6. BIDs at Home and Abroad

A simple map is part of the marketing tool for one urban BID.

Several trends should influence the future of business improvement districts (BIDs) in the next five to ten years, changing these business-led, public/private partnerships largely for the better.

• There will be a dramatic expansion of BIDs in countries beyond the United States and Canada.

• Growth in the number of BIDs in the United States will occur mainly in small commercial areas- suburbs and city neighborhoods, as well as older industrial areas.

• A shift in motivation for BID creation is underway, from desperation to a new optimism about the prospects for old commercial areas.

• Among the larger BIDs, there is increasing attention to planning, transportation, downtown living, and tourism.

• Better state legislation is emerging in the United States and new laws are being drafted in other countries.

North America’s near monopoly of experience is being fast overtaken by organizations around the world that are applying the same fundamentals in ever diversifying ways. There need to be elements constituting a common definition and term of reference. Are BIDs systems that are largely limited to providing safe and clean services? No. That would exclude at least half of the BIDs, particularly those with small budgets, little litter to dispose of, and no security problems of note. Is it a system confined to large commercial centers? No. Many BIDs operate in industrial areas, small suburbs, and neighborhood commercial districts, and at least one is located in a residential area. Is a BID financed exclusively by assessment on real property? No. While that is the chief source of funds for U.S. BIDs, there are even a few exceptions there. In other countries with well established BIDs, and in most of those known to be planning BIDs, the sustainable financing system is or will be a business tax or special rate. Further, virtually all mature BIDs have worked out significant supplementary financing from diverse sources.

A BID is a system in which the owners of two or more private properties or businesses work together to share the costs of solving common problems ~r realizing economic opportunities associated with their location. BIDs are systems of cooperation among private sector interests that may involve few or thousands of properties or businesses in which representatives agree to a formula for cost sharing and for managing plans they have helped to shape.

A BID has a sustainable funding system making possible the formulation and implementation of multiyear budgets. Sustainability requires that an assessment or a business tax be involuntary, multiyear, and applied to all benefiting properties or businesses. Once adopted and until repealed, it is enforceable with the power of government behind its collection. The strength of BIDs, as distinguished, for example, from the Main Street projects, is the assurance that funds will be available five, seven, or more years in advance, enabling multiyear contracts with vendors, agreements to employ staff, implement multiple-year plans and, occasionally, the ability to finance capital improvements.

A BID is authorized by governments in legislation that defines its purpose, functions, and limits, and that authorizes its sustainable revenue sources. Because sustainable funding relies on the government’s power to tax, provincial, national, or state laws authorize BIDs and define local government’s roles as well as those of the BIDs. An effective BID involves a working partnership with the local government

BIDs are authorized to offer business- and property related services designed to improve business profitability and/or property values. BIDs may perform a wide variety of services ranging from cleaning to planning to business and consumer marketing; a few BIDs also are authorized to issue bonds to pay for capital improvements.

A BID may be managed by an organization that is either a public agency or a nonprofit corporation. In either case, oversight is the responsibility of a board of directors whose membership is dominated by business and property representatives-those who are also responsible for paying the assessment or rate. This common element reflects the self-help objective of BIDs. Because governments have limited authorizing and oversight responsibilities, the onus for planning, financing, and managing districts rests with the private sector.

While there is no central font of information on BIDs, the constant growth of those with budgets ranging from $40,000 to $300,000 is apparent everywhere. Few new BIDs are being formed in the United States with budgets in the million-dollar range. Most are being created in small suburban communities and urban neighborhoods, which are far more numerous than large city centers. One BID in Canada raises only $1,000 annually, which is enough to meet local needs.

Small but fairly affluent trade areas centered around places such as Red Bank and Millburn, New Jersey, illustrate how successful business operators and property owners derive more value from their existing investments. The Red Bank BID has transformed its principal street with subsidized facades, sign improvements, and design guidance, and has attracted capital improvements to widen the sidewalks, add trees and crosswalks, and relight pedestrian ways. Millburn is one of the many BIDs that use farmer’s markets to draw crowds, along with a yearlong program of festivals and entertainment. Both pay their directors a good wage, reflecting a desire for quality performance and an acknowledgment that it is a tough job.

