Madison’s commissioners approved on Monday the establishment of a new business improvement district in Madison centered on the operation of hotels and motels in the city.

Eric Hortness, executive director of the Greater Madison Area Chamber of Commerce, presented a resolution to the city commissioners in November to create a Business Improvement District No. 1 in Madison that would include property that is zoned and used for hotels, motels and lodging establishments.

Last month, the commissioners decided to schedule a hearing on Dec. 21 to hear any testimony about the BID proposal, and the hearing was held on Monday.

During the November meeting, Hortness said the lodging operators in BID No. 1 would collect fees -- amounting to $2 per room per night -- to fund improvement projects. He added that out-of-town travelers staying at the motels and hotels would pay the per-night fees.

Hortness also presented the city commissioners with a petition signed by operators of three lodging establishments in Madison -- AmericInn, Super 8 and Best Western -- asking for a hearing by the city to create a business-improvement district.

With the passage of the BID proposal by the Madison City Commission, the mayor would have -- with the approval of the city commission -- the authority to appoint a business-improvement board consisting of property owners, residents, business operators or users of space within the business area that is selected for improvements. In Madison’s resolution, the board for BID No. 1 will consist of five members – appointed by the mayor and approved by the commissioners -- with at least one hotel or motel official included among the board directors. The board members will have three-year terms with the original members having staggered terms of one, two and three years. The city commissioners and the local chamber can also appoint one person each to the BID board to serve as nonvoting members.

The city commissioners have the authority to designate the boundaries of the business area prior to the appointment of the board. The BID board would make recommendations to the city commissioners for the establishment of a plan or plans for improvements in the business area.

South Dakota law allows communities to impose a special-assessment tax upon the property within a business-improvement district in the municipality. The notice of intent for creating a BID is expected to include the method of raising revenue and assure that the method is fair and equitable. If the occupational tax is based on rooms rented by a lodging establishment, the tax imposed on the transient guest may not exceed $2 per occupied room per night.

The proposed tax was calculated to generate between $50,000 to $100,000 each year. When the occupational tax on the use of motel and hotel rooms in Madison is collected, the commissioners can allow the municipal finance officer to recover the department’s administrative costs by directing 2% of the total tax collected toward paying those expenses.

State law allows any revenue generated by the businesses in the BID to find many types of projects that include the construction or installation of convention or event centers, pedestrian shopping malls or plazas, sidewalks, parks, meeting and display facilities, lighting, benches, sculptures, trash receptacles, shelters and pedestrian and vehicular overpasses and underpasses, or any useful or necessary public improvement.

Upon receiving a recommendation from the business-improvement board, the city commissioners could create one or more business improvement districts by adopting a resolution of intent to establish a district or districts.

Committee re-appointments

The commissioners approved re-appointing Danny Frisby-Griffin and Jennie Thompson to new terms as members of the governing board for The Community Center, Madison’s wellness center.