What is an Improvement District?
An Improvement District is a defined geographic area within which property owners agree to pay for certain services set to enhance the physical and social environment of the area. The services provided are supplementary to those provided by the local authority and usually include safety and security patrol officers, pavement cleaning, litter collection, maintenance of public space and the removal of illegal posters.
Complementary services, which are often taken on by the improvement district include: web-based communication and information systems connecting all businesses in the area; business attraction; business retention; branding and marketing the CID precinct area or events management to attract more people to the CID area.
The provision of these services is based on a hierarchy of needs that looks at how cities move from an unpleasant to an exceptional experience. The type and level of services required of each area is based on its needs and where it fits on this laddered hierarchy.
In Gauteng, improvement district applications to local authorities are considered in terms of the Gauteng City Improvement District Act No. 12 of 1997 which was approved by the Gauteng provincial legislature on 9 December 1997. In some other provinces improvement districts are established in terms of local authority by-laws.
Who pays for additional services in the Improvement District?
Once an improvement district is legislated, according to the City Improvement District Act, the cost of providing additional services is borne by the property owners through the payment of a CID levy. The levy is mandatory and is based on the land value of the individual stands. Unlike rates, funds contributed by the property owners may only be spent in the area in which they are collected.
Formation and operation of city improvement districts
- The geographic boundaries of the improvement districts have to be established.
- All property owners and major tenants within a defined area must be identified and exposed to the proposed intervention.
- A referendum has to be held and a pre-determined majority must be achieved in order to legally establish an improvement district.
- Whilst the application to the local authority to establish an improvement district may be made by 25% of property owners, final approval will not be considered unless more than 50% of relevant property owners are in agreement.
- Once a district is authorised, 100% of property owners within a district have to contribute financially.
- Once legally constituted the improvement district authorises the council to levy an additional tax on improvement district members, who are required to pay them just as they have to pay rates.
- The council collects the levy on behalf of the improvement district and pays the money received directly over to the improvement district without deduction or gives agency status to an approved agency to collect levies on its behalf.
- Each district has its own board of directors elected from the contributors and they effectively control the district within the terms of their original improvement district business plan.
- The board appoints a specialist urban management company such as Urban Genesis Management to manage the day-to-day operations within the district.
- The services to be provided by the improvement district reflect the actual needs of the area and are negotiated with the local authority.
- An agreement as to the level to which the local authority will be providing services out of the normal rates base has to be negotiated.
- The improvement district is established for an initial period of three years but its life can continue indefinitely unless members move for material changes to the original business plan.
What are the benefits of establishing an improvement district?
The improvement district approach is holistic
All issues that may be negatively impacting on the area are investigated and dealt with on an integrated basis.
Enhancement of the environment and strengthening investor confidence
Enhancing the safety, cleanliness and economic vitality of different business, retail and commercial nodes strengthens the competitiveness in the region.
The improvement district supports investment by business
The perception of crime, grime and general environmental disorder in most urban areas has a negative impact on staff, willingness of customers to visit the area and thus business growth and development.
An improvement district creates a positive identity for the area
The establishment of an improvement district provides a new and positive identity from which to launch a concerted effort to maintain and enhance the asset base in the area thus attracting continued investment and development.
The improvement district offers private sector management and accountability
Once the improvement district is set up, a management body is then established in the form of a section 21 company. This company appoints a manager through which the improvement district is managed. Annual activities and budgets are developed by the CID management company who provides a full set of monthly management accounts all of which are overseen by the board. This ensures that the improvement district is directly accountable to those in the business community who pay the levy.
The effectiveness of the improvement district is constantly measurable
By mounting regular opinion surveys, which are compared to the results of an initial perception survey of the area, the board and all stakeholders are able to measure the success of the initiative.
CID’s monitor any new major developments or interventions that impact the area.
As the custodian of the area the CID is aware and comments on developments in the area. In Sandton this includes projects such as the Gautrain project.
Improvement districts have effective working relationships with appropriate bodies or associations.
In Sandton these relationships include Council, the Johannesburg Tourism Company, the Sandton Tourism Association and the Alexandra Tourism Association.
The improvement district is able to put forward ideas for change to council.
Due to its close relationship with council, the improvement district is able to petition for new initiatives which will further improve the area. This can include things like traffic surveys.
