What is a Suburban Improvememt DIstrict (SID) and how does it work?

SID's are a Qazi Form of Government created by Legislation with Taxing authority.  It can get confusing and some people like to compare a SID to a HOA or POA.  The only way they may resemble is that they create, purchase and improve amenities that benefit the property within their boundaries but SID's are not meant to be a generation organization.  A SID should go into debt, create or purchase and amenity, assesses property within the district, levy the assessment, pay off the debt and end.  If a need arises for an improvement or to build/purchase an amenity, the the process starts over.  

I personally do not believe a SID is intended for a large amount of properties such as ours with 25,000 lots.  They would work best for maybe a subdivision or two where tax revenue is most likely to be paid by all properties.

Over half, some 12,000 lots or so are delinquent in taxes and are sitting at the Commissioner of State Lands which supports my opinion of sizes a SID should be.

Further, SID can foreclose on property within the district for non-payment of their Assessment Tax.  They have done this in the past and even people buying from CoSL receives a collection notice with threat of foreclosure from SID, even up to this July these have been sent out.

Commissioners are responsible to set the assessment and levy and collect the Tax, upkeep of amenities, finances, and policy among other things and it is an unpaid position that is also thankless.  They may buy, sell, authorize going in debt and even dissolve the SID.

While we are a form of government, there is very little to almost no oversight by the State which creates SID's, which is what leads to these lawsuits.

You will hear a lot of people say what we pay is a "Fee" but it is not.  Reading the Law for SID, it is called a "Tax".

Our original commissioners were self appointed, life time commissioners, we were not allowed to elect them.

We are now governed by 5 Elected Commissioners with years staggered.  3 elected, then 2 elected.  Terms are 4 years each as of 2021 with the Settlement Agreement.

The County Assessor and Clerk are who is responsible for collecting the tax from Property Owners and each receives 1.5% of the yearly assessment to total 3% that County gets.

The current Assessment is due to be paid off in 10 to 12 years if the current 10% levy remains which you can read about under the "Issues that SID is Facing" heading.

Our SID was formed and everything we have was Gifted by Mr. Cooper before he left here and SID was tasked with maintaining everything. 

In 2018, the 3 Commissioners and GM decided to re-assess to bring in more money because SID had a funding problem.  This was met with resistance and due to negations failure, a class action lawsuit was filed.

The Plaintiff (Property Owners) Contended that the re-assessment was an illegal exaction as the original assessment had long been satisfied (paid off).  It also claimed that the funds SID gave to the City was illegal as SID can not spend funds on what they don't own.  Further, it claimed that the contract between ALC and SID should be nulled and voided as ALC wasn't adhering to it.

So SID, City, ALC and the Plaintiff were now in a suit.

After a couple years, an agreement was met which allowed our SID to continue with a, I think it was, $40 million Assessment (which started/was backdated in 2019 per the settlement) to get our amenities fixed and my understanding was to start the "wined down of SID", the City was to stop receiving funding from SID, ALC Contract was to end and we went from 3 self appointing/lifetime commissioners to 5 Elected commissioners serving 4 year offset terms.  

In 10 to 12 years and depending on whether the Commissioners keep the current % of 10% (maximum allowed by law) will be the deciding factor on exactly how much longer SID can continue.  UPDATE:  this 10-to-12-year number I'm changing due to finding out the GM and Commissioners miscalculated the assessment of benefits agreed to in the Class Action Lawsuit Settlement.  They, SID, started their figure in 2022 when in fact the settlement back dated collection to 2019.  This leaves us with 9 years, 2034 is when this assessment ends at the current 10% levy.

Our current leadership has not nor is planning any short or long term let alone end of assessment which concerns and leaves so many questions.  Questions like what happens when the funds quit rolling in?
We have hundreds of parcels that were included in the district when it was created that are not paying one red cent.  Many parcels paying a mere $20.  Our GM, per admission goes into the parcel list and "turns on or off" parcels prior to reporting to the county tax clerk.  There is no law that allows SID to do this, in fact, law  

• "(i) It shall then be the duty of the tax collector of the county to collect each year the taxes extended upon the books along with the other taxes until the entire levy is exhausted."

