PID legislation seeks to curb defaults
The good and the bad of the public improvement district movement in Mississippi can be found in Madison County, right next to each other.
Ridgeland’s Colony Park PID has flourished, anchored by Renaissance at Colony Park and its retail and housing units that have turned the Highland Colony Park area into one of Metro Jackson’s most successful. It’s adding amenities. Officials broke ground last fall on bike trails and walking paths paid for by transportation enhancement funds from the Mississippi Department of Transportation.
Just to the north of Colony Park, winding from Madison to Gluckstadt, Parkway-East PID represents the inherent financial risk some PIDs carry. It is named after a 4-mile, four-lane boulevard that runs parallel to I-55 and connects Madison and Gluckstadt. Late last year, developers were unable to service the PID’s debt, and plans for a waterpark and an amphitheater stalled. Because Madison County guaranteed the bonds, taxpayers there had to shoulder the financial burden. In October, the county was officially on the hook for nearly $400,000.
The concept of a PID is simple: Property owners can gather and essentially tax themselves to build something or provide a service their city or county otherwise could not. Some PIDs have convinced counties or other local government entities to guarantee their debt.
For those who have, Secretary of State Delbert Hosemann is proposing instituting standards that would govern post-construction valuation practices. The proposal is one part of Hosemann’s bundle of business reform legislation he will submit this session.
“Unfortunately, because of the success of some of these PIDS, they went and replicated it, and some of them have failed,” Hosemann said. “We have quantified the method of valuation of property post-construction. Some of these have had some enthusiastic appraisals. They didn’t materialize, and the liens on the property were so high that they eventually forfeited to the state, which does no good for anybody.”
As of late Wednesday, the bill had not yet been introduced. The bill-filing pace at the Capitol started to quicken last week after an abnormally slow start due to the installation of new leadership in both chambers.
When it is filed, the legislation would require the appraisal of PID property post-construction to adhere to standards other commercial and residential property is already subject to. It would only apply to PIDs with government-backed loans. The way the law reads now, there are no standards governing post-construction valuation of PIDs.
“This would utilize standards that were proposed by real estate appraisers and tax assessors,” Hosemann said. The bill is the result of committees made up of business professionals and government officials Hosemann formed.
“Clearly, there were holes in the valuation process of some sort because we’ve had a giant default,” Hosemann said. “We want to make sure everybody has taken a real close look at all this and we have good appraisal methodology. We need confidence that the guaranty of the county is not going to be called upon.”
Derrick Surrette, executive director of the Mississippi Association of Supervisors, sat on the committee that formulated the PID legislation.
“Some of these PIDs just haven’t performed like they thought they would” and have created a financial burden for counties that have backed them, he said.
“It’s a tax. That’s the nuts and bolts of it. We have to make certain taxpayers are protected, and I think this has the potential to do that. Another thing I hope this bill will do is prevent counties from being stuck with property with a tax lien that’s worth more than the property itself. I hope it will allow these counties to sell these properties. PIDs can be a good thing. They’re not all bad. But when they do go bad, they’re a tax; in some cases, an expensive tax.”