4. Are BIDs Working?

Uniformed patrollers attract attention and can help people with many different needs

The change in conditions, conveniences, and comfort wrought in once scruffy Times Square is part of a movement to reestablish middleclass standards of cleanliness and security in commercial areas across the United States and Canada through the creation of business improvement districts (BIDs). After five, ten, and in some cases 20 years of experience, it is fair to ask whether BIDs are working. Are downtown prospects better because of them, and, if so, in what ways?

Three years ago, the Atlantic Group conducted a survey of 24 BIDs in New York City (there are now more than 30) and a comparative survey of six others from across the country. (See “Betting on BIDs,” June 1994 Urban Land.) Earlier, the firm had surveyed BIDs throughout New Jersey. On the basis of survey data and extensive anecdotal information, BIDs can be grouped in two major categories:

• BIDs with annual budgets of approximately $50,000 to $250,000 (small BIDs). These tend to focus on retail, offering services such as promotions, special events, joint advertising, seasonal lighting, and business attraction and retention programs, including marketing and sometimes incentive financing. Board membership includes a large number of retailers.

• BIDs with large operating budgets, often of $1 million or more, and in some cases with capital budgets of as much as $30 million (large BIDs). These tend to concentrate resources on improving and maintaining the public environment, with major outlays for labor-intensive sidewalk cleaning and supplementary security. Board members tend to be managers of hotels, owners of office buildings, real estate brokers, and those who control significant amounts of commercial property.

The survey revealed that smaller BIDs saw security and public-area improvements as their area’s greatest needs. Correcting these problems requires services and capital projects that few small BIDs can afford. BIDs with large budgets, on the other hand, expressed satisfaction in those areas, where they already were spending a large share of their resources. Instead, they saw their area’s biggest need as filling commercial vacancies. Few large BIDs had undertaken systematic business attraction programs at that time.

Brighter Philadelphia

In the past decade, a crop of professional BID managers has emerged in programs operating in the larger districts in the United States and Canada. These new professionals are directing multimillion dollar enterprises in sometimes highly politicized communities and in economies that are perennially precarious.

Center City District (CCD) in Philadelphia has an annual budget in excess of $7 million, devoted primarily to round-the-clock sidewalk cleaning; providing uniformed, radio-equipped supplementary security personnel (community service representatives); and paying off a 20-year, $21 million bond issue for capital improvements to the pedestrian environment. Sidewalk cleaning for the 80-block district is provided by a private contractor whose employees wear CCD’s attractive uniforms and operate mechanical sweepers that sport CCD’s colors and logo.

Determined to get the basics right, CCD spent the first four years launching and perfecting the cleaning and security systems. The security system produced a significant change in city police procedures, unifying precincts to coincide with district boundaries and creating a joint operations headquarters to facilitate cooperation between CCD’s uniformed personnel and the police department. By the fifth year, CCD was ready to begin one of the most ambitious BID-funded streetscape programs in North America. The center city district had relatively few of the vacant lots, parking lots, and buildings with vast expanses of blank walls found in many of America’s downtowns; still, public sidewalks were badly littered and shabby, creating a stark contrast to the new buildings constructed in the mid-1980s, the unique historic area, and the centrally located Pennsylvania Convention Center.

The subsequent streets cape project was designed to take maximum advantage of the convention trade, while enhancing the environment for tourists, office workers, and shoppers. With CCD’s assessment financed $21 million bond issue and $5 million in matching funds from the city, construction started in late 1996. Earlier, the block in front of the CCD police department joint headquarters had become a test site for new trees and curbs, directional maps for pedestrians, and lights. In contrast to the towering “cobra” style streetlights, the new, closer-to-the pedestrian light fixtures provide lighting for sidewalks that is two to three times brighter.

CCD also is creating state-of-the-art tree pits and special irrigation facilities, assuring greater longevity for street trees, and the district will soon take on maintenance of all center city trees, new and old, employing former welfare recipients.

