You are not alone if you have never heard the term “NIDMA” dropped in casual conversation.  When planning your next project, however, familiarizing yourself with the terms of Pennsylvania’s Neighborhood Improvement District Act would be time well invested.

Although passed in 2000, the NID Act appears to be relatively unknown and seemingly underutilized.  Simply stated, the Act affords municipalities the opportunity to make capital improvements or offer additional services to specific constituents without levying generally applicable taxes.  Those who benefit from the service or improvement share the cost of paying for it through special assessments on their properties. 

The beauty of the NID Act is that it has the potential to change the dynamics of the political process to allow municipal officials to meet the unique and varying demands of their communities.  Now, municipal officials can move forward with that neighborhood park project, even though a majority of constituents may not support it.  So long as forty percent of the property owners in the area surrounding the park are not disagreeable to the idea, a NID could be created for that purpose.

Now consider a very different application of the NID Act.  You are a developer who would like to build a unique community using clustering techniques.  Due to the density of the residential portion of the community, you are going to need public sewer and water; however, as a tradeoff to building density, you will preserve open space and create recreational opportunities.  A bike or walking trail and a pool would create value and desirability.  Proper lighting and landscaping and even trail security services would add the finishing touches to the lifestyle community you are trying to create.

Enter the NID Act.  Creating a NID for the example above would enable the financing of a significant portion of the project on a limited recourse, possibly tax-exempt, basis.  The open space, recreational facilities, streets, curbing, sewer and water, lighting, landscaping and security services could be financed using municipal revenue bonds, instead of traditional construction loans.  Residents will pay a lower sticker price for their home in return for the knowledge that they, or their successors, will be paying a periodic assessment together with, or as part of, their owner’s association payments to amortize the financing of the community’s amenities.

Consider a third application of the NID Act.  Is there a redevelopment opportunity in your commercial downtown?  Here again, the NID Act provides a mechanism for property owners, in this case downtown businesses, to contribute to the redevelopment of a blighted or underutilized property.  Using the NID Act in combination with other economic and redevelopment tools such as tax increment financing, can be an effective catalyst for downtown revitalization.

To explore ways in which the NID Act and other economic development tools could be utilized to finance your next project, contact Jon Cox or Tom Nehilla at Rhoads & Sinon LLP in Harrisburg at 717-233-5731, or by email, jcox@rhoads-sinon.com or tnehilla@rhoads-sinon.com.