Why Use a Sanitary & Improvement District
The SID model has proven to be a sustainable and effective tool for financing the construction of public infrastructure improvements.
SID Benefits
SIDs have the authority to finance public infrastructure by issuing tax-exempt debt, including warrants and general obligation bonds.
Construction fund warrants are issued during the development phase to cover work-in-process payments. These short-term instruments have a statutory maturity of five years and pay interest annually. Warrants are redeemed through a combination of special assessment collections and proceeds from bond issuances. Special assessments may be levied against parcels that directly benefit from specific infrastructure improvements and are typically paid to the District when those parcels are sold.
Once the District establishes sufficient valuation and a reliable tax base, it may issue general obligation bonds. These bonds are supported by ad valorem property taxes levied within the District and are used to redeem outstanding warrants and provide long-term financing. Bonds generally have a final maturity of 20 years with a three- or five-year call protection period. Over time, most SIDs are annexed by the city with zoning jurisdiction. Upon annexation, the SID is dissolved.