In what promises to be a first among North American cities, CCD is installing colorful, understandable directional maps and signs at frequent intervals that will show pedestrians at a glance how to reach their destination and approximately how long it will take to walk there. This last touch, borrowed from Switzerland, gives visitors the confidence to start out on a pedestrian journey, for example, from the Bellevue Hotel to the Convention Center, knowing that there is time to enjoy the journey on foot. With more than 400 shops and services catering to the walk-in trade within ten minutes of the convention center, the rewards to the tourist (and to the local economy) will be significant.

Financing this urban face-lift could have cost the district some of its remarkable popularity. With steadily declining property values (15 percent over five years), CCD’s assessment revenues have dropped correspondingly. Assessment charges have risen about 4 to 5 percent per year-a change endorsed by property owners- to support an annual budget that rose from $6.3 million in 1991 to $7 million in 1996. Pennsylvania law requires a remonstrance vote before initiation of a BID or any changes in its financing or boundaries; if owners of more than a third of the assessed properties or a third of the total assessed valuation object, the process stops. Of more than 2,000 properties eligible to vote each time, fewer than 12 percent objected in the first remonstrance; fewer than 2 percent objected when the streetscape bond issue was proposed; and only one owner objected when the boundaries were expanded recently to include 59 properties on East Market Street, site of about half of the downtown retail space previously cleaned by a voluntary association.

Like many cities, Philadelphia’s central business district includes some people who sleep and beg on the sidewalks. CCD consulted experts to suggest what, if anything, the city, the district, or others could do about this pervasive social problem. On the basis of the study, Paul Levy, the executive director, convinced city officials that a disproportionate amount of public money was being spent on temporary shelters and that insufficient money was available for treatment, training, and job placement. The city has agreed to do everything it can to switch its orientation to rehabilitation. Specially trained CCD community service representatives, the Homeless Action Team, try to motivate street people to accept substance abuse treatment, mental health services, and shelters, with some success.

CCD also serves as a resource for the Private Industry Council and the state department of welfare, providing paid work experience for formerly homeless job-training graduates who remove graffiti and maintain sidewalks and landscaping. The resulting improvements to the public realm accrue without charge to the assessed properties. Many of the larger BIDs exhibit a similar entrepreneurial spirit.

Is the BID working in central Philadelphia? Professionally managed with strong business support and without political interference, CCD would star in any city. Crime is down and hotel occupancy is up, as is retail overall. Retail occupancy in the blocks catering to higher-income consumers suggests that CCD’s heavy promotion of Wednesday night shopping is paying off, although occupancy in the discount dominated blocks is off. As it is in most of the rest of America’s urban markets, office occupancy is down in older buildings.

Portland: Coping with Street People

The Association for Portland (Oregon) Progress (APP), headed by Ruth Scott, organized the Clean and Safe District almost ten years ago. Her agency has become a leader, particularly on the troublesome issue of people who sleep or beg on commercial sidewalks.

In 1986, APP took over management of the sidewalk-cleaning program. Funded by the city and APP, the program hires formerly homeless, recovering substance abusers to sweep downtown sidewalks. The program’s budget was expanded to $300,000, and it now employs about 20 individuals in minimum-wage jobs that represent a first step toward self-sufficiency. Employees who stay clean and sober have an opportunity to advance to the heavy-duty cleaning crew or other positions managed by APP. Jobs are the “carrot.” The “stick” is an ordinance making it a misdemeanor to “aggressively panhandle.” Panhandlers cannot block the sidewalk or harass pedestrians.

In 1988, APP also developed the “Real Change NOT Spare Change” education campaign. APP’s social service providers’ experience was that many of their clients spent the money they acquired begging to purchase alcohol and drugs. The message was simple: giving to panhandlers supports the habits that put many of them on the streets-if you want to help, give to the organizations that provide services.

