29. BID Success: Are We Happy Yet?

“This population is one of the happiest in the world.”

Alexis de Tocqueville

The most predictable question raised by property owners and merchants confronted with the prospective formation of a business improvement district (BID) is, “How do we know they are  successful?” Those asked to agree to an involuntary charge to support measures previously not locally attempted understandably want to know whether their payments will produce economic returns greater than their payments. Many seek reassurance in research.

There is, however, little qualified, independent research available to provide the desired reassurance. There are no reports examining the economic benefits of a cross section of BIDs in prototypical locations and conditions, no before and after studies. What exists is confined to limited locations or limited subjects and even these studies are not wholly reassuring. A qualified economic consulting firm studied more than 100 commercial corridors in Philadelphia (eg., did the programs generate retail sales, attract merchants and other useful tests?) and found that the self financed BIDs outproduced a half dozen city-financed subsidy programs. Another study suggested that BIDs were associated with lower reported crime in Los Angeles. A hard nosed analyst, however, might question whether BID programs (such as uniformed security patrols) reduced crime or fear or whether preexisting conditions—such as better than average business leadership that made BID formation possible– explained the more favorable outcomes. Were these locations likely to have less crime perhaps because there were more pedestrians in evidence or because of brighter lighting? Was crime reduction a major goal of the identified BIDs or were they formed to achieve broader economic goals?

Lacking persuasive research, inferential evidence is often introduced. BIDs “must be successful” because:

  • Every year boards of directors dominated by the people who are paying the fees approve BID budgets and, where applicable, support reauthorization by their municipal governments for multi-year periods.
  • BIDs continue to increase in numbers and they are almost never terminated by those who pay the compulsory charges. Ergo, they must be doing something right.

Nevertheless, these arguments leave unanswered, “What constitutes BID success?” A conscientious BID board of directors should look to some tests when considering what programs to support year by year and what results should be expected. Different BIDs treat this possibility in different ways:

  • Ignore the question
    • This is probably the most common practice. Most BIDs have only the most rudimentary goals  and many lack even those. Many were formed as “safe and clean” agents (our goal is to make the sidewalks clean) and don’t see their mission as improving economic conditions.
  • Measure Inputs
    • Some BIDs report that they spent more money year on year. This is a familiar device of governments at every level. If more money is spent, more contracts approved, the organization deems itself more successful.
    • Many BIDs report that their employees last year removed more bags of trash; recorded more examples of assistance to pedestrians or drivers, reported more apparent crimes to police or more incidents of BID Ambassadors assisting police. Success is associated with activity—we were busy. An unaddressed problem, however, may lie behind the greater amounts of litter requiring an expensive removal system or the greater need for pedestrian assistance or aid to police. Does this constitute success or do these activities indicate that conditions are worsening? One BID was launched by the local government, offering a share of the retail sales tax. That was easily measured, but had the usual problem of not being able to say with certainty that the BID had caused the improved tax revenues.
  • Measure Outcomes
    • A small suburban BID seeking to improve property values reports annually on municipal permits for real estate improvements. More permits are approved and for larger annual total investments since the BID was formed. The BID was probably responsible for some of this growth.
    • The Phoenix AR BID organized a thorough and inclusive year by year examination of changes in critical aspects of the Downtown economy—vacancy rates, pedestrian counts, attendance at events, etc. While not designed as a basis for measuring BID success, it did provide evidence of how the central business district was performing, potentially useful for all of those involved in its wellbeing including police, inspections and other services.
    • Pedestrian counts may be useful measures of BID success, although they don’t distinguish between the results of BID investments and various other factors, including overall economic trends or new redevelopment that produces new businesses, additional employees or new customers. Pedestrian counts in commercial centers are similar to user counts at urban parks and plazas; the more people, the more successful. One big city BID has more than doubled the number of properties within the district (without changing the service area). Virtually all the newly assessed properties are residential condos. This evidence of private investment is a useful metric— people like the place.
    • The Downtown DC BID collects information on block-by-block conditions (is there excessive litter, does the area fall below BID standards for plantings?) and  tracks changes. A tool for management and not designed to quantify success, the process provides useful evidence that may also be applied for this purpose.
    • Early in its formation, the Seattle BID arranged for major retailers to provide confidential sales reports to an accounting firm, which then reported yearly on overall retail performance. Again, increased sales may result from forces far beyond those the BID can influence.
    • A device measuring various aspects of BID and commercial area performance includes what are sometimes called satisfaction surveys. BIDs may ask property owners and business operators their degree of satisfaction with BID programs, the BID itself and/or with the commercial area. Downtown users—shoppers, visitors, etc.– may be asked in the early years if conditions are improving. Potential customers in the trade area may be asked in phone interviews to rate the district and, if they don’t shop in the BID area, what are the reasons? Why do they choose another location? Satisfaction surveys reveal the degree to which commercial districts please shoppers, employees, visitors and increasingly residents. Philadelphia’s University City District publishes measured changes in satisfaction among service area users. The Downtown Washington district asked people if there were lots of activities in the district and over a few years recorded increased awareness of entertainment, culture and other attractions. The late developer James Rouse said “Cities must be fun.” Are they?

Ultimately, success depends on soft factors, perceptions and attitudes. If office employees, for example, are not comfortable as pedestrians, they will eat at their desks and in large districts $2,000-$3,000 a year per potential customer purchases will be lost to local businesses. Adverse reputations for poor service or limited offerings or difficult parking may steer shoppers  to other markets. Do people like the district? Is it regarded as a good place to live or for leisure? Basically, does it make people happy?  Perhaps the most convincing evidence of success is the widespread growth in middle income households living in town and city centers. If those with the luxury of locational choice move there or stay there, are paying rent or mortgages for the privilege, the district has legitimate claim to success.

