SB 112

Under existing law, a Class 2 municipality may provide for the establishment of self-help business improvement districts authorized to levy assessments to promote economic growth in the districts

The bill would provide procedures for any Class 2 municipality to establish additional self-help business improvement districts for the purpose of promoting tourism, including the creation of nonprofit district management corporations to manage the districts. The bill would authorize districts to levy a special assessment on particular classes of businesses located within the district for the purpose of promoting tourism for the benefit of businesses in the district. The bill would provide for the dissolution of a district and withdrawal of a nonprofit corporation's designation as a district management corporation

The bill would also provide procedures for certain self-help business improvement districts to expand or reduce the territory in the district under certain conditions

Relating to Class 2 municipalities; to amend Sections 11-54B-40, 11-54B-41, 11-54B-43 to 11-54B-50, 11-54B-57, and 11-54B-58 of the Code of Alabama 1975, to provide procedures for the establishment of self-help business improvement districts for the purpose of promoting tourism, including the creation of nonprofit district management corporations to manage the districts; to provide for the levy of a special assessment on particular classes of businesses located within the geographical area of a district for the purpose of promoting tourism for the benefit of businesses in the district; to provide for dissolution of a district and withdrawal of a nonprofit corporation's designation as a district management corporation; and to provide procedures for certain self-help business improvement districts to expand or reduce territory in the district under certain conditions.

Section 1

This act only applies to Class municipalities.

Section 2

Sections 11-54B-40, 11-54B-41, 11-54B-43 to 11-54B-50, 11-54B-57, and 11-54B-58 of the Code of Alabama 1975, are amended to read as follows:

§11-54B-40.

Legislative findings.

(a) The Legislature makes the following findings:

(1) That patterns of urban development have had substantial adverse impacts upon downtown and community business districts vital to the economy of the State of Alabama.

(2) That the public interest would be advanced by authorizing the creation of self-help business improvement districts and district management corporations to assist any Class 2 municipality in promoting economic growth in business districts.

(3) That the public interest would also be advanced by authorizing the creation of self-help business districts for the promotion of tourism that include businesses of a designated class and funding supplemental business services through the levy of assessments on businesses of the designated class that receive benefits from those supplemental business services.

(3) (4) That a district management corporation representing real property owners, or in certain cases, owners of a particular class of business, within self-help business improvement districts can assist any Class 2 municipality in promoting economic growth and employment within business districts.

(4) (5) That any Class 2 municipality should be authorized to create self-help business improvement districts and designate a district management corporation to execute self-help programs to improve the local business climate.

(b) The Legislature further finds that it is the public policy of the State of Alabama to permit any Class municipality to protect the public welfare and the interests of the public in the safe effective movement of persons, to encourage healthy economic development, to promote jobs, and to preserve and enhance the function and appearance of business districts located within any Class 2 municipality through the adoption of ordinances as authorized by this article.

§11-54B-41.

Definitions.

As used in this article, the following words and phrases shall have the following meanings:

(1) DISTRICT MANAGEMENT CORPORATION. An entity created by incorporation under the Alabama Nonprofit Corporation Act, Chapter 3A of Title 10, and designated by ordinance by the incorporated municipality to manage a self-help business improvement district.

(2) MUNICIPALITY. Those municipalities designated as Class 2 municipalities as defined in Section 11-40-12.

(3) SELF-HELP BUSINESS IMPROVEMENT DISTRICT. An area within the incorporated municipality designated by ordinance as an area in which a special assessment may be levied on the owners of real property located within the geographical area of the district for the purposes of providing supplemental services within the district and promoting the economic and general welfare of the district. or, alternatively with respect to a district formed for the purpose of increasing tourism within the municipality, an area or areas within the municipality designated by ordinance as an area or areas in which a special assessment may be levied on businesses of a particular class located within the geographical area of the district for the purposes of providing supplemental services for the benefit of the businesses within the district, in which case the district shall include only those existing and future businesses of the designated class.

§11-54B-43.

Findings required for a public hearing on the adoption of a self-help business improvement district ordinance.

A public hearing on the adoption of an ordinance creating a self-help business improvement district may be called only if the governing body of a Class 2 municipality finds that:

(1) A request for the creation of a self-help business improvement district which satisfies the requirements of Section 11-54B-44 has been filed with the clerk of the municipality.

(2) The area described in the self-help business improvement plan would benefit from being designated as a self-help business improvement district.

(3) The self-help business improvement district plan required by Section 11-54B-44 includes a designated district management corporation to provide administrative and other services to benefit businesses, employees, residents, and consumers in the self-help business improvement district.