The Portland Guides-unarmed, radio-equipped, uniformed security personnel who patrol downtown streets-have a dual mission: to act as goodwill ambassadors for visitors and as “eyes and ears” for local law enforcement agencies. After a noticeable increase in panhandling, APP developed a “panhandling team” to discourage begging by trying to deprive panhandlers of their market. Guides actively discourage giving to panhandlers, verbally encourage panhandlers to move from high-profile corners, and stand on both sides of a panhandler and encourage people not to give. If guides witness an aggressive panhandler, they act as complaining witnesses.

The Portland police support the APP’s efforts. Officers will issue citations for aggressive panhandling. The Multnomah County district attorney has assigned a deputy to work on downtown issues; part of the budget for the position is supported by APP. The incidence of panhandling in downtown Portland was down 60 percent in the last year. Aggressive panhandling is almost nonexistent.

Scott has been with APP since 1985 and headed the organization at the time the BID was approved. APP, a 501(C)(3) business association, operates the BID with an overlapping board whose members include two elected city representatives. APP’s total annual budget is approximately $~.5 million; $2.4 million of that is derived from assessments within the BID called the Clean and Safe District.

Common Problems; Diverse Attacks

Although BIDs learn a fair amount from each other, there is considerable diversity in their approaches to problems. Here are some approaches to security—some involving services and some involving advocacy:

• The Allentown, Pennsylvania, BID contributes $77, 000 annually to payoff-duty police officers to patrol downtown.

• The West Palm Beach, Florida, BID has developed a partnership with local police, producing a 50 percent drop in narcotics-related crime. K-9 units reduced loitering and panhandling.

• The Trenton, New Jersey, BID at first paid for off-duty police to patrol the shopping area. After two years, however, it negotiated a change in the level of service agreement with the city that resulted in more regular police foot patrols in the district with some unarmed security personnel.

• Riverside, California, has adopted additional laws to improve the public environment, including making it unlawful to obstruct the public right of way; to sit or lie down on public sidewalks; and to urinate or defecate in public.

• The Vancouver, British Columbia, BID hires youth as uniformed summer “Downtown Ambassadors” to aid tourists and businesses by providing information, guidance, and a wide range of assistance.

• Times Square, New York City, BID officers made 82 citizen arrests in the first nine months on duty; crime in the area is down 21 percent since the BID was formed.

• The Grand Central Partnership, New York City, security program contributed to a 27 percent crime drop; in the sector nearest the station, crime dropped 83 percent.

• Philadelphia’s Center City District surveyed downtown workers, shoppers, employers, and visitors, finding that 48 percent consider downtown safer since uniformed security personnel went on duty. Police say that crime fell by 14 percent. Here are some approaches to keeping downtowns clean in order to compete with shopping malls and office parks:

• The Mesa, California, BID and many others move fast to remove graffiti.

• The Riverside, California, BID performs graffiti removal under a contract for services with the municipality.

• The Times Square BID is responsible for a dramatic improvement in cleanliness at the “Crossroads of the World.” The mayor’s report card shows Times Square now to be 93 percent clean, compared with 54 percent before BID cleaning services. The BID last year scraped and painted 320 light poles, 48 switch boxes, 71 fire hydrant caps and bases, and 68 sets of guard poles and arranged with store operators to reduce the amount of trash awaiting pickup on the sidewalks.

• Philadelphia’s Center City District sidewalks are pressure-washed several times a year. A CCD survey shows that 78 percent of 2,000 respondents-shoppers, storeowners, visitors, and downtown employees say the district is cleaner since around-the clock cleaning began.

• The Atlantic City BID collects 14 million gallons of trash from its boardwalk and streets annually.

BIDs, either through their own initiatives or through advocacy, engage in a wide variety of locally important downtown projects, including improvement of parking conditions.

• The Association for Portland Progress (APP) argued successfully to restrict a proposed rate increase for metered parking and convinced the city council to adopt a policy for evaluating future rate increases. APP also developed a marketing campaign built around the fictional character “Les Park” to let customers know that the area has abundant parking.

• Calgary, Massachusetts, organized a discount parking system ($1 for four hours) on Saturdays.

• West Palm Beach organized the “free and easy” parking program (no charge evenings, Saturdays, and Sundays) and a trolley-style bus to bring customers from remote sites.

