PID Fundraising Methods

Because a PID is a separate entity from the town/city/county/state in which it is located, it is responsible to collect, enforce, or foreclose in regards to any taxes or fees it imposes. It also bears 100% of financial responsibility and liability for its actions. In other words, no, the municipality won’t necessarily bail out a PID if a project flounders or if community members don’t pay their bills.

PIDs have three ways of raising money:

1. Property Tax

PIDs may levy property taxes on property owners living within their boundaries. These property taxes are in addition to existing property taxes from the county and municipality. The default maximum for this tax is an annual rate of 1.5% on the appraised value of a property, but that limit may be raised or lowered by the governing document. 

This limit does not apply if the tax is specifically to pay for a bond the PID has issued (if the PID is going bankrupt, it can charge whatever it needs to). The PID can also impose an additional penalty rate of 0.7% for non-payment of its property tax.

1.5% may not seem like a lot, but in many Utah cities, a rate that high could easily double the property tax residents currently pay on their homes. 

2. Fees

PIDs may charge fees for administrative services or to pay for the costs of enforcement or acquiring, improving, or extending property or facilities.

3. Bonds

PIDs commonly use their expected tax revenue as collateral on bonds that they issue to fund large projects that they hope will pay off down the road. 

Generally, the PID board must set parameters on bond use and then submit those parameters to the State Finance Review Commission for approval before any are issued. These parameters include the amount, term and interest rate, and expected security. This keeps PIDs from being financially irresponsible and ruining their residents financially.

Specific restrictions on bond issuance can be found in Utah State Code §17D-4-3.

Between the high property tax limit and bond leverage, PIDs have the power to generate a sizable amount of revenue, which will hopefully go a long way toward making the community a more desirable place to live. 

In all its dealings, the PID is expected to adhere to its adopted financial plan, follow wise financial practices, and file annual reports with the creating entity as provided in the governing document.