(4) The self-help business improvement district plan includes a special assessment which will be levied by the municipality on the owners of the real property or, in certain cases, on businesses of a particular class, located within the geographical area of the district to finance the supplemental services described in the plan and that the special assessment is expected to produce revenue which is consistent with the annual budget adopted and approved as provided in this article.

(5) The copies of the articles of incorporation and bylaws of the district management corporation shall satisfy the requirements of Section 11-54B-48.

(6) It is in the best interest of the Class municipality and the public to designate the geographical area described in the plan as a self-help business improvement district and to designate a district management corporation to provide administrative and other services to the district.

(7) The existing level of publicly funded services provided by the municipality in the geographical area of the proposed district has been documented in writing and certified by the mayor of the municipality.

§11-54B-44.

Requirements of a request for the creation of a self-help business improvement district.

A request for the creation of a self-help business improvement district shall contain all of the following:

(1) The signatures of a representative group of the owners of the nonexempt real property located within the geographical area of the proposed district. The group shall include the signatures of the owners of the nonexempt real property comprising at least 60 percent of the total fair market value of all nonexempt real property located in the proposed district and the signature of an owner of at least 50 percent of the parcels of property located within the proposed district. The county property tax assessment records shall determine ownership of real property and the fair market value. When record title to real property is vested in a public corporation or authority under a bond financing plan provided for by statute, the beneficial user of the real property in which title may ultimately be vested by purchase shall be deemed the owner of the real property.

(2) Alternatively, in the case of a district formed to increase tourism within the municipality, the signatures of a representative group of the owners of the designated class of businesses located within the geographical area of the proposed district. The request shall define the designated class of businesses. The group shall include the signatures of the owners of businesses comprising at least 60 percent of the proposed annual assessment and the signatures of the owners of at least 50 percent of the number of the businesses of the designated class located within the proposed district. The municipality's records shall determine ownership of businesses. If, however, the assessment methodology is based on a fixed rate per occupied room per night, the group shall include the signatures of the owners of businesses comprising at least 60 percent of the number of rooms within the district and the signatures of the owners of at least 50 percent of the number of businesses of the designated class located within the proposed district.

(2) (3) An accurate description, whether by metes and bounds, or by lot and block numbers, or by street addresses, of the proposed district.

(3) (4) A self-help business improvement district plan that shall include all of the following:

a. A description of the supplemental services to be provided in the district.

b. A budget outlining the annual cost of the supplemental services described in paragraph a.

c. A description of the method which will be used to determine the amount of the special assessment to be levied on the owners of the real property or, in the case of a district formed to increase tourism within the municipality, on businesses of a designated class, in either case located within the geographical area of the district to finance the supplemental services described in paragraph a. If the district is formed to increase tourism within the municipality, special assessments may be levied based on the business activity, including, but not limited to, a percentage of gross revenue or a fixed rate per occupied room per night on parcels of property or on businesses of a designated class within the district. If the assessment is levied on businesses of a designated class, all other provisions of this article referring to property assessment shall also include assessments against the businesses.

d. The number of years, not to exceed five years, that the special assessments described in paragraph c. will be levied.

e. Copies of the articles of incorporation and bylaws of the district management corporation designated by the plan to provide the administrative and other services to the district.

§11-54B-45.

Mailing of proposed ordinance and notice of hearing.

At least 20 days prior to the date set for a public hearing on the proposed self-help business improvement district plan, notice of the date, time, and place of the hearing, with a description of the geographical area proposed to be included in the district, the proposed ordinance, and the self-help business district plan shall be mailed to all known owners of nonexempt real property located within the geographical area proposed to be included in the district by the municipality. The notice shall be mailed to all known owners of nonexempt real property at the address listed in the county property tax assessment records. In addition, a copy of the notice shall be posted in at least three places located within the geographical area proposed to be included in the district. A property owner's failure to receive a copy of the notice shall not constitute grounds to contest the validity of a self-help business improvement district established by ordinance.

Alternatively, in the case of a district formed to increase tourism within the municipality, the notices required shall be mailed to the owners of the businesses of the designated class, but the failure of a business owner or business to receive a copy of the notice shall not constitute grounds to contest the validity of a self-help business improvement district established by ordinance.

§11-54B-46.

Review of self-help business improvement district plan and adoption of ordinance.