• Buffalo, New York, has granted BID security employees power to write parking tickets.

• The Trenton, New Jersey, BID operates a parking lot close to stores and runs a validation program to serve retailers.

Similarly, BIDs initiate diverse programs for marketing and economic development.

• The Times Square BID is one of many throughout the United States and Canada that hold “A Taste of … ” festivals to promote restaurants.

• The Red Bank, New Jersey, BID organized a campaign to encourage more stores to open on Sunday. With special advertising and promotions, plus free parking, the number of stores that open rose from 22 to 82 in a few months. Many retailers now say that Sunday is their second-best day in total sales volume.

• Philadelphia’s Center City District won an international award with its “Make It a Night” program to draw shoppers on Wednesdays after normal closing hours. Special promotions are created, parking is discounted, and there is music and other entertainment on sidewalks. Stores report increased foot traffic, number of sales, and amount per transaction.

• The Millburn, New Jersey, BID produced the lowest retail vacancy rate in five years. The BID created an award-winning marketing kit to be used by real estate agencies, which lacked demographic and other important information needed by prospective tenants. The kit includes a quarterly report describing vacant properties, rents, size, and so forth. Millburn also has an aggressive program to help businesses get all the permits necessary to open new stores and created a below-market-rate business loan program to help new and expanding businesses meet fit-up, facade, and sign costs. Nine commercial banks and the county economic development corporation participate. Millburn also conducts an annual consumer survey to test preferences, satisfaction with downtown progress, views about competitive downtowns, and the direction downtown should take with regard to redevelopment and parking improvements.

• Denver, Colorado, retailers reported sales of $400 per square foot as a result of the BID’s marketing, security, cleaning, and promotions. Property owners see substantial benefit from district services in terms of property value. Seventy percent reported significant or moderate increases.

• New York City’s Grand Central Partnership published data by the independent Gordon Office Market Report that illustrate the effect of BID services-cleaning, security, and marketing-on properties in the area. Of eight commercial districts studied in Manhattan, only the Grand Central Partnership area recorded gains in average asking rents.

• The Red Bank, New Jersey, BID surveyed 200 merchants after the holiday season. As the result of promotions (including a Santa parade that included giant balloons from the Macy collection) merchants reported an increase in the number of sales of three to one; an increase in transaction amount of five to one; and an increase in customer foot traffic during the holiday season of 1. 7 to one.

• The Phoenix, Arizona, BID reported that the area is producing significantly more sales taxes for the city-up 26 percent over a three-year period-reflecting increased profitability. Restaurant and bar revenues led the way (40 percent), with retail at 21 percent and hotels at 3 percent. Data from the city finance department were released by business leaders, who noted that these gains benefited residential taxpayers.

• Buffalo Place, in Buffalo, New York, regularly conducts a professional telephone survey of people in the region. Results include the following: 65 percent agree Buffalo Place is “a fun place to be”; 66 percent agree it is a “safe place to be”; 83 percent agree it is a “clean place to be”; 65 percent agree it is a “good place for dining”; and 53 percent agree it is a “good place to go shopping.” Using these data, the BID is placing greater emphasis on retail attraction.

• The Cranford, New Jersey, BID has an assessment that typically costs businesses approximately $1.50 per day. During the recession, commercial properties held their values while residential property values declined.

Issues and Concerns

One common concern about BIDs has to do with the suspicion that hard-pressed city governments will shift the cost of some services from general taxpayers (a more formidable voting block than business owners) to assess. This issue raises the question of the degree to which government and BID activities are the same, as well as how to protect BIDs against potential cost shifts.

The issue is raised most often in the earliest phase of considering whether to organize a BID-the “what if” time, when every possible negative outcome is questioned. At this stage, there has not yet been an opportunity to determine whether the BID would provide services comparable to those provided by the local government. In fact, relatively few BID services actually supplement city services. The largest cost among the larger BIDs, for example, is sidewalk cleaning. Few cities provide this service; it is typically a requirement by law that owners keep sidewalks free of trash, snow, and ice.

