2. Capitalist Tool

One suburban BID went beyond simply offering grants for new facades to using these grants as bait to attract desired new occupants.

There are more than 1,000 business improvement districts (BIDs) in North America and hundreds more overseas, many in small communities.  These self-help enterprises allow private firms to share costs, attack common problems, and, in some cases, finance capital improvements. BIDs are a type of cooperative capitalism-but with the power of government behind them. Small BIDs exist in the subordinate commercial districts of large cities (Milwaukee has more than a dozen), in older industrial areas, and in the town centers of well-established suburbs and other small towns. Revenues may range from $20,000 to as much as $250,000 annually. While a few small BIDs receive help in cash or in kind from their municipalities, most of them function with only the assessments they can raise. However, once a BID is established, its ability to raise fees is backed by the power of government.

What they do

BIDs deal with conditions for which standard planning tools (comprehensive plans, zoning) may not suffice. First, the owners of commercial properties and businesses ate on the front line in decision making-and many of them feel they cannot wait a decade or more for the best master plans to be implemented; BID leaders expect demonstrable results in a year or two.

Because they can typically count on funding for five years at a time, BIDs can let contracts for services, attract superior staff, and plan their operating future for longer periods than community enterprises that rely on annual and voluntary funding.

Finally, BIDs can exploit opportunities and solve problems that often frustrate the public sector, such as deteriorated commercial buildings and signage, empty lots and commercial and industrial buildings, and a lack of marketing. Other examples include creating the plans for, and providing matching funds for, physical improvements’ and, on occasion, investing in redevelopment. BIDs can be relied upon to maintain a streetscape or attract new businesses for years at a time.

Places they work

The BID in Red Bank, New Jersey (pop. 10,000), has transformed dozens of privately owned buildings and signage with attractive financial incentives. Using a professional design committee to review applications and advise owners, this BID may now have the highest proportion of restored to total commