HB3303 103RD GENERAL ASSEMBLY

LRB103 30801 AWJ 57294 b

103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB3303

Introduced 2/17/2023, by Rep. Robyn Gabel

SYNOPSIS AS INTRODUCED:

New Act

Creates the Business Improvement District Law. Provides for the establishment of business improvement districts by a county or municipality by ordinance after petition of a percentage of property owners or business owners, creation of a district plan, notice, and hearings. Provides that a business improvement district may impose district charges on property owners whose real properties are located within the business improvement district or on businesses within a business improvement district. Provides that the county or municipality shall contract with a district management association to administer or implement activities and improvements specified in the district plan. Contains provisions relating to district plans, formation of a district, district boundaries, issuance of bonds, terms and renewal of districts, amendment to district plans, governance of the district, reports of a district management association, dissolution, and legislative purpose. Limits the concurrent exercise of home rule powers. Defines terms. Effective 120 days after becoming law.

A BILL FOR

AN ACT concerning local government.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Business Improvement District Law.

Section 5. Purpose. The General Assembly finds that it is in the interest of the State of Illinois to promote the economic revitalization and physical maintenance of business districts in order to create jobs, attract new businesses, retain existing businesses, reduce crime, and spur new investments. The General Assembly finds that this purpose may best be accomplished by allowing business improvement districts to fund business-related activities and improvements through the levy of district charges upon the owners of real property that receive benefits from those activities and improvements.

Section 10. Definitions. As used in this Act:

"Activities" means services provided for the purpose of conferring benefit upon owners of property located within a business improvement district, including, but not limited to:

(1) promotion of events taking place within the business improvement district;

(2) furnishing of music;

(3) promotion of tourism within the business improvement district;

(4) marketing and economic development, including retail retention and recruitment;

(5) providing security, sanitation, graffiti removal, street and sidewalk cleaning, and other services supplemental to base services; and

(6) other services provided for the purpose of conferring benefit upon owners of property located within the business improvement district.

"Activities" does not include lobbying, as that term is defined in Section 2 of the Lobbyist Registration Act and Chapter 2-156 of the Municipal Code of Chicago.

"Base services" means services provided by any public entity, or paid for wholly or in part out of public funds, generally throughout a governmental unit to real property within the governmental unit.

"Business improvement district" means a contiguous area within a governmental unit in which activities, improvements, or activities and improvements are provided in addition to base services. Territory shall be considered contiguous for purposes of this Act even though certain completely surrounded portions of the territory are excluded from the business improvement district. For purposes of this Act, parcels are within the same contiguous area if they touch or join one another in a reasonably substantial physical sense or if they meet the criteria for annexation to a municipality under Section 7-1-1 of the Illinois Municipal Code.

"Clerk" means the county clerk or municipal clerk, as the case may be.

"District charge" means a charge levied on behalf of a business improvement district for the purpose of acquiring, constructing, installing, or maintaining improvements or providing activities that will confer special benefits upon assessed property owners within the business improvement district. District charges levied for the purpose of conferring special benefits upon assessed property owners within a business improvement district are not taxes for the general benefit of a governmental unit, even if real property or persons not charged receive incidental or collateral beneficial effects.

"District management association" means a private or not-for-profit entity that enters into a contract with a governmental unit to administer or implement activities and improvements specified in the district plan for a business improvement district. A district management association shall not be considered a public entity for any purpose.

"District plan" means a proposal for a business improvement district that contains the information described in Section 15.

"Downtown area" has the meaning given to that term in Section 17-1-1500-A of the Chicago Zoning Ordinance.

"Governing body" means the corporate authorities of a municipality or a county board or board of county commissioners, as the case may be.

"Governmental unit" means a county or municipality, as the case may be.

"Improvements" means the acquisition, construction, installation, or maintenance of any tangible property provided for the purpose of conferring benefit upon assessed property owners located within a business improvement district.