There are a sprinkling of BIDs serving industrial areas in Los Angeles, Milwaukee, and Brooklyn, including one that mothballed its security program when the level of crime dropped. After a slow process of gaining city and member support, a BID is starting in Philadelphia’s Port Richmond industrial section. The industrial BID in Paterson, New Jersey is almost eight years old and shares a manager with the downtown BID.

Most of the BIDs likely to emerge in large cities in Great Britain and Ireland probably will serve relatively small districts. In contrast to the tendency in the Unites States-outside of New York City-to create BIDs that encompass the entire city center, Grafton Street and O’Connell Street in Dublin have planned BIDs that should be operating by next year. London’s West End theater district is another likely BID. Micro BIDs such as those in Netcong, New Jersey, have a business-led board, but operate out of the local government.

BIDs exist in New Zealand, Australia, South Africa, and Canada, which many claim initiated the world’s first one in a neighborhood commercial district of Toronto more than 25 years ago. There is also serious interest in Spain and Brazil. Great Britain has almost 300 “town center management” programs, some with a decade or more of experience, suggesting that there is considerable BID readiness there. Currently, these organizations depend on a diverse pattern of voluntary support from businesses and local authorities, but new U.K. legislation promoted by Alan Talentire, head of the town center management organization, and others will authorize sustainable funding based on a new BID-limited business rate. In this, Britain’s law will resemble options offered in the aforementioned Commonwealth countries.

Careful preparation has been the hallmark of the prelegislative phase in both Ireland and Great Britain. In looking at the American experience, however, their lawmakers appear to favor the approval system-petitions-that in the United States is most costly in time and money. Moreover, there is no evidence that this system produces better BIDs. Other U.S. approval options include authorization by municipalities based simply on a plan and a public hearing, and another in which objectors in Pennsylvania can stop the creation of a BID there if 40 percent of property owners file objections.

BIDs formed during recession periods have tended to reflect desperation on the part of the business framers. After a long period of prosperity, however, BIDs now reflect a greater optimism about old commercial centers in general and about the utility of BIDs in particular. Motivation reflects constructive dissatisfaction and the desire not to fill buildings or stores with just anybody who can pay rent, but to attract the best and most diverse businesses to an area. Larger BIDs represent impressive alliances among office, hotel, restaurant, retail, and entertainment economic interests, each with its own specific needs but all cooperating in the improving and marketing of their areas. As a result, virtually all large BIDs and some small ones have seen a substantial gain in the number of new of downtown residents.

BIDs are being formed in relatively small places in Georgia to capture more of the road and amenity funds available through state and federal transportation funding. The Buckhead BID recently engaged in a masterful planning exercise to create a pedestrian- and transit oriented commercial center where autos had dominated. The BID’s strong implementation powers, including its own bonding authority, indicate that this will be a plan that is efficiently implemented.

Philadelphia’s Center City District (CCD) replanned and created an as-yet-unmatched streetscape and successfully led the charge to attract more residential development through new tax abatement legislation. The repopulation program has been so successful that the BID has proposed a new and substantially expanded delineation of Center City, Philadelphia’s downtown. Paul Levy, director of the CCD, struck out trying to locate the new Phillies stadium downtown, but was able to show what a well-planned public policy initiative should look like.

Transit is getting more attention as well. Downtown Washington’s BID is creating a cost sharing mechanism to provide shuttle bus service. The University City District in Philadelphia has a successful bus system that connects the 30th Street train station with a dozen other destinations. Many BIDs have formed or are associated with transportation management associations.

Whether in Manchester or Graves End, England, two of Britain’s B1Ds-in-waiting, or in small places like Philadelphia’s Manayunk district, tourism has become a major, even a transforming, economic focus. Reflecting a decline in crime, BID supplementary security patrols-often referred to as ambassadors in the United States or wardens in Great Britain have assumed more of a welcoming role, rather than simply providing a uniformed, radio equipped presence to lessen fear.