What is it that SID is to report to the county tax collector?  This is what the law states:

(14-92-228)

"(a)

• (1) The board of commissioners of a suburban improvement district shall, at the same time that the assessment of benefits is equalized or at any time thereafter, enter upon its records an order, which shall have all the force of a judgment, providing that there shall be assessed upon the real property of the district a tax sufficient to pay the estimated cost of the improvement, with ten percent (10%) added for unforeseen contingencies.
• (2) The tax is to be paid by the real property in the district in proportion to the amount of the assessment of benefits thereon and is to be paid in annual installments, not to exceed ten percent (10%) for adnyone (1) year, as provided in the order.

If you noticed, it states, "Shall be assessed upon the real property of the district" and "the tax is to be paid by the real property in the district".  

I personally do not see any provisions for exemptions in the law, so every parcel needs to pay.  

Why?  If they do not, it robs the district of much needed funds and creates a new taxing bracket which is unfair and could lead to another suit.

Sid has 7 lakes, all of which have leaking levies that to my understanding requires work.  I get that pretty much every levy out there will leak, especially earth levies.  Question is, does the state require us to repair all 7 levies?  if they are bad enough and are required, we need funding for this.  without everyone paying taxes and two golf courses losing money each year, how can is SID going to be funded?

We have also averaged a lawsuit per year.  Is our current council providing us with accurate advice and information?  One thing for certain is that these suits need to stop,

Glad you asked and I will try my best to explain this as clear as I can.

Once this current assessment is satisfied, or paid off, meaning you pay off the total assessed against your lot, SID can not by law or legally just simply re-assess or keep Taxing your or my lot... that is an "Illegal Exaction" which is what triggered the 2018 Class Action Lawsuit and the 2022 Settlement which allowed them to use this assessment to get things fixed and up to par.

In order to perform a "Re-Assessment", SID would need to perform a Capital Improvement/s or build/purchase a new amenity then hire an assessor who assigns a value of the assessment to each lot, that is what you owe against the assessment, your slice of the pie if you will.  I tried to say that as easy as can be but there is legal jargon that's actually in the law that says this.  So once you are assessed, SID would then need to provide an Equalization Board Hearing of the Commissioners to hear any disagreements from property owners before it becomes final and in effect.

They, SID Commissioners, could however reduce the levy applied each year to a lower rate.  This would be cause for amortization (for lack of words) and a new payoff date later down the road.

By law, they can charge up to 6% of that levy to interest and law says anything over 6 must be applied to principal, or what your lot owes.  

You have to understand also, that this current assessment has no loans to pay off.  Any future capital improvements would most likely require SID obtaining funding from a lender of sort.  

Most folks, I do not believe, understand that any assessment where we end up owing money for would require a huge chunk of the Tax SID receives each year set aside for Loan Servicing, interest and saving for the End of Loan payoff.  In short, we will never see funding like we currently have!  

         
I guess you can use your HOME mortgage,  as an example.  SID collects taxes from us each year, SID then has to pay on the loan or set aside funds for the agreed loan terms of payments, interest and payoff.  

Like your mortgage, you pay so much for interest on the loan and so much to principal.  You set aside or have auto draft and even escrow to pay your monthly loan bill, SID would need to do this as well.  

As in the mortgage example, once you pay it off, the bank can not simply just start charging you again because they need more money or need money to support their payroll or because your neighbor did not pay their loan payment... as such, SID can not make us pay for the lots at state lands which isn't paying anything.... you get the gest.

 Let me explain why I have been saying, "there are three (3) ways for SID to go".  And as of yet, there has been no one that has proven a way financially or otherwise another way.