"Property owner" or "owner" means the record owner of fee simple interest in a real property subject to assessment, which will be deemed to be the person or entity that pays property taxes on the real property according to county records, unless another person or entity establishes to the governmental unit by clear and convincing evidence that they are the record owner of the fee simple interest.

"Public entity" means (i) the State or any agency, board, or commission of the State, (ii) any school district, or (iii) any unit of local government.

Section 15. District plan.

(a) A business improvement district established under this Act is subject to and governed by a district plan, as may be amended as set forth in Section 65, and filed with the clerk.

(b) The district plan shall include, but need not be limited to, the following:

(1) The name of the business improvement district.

(2) A map of the business improvement district in sufficient detail to allow a property owner to reasonably determine whether a parcel of real property is located within the boundaries of the business improvement district.

(3) A description of the boundaries of the business improvement district in a manner sufficient to identify the real property included in the business improvement district.

(4) The initial term of the business improvement district.

(5) A statement identifying the activities and improvements within the business improvement district that may be provided from time to time for which property owners will be charged and that the activities and improvements that are provided may vary from year to year and may differ by class.

(6) A statement identifying the maximum amount of the annual district charge to be levied and that the maximum amount of the annual district charge levied may vary from year to year.

(7) A statement identifying the maximum amount of total district charges to be levied for the term of the business improvement district.

(8) A statement identifying the proposed source or sources of financing, including the proposed method and basis of levying an assessment, in sufficient detail to allow each property owner to calculate (i) the estimated amount of the district charge to be levied upon the property owner annually, (ii) the maximum amount of the district charge that could be levied upon the property owner annually, and (iii) the total amount of the district charges that could be levied upon the property owner for the term of the business improvement district. The statement shall specify whether bonds may be issued to finance activities and improvements, and the anticipated term for the bonds.

(9) Any interest or penalties that may be imposed for delinquent payment of a district charge.

(10) A list of the real property subject to a district charge, and a statement of any proposed classifications. The list shall include the permanent tax index number of each parcel located within the business improvement district.

(11) A statement of the real property classes exempt from charge, and a list of the real property to be exempted.

(12) A statement identifying the proposed procedures for renewal, subject to the limitations under Section 60.

(13) A statement identifying the district management association, the district management association's governance structure, and the district management association's anticipated liability insurance coverage limits.

(14) A statement identifying how unspent revenue collected from district charges may be allocated, carried over year to year, or returned to the property owners at the end of each year by applying the same method and basis that was used to calculate the district charges levied throughout the term of the business improvement district.

(15) The manner by which a property owner may contest the calculation of a specific district charge.

(16) Any proposed rules and regulations to be applied to the business improvement district.

Section 20. Assessments and district charges.

(a) Each district plan shall provide for an assessment levied upon property owners owning property within the business improvement district upon which district charges are based. District charges shall be levied at a rate or amount sufficient to produce revenues required to provide the activities and improvements specified in the district plan. The revenue from the levy of district charges within a business improvement district shall not be used to provide services outside the business improvement district or for any purpose other than the purposes set forth in the ordinance adopting the district plan.

(b) District charges shall be levied on the basis of the estimated benefit to the real property located within the business improvement district. In determining the assessment, the district management association may reasonably classify real property for purposes of determining benefit if so provided in the district plan. The classification may be based on various factors, including, as applicable, square footage, geography, or any other factor reasonably relating to the benefit received. Certain classes may be specified in the district plan as exempted from being charged if they would not receive a special benefit from the activities and improvements. District charges need not be imposed on different classes on the same basis or the same rate.

(c) District charges levied upon property owners owning property within the business improvement district may be billed and collected as follows:

(1) a county that has established a business improvement district may include district charges in the regular property tax bills of the county. The county collector of the county in which a business improvement district is located may also bill and collect district charges with the regular property tax bills of the county if requested by a municipality within its jurisdiction that has established a business improvement district; however, no municipality is required to make this request of its county collector. If the county collector agrees to bill and collect district charges with the regular property tax bills of the county, then the applicable district plan shall be filed with the county collector and the annual amount due as set forth by the district management association shall become due in installments at the times property taxes shall become due in accordance with each regular property tax bill payable during the year in which the assessment comes due; or

(2) if the county collector does not agree to bill and collect district charges with the regular property tax bills of the county or the governmental unit that has established the business improvement district declines to request the county collector to do so, then the governmental unit shall bill and collect the assessments, either directly or through a third party, and the annual amount due as set forth by the district management association in accordance with the district plan shall become due in installments on or about the times property taxes would otherwise become due in accordance with each regular property tax bill payable during the year in which the assessment comes due.

