Ohio Public Law Update

    View Author Fall 2006

    Special Improvement Districts

    Property owners and municipalities in Ohio are working together for the betterment of designated areas of municipalities through the implementation of Special Improvement Districts ("SID"). A SID is a district created pursuant to a petition of property owners seeking to have provided certain public services or public improvements that benefit the SID and to have those public services or public improvements paid for through special assessments levied by the municipality on properties in the SID.

    A SID constitutes another variation on the public-private partnership. The property owners in a defined area initiate a petition process to form a district and develop a plan for public improvements or public services in the district. Working through the municipality in which the SID is located, the SID provides a mechanism by which to pay for district-wide public improvements (e.g., curbs, sidewalks, street lighting) or public services (e.g., street and sidewalk maintenance, security patrols, marketing campaigns) through special assessments levied on properties in the SID.

    In Ohio, Ohio Revised Code Chapter 1710 provides the authority and procedures for establishing a SID.

    • Petition. A SID is created pursuant to a petition submitted by the owners of at least 60% of the front footage (i.e., footage abutting on streets, alleys, public roads, places, boulevards, parkways, park entrances, easements or other public improvements) or 75% of the area of real property located within the proposed district.
    • Members of the District. Each owner of real property within the SID is a "member" of the SID. (Not included within the district is church property or property owned by the federal, state, county, township or municipal government, unless a church, county, township or municipal corporation has specifically requested in writing that the property be included in the district.)
    • Board of Directors. The SID is governed by the Board of Directors of a nonprofit corporation formed by the SID. The Board of Directors must include at least five members, including the Mayor and a person appointed by the City Council. The remaining members of the Board of Directors must be owners of real property elected at a meeting of the members of the SID.
    • Initial Plan. An Initial Plan for public services or public improvements for the SID may (and typically does) accompany the Petition of the property owners. The Initial Plan sets forth the specific public improvements or public services to be provided (and length of time services will be provided), identifies the area in which it will be provided and specifies the method and period of time during which special assessments are to be collected. The Initial Plan may also include the creation and operation of the SID and of the nonprofit corporation.
    • Submission to Council. The Petition and the Initial Plan, along with the proposed articles of incorporation for the nonprofit corporation, must be submitted to the Mayor and to the Council of the municipality. The Council must then approve or disapprove them within 60 days. The Council may impose reasonable conditions in its resolution of approval.
    • Special Assessments. After it approves the Petition, the Articles of Incorporation and a plan for public services or improvements, the Council may undertake special assessment proceedings in order to levy special assessments against all of the property within the boundaries of the SID (other than property of governments or churches that have not requested to be included) for a period of up to 10 years to provide funds to pay costs of carrying out the plan. The process is generally consistent with the procedures for special assessment projects contained in Revised Code Chapter 727.
    SIDs can be a win-win for property owners and municipalities alike. Property owners value the process because it gives them a mechanism to obtain enhanced services and improvements in their area, because SID improvements or services must be in addition to, and not in lieu of, any public improvements or public services provided by the municipality. For example, in the case of enhanced public services, the SID maintains its current level of municipal services and all of the additional revenues generated by the special assessments are delivered to the SID for use in accordance with the plan developed by the property owners. Similarly, municipalities benefit by gaining additional improvements or services within their boundaries without affecting existing city budgets and also benefit by having active and engaged property owners working for the betterment of the community.

    Squire Sanders has counseled clients with special improvement districts throughout Ohio. We provide advice on all aspects of special improvement districts including the petition of property owners, the improvement or services plan, the process for the levying of special assessments, contracts with political subdivisions and service providers, corporate matters.