Understanding SID and LID Fees

Understanding SID and LID Fees

Whenever a building is constructed on undeveloped land, the city is responsible for installing water, sewage, gas, and electrical lines. While developers focus on the building, the city focuses on the infrastructure. This cost is what constitutes the Special Improvement District (SID) and Local Improvement District (LID) fees.

SID fees are usually aimed at funding operating expenses managed by the Assessment Management Group while LID fees finance capital improvements such as constructing infrastructure.

Developers may either choose to pay these fees right away and adjust it in the sales price later on or pay the fee up front. If that is the case, the city will assess the newly built community and determine a figure which will be divided among all of the properties in that community. This fee is then paid semi-annually for a fixed number of years.

The fees will reflect the type of community it is, i.e., if it is categorized as luxury real estate, these fees will be higher compared to regular communities. Usually, the fee is broken down into installments for 10 or 20 years.  In Las Vegas, SIDS are more commonly found in the Summerlin community while LIDS are more commonly found in Green Valley and Seven Hills but they are essentially the same type of fee.

As a home owner or potential buyer, you can see if there is any assessment attached to the property you’re looking to buy, or you can simply ask your real estate agent (US). It is important to note that SID and LIDs are attached with the property; meaning that if you’re looking to transfer home ownership over, SID fees and LID fees are also transferred.  This is important to understand when calculating the total cost of ownership as well as seeing if we can get the fees covered in the transaction closing costs.

These fees aren’t the same as property tax and are similar to HOA fees.

Failure to pay SIDs and LIDs can lead to your home being foreclosed, so remember to consider this additional cost when considering any property. SID and LID payments aren’t a capital improvement and therefore don’t improve home value, so if you are selling your house, you don’t have to pay it.

Disclaimer: There are numerous factors to consider in every investment, including real estate. The information provided above is just a matter of opinion and can change with time. It shouldn’t be construed as legal or tax advice; neither does the report constitute a financial promotion or investment advice. It is general information and before making any such decision, you should seek out licensed professionals and see all ends clearly.