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Special Improvement District FAQs

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1. What is a SID?

A Special Improvement District (SID) is a public/private partnership in which property and business owners elect to make a collective contribution to the maintenance, development, and promotion of their commercial district.

The idea for the SID is modeled on the shared maintenance program of many suburban shopping centers. Tenants of a mall pay a common area maintenance fee to underwrite services that enhance the appearance of the common areas and provide cooperative advertising for the mall and its stores.

A SID works in much the same way. However, because a SID has multiple property owners (not one as in a mall) they agree to the extra fee (assessment). Thus, stakeholders in a commercial district can align themselves in much the same way to improve their area as does a mall operation.

Several advantages from this arrangement are: 

• A cleaner, safer and more attractive business district
• A steady and reliable funding source for supplemental services & programs
• The ability to respond quickly to changing needs of the business community
• Potential to increase property values and decrease commercial vacancy rates
• A district that is better able to compete with nearby retail and business centers

2. What does a SID do?

A Special Improvement District delivers a range of supplemental services in coordination with municipal services and invests in the long-term economic development of their district. These supplemental services and improvements may include the following:

• Maintenance - street/sidewalk cleaning, graffiti removal
• Public Safety/Hospitality – Public safety officers, visitor assistance
• Business Development – Commercial vacancy reduction, business mix improvement
• Marketing – Special events, public relations, promotional materials, holiday decorations
• Capital Improvements – Improved streetlights, custom trash receptacles, directional street signage, custom news boxes, flower boxes
• Landscaping – Planting trees/flowers, tree pit maintenance
• Community Service – Fundraising, charitable events, homeless and youth services

3. How are SID programs and services paid for?

Funds to pay for SID programs and services are generated from a special assessment paid by the benefited property owners. (Note: Many leases have a clause that allows property owners to pass the SID assessment on to their tenants.) The assessment is billed and collected by the Municipal government and then disbursed to the SID, which in turn delivers the District services.

A SID assessment is a fee that each property owner pays to support the operations of the SID. The sum of all the individual assessments that property owners pay comprises the total yearly assessment of the SID, and underwrites most, if not all, annual operating expenses.    The total yearly assessment is unique to each SID. The amount paid by each property owner is determined by a formula that each SID creates for its district during the formation process. Formulas are based upon property size and or value.

Different properties may pay different assessments depending upon their type of zoning classification. For instance, commercial, business and retail properties are all assessed at 100 % of the assessment rate established. Not-for-profit owned and occupied properties generally do not pay an assessment, but may be charged a fee. City, State and or Federal Properties do not pay an assessment. Each district decides on their own how they will assess their unique different property classifications.   A business that operates out of a residential property is usually assessed at a lower percentage of the full assessment but is assessed nonetheless.

4. SID or Merchants' Association?

While property owners and tenants could participate in a voluntary merchants association, the SID model presents two distinct advantages:

SID's	Merchant Associations
Provide a steady and reliable source of funding.	Does not offer a continuous source of funding, depends on voluntary contributions.
Legislation states that all property owners in a SID must pay assessments; there are no free rides.	Cannot enforce the financial participation of all stakeholders in a given district.

5. Will municipal services be reduced if the SID is providing similar services?

No. The services provided by the SID are supplemental to the services provided to the district by the municipality. For example, if a SID provides sanitation services, it will still receive the same level of service from the municipalities Public Works/Sanitation as it did before the supplemental services were added.

6. Who oversees the SID?

Each SID is governed by a Board of Trustees that is elected by the members of the district or in accordance with the by-laws. The Board has a fiduciary responsibility to the SID and hires the management that administers the SID on a day-to-day basis. The Board is divided into classes that include commercial property owners, business owners, retail tenants, public officials, and sometimes residents. The Board should be representative of the district, but the majority of Trustees must be property owners.

7. How is a SID formed?

SID’s represent a long-term financial commitment; therefore the formation of a new SID requires the support of the property owners, business owners and the tenants in the district. A municipality creates a SID only when there is widespread support among the property owners, business owners and tenants who are fully informed about the proposed program.

There are usually three phases in the formation of a SID: 

• Phase One – Planning
• Phase Two – Outreach
• Phase Three – Legislative Authorization

8. What other municipalities in New Jersey have a SID which includes the entire municipality?

Some examples include Livingston, Springfield, Hoboken, E. Hanover, Rahway. However larger municipalities have several SID’s, for instance, Jersey City has 8 different districts, and Newark has multiple districts as well.

9. What other municipalities in New Jersey have a SID with multiple sub areas in which the assessment rates differ from one district to another?

Livingston, Springfield, Hoboken, E. Hanover, Rahway, all have varying assessment rates.

10. The report of the feasibility study suggests sub areas and variable tax rates. Are those sub area boundaries and tax rates fixed?

They are suggested rates and the budget will be set annually, so can be changed. Right now the suggested rates are based on a budget that relies entirely on assessment funding. If other funding is available, i.e. state grants like Main Street funding, corporate donations, municipal funds such as parking utility or hotel tax funds, or any other such public funds, this would potentially lower the amount assessed, or increase the amount that could be spent.