The second-largest cost among large BIDs is supplemental security. Here the issue is less clear. Typically, uniformed, radio-equipped, unarmed BID personnel serve in part as walking eyes and ears for police and emergency service units. Their uniformed presence is widely viewed as a deterrent to crime and reassurance for pedestrians. Often, however, their primary function is to provide hospitality services.

Another common BID service is marketing; something the public sector rarely does well, if at all. And much attention is devoted to advocacy, such as whether the city should adopt new zoning, sign, and façade standards or new street cleaning techniques (few BIDs clean streets).

Assuming that BID activities, such as security, do supplement city services, some will worry that the municipal burden will be shifted in whole or part to assessment financed programs. Where state law or property owner interest requires that the BID proceed on the basis of a services agreement with the city, this becomes a ready device for clarifying the municipality’s expectations of the BID and the BID’s expectations of the municipality. Nonprofit Buffalo Place, Inc., has service agreements with the city and county. The Baltimore BID (an authority or “body corporate and politic”) has an agreement with the city covering

• police protection;

• street and alley cleaning;

• trash collection and landscaping;

• maintenance of public areas; and

• marketing and promotion.

In small BIDs, the situation may be much simpler. The Elizabeth, New Jersey, BID struck an agreement with the city (one page in length) ensuring that the police department would continue to maintain an officer at a key corner for both traffic and security reasons.

Some BIDs, including those of New Orleans and Brooklyn, New York, have 15 years or more of experience behind them, and one might expect some pattern of problems to have emerged over that time. However, there is no perceptible pattern, although some isolated situations may indicate issues that might be troublesome in the future.

In at least one case in a large city, control of the board of directors is in the hands of the mayor and observers feel that the emphasis is more on politics than business improvement. Another BID was pressured by the city council to include within its service area blocks that it would have preferred to leave out; the BID accepted the modifications as a cost of council approval. In a different city, the city council president threatened to block the BID’s budget if his preferred candidate was not employed as BID manager (the candidate was not employed and the budget went through without dissent). BID managers have been fired because they or their board leadership were seen as having backed the losing side in a mayoral contest. One BID director, who was responsible for programs that attracted highly favorable national attention, found himself embroiled in a controversy related to the subcontracting agency that handled programs for the homeless. Among the costs of the flap were the cancellation of new federal funding for that program and the loss of previously impeccable treatment by the press.

According to the International Downtown Association, the only known examples of disbanding of BIDs occurred in a half-dozen small communities where the problem appeared to be inadequate funding. Nevertheless, change occurs. The Fulton Mall Improvement Association (Brooklyn, New York) had a dispute within its constituency, with some wanting to refocus the image on discount retailing. Through the annual election process, the dissidents became the establishment, with major changes in the nonprofit board’s membership. There are no known cases of scandals involving misuse of BID funds in the United States.

The future of BIDs seems fairly secure. Their numbers continue to grow, and the responsibilities of their sponsors continue to increase. The charge to individual owners and operators is a minor cost of business (typically $0.10 to $0.20 per square foot or 4 to 10 percent of property taxes), and there is no other known way to achieve such continuous results at any cost. Business and commercial property interests control policy and, as in the case of Philadelphia, express continued support.

Prospects and limits

Still, there are limits to what BIDs can be expected to do in overcoming the enormous problems besieging central business districts. Four major concerns help illustrate this point. With noteworthy exceptions, relatively little progress has been made in improving the appearance of downtowns enough to attract large numbers of middle-income shoppers, tourists, clients, and commercial tenants. BIDs can claim that that threshold has been reached when hotel guests are enthusiastic about taking walks after dark or when office workers stop insisting on parking at their workplace. Robert McNulty, head of Washington, D.C.-based Partners for Livable Places, argues that all the other efforts being made downtown will be lost “if the place still looks like hell.” While there are dramatic exceptions, ranging from Manhattan’s Grand Central Partnership to suburban Cranford’s Special Improvement District, in general few BIDs and municipalities have agreed to pony up the costs of what is predictably a major public works project.