Downtown D.C. BID director Richard Bradley observes that districts “have earned a place in the pantheon of economic development organizations:’ because they improve, not simply market, their products-the places that they serve.

Most BID legislation in the United States can be traced back to the time a decade or two ago when there was little actual BID experience to guide lawmakers. In most states, many legislators assumed that these laws should protect property owners from the imposition of a BID assessment rather than encouraging them to form BIDs to raise property values. Requiring signatures of as many as 60 percent of property owners on petitions was one result of this concern. Furthermore, state laws often require adherence to details of administration that would be better left to local decision makers. An otherwise very good state law recently passed in Pennsylvania, for example, requires most BID boards to be composed of no more than nine members. No one knows why. Colorado’s law is similar in this regard. A few U.S. BID laws did not allow BIDs to be managed by nonprofit corporations, the most popular form; they required the BID to be a government agency. As bad as some of these statutes are, there is little constituency for improvement. Once a BID has gone through the many required steps, the board is preoccupied with making the BID work, not with helping the next BIDs through the mill. There are, however, some good legal models available, including New Jersey’s, New York’s, and the more recent Pennsylvania one.

It is hard to imagine what the ultimate scale of the BID movement may prove to be. While there already are 40-odd BIDs in New York City, one authority observes that there are 1,700 business centers in London with “a wide variety of sites that might be suitable candidates for a BID.” Dublin is not a large city, but there is probably potential for seven or eight of the scale currently considered. New Jersey has 40, none of them large, and two or three new ones emerge there each year. Philadelphia’s planning commission reports the existence of more than 100 commercial areas of BID size, and there are probably another half dozen in industrial areas. On the other hand, there are places, perhaps many, where the economic leaders are content with the status quo. For instance, Chattanooga’ Tennessee, has started the BID process twice and both times decided not to form a downtown BID.

If the American experience holds true elsewhere, most large urban BIDs will not provide much beyond basic three services: cleaning, marketing, and some form of supplementary security or hospitality staff. Small BIDs will stick to attracting customers. The innovators; those

who transform a district’s public realm and private buildings; those who attract businesses, subsidize the creation of a movie house, or bring in another anchor; those who develop new transportation schemes, or noteworthy advertising or public relations themes-will remain few, although they will dominate public attention. BIDs that start well tend to continue as strong forces. Those that show limited ambition at the outset continue that way. Despite certain expansion in Britain and Ireland, the prospects in continental Europe or Latin America for additional BIDs are uncertain. In some countries, there is a greater degree of reliance on government to deal with these issues, and less of a tradition of voluntary self help initiatives.

Even though there are no “model” BIDs because circumstances, needs, resources, and creativity vary so much from place to place there are a few that merit attention from those in the United States and abroad seeking topflight experience from those in existence for more than a decade. For a solid record of high performance, low-cost services, and creative use of the district for civic advancement, Center City District in Philadelphia may be the champion. While there is a lot of competition among the hundreds of BIDs in small places, Red Bank, New Jersey’s district and the Manayunk district in Philadelphia, for example, launched a lot of tough challenges and have succeeded admirably.

Since 1997, when UU’s first book about BIDs was published, there have been few bad headlines in the United States centering on BID’s misdeeds. In the longer history of BIDs, however, enough have popped up to justify more oversight by local government than is typical, especially regarding organization transparency and democratic functioning. Overall, however, with more than a quarter century of experience, the BID concept has effected a great deal· of civic good and economic progress that would never have been accomplished otherwise. It has engaged residents as well as property owners and business operators in a productive system, adding value to real estate and generating economic strength in the economically most critical segments of older towns and cities in the United States and abroad. The best BIDs are vital, lively agents of change. Their formula for cooperation and cost sharing can produce a wide array of benefits, including expanding facilities for arts and culture, entertainment, parks, recreation, historic preservation, and environmental improvement and protection. Despite the heretofore-limited success in residential areas, legislation like Pennsylvania’s “Neighborhood Improvement Districts” should attract some receptive audiences. Alexis DeToquville, in the early days of the republic, noted that Americans’ great genius was to create nongovernmental organizations to fix problems and capture opportunities. BIDs are part of that persistent tradition.

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