Sanitary Improvement Districts (SIDs) are formed to provide basic services for new housing developments, such
as electric service, sewer and water services, sidewalks and roads. In the Omaha metro area, hundreds of these districts have been established to bring these urban services to development projects on the fringe of the city.
SIDs have been a source of contention within local municipalities for decades now as many have filed for Chapter 9 bankruptcy (a category that applies to municipalities and other taxing authorities) through the State of Nebraska. There have been so many bankruptcies of SIDs in the state, that Nebraska accounts for nearly 1/5 of all the Chapter 9 bankruptcies in the entire country since 1981. Since SIDs are pseudo-governmental entities, they have the privileged of levying taxes and accruing debt. As we have seen, this debt has forced many SIDs into bankruptcy in recent years, prompting Bloomberg to name the state the "King of Municipal Collapse." Is this a fair title though?
Nebraska is unique in that it allows SID development to occur and grants them unobstructed access to bankruptcy courts. So while bankruptcies from states like California, Michigan, and Alabama are the result of a large number of municipality failures, Nebraska's cases are a less severe problem. SIDs effectively use the procedure to restructure their debt and allow them to repay bonds at lower interest rates over longer terms. This jump-starts many of the development projects, allowing them to be successful post-restructuring.
As Omaha continues to grow south into Sarpy County, these issues regarding SID development have been at the forefront of a debate on how best to proceed with growth. Geographic conditions existent within the county are forcing developers and municipal and County government to think strategically about the construction of city services. SIDs remain an effective tool for development, but it has been argued that they are expensive for homeowners, and active contributors to rapid urban sprawl.
In forthcoming posts, we will explore development of infrastructural systems as Omaha continues to push south into Sarpy County. Stay tuned.
SIDs have been a source of contention within local municipalities for decades now as many have filed for Chapter 9 bankruptcy (a category that applies to municipalities and other taxing authorities) through the State of Nebraska. There have been so many bankruptcies of SIDs in the state, that Nebraska accounts for nearly 1/5 of all the Chapter 9 bankruptcies in the entire country since 1981. Since SIDs are pseudo-governmental entities, they have the privileged of levying taxes and accruing debt. As we have seen, this debt has forced many SIDs into bankruptcy in recent years, prompting Bloomberg to name the state the "King of Municipal Collapse." Is this a fair title though?
Nebraska is unique in that it allows SID development to occur and grants them unobstructed access to bankruptcy courts. So while bankruptcies from states like California, Michigan, and Alabama are the result of a large number of municipality failures, Nebraska's cases are a less severe problem. SIDs effectively use the procedure to restructure their debt and allow them to repay bonds at lower interest rates over longer terms. This jump-starts many of the development projects, allowing them to be successful post-restructuring.
As Omaha continues to grow south into Sarpy County, these issues regarding SID development have been at the forefront of a debate on how best to proceed with growth. Geographic conditions existent within the county are forcing developers and municipal and County government to think strategically about the construction of city services. SIDs remain an effective tool for development, but it has been argued that they are expensive for homeowners, and active contributors to rapid urban sprawl.
In forthcoming posts, we will explore development of infrastructural systems as Omaha continues to push south into Sarpy County. Stay tuned.
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