1.      They can do capital improvements to trigger a re-assessment.  Issue with this is that every lot, some 25,000 in the district, is assigned a portion of the debt incurred in the assessment to repay that debt incurred to do the improvement, plus any levy (up to 10%) the commissioners impose each year.  Remember I said they can only go to 10% which up to 6% can be interest and the rest (4% if they levy 10% each year) is principal (goes to pay off the debt (assessment) on your lot).            
         Second issue is because over half of the lots within the district meant to pay their part of the assessment (repay any loan/bond) is sitting at state lands commission for non-payment of Taxes.  Because these lots are not paying, it is not legal grounds to come back to the ones who paid and are paying their Taxes and say "Hey, we need more money to repay the loan so we are extending YOUR Taxes or making up for those that aren't paying, until we pay off or lots start paying".  Again, Illegal Exaction!  This leads to my final question on this option.... What lending institution would knowingly give SID money for projects when it knows over half of the lots that figure in the repayment system isn't going to pay one red cent and will probably have back SID Taxes forgiven or reduced as they have done in the past.  So exactly how do we repay the lender when the terms of the loan comes due?  Even if back taxes are pushed to the end of that lots accounting... what happens if the loan comes due and we are short because of those lots?
2.      Commissioners can drop the yearly levy to 6% and unless you go into the office and pay off your debt against the  assessment (typically either $7,400 or $3,400), you will pay a yearly Tax for ever or until the Commissioners raises the levy above 6%.           
        The Problem I see with this is, a 6% levy each year will not pay for the upkeep of the amenities with our payroll.  As we have seen over the past 4 years, we still don't have enough funding to address everything at the 10% rate...  we still have not seen a lake stocked and the big money has all gone to the golf courses.  Well, maybe we could squeeze and budget one project each year which I seriously doubt as after you factor in operating costs, Employees costs, Insurance, Electric, Water, Garbage.. you know all the things needed in running a business, there wont be much left over to do any serious maintenance..... God forbid a irrigation system goes down again at a golf course or the State comes and makes us fix the "High Risk" dams on each of the 7 lakes.  By the way, yes, all 7 of the lakes has leaking levies.          
         Again, factor in the reason of item 1 above and we simply have no funds!
3.         Last but not least, Unless someone can show me a Legal, Financially Sound and Responsible way to continue our SID in its current form or even as a POA, please enlighten me as I'm open to anything that is in the best interest of the property owner!  This is why my current feeling is it is for SID to use these last 10 to 12 years fixing and upgrading our amenities to prepare to convey  everything to the City.            
         Yes, of course the City would need to start planning right now work out ideas of how they are going to fund all this.  
         My thoughts on this is that they would need to create a Parks and Rec District, appoint commissioners and set a Tax rate that each property is to pay.  It will not be a whole lot different than what we currently have under SID, just that it would have oversight and controlled by the City Parks and Rec District and City Council, and under the City, we have grants that open up to us for our amenities that SID can not.          
         Having the City own all this is not our community loosing its "Community Identity" as suggested by some.  This is an avenue that allow us to keep the community going in the manner it is, and quite possible benefiting us citizens by being able to use this to grow our community, if we aren't growing, we aren't going to survive.  Also, being under the City, we now have local and state oversight to keep everything on the up and up unlike SID who hires their auditor and has no real oversight by the county, city, or state.              
         Y'all have to understand that SID's were never meant to be a forever ongoing system unless it operates as intended and I feel ours does not.  That is, go in debt to create or purchase an amenity then end, then go into debt again, purchase or build/improve an amenity, pay off the debt and end. It would be a never ending cycle.            
         You also need to understand that a working SID should not be 25,000 lots and parcels.  SID's are better suited for smaller communities where all lots are paying their Taxes, which ours does not even get half of the lots to pay.            Even though a City would also suffer the fact half the Taxes wont be collected for the same reasons of being at State Lands Commission for non-payment of Taxes, EVERY Tax Paying property would contribute equally.  There would no longer be those "Reserved Properties" owned by select individuals not paying SID Tax as well as those properties left out of the District Boundaries such as Coopers Point and Los Indio's.  There would not be any more favoritisms and hoodwinking the taxpayers by not paying.  If they don't pay the taxes, they get sold on the County Court House Steps just like everyone else.