(d) District charges shall be payable at the times and in the manner set forth in the applicable bill. Delinquent payments for district charges levied pursuant to this Act may be charged interest and penalties as may be set forth in the district plan.

(e) District charges shall promptly, and in no case later than 90 days after collection, be remitted by the governmental unit to the district management association.

Section 25. Boundaries of business improvement district.

(a) The boundaries of a proposed business improvement district shall not overlap with the boundaries of another business improvement district or with the boundaries of a special service area established pursuant to the Special Service Area Tax Law.

(b) The boundaries of any proposed business improvement district may overlap with the boundaries of a tax increment financing district.

(C) A county may establish a business improvement district within a municipality or municipalities only when the municipality or municipalities consent to the establishment of the business improvement district. A municipality may establish a business improvement district within the municipality and the unincorporated area of a county or within another municipality only when the county or other municipality consents to the establishment of the business improvement district.

Section 30. Proposals to establish a business improvement district.

(a) To propose a business improvement district, a written petition shall be filed with the clerk and shall include the name and legal status of the filing party, information specifying where the complete district plan can be obtained, and a summary of the district plan that includes: the boundaries of the proposed business improvement district; the proposed activities and improvements, and estimated amount of annual funding required; the method of assessment; and the total amount of the proposed district charges. The information contained in the summary shall be sufficient if it enables a property owner to generally identify the location and extent of the proposed business improvement district, the nature and extent of the activities and improvements, the estimated annual district charge that the property owner would pay, and the maximum annual district charge that the property owner would pay.

(b) Upon receiving a written petition to establish a business improvement district and concluding that the petition meets the requirements of Section 80, the clerk shall submit the petition to the governing body.

Section 35. Resolution of intent to consider establishment of a business improvement district. After receiving a verified petition from the clerk, the governing body shall adopt a resolution of intention to consider the establishment of a business improvement district. The resolution shall state the time and place of a public hearing to be held by the governing body to consider establishment of a business improvement district and shall restate all the information contained in the petition regarding the boundaries of the proposed business improvement district, the proposed activities and improvements, and estimated amount of annual funding required, the method of assessment, and the total amount of the proposed district charges anticipated for the initial term of the business improvement district.

Section 40. Establishment.

(a) Within 30 days after the public hearing to consider establishment of a business improvement district, the party who filed the district plan with the clerk may modify the district plan, including to satisfy any applicable legal requirements or remedy any deficiencies, prior to the adoption of an ordinance establishing a business improvement district. Any modification to the district plan that changes the source or sources of financing, including the method and basis of levying the assessment or an increase or reduction in the maximum annual amount or maximum total amount of the assessment against one or more properties within the business improvement district, the procedures for renewal, the boundaries of a business improvement district, the district management association's governance structure, the activities and improvements to be provided within the business improvement district, or a change to the filing party must be approved by a written petition that conforms to the petition signature requirements set forth in Section 80. If the district plan is so modified, the governing body shall call an additional public hearing to hear and consider objections to the modified district plan prior to the adoption of an ordinance establishing a business improvement district.

(b) If, following all required public hearings, the governing body decides to establish a business improvement district, the governing body shall adopt an ordinance establishing the business improvement district that shall include, but is not limited to, all the following information:

(1) A detailed description of: the boundaries of the proposed business improvement district, which may be made by reference to a plan or map; the proposed activities and improvements, and an estimated amount of annual funding required; the method of assessment; the maximum amount of annual district charges; and the total amount of the proposed district charges for the initial term of the business improvement district. The descriptions shall be sufficient if the descriptions enable a property owner to generally identify the location and extent of the proposed business improvement district, the nature and extent of the activities and improvements, and the maximum annual district charge that the property owner would pay.

