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Columns David Pendered

Community Improvement Districts could tap Internet of Things to expand services

By David Pendered

After fostering more than $6 billion in development in metro Atlanta, the question of “what’s next” for the region’s community improvement districts is one subject of a new evaluation of CIDs that was released as their funding faces an uncertain future.

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CIDs may not collect as much as expected in property taxes if atypically high vacancy rates are not filled after the pandemic. File/Credit: Kelly Jordan. 2019

Office buildings are the “bread and butter” funders of CIDs, the report notes, and their vacancy rates have shot up to 19.2% during the pandemic. Vacancy rates are projected to remain “stubbornly high” through 2021, the real estate firm CBRE reported in March.

One avenue forward for CIDs is to turn to smart cities technology, where funds are available to expand use of the Internet of Things, in an effort improve quality of urban life, according to the CID report. Definitions of “smart cities technology” vary. An easy example is a trash can on a city street that sends a message to the sanitation department when it’s full and needs to be emptied. Another is a device on a transit bus that tells a traffic light to let the bus pass without stopping.

CIDs could expand into the IoT realm even while continuing to fulfill traditional roles in placemaking including mobility and streetscapes, parks and public safety, according to the report. Public funding for these projects remains fairly secure.

The point is – CIDs are nimble entities that can adapt to their changing environments, according to the paper by Georgia Tech and Lexicon Strategies, an Atlanta think tank. The report, “Ready for the Smart(er) City: How Community Improvement Districts (CIDs) are Building the Future,” observes:

  • “We can be certain from our findings that CIDs are impactful socioeconomically, and their inherent resiliency and adaptability means they will continue to be so for the foreseeable future.”
Portions of metro Atlanta that don’t have broadband service are marked in beige. Credit: broadband.georgia.gov

Portions of metro Atlanta’s urban core, marked in beige, are not covered by broadband service. Credit: Credit: broadband.georgia.gov

The research effort was led by Tech’s Debra Lam, Arthi Rao and Rachel Muller; and by Lexicon partner Malaika Rivers, who also serves as executive director of the recently formed Chamblee Doraville CID, and is a past executive director of the Cumberland CID.

As it happens, Biden’s American Jobs Plan includes $100 billion to upgrade the nation’s digital infrastructure. Details are to be determined. The concept is to ensure the nationwide availability of affordable, high-speed broadband service. Some of that proposed money could be sought for the regions of metro Atlanta currently without Internet service. Some may be available to address areas where there’s a stark divide between the use of home broadband by white, Black and Latino residents of dwellings located within a CID.

The Biden plan also contains $621 billion for transportation. This includes roads and bridges, and an $85 billion carve-out for transit. The expansion of the northern crescent of I-285 could be a fit for some of this funding. Plans call for the double-decking of portions of the highway, with the potential for transit service from Tucker to Smyrna. Four CIDs have joined with seven cities and multiple agencies in a feasibility study of how transit could be funded and operate in this corridor.

Despite their flexibility, the pandemic has confirmed that CIDs are subject to market pressures, just as they were in the Great Recession of 2007. Office buildings that incurred rising vacancy rates during the coronavirus pandemic may face stress to pay the additional tax rates that fund CIDS, the report suggests:

The resilience of CIDs is evident in their evolving purposes. CIDs may be formed to fulfill a specific function, and changes in the market can lead to the CID being maintained to service purposes different from the original. Credit: ‘Ready for the Smart(er) City’

  • “At the time of this publication [February], the pandemic had impacted Metro Atlanta’s office vacancy rate, which climbed to 19.2% in the third quarter of 2020. With market fundamentals continuing to soften, this trend may have material implications on this sector, the ‘bread and butter’ of many CID commercial areas.”

The post-pandemic workplace is new ground for the commercial property owners who pay a higher tax rate to fund a CID and its community improvement programs.

The $6 billion in development the report credits to CIDs is characterized in this observation:

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The Buckhead CID works to ease traffic congestion in the commercial district. The volume of vehicles overwhelms the roadway system. Credit: David Pendered. 2018

  • “CIDs are highly impactful financial contributors to regional growth and development. Between 1988 and 2019, CIDs levied an estimated $875M in total tax assessments. With another $77M projected in 2020, estimates begin to approach a billion dollars in potential private sector funding for infrastructure and community development over the years.
  • “CID resources have either directly initiated, or indirectly contributed to, billions of dollars in infrastructure projects and programs. With only half of the CIDs reporting, an estimated $6B in programs and projects have been implemented or constructed over the years through the influence of CIDs. This indicates that on average, for every dollar spent by CIDs, five more dollars are leveraged in outside funding.”

CIDs are comprised of a designated geographic area that’s established by a local government. Commercial property owners inside the district agree to pay a higher tax rate to pay for projects the CID leadership determines will enhance the desirability of the area in order to attract further growth and development.

Historically, CIDs have been established to enhance thriving areas rather than uplift those in need of renovation. Other tax tools are available for blighted areas, such as the tax allocation district that’s helping to pay for the walking trail and other public amenities on the Atlanta BeltLine.

Note to readers: Lexicon Strategies is a sponsor of SaportaReport.com. The company did not participate in reporting or writing this story.

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David Pendered

David Pendered, Managing Editor, is an Atlanta journalist with more than 30 years experience reporting on the region’s urban affairs, from Atlanta City Hall to the state Capitol. Since 2008, he has written for print and digital publications, and advised on media and governmental affairs. Previously, he spent more than 26 years with The Atlanta Journal-Constitution and won awards for his coverage of schools and urban development. David graduated from North Carolina State University and was a Western Knight Center Fellow.

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