The governing body of the municipality, upon review of the self-help business improvement district plan and after public hearing, may adopt an ordinance to designate, establish, and maintain the area described in the plan as a self-help business improvement district. The ordinance shall provide for an effective date of 30 days from the date of adoption of the ordinance by the governing body of the municipality and shall provide that, if the owners of nonexempt real property representing 60 percent of the total fair market value of all real property located within the district, or the owners of at least 50 percent of the parcels of property located within the district,; or, alternatively with respect to a district funded by assessments against a particular class of businesses, if the owners of businesses, consistent with the signatures required under subdivision (2) of Section 11-54B-44, file written objections to the establishment of the district with the clerk of the municipality, the provisions of the ordinance shall be null and void and no district shall be created. The ordinance shall designate the district management corporation provided for in the plan as the district management corporation authorized to provide administrative and other services to the district and authorize the execution of a contract between the municipality and the district management corporation setting out the services to be provided by the district and the municipality. The contract shall provide that the municipality shall continue the same level of services in the district as provided prior to the creation thereof.

§11-54B-47.

Costs of supplemental services.

(a) The self-help business improvement district ordinance adopted by the municipality pursuant to Section 11-54B-46 shall provide that all costs of the supplemental services provided in a self-help business improvement district shall be financed through the levy by the municipality of a special assessment on the owners of the nonexempt real property located within the geographical area of the district and or, in the case of a district formed to increase tourism in the municipality, on businesses of the designated class within the geographical area of the district, and in either case shall designate the method set forth in the plan as the method used to determine the amount of the special assessment in a manner which fairly and equitably distributes the burden of financing the supplemental services among the nonexempt real property owners in the district. The ordinance shall list and describe, by lot and block numbers and by street addresses, all real properties or businesses against which the special assessment shall be made to fund the supplemental services. The ordinance shall also provide that property which is a single-family, owner-occupied residential property shall be exempt from the special assessment imposed by the district management corporation to finance the supplemental services provided in the business improvement district. Further, all property of utilities shall be deemed personal property exempt from the special assessment imposed by the district management corporation except for land and retail, storage, and office facilities owned by a utility within the business improvement district.

(b) The nonprofit corporation designated as a district management corporation under this article shall be exempt from the state corporate income tax, corporate franchise tax, and permit fee, and from state, county, and municipal sales, use, license, gross receipts, and ad valorem taxes.

§11-54B-48.

Collection of special assessment. (a) The self-help business improvement district ordinance adopted by the municipality pursuant to Section 11-54B-46 shall provide that the special assessment levied on the owners of the nonexempt real property located within the geographical area of the district shall be collected by the district management corporation, by the offices of the municipal revenue department, or by the offices of the revenue commissioner, who may be compensated for the service. The Except in the case of an assessment against a designated class of business, the ordinance shall also provide that the amount of any outstanding special assessment levied on a parcel of real property, together with any accrued interest and penalties, shall constitute a lien on the property. The lien shall take precedence over all other liens, whether created prior or subsequent to the date of the special assessment, except a lien for any of the following: (1) State, county, or municipal taxes. (2) A prior special assessment. (3) A prior recorded mortgage, deed of trust, or similar security instrument. (b) Other than foreclosures for state, county, or municipal taxes, a prior special assessment, or a prior recorded mortgage, deed of trust, or similar security instrument, the lien for the special assessment shall not be defeated or postponed by any private or judicial sale, or by any mortgage, deed of trust, or similar security instrument recorded subsequent to the date of final adoption by the municipality of the self-help business improvement district ordinance. No error in the proceeding of the governing body of the municipality or of the board of directors of the district management corporation shall exempt any real property from the lien or from payment thereof.

§11-54B-49.

Amendment of the self-help business improvement district ordinance.

(a) The governing body of the A municipality may amend an ordinance relating to the self-help business improvement district upon the written request of a representative group of the owners of the nonexempt real property located within the geographical area of the district. The request shall specify the content of the desired amendment or amendments which should be made by the governing body of the municipality to the self-help business improvement district ordinance. The request shall also include the signatures of the owners of the nonexempt real property comprising at least 60 percent of the total fair market value of all real property located in the district, or the owners of at least 50 percent of the parcels of property located within the district,; or, alternatively with respect to a district funded by assessments against a particular class of businesses, the signatures of the owners of businesses, consistent with the signatures required under subdivision (2) of Section 11-54B-44, determined pursuant to subdivision subdivisions (1) and (2) of Section 11-54B-44.