(2) The time and place where any public hearing concerning the establishment of the business improvement district was held.

(3) A statement that the activities and improvements to be conferred upon property owners will be funded by the levy of district charges.

(4) A statement on whether bonds will be issued.

(5) A finding that each item in the district plan satisfies all applicable legal requirements and that establishing the business improvement district is in the public interest.

(6) The adoption of the district plan, as may be modified pursuant to subsection (a), including each item set forth in Section 15.

(7) A statement identifying the entity that will be responsible for administering district charges, including the functions of billing, collecting, and enforcement, pursuant to Section 20.

(8) Authorization for the governmental unit to remit district charges to the district management association for the provision of activities and improvement.

(9) The deadline and manner for submitting the annual report required in Section 70.

Section 45. Activities and improvements.

(a) Upon establishment of a business improvement district, the governing body may levy and collect the district charge pursuant to Section 20 as allowed by the district plan and the ordinance adopting the district plan.

(b) Activities and improvements provided pursuant to this Act shall be provided in addition to base services. The appropriate governmental unit shall continue to provide the same level of base services in any business improvement district as is provided to other real property within the governmental unit. The district management association shall not be expected or required to supplement any base services, but the district management association may supplement any base services within the business improvement district in accordance with the district plan.

Section 50. Governance.

(a) For each business improvement district, the governmental unit shall contract with the district management association designated in the district plan to administer the operation of and provide for and maintain activities and improvements in and for a business improvement district. The contract may provide for the provision and maintenance of activities and improvements by one or more subcontractors of a district management association.

(b) The certificate of incorporation or bylaws of a district management association shall provide for voting representation of owners whose real property is located within the business improvement district, and may provide that the votes be weighted in proportion to the district charge levied or to be levied upon property owners within the business improvement district, except in no case shall the total number of votes assigned to one owner exceed 20% of the total number of votes which may be cast. Not less than 80% of a district management association's board of directors shall be composed of property owners or representatives of property owners within the business improvement district, and the composition shall generally be described in the statement identifying the district management association's governance structure in the district plan.

(c) In addition to other powers as are conferred on it by law, the district management association may make recommendations to the governing body with respect to any matter involving or relating to the business improvement district.

(d) For consideration as it may deem appropriate, the governing body may license or grant to the district management association the right to undertake or permit commercial activities or other private uses of the streets or other parts of the business improvement district in which the governmental unit has any real property interest.

Section 55. Issuance of bonds. A governmental unit may issue bonds in the amounts and for the periods necessary to finance activities and improvements if authorized by the ordinance establishing the business improvement district. District charges levied in a business district shall be pledged to secure the bonds and district charges levied in 2 or more business improvement districts may be pledged to secure a single bond issue benefiting the business improvement districts. The district charge shall be levied on a basis that provides a rational relationship between the amount of the district charge against each property owner in each business improvement district and the benefit received. Bonds issued pursuant to this Act shall not be regarded as indebtedness of the governmental unit for the purpose of any limitation imposed by any law. The term of any bonds issued pursuant to this Act shall be limited to the term of the business improvement district, including any renewal period. A governmental unit may set forth additional requirements by ordinance prior to bond issuance.

Section 60. Term; renewal.

(a) The initial term for a business improvement district shall be a maximum of 5 years or, if bonds are authorized to be issued for the business improvement district, until the maximum maturity of those bonds. Any business improvement district may be renewed one or more times by following the procedures for renewal as provided in the district plan if each property owner that is subject to assessment is notified of a pending renewal. A renewal shall not go into effect when, prior to the effective date of the renewal, a written petition seeking termination of the renewal that conforms to the petition signature requirements set forth in Section 80 is delivered to the clerk.

