Public improvement fees as sales tax add-ons

The entry on municipal finance discussed wide-scale funding mechanisms, including county and regional sales taxes.

It didn't discuss community specific sales taxes, which are quite common.  For example, in Georgia they have what are called SPLOSTs, which stands for Special Purpose Local Option Sales Taxes, which communities mostly use to fund infrastructure and revitalization programs.  The state legislation authorizing the program limits the charge to a maximum of 1%.

Interestingly, an airport improvement program in Lafayette, Louisiana was funded by a temporary sales tax upcharge of less than one year's duration, which raised the $32 million needed ("Temporary Sales Tax Raises Funds for New Terminal at Lafayette Regional," Airport Improvement Magazine).

In Colorado they have a program called Public Improvement Fees, which are sales taxes that aren't called sales taxes.  What's interesting is that they can be assessed at either a community-wide or sub-community district scale .

-- "Public Improvement Fees as a Development Finance Tool, Brownstein Hyatt Farber Schreck
-- Special District Association of Colorado

For example, in Denver, the Larimer Square district has a "Historic Preservation and Restoration Fee," a 1% surcharge on retail and restaurant transactions.  The monies are used to fund physical improvements in that commercial district.

Instead of providing tax increment financing to the redevelopment of the Garden on Havana shopping center in Aurora, the city allowed the development to assess a PIF on sales transactions there, as a more direct way to fund improvements.

This is done by creating a special purpose taxing district.  Colorado has many types of special districts because counties are legally limited in the services they offer.  Mostly, this funds programs such as water, libraries, or parks.  But one type, "metropolitan districts," are used to support site/area/district specific programs which can provide either public or private benefits.  Metropolitan districts are the entities which collect and manage the fee revenue.

 Except for the funding method, sales taxes instead of property taxes, it's comparable to how cities allow for the creation of business improvement districts, which are funded by a property tax surcharge agreed to by a majority of property owners.