(b) Except for districts funded by assessments against businesses of a particular class, the governing body of the municipality may amend the self-help business improvement district ordinance to reduce or expand the real property comprising the self-help business improvement district in accordance with this subsection as follows:

(1) The ordinance may be amended to reduce the real property comprising the district following the submission of a request for reduction by the board of directors of the district management corporation.

(2) The ordinance may be amended to expand the real property comprising the district following the submission of a request for expansion by both of the following:

a. The owners of real property located within the area that is to be newly included within the district as provided in subdivision (3).

b. The board of directors of the district management corporation.

(3) Where a request for expansion is sought under this subsection, the request shall contain the signatures of the owners of nonexempt real property comprising at least 60 percent of the total fair market value of all nonexempt real property located in the geographical area to be added to the district and the signatures of the owners of at least 50 percent of the parcels of property located in the geographical area to be added to the district. Ownership of real property and the fair market value thereof shall be determined using the records of the tax assessor. When record title to real property is vested in a public corporation or authority under a bond financing plan provided for by statute, the beneficial user of the real property in which title may ultimately be vested by purchase shall be deemed the owner of the real property.

(4) A request for expansion or reduction shall include an accurate description, whether by metes and bounds, by lot and block numbers, or by street addresses, of the geographical area which is the subject of the reduction or expansion, as well as a similar description of the resulting district if such reduction or expansion was approved.

(5) At least 20 days prior to the date set for a public hearing on the proposed self-help business improvement district reduction or expansion, notice of the date, time, and place of the hearing, together with a description of the geographical area which is the subject of the reduction or expansion, shall be mailed to all known owners of nonexempt real property located within the geographical area which is the subject of the reduction or expansion, as ownership shown on the records of the tax assessor. In addition, a copy of the notice shall be posted in at least three places located within the geographical area which is the subject of the reduction or expansion. A property owner's failure to receive a copy of the notice shall not constitute grounds upon which the owner may contest the validity of a self-help business improvement district amendment.

(6) The municipality, upon review of the request for the reduction or expansion of the self-help business improvement district and after public hearing, may adopt an ordinance reducing or expanding the self-help business improvement district. The ordinance shall provide for an effective date which is 60 days from the date of adoption of the ordinance by the municipality and shall provide that, if the owners of real property which represent 50 percent or more by number of all parcels of real property located within the geographical area of the resulting district file written objections to the establishment of the district with the clerk of the municipality, the provisions of such ordinance shall be null and void and no reduction or expansion shall occur. The ordinance shall provide that the contract between the municipality and the district management corporation setting out the services to be provided by the district and the municipality shall be amended to provide that the same level of services provided by the municipality shall continue as before the reduction or expansion of the real property comprising the self-help business improvement district.

(c) There shall be no requirement that the real property located within the geographical area of the self-help business improvement district be contiguous.

§11-54B-50.

District management corporation limits, powers, and duties.

(a) District management corporations provided for in this article shall be incorporated under the Alabama Nonprofit Corporation Act, Chapter 3A of Title 10, and shall exercise their powers in a manner consistent with that law.

(b) To qualify for designation by ordinance to manage a self-help business improvement district, the articles of incorporation of a proposed district management corporation shall provide all of the following:

(1) That a board of directors shall manage the property, business, and affairs of the corporation.

(2) The names and addresses of the initial members of the board of directors.

(3) That the initial members of the board shall be divided into three groups which are as equal in number as is possible, that those groups will serve for initial terms of one, two, and three years respectively, and that all directors thereafter elected by the board of directors shall serve for a term of three years.

(4) That the members of the board of directors elected after the expiration of the initial terms set forth in subdivision (3) shall be elected by a majority vote of the owners of assessed real property or, in the case of districts funded by assessments against a particular class of businesses, of businesses of the designated class and dues paying members present after notice by first class mail.

(5) That a majority of the board of directors own real property or, in the case of districts funded by assessments against a particular class of businesses, of businesses of the designated class located in the geographical area of the district.

(6) That no funds received by the corporation from assessments on the property or businesses located in the district shall be expended except in accordance with the budget adopted or amended under the provisions of this article.

(7) That vacancies on the board of directors resulting from death, resignation, or removal, shall be filled by the remaining members of the board of directors of the district management corporation for the unexpired portion of the term.

(8) That at least once a year after designation, the corporation shall hold a general membership and public meeting appropriately advertised in the district at a place convenient to persons concerned with the operation of the district.

(9) That the corporation shall receive written suggestions from businesses in the district at any time.

(10) That municipal representatives designated by the mayor and by the governing body of the municipality shall be authorized to attend and participate in regular and called meetings of the board of directors of the district management corporation, but shall not vote on any matters considered by directors.