(b) Upon each renewal, a business improvement district shall have an additional term not to exceed 15 years, or, if bonds are authorized to be issued for the business improvement district, until the maximum maturity of those bonds. Prior to renewal, the ordinance adopting the district plan may be amended pursuant to Section 65, with the amendments to take effect upon renewal.

(c) Upon renewal, any remaining revenues derived from the levy of district charges, or any revenues derived from the sale of assets acquired with the revenues, shall be transferred to the district management association of the renewed business improvement district. If the renewed business improvement district includes additional real property not included within the prior business improvement district, the remaining revenues shall be spent to benefit only the real property within the boundaries of the prior business improvement district. If the renewed business improvement district does not include real property included in the prior business improvement district, the remaining revenues attributable to that real property shall be refunded to the property owners of that real property.

Section 65. Amendments.

(a) Upon the written request of the district management association, the governing body may amend the ordinance adopting the district plan upon which the establishment or renewal of the business improvement district was based as set forth in this Section.

(b) Amendments that provide for any change to the source or sources of financing, including the method and basis of levying the assessment or an increase in the maximum annual district charge or the maximum total district charges for the term of the business improvement district, or that provide for any change to the procedures for renewal may be adopted by the governing body by ordinance if, after a public hearing, the governing body determines that it is in the public interest to authorize the change to the source or sources of financing or to authorize the change to the procedures for renewal.

(c) Amendments that provide for a change to the boundaries of a business improvement district may be adopted by the governing body by ordinance if, after a public hearing, the governing body determines that it is in the public interest to authorize the change to the boundaries of the business improvement district and, if applicable, that all newly included property will benefit from the activities and improvements provided. The governing body may change the boundaries of a business improvement district by either expanding or reducing the existing boundaries. If the change to the boundaries is an expansion to existing boundaries, the expansion area must be contiguous with an existing boundary and the assessments upon property owners in the expansion area shall be established pursuant to Section 20. The governing body may consider an expansion to the boundaries of a business improvement district only upon receipt of a written petition of property owners within the proposed expansion area that conforms to the petition signature requirements set forth in Section 80. Any revenues that are unspent at the time of an amendment expanding the boundaries of a business improvement district shall be spent to benefit only the real property within the prior boundaries of the business improvement district. If the change to the boundaries is a reduction to existing boundaries, any revenues that are unspent at the time of the amendment and are associated with real property that is being removed from the business improvement district, then those remaining revenues shall be refunded to the property owners of the real property. Any amendment that changes the boundaries of a business improvement district shall provide an updated map of the business improvement district that reflects the expansion or reduction of its boundaries.

(d) Notice shall be given and public hearings shall be held in accordance with Sections 85 and 90.

(e) Amendments not provided for in subsection (b) or (c) may be adopted by the governing body by ordinance without notice and a public hearing if the governing body determines that the amendments are consistent with the objectives of the district plan and are in the public interest to approve the amendment.

Section 70. Reports.

(a) The district management association shall prepare or have prepared a report for each fiscal year, except the first fiscal year, for which district charges are to be levied and collected to pay the costs of activities and improvements. The district management association's first report shall be submitted after the first year of operation of the business improvement district.

(b) The report shall be submitted to the governing body, and to each property owner subject to a district charge upon request, and shall be made available for public inspection. The report shall refer to the business improvement district by name, specify the fiscal year to which the report applies, and, with respect to that fiscal year, shall contain, but is not limited to, all the following information:

(1) The anticipated activities and improvements to be provided in that fiscal year.

(2) An estimate of the cost of providing the anticipated activities and improvements in that fiscal year.

(3) The estimated amount of any surplus or deficit revenues to be carried over from a previous fiscal year.

(c) In addition to the annual reporting requirement, the district management association shall notify the governing body of any proposed infrastructure or capital project in excess of $50,000 within a reasonable time.

Section 75. Dissolution.

