38. Neighborhood Improvement District Explored for University City

Successful BIDs pay attention to how people regard conditions.

Unconstitutional! The meeting was barely three minutes old before this assessment rose from the audience. ”We’ll get to that”, interjected Lewis Wendell, University City District Executive Director, waving House Bill No. 1142 (1999), all eighteen pages of it. The bill authorizes Neighborhood Improvement Districts in municipalities and gives them the power to tax (an unwelcome word), as well as the power raise money by floating bonds.

The idea traces back to the 1700’s pointed out the meeting’s facilitator, Larry Houstoun of The Atlantic Group, an urban development consulting firm with offices in Philadelphia. Houstoun has worked on economic developmentin 70 commercial areas nationally, and helped draft Pennsylvania’s business improvement district laws. Fifty business owners came out to the Spruce Hill ChristianSchool, on this last day of a balmy November to listen, and be heard.

University City NID (Neighborhood Improvement District) would supplement the University City District. That is, presently, the UCD’s services are provided by voluntary donations (from the likes of the University of Pennsylvania, Campus Apartments, Central City Toyota, Blockbuster) toward its annual five-million dollar budget. NID would add an additional one million dollars in services by “assessing “real estate businesses in the District.

Before defining what the NID assessment was, Wendell wanted to make clear what it was not: NID will not include an assessment on owner-occupied residential properties. Although, he did point out later in the meeting, if a NID Board deemed this a wise path, it could propose it. The UCD Board’s present opinion is that they still would like residential owners to contribute, voluntarily.

Which properties would be affected? Under current guidelines, proposed by a NID steering committee, a University City NID would include commercial and residential investment properties of four or more units (apartments). Many argued that ten or more units would be more acceptable. The surcharge assessment would be computed at approximately 12% of the taxes paid to the City. “It is not a tax”, Wendell also pointed out. The voluntary donors to UCD would not be assessed.

Much of the discussion revolved around the “fairness” of the proposal, and, indeed, a definition of “fair”. Most agreed on the merits of the UCD initiative over the past five years. Its accomplishments: cleaner, safer streets and the marketing of the District, were quantifiable to the audience. UCD will help you if you are locked-out of your car, or jump it if it won’t start.

UCD’s role and benefit has expanded since its creation eight years ago. Wendell maintains services to University City would intensify dramatically with NID.

An important distinction between UCD and NID is the power NID would have to generate bonds. The further improvement of lighting in University City could require as much as a ten million dollar bond. Unlike the UCD, a NID Board of Directors would be comprised solely of assessed property owners. How the cost would be shared and how a NID Board would govern are key decisions the community must make, according to Houstoun. Every participating business would get a vote at an annual board meeting. “Would members be regularly consulted?” queried Tony West, past President of the Clark Park Association. Nothing has been decided yet: it is assumed a Board would listen to the recommendations of its members, explained Wendell.

The governance of a NID Board was a key issue to the audience. The present steering committee appeared to one as “self-selected”. “It was a coalition of the willing” was offered as explanation, to lukewarm reception. Call it an assessment, call it tax, the businesses wanted a democratic process. “How is it fair, if a select few pay, and all benefit?” The discussion circled back to the cost. “If the area is opposed, don’t proceed”, Houstoun advised. How do you know without a vote, one wondered. Bill Foronda, of the Universal Investment Group, is for the idea, even though his non-profit business de-converts apartment housing back into single residencies. The way he sees it, he would have to pay during reconstruction periods. Russ Galligher, of New Horizon Housing, also supports the proposal. New Horizon maintains 600 rental units in University City. Since its arrival in 1998, New Horizon has not paid into UCD, they are happy to now, Galligher reports. Mary Nixon was there to “make sure my mother is not on the list”. The present NID proposal excludes those for whom an assessment would pose a hardship. Nixon was not seeking assurances, she wanted a guarantee. Let’s not do it at all. Let’s make it higher than 10 units. Why should some get a free ride? Let the 26 members of the Steering Committee pay for it all. The discussion, with a projected backdrop of The Rules of Engagement (All options are valid), was picking up speed. Will the recent eminent domain ruling have any impact? No one will be afforded eminent domain.

What if the real estate bubble bursts? Cleaner, safer neighborhoods will have ensured value. What if the large, voluntary contributors, like the University of Pennsylvania, perceive the NID as a way to ease out of their commitment? A valid sentiment.

Lindsay Johnston, President of Common Ground Realtors (a Bronze contributor to UCD) and a member of the NID Steering Committee, says “The jury is out”. Yet, properties valued at $150,000 a decade ago have increased to $400, 000, he adds. Many factors have contributed significantly to this increase, including the special services of UCD. “Unfortunately, it is a necessity”, he characterizes the proposed NID, “it is an insurance policy to maintain our property values.”

“It is nothing yet, no decisions have been made”, Wendell announced to the audience. The next NID open meeting is scheduled for Wednesday, January 11, 2006, 7:00 PM, at a location to be determined. A glossary of terms (assessment, by-laws, district, vendor … ) was handed out for the purpose of this meeting.

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