(11) That no amendment to the articles of incorporation or any bylaws shall be effective unless approved by the board of directors of the district management corporation.

(12) That a director shall receive no compensation for his or her service as a director, but shall be entitled to receive reimbursement for expenses actually incurred in the performance of his or her duties as approved by the board.

(13) That upon dissolution, or upon any withdrawal of the designation as the district management corporation, all interests in and title to funds held by or for the corporation, and all property of the corporation shall be transferred and assigned to a successor district management corporation, or if no successor district management corporation exists, to the general fund of the municipality for use in funding the programs as the board of directors of the district management corporation shall direct and designate.

(c) The district management corporation may do all things necessary to implement its purposes, including, but not limited to, the following:

(1) Adopt bylaws for the regulation of its affairs and the conduct of its business and to prescribe rules, regulations, and policies in connection with the performance of its functions and duties.

(2) Employ persons as may be required, and fix and pay their compensation from funds available to the corporation.

(3) Apply for, accept, administer, and comply with the requirements respecting an appropriation of funds or a gift, grant, or donation of property or money.

(4) Make and execute agreements as may be necessary or convenient to the exercise of the powers and functions of the corporation, including contracts with any person, firm, corporation, governmental agency, or other entity.

(5) Administer and manage corporate funds and accounts and pay corporate obligations.

(6) Borrow money from private lenders or from governmental entities.

(7) Enforce the conditions of any loan, grant, sale, or lease made by the corporation.

(8) Provide security, sanitation, and other services to the district supplemental to those provided by the municipality.

(9) Advertise the district and businesses included within the district.

(10) Recruit new businesses to fill vacancies in the district.

(11) Organize and promote special events in the district.

(12) Provide special parking arrangements or management of ongoing parking programs for the district.

(13) Participate in other governmental programs for which qualified and included in its approval plan.

(14) Undertake other activities or initiatives within the district as the board of directors of the district management corporation deem appropriate.

§11-54B-57.

Annual reports and audits.

(a) Within 90 days after the close of each fiscal year, the district management corporation shall make an annual report of its activities for the preceding fiscal year to the governing body of the municipality.

(1) Each annual report shall include, at a minimum:

a. A financial statement for the preceding year, including a balance sheet, statement of income and loss, and such other information as is reasonably necessary to reflect the district management corporation's actual performance, certified by the treasurer of the corporation.

b. The budget for the current fiscal year.

c. In the case of a district funded by assessments against businesses of a particular class, a list of the businesses of the designated class that are currently operating within the district.

(2) A copy of each annual report shall be sent to the mayor, the city council, and to all property owners, or in the case of districts funded by assessments against businesses of a particular class, business owners of the self-help business improvement district, in each case by first class mail or by personal delivery.

(b) Within 90 days after the close of each fiscal year, the district management corporation shall cause an annual audit of its books, accounts, and financial transactions to be made and filed with the municipality and for that purpose the corporation shall employ a certified public accountant. The annual audit shall be completed and filed with the governing body within four months after the close of the fiscal year of the corporation and a certified duplicate copy of the audit shall be filed with the mayor and the finance director or other financial control officer of the municipality.

§11-54B-58.

Sunset provision.

(a) Within 90 days after the adoption and approval of the fifth annual budget for any self-help business improvement district, the municipality shall set a hearing to determine whether the district should be continued, modified, or terminated. At least 20 days before the hearing, notice of the date, place, and time of the hearing shall be posted in at least three places within the district and mailed, along with the new district management plan, which shall contain the items described in subdivision (3) of Section 11-54B-44, to each real property or business owner who paid assessments to the district during the previous year as certified by an officer of the district management corporation collecting such assessments, the officers of the municipal revenue department, or the offices of county tax assessor and county tax collector, if they are the billing and collecting agency.

(b) At this hearing, if a petition presented to the municipality objecting to the continuation of the district is signed by non-exempt real property owners representing 60 percent of the total fair market value of all real property located within the district and the owners of at least 50 per cent of the parcels of real property located within the district,; or, alternatively with respect to a district funded by assessments against businesses of a particular class, signed by owners of businesses consistent with the signatures required under subdivision (2) of Section 11-54B-44, the district shall be terminated as of the end of the fiscal year next following the hearing."

Section 3

All laws or parts of laws which conflict with this act are repealed.

Section 4

This act shall become effective immediately following its passage and approval by the Governor, or its otherwise becoming law.