(a) After a public hearing on the subject of dissolution, the governing body may dissolve by ordinance any business improvement district in either of the following circumstances:

(1) If the governing body finds there has been misappropriation of funds, malfeasance, or a violation of law in connection with the management of the business improvement district; or

(2) Each year during the term of the business improvement district, there shall be a 60-day period in which property owners who paid more than 50% of the total of district charges levied in the prior year may request dissolution of a business improvement district by a written petition that conforms to the petition signature requirements set forth in Section 80. The first period shall begin 60 days prior to one year after the date of establishment of the district and shall continue for 60 days. The next 60-day period shall begin 60 days prior to 2 years after the date of the establishment of the district. Each successive year during the term of the district shall have a 60-day period beginning 60 days after the anniversary of the date of the establishment of the district.

(b) The governing body shall adopt a resolution of intention to dissolve the business improvement district prior to a public hearing required by this section. The resolution shall state the reason for the dissolution, shall state the time and place of the public hearing, and shall contain a proposal to dispose of any assets acquired with the revenues of district charges levied on behalf of the business improvement district in accordance with subsection (d).

(c) Notice shall be given and public hearings shall be held in accordance with Sections 85 and 90.

(d) Upon the dissolution or expiration without renewal of a district, and after all outstanding debts are paid, any remaining revenues derived from the levy of district charges, including any remaining revenues from district charges collected after dissolution, or derived from the sale of assets acquired with these revenues or from bond reserve or construction funds, shall be either: (i) refunded to the property owners then located or operating within the business improvement district in which district charges were levied by applying the same method and basis that was used to calculate the district charges levied in the fiscal year in which the district dissolves or expires; or (ii) spent on activities or improvements specified in the district plan under a valid and enforceable contract executed by the district management association prior to the dissolution. If the dissolution occurs before district charges are levied for the fiscal year, the method and basis that was used to calculate district charges levied in the immediate prior fiscal year shall be used to calculate the amount of any refund.

Section 80. Petition signature requirements. Any petition required by this Act must be signed by property owners in the proposed business improvement district or proposed expanded area of a business improvement district, as the case may be, who cumulatively are expected to pay more than 20% of the total of the district charges proposed to be levied. However, where the proposed business improvement district or proposed expanded area of a business improvement district is located wholly or in part in the downtown area, then the petition must be signed by property owners in the proposed business improvement district or expanded area of a business improvement district, as the case may be, who are expected to cumulatively pay more than 50% of the total of the district charges proposed to be levied. All signatures for a petition to establish or expand a business improvement district must be collected within a period ending no more than 120 days from the initiation of the petition, which date shall be specified on the petition.

Section 85. Manner of notice. The notice of any public hearing required under this Act shall be given by publication and mailing. Notice by publication shall be given by publication at least once not less than 15 days prior to the public hearing in a newspaper of general circulation within the governmental unit. Notice by mailing shall be given by depositing the notice in the United States mail addressed to each owner subject to a district charge. Notice shall be mailed not less than 10 days prior to the time set for the public hearing. The mailed notice shall enclose, or include information allowing a property owner to obtain, a copy of the proposed district plan.

Section 90. Public hearings. At a public hearing held pursuant to this Act, any interested person, including all property owners owning real property located within a proposed or existing business improvement district, may file with the clerk written objections to or statements in support of, and may be heard orally, with respect to any matter embodied in the district plan or concerning the management of the business improvement district. The governing body shall hear and consider all statements and objections at the public hearing. The governing body may adjourn a public hearing to another date without further notice other than a motion fixing the time and place the public hearing will reconvene.

Section 95. Existing law. This Act provides an alternative method of financing certain activities and improvements. The provisions of this Act do not affect or limit any other provisions of law authorizing or providing for the furnishing of activities or improvements or the raising of revenue for these purposes. Every special service area established pursuant to the Special Service Area Tax Law is unaffected by this Act.

Section 97. Local authority. A governmental unit may not establish or regulate business improvement districts in a manner inconsistent with this Act. This section is a denial and limitation of home rule powers and functions under subsection (h) of Section 6 of Article VII of the Illinois Constitution.

Section 99. Effective date. This Act takes effect 120 days after becoming law.