Second, downtowns must continually adapt to changing physical conditions and opportunities. Redevelopment is not something that only downtown Chicago or Boston requires; even small towns like suburban South Orange, New Jersey, need to convert old lumber yards or parking lots into townhouse sites. Of all the types of redevelopment needed, residential redevelopment is most important. It creates the customer who is most likely to shop, dine, and go to the movies downtown, and it remedies some of the image problems that no concentration of street trees can adequately hide. A few BIDs recognize this need; fewer have acted.

Third, where BIDs are unlikely to gain the authority to act, they must nevertheless advocate aggressively. Downtowns need strong advocates who do not require annual or quinquennial approval from elected officials. BIDs advocate most effectively when coaching public agencies on technical subjects, such as how to make downtowns more secure or cleaner. When the subject is controversial, such as locating a new stadium where it can benefit the downtown economy, it is often wise to have independent business interests lead the crusade. Denver and Houston, where strong business organizations preceded the BID, retain separate but related organizations for such purposes.

Fourth, BIDs need to become more entrepreneurial in order to expand business services while capping fees. A natural source of financing, often through an affiliated nonprofit entity, is parking management. The Manayunk (Pennsylvania) Development Corporation and Summit (New Jersey) Downtown, Inc., support extensive marketing programs financed by parking fees.

BIDs represent a latter-day counterweight to the American tendency to ignore, devalue, and often denigrate our city and town centers, despite their irreplaceable cultural attractions and entertainment offerings and their continued significance as centers of commerce. It is noteworthy that BIDs are primarily the creatures of businesses and property owners who share the belief that they can achieve greater profitability through cooperation than anyone of them can accomplish alone. The means to profitability include many investments in intangibles pleasant street vistas, a sense of security in walking after dark, the pleasures of convenient shopping, and diverse options for dining. All are important, and corporate assesses find all to be good for the bottom line.

Even where statutes make the BID a public entity rather than a nonprofit corporation, the sense of pursuing private sector goals is strong. Although politics may produce short circuits in the energy source, BIDs that take the government form do not seem to be seriously impeded in their work.

Measuring Success

Are downtowns demonstrably better because of BIDs? It depends on how you define success. No one suggests that commercial areas are worse off because of BIDs. Even when services are so-so, the costs to assess are trivial. In some cases, BIDs may only have slowed decline resulting from economic forces far beyond local control. In other cases, there is evidence of BID-induced economic revival. Under still other circumstances, especially in the suburbs, BID sponsors seem to be achieving their desire to make already stable areas increasingly profitable. Where economic conditions have improved, local observers tend to credit the BIDs. Often, there are few other initiatives to share credit.

The evidence overwhelmingly supports the contention that BIDs are working, usually quite well. However, causes of changes in economic conditions are often so complex that serious researchers avoid the subject. When indicators reveal improvements, such as in hotel occupancy rates, additional important influences, which may include national trends and improved convention business, may help explain the favorable trend. In Times Square, for example, others are also working on redevelopment, including New Forty Second Street, which oversees theaters, and the 42nd Street Project, which leads redevelopment planning. On the other hand, if downtown conditions do not meet national norms of safety, cleanliness, and attractiveness, they certainly cut into convention bookings, induce business travelers to choose hotels farther away, and persuade tourists to shorten their visits.

Probably the most stringent test of success is reflected in the fact that more than 1,000 business-dominated boards vote regularly to continue (and frequently to expand) local programs whose costs they share. So common are BID-financed services and improvements that a firm contemplating siting a new branch might be skeptical of a commercial area that lacks one. Beyond question is the momentum now achieved by private sector leaders in their common efforts to reinstate the middle-class values of civility and cleanliness in America’s established centers of commerce.

Most new BIDs are located in suburban centers.

In urban centers, both large and small, early BIDs worked hard to overcome the impression that places were ugly and fearsome.

Not many BIDs have successful programs to attract new businesses

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