10. The Future of BIDs: Smaller and More Creative

Self-assessing business improvement districts have done much good for downtowns across the country. BIDs have provided a new and exciting source of revenue for revitalization, particularly in the last decade as they have proliferated (there are now more than 1,200 BIDs in North America, according to the International Downtown Association).

BIDs have cleaned up sidewalks, made streets safer and brighter, marketed downtown to shoppers and tourists, attracted businesses, created databases of downtown activity, improved public spaces and rebuilt streetscapes.

In the future, BIDs will continue to spread as a viable source of funding for revitalization. They will proliferate, especially in small towns and in neighborhood commercial districts. And, their managers will be more creative in their use of BID assessment dollars in order to meet local needs and fit local realities.

But there are challenges ahead, said Larry Houstoun, author of the newly published Business Improvement Districts ($59.95, Urban Land Institute) at a session of the International Downtown Association’s annual conference, held September 20-23 in New York City.

Trouble Spots for BIDs: Copycat Programs

Houstoun said that the “most insidious force working against successful BIDs” is the tendency to copy the program mix of other downtowns. “When business people know little about BIDs beyond the headlines in out-of-town newspapers, there is an understandable, but wasteful, inclination to assume that there is a one-size-fits-all formula for success,” said Houstoun. In the process, leaders overlook local assets and limitations.

For example, while some BID districts like Times Square might need around-the-clock sidewalk cleaning, others like Grand Junction, CO, do not. In fact, some downtowns would do better to employ their clean-up crews in graffiti removal rather than sidewalk cleaning.

This also applies to security efforts, said Houstoun. While some downtowns have had success employing retired police officers to lead security, others have had better results with trained ambassadors who have no policing background.

“Misdirected enthusiasm for exogenous remedies carries with it the risk of wasted resources and painful changes in direction down the road. Eventually, the local realities prevail,” said Houstoun.

Copycatting is also a problem for financing. Many BIDs claim in their promotional literature that the proposed assessment fee is “comparable to other cities,” said Houstoun. This is a real red flag and means that the group has no “idea what is required to revitalize their downtown, so they used an assessment formula that reflects another community’s priorities.”

What downtowns need to do in setting the level of assessment is to ask themselves: “What will it take to do the job in our downtown?” Instead, said Houstoun, they usually ask themselves, “How can we set an assessment rate so low that no one will object?”

An example of a district that avoided this problem is the Manayunk Development Corporation (see DIX 10/15/97). When corporation Director Kay Smith and staff formed a BID, they worked up an assessment fee that would give them enough money to develop a master plan for the district ($80,000).

This fee was twice the percentage usually assessed (10 percent of real property tax instead of five). Although Smith admits to some nervousness when the assessment level was announced to property owners, she says that they understood what was required to make the BID work and they voted it in.

Setting Goals

Other problems: In terms of security, BIDs need to set clearer goals about what they want to accomplish and what they can realistically achieve. Questions that need to be asked include: To what extent is a BID trying to reduce crime? Or is the BID more interested in reducing perceptions of crime and reassuring pedestrians? Does the BID want to concentrate on uniformed personnel or on lighting to make downtown look less threatening?

Houstoun also said that, going forward, BIDs need to start thinking about doing more to improve and provide quality public spaces – the kind that Americans “spend small fortunes to enjoy in other countries” such as town squares, piazzas, public fountains and parks and sidewalk cafes. Places to sit, to walk and to rest.

BIDs need to think more about furnishing these spaces with rest rooms, food, entertainment, maintenance and security. But also they must get involved in creating these spaces and overcoming the poorly designed, badly maintained spaces that were built in the past. (Houstoun argues against the reopening of pedestrian malls to traffic, pointing to the success of such spaces in Miami Beach, FL, Savannah, GA, Burlington, VT and Denver, CO.)

BIDs need to go beyond “clean and safe” to spend more time on better lighting, better facades, better public spaces, flowers and more entertainment – “in short, all the conditions Americans value so highly in their expensive trips abroad and sadly, that they find in few BID-run American ‘downtowns.”

And, yes, once they have made downtown a more beautiful and entertaining place to be, BIDs need to spend more time on marketing

Legislation and Research

Houstoun proposed that better state enabling legislation is needed for BIDs. The process is too long and too difficult in many states. Also some states allow local governments too little say in setting boundaries, deciding on the organization structure of the BID, etc. Houstoun also thinks that enabling legislation that allows property owners to excuse themselves from the assessment – such as the legislation in Massachusetts- is a mistake.

BIDs also need to get more involved in research, measuring what makes cities and small towns “tick.” But a problem with BIDs as data collectors is that BIDs also need to make their downtowns look good. This can cause a conflict when there are negative data. What to do? Houstoun said that it is in a BID’s best interest to report the bad news along with the good, because “local realities will ultimately prevail.”

What Lies Ahead?

In the decade ahead, “most of the expansion will be in smaller commercial areas,” said Houstoun. Smaller communities and neighborhood commercial districts are getting more comfortable with the idea of BIDs as they see them achieving success in other small towns. An example of successful small town BIDs is the SIDs (special improvement districts) of New Jersey. There exist about 30 SIDs in New Jersey, many in small towns like Millburn (pop. 18,000) and Cranford (26,000). Also, neighborhoods like Grand Avenue in ~ew York have been able to use relatively small assessments (originally $33,000) to pay for the purchase of Christmas decorations. Small towns and districts are learning that BIDs aren’t just for big city downtowns anymore.

Kudos, and a Warning

Houstoun congratulates BIDs that have been forward-thinking and, optimistically, hopes to see more BIDs following their lead (although not copycatting). He congratulates downtown Phoenix for performing excellent data measurement, Philadelphia for physically rebuilding its streetscape, Denver for bringing residents back to downtown, Red Bank, NJ for converting old buildings, Millburn, NJ for its successful business recruitment program, Bryant Park, NYC for reclaiming and maintaining a beautiful and: usable public space, Baltimore for marketing and business attraction, and Times Square for creating new events.

“One important distinction is between those that are investing modestly in making the best of downtown as it is, and those that are aggressively working to improve the product,” says Houstoun. ”A successful firm is never satisfied with its product – nor is a successful BID. Too many BIDs proceed as if they are satisfied. The competition will eat them up!”

The same is true for downtowns and Main Streets in general.

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