11. If those sub areas and assessment rates are not fixed what individual or entity will fix them?

The Board of the SID will propose a budget it will then be submitted to Council as an Ordinance, noticed to all property owners, and a hearing will take place. The final budget will be set once approved by Council.

12. Can the feasibility study map designating the proposed sub areas be enlarged so that it is clear ....

Can the feasibility study map designating the proposed sub-areas be enlarged so that it is clear which block and lot lie within each area and which blocks and lots are not part of the SID? In the alternative can the list of properties subject to the SID assessment on attachment A indicate which sub-area that property is in and/or the SID assessment rate that property would be subject to?

SID Sub-Area Map-Enlarged (PDF)

Appendix A (PDF)

13. Are all of the decisions regarding sub areas and assessment rates to be made by the District Management Corporation (DMC)?

Yes. Each year the Council must vote to adopt the budget.

14. Will all of those individuals and entities subject to the SID assessment have any role in electing members of the DMC?

All are welcome to participate. There will be Board seats to fill, as well as many committees that will need volunteers. The Board will have term limits, with the design to have a rotation of Board members and the Committee positions will be building a bench for rotation onto the Board. All Board meetings will be open to the public.

15. Where can the organizing documents of the Princeton Business Partners Inc, created by the ordinance to be found?

The draft ordinance says that the Princeton Business Partners Inc. will be the District Management Corporation. The Draft Ordinance also says the Princeton Business Partners, Inc. is created by the ordinance. 

The incorporating documents will be available AFTER the ordinance is approved, but before the budget is adopted. The incorporating documents cannot be finalized until the Ordinance is adopted.

16. Do the members of the Princeton Business Partners Inc. have to live in Princeton? Pay Taxes in Princeton? Own property in Princeton?

Assuming this is both Board members and Committee members. They do not need to live in Princeton unless they are a resident designee. The Board will consist of a mix of property owners, business owners that are located in Princeton or they can be residents of Princeton. There will also be one council member and either the Mayor or Mayor’s designee, on the Board.

17. Who will pay the SID assessment, the landlord or the tenant? Does it depend on whether the lease is a gross or net lease?

The landlord will be responsible for the payment of the assessment. Whether or not the landlord passes the assessment to their tenant is the landlord’s decision.

18. How many members, trustees, board members of the Princeton Business Partners, Inc. will there be?

15 members. 2 from the governing body (Mayor, or designee, and one councilmember), 7 property owners, and 6 business owners, that may include non-profit (s), or resident member (s). (this is still in discussion)

19. How will the members, trustees, board members be elected, selected, appointed?

There will be four incorporating officers, selected from the Steering Committee. They will, in collaboration with the Steering Committee, select the Board members.

20. In making sure that the members, trustees, board members of the Princeton Business Partners Inc. are diverse, equitable and inclusive....

Will that diversity include a member, trustee, board member from each of the proposed sub-areas? Will tenants subject to net leases have a voice in DMC decisions?

Everyone who qualifies (i.e. is a Princeton resident, property or business owner), is welcome to join a committee and/or attend the open meetings. Board members will be selected based on the balance of property and business owners and with the goal of having a balanced board of minority and women-owned businesses and property owners.
Ideally, having board members of sub-areas would be great but may be very limiting to try and achieve sub-area balance, minority and women-owned balance AND property owner/business owner balance.

21. Will there be term limits for the Board?

Board membership will have term limits so a rotation of the Board will happen annually. The inaugural Board will be divided in thirds, with one, two and three-year terms, to assure new Board members may rotate in annually.

22. In selecting assessment rates for the sub areas what criteria did the Steering Committee use?

The SC compared rates to other municipalities’ SIDs. Some were much higher, but since the area encompassed all of Princeton, (not wanting to leave anyone out) it enabled the rate to stay low throughout town. The Tiers of 1, 1.5, 2, and 3% were based on the anticipated amount of benefit that each area would gain from the SID programs.

23. To the layman it would seem that the greatest beneficiary of SID expenditures would be those businesses in the center of Princeton, Palmer Square...

To the layman it would seem that the greatest beneficiary of SID expenditures would be those businesses in the center of Princeton, Palmer Square, yet it is proposed that properties in Palmer Square should be subject to the lowest tax rate. How was that determination made?

Palmer Square and the Shopping Center already operate much like a SID, by offering marketing, events, and additional services to their tenants, and whose costs are already passed onto their tenants. Therefore, it was determined that they would continue to offer their tenants those same services, and would not have to duplicate efforts. The goal being to build a synergistic plan between the three entities to leverage media buys, staffing, and resources.

24. Where can one find attachment A to the ordinance, the listing of every property in Princeton that will be subject to the SID assessment.

Attachment A, SID ordinance (PDF)

25. Will the members, trustees, board members, and employees of the Princeton Business Partners, Inc. be subject to a code of ethics ....

Will the members, trustees, board members, and employees of the Princeton Business Partners, Inc. be subject to a code of ethics so that for example the DMC and Princeton Business Partners, Inc will be barred from contracting with entities or individuals in which those individuals or their families have an interest?

The DMC will be a not-for-profit (501C) under IRS guidelines which prohibits such activities.