Successful BIDs are in the happiness business, as are successful shopping malls. Retail pioneer Rouse constantly tinkered with his shopping centers to make them more pleasing, an essential consideration in producing repeat shoppers. He introduced mall entertainment. He recreated an old urban feature, the shopping cart, making productive otherwise empty square footage. To reduce customer boredom, Rouse required pushcart operators to change their offerings every six months, assuring variety of choices where major tenants rarely changed. He invented the festival marketplace without department store anchors, substituting high yield restaurants and specialty retail oriented to leisure shoppers, creating  nearby vacation spots within metropolitan areas. BIDs sponsoring outdoor movies, buskers, restaurant samplings and architectural tours have followed his lead. Urbanist William H Whyte derided the business magazines’ annual surveys of the most successful Downtowns, such as Dallas, which he said were better described as the most broing.

At the national level, success has long been measured by money spent and is measured in reports of Gross National Product (GDP). This widely used tool assumes that economic growth tested by consumption is the nation’s ultimate objective. Coming out of the Great Depression and in the context of the post war adjustment, that was probably a reasonable choice. But the concept is increasingly called into question. Is success reliably tested simply by how much is spent? It is not clear, for example, that persons who spend the most are the happiest for that reason. Are there other possible measurements?

French President Nicolas Sarkozy says “yes”. Even the dollars and cents oriented Urban Land magazine last year proposed that development projects  be rated on their contributions to “human interaction” as one  element of sustainability and that post occupancy evaluations test if “users consider ( projects) beautiful”. The late Holly Whyte proposed an “enjoyability index…the number of street entertainers, food vendors, people in conversation, the number smiling.”  He and fellow urbanist Jane Jacobs complained that cities selected as the most “business friendly” were rarely people friendly and were often pervasively boring. Dutch sociologist Ruut Veenhoven has developed the World Database of Happiness which, among other tests, asks people to rate their own happiness on a 10 point scale (the US comes in 20th at 7.4).

Bhutan’s former leader organized the government around the concept of Gross National Happiness (GNH). Statistics were collected under seven categories, each with its own set of tallies:

  1. Economic wellness—includes consumer debt, income related to consumer price index and income distribution.
  2. Environmental wellness—includes measures of pollution, noise and traffic.
  3. Physical wellness—includes indices of  severe illnesses.
  4. Mental wellness—includes use of anti-depressants, changes in psychotherapy patients.
  5. Workplace wellness—includes jobless claims, job changes, workplace complaints.
  6. Social wellness—includes safety, divorce rates, domestic conflict reports, crime rates.
  7. Political wellness—includes quality of local democracy, individual freedom and foreign conflicts.

The French President last year ordered his country’s statisticians to measure “quality of life” factors including health, marital status, age, unemployment and other ingredients in individual well being.

Much of the theory supporting GNH emphasizes that happiness or satisfaction is revealed through choice; the more choices the greater satisfaction or happiness. Some  BIDs emphasize expanding choices. Philadelphia’s University City District, for example,  was launched as little more than a safe and clean district whose uniformed presence throughout the neighborhood was intended to reassure students, staff, parents and the substantial non-student residential population in the wake of a notorious murder. From the beginning, annual surveys asked key groups if they regarded the district as better, the same or worse than the previous year, revealing gradual but steady improvement in public approval. The BID now offers diverse programs such as one that organizes young post college residents to learn about architecture and to provide various community services. In a major financial commitment offering more leisure choices, the district paid to redesign and upgrade an underutilized park most convenient to residential neighborhoods. BID workers maintain the park and organize most of its activities. These investments in district happiness probably benefit owners of nearby real estate and boost university enrollments.

What might an annual assessment of district satisfaction consist of? Emphasizing outcomes rather than inputs, here are some examples:

  1. A welcoming environment– Trends in reported crimes, pedestrian and traffic accidents, noise, windows lighted after dark, friendly BID staff,  helpful store employees and public event attendance. Are there progressively more people living there?
  2. A well used environment—Sidewalk pedestrian counts day and night; numbers using parks/public spaces; retailers’ foot traffic counts; gains in bicycle use, increases in children attending  school.
  3. Satisfaction Surveys—Regular users and infrequent users can rank the district as a place to work, shop, dine, visit and for entertainment. Downtown DC has shown impressive gains in the public’s appreciation that there “is lots to do there”. Daring BIDs might ask respondents to rate their districts in terms of fun.

Measuring success should reflect the BID’s intended purposes. There are three broad categories. If a BID serves as little more than an extension of local government’s responsibilities to keep the place clean, success can be easily measured—are the sidewalks clear of litter? On the other hand, if a BID’s goals consist of improving business profitability and enhancing property values, there are many models to choose from—simple ones such as tracing the value of the year’s building permits or more difficult ones such as Seattle’s retail sales reports or tallies of municipal sales taxes. Where goals emphasize user satisfaction, surveys of different user groups—eg., shoppers, residents, visitors—can reveal changes year on year by asking how people feel about important district conditions–“Do you sometimes feel frightened on the sidewalks after dark?”– or DC’s probing question of whether the district is fun (“Are there lots of things to do Downtown?”)? “Do you enjoy being there?’ “Is it a friendly place?”

The BID movement at home and abroad would benefit from research that considered tests of success in a variety of circumstances, in small towns as well as large cities, emphasizing outcomes. The commercial corridor study referenced above would be a useful example—are there more shops, are they doing better? Individual BIDs would do well to explore outcomes in terms of user satisfaction, recognizing that BID success ultimately depends on how people regard the district as a place to live, work, shop or visit. Do people believe it contributes to their happiness? Shopping malls work hard at this. BIDs would benefit from such an orientation.

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