. http://www.macon.com/mld/macon/news/local/13873832.htm
Business Improvement District. Bloor West Village Business Improvement Area. Toronto, Canada. http://web.mit.edu/11.204/www/webportfolio/BID/BID_What_is_a_BID.html
Census 2000. http://www.census.gov
Central Atlanta Progress / Atlanta Downtown Improvement District 2004 Annual Report. http://www.atlantadowntown.com/docs/CAP_AR_2004final.pdf
Cobb Chamber of Commerce. Cumberland CID Wins Prestigious Award, 12 December 2002. http://www.cobbchamber.org/chamber/chamberinfo/Press_Releases/2002_Press_Releases/cumberland_cid_wins_prestigious_award.htm
Cumberland CID. Providing a Better Way to Work. Commuter Club. http://www.commuterclub.com/communityimprovedist.htm
Ellwood, Wayne. “Inside the Disney Dream Machine.” New Internationalist. Issue 308, December 1998. http://www.newint.org/issue308/keynote.htm
Florida Statute. Title XIII Planning and Development. Chapter 190 Community Development Districts.
Georgia Department of Community Affairs. “City Business Improvement Districts.” GA. Laws 1981; OCGA 36-43-1 along with the 1990 and 1992 Amendments.
Goldstein, Doris S. “Beyond the Homeowners Association: Blending Community Development Districts, Tax Exempt Organizations and Commercial POAs for Larger Planned Communities.” Prepared for the Twenty-Eight Institute on Condominium and Cluster Developments. Miami, Florida, 30 October 2003.
Hendrick, Bill. “A Big Generation starts to turn 60.” Atlanta Journal Constitution, 15 January 2006. http://www.ajc.com/news/content/living/stories/0115lvboomers.html

House Bill 1323. “Georgia Smart Infrastructure Growth Act of 2006.” Version LC 18 5183ER.

Hudson, Kari. “Special District Governments: Examining the Questions of Control.” American City and County, 01 September 1996. http://americancityandcounty.com/mag/government_special_district_governments

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Lewis, Laurence. “Celebration Traffic Study Reaffirms Benefits of Mixed-use Development.” HDR Transportline, Vol. 14, No. 2, September 2004. http://www.hdrinc.com/Assets/documents/Publications/Transportline/September2004/CelebrationTrafficStudy.pdf
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Map of Osceola County. Snob Hollow Designs. http://www.snobhollow.com. http://www.floridacountiesmap.com/osceola_county.shtml
Metropolitan Life Insurance Company. MetLife’s Mature Market Institute. Market Study. Demographic Profile: American Baby Boomers (New York, 2003). http://www.metlife.com/WPSAssets/19506845461045242298V1FBoomer%20Profile%202003.pdf
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Revision of Senate Bill 414. “Rural Georgia Economic Development Act of 2006.” Received on 12 January 2006. http://www.legis.state.ga.us/legis/2005_06/pdf/sb414.pdf
Substitute to Senate Bill 414. “Rural Georgia Economic Development Act of 2006.” version LC 28 2753S.
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Supreme Court ruling on Kelo v. City of New London. http://www.law.cornell.edu/supct/html/04-108.ZS.html
Telephone interview with GAW Realty’s Dave Kaszubinski.
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Town Center Area Community Improvement District Website. http://www.cobbrides.com/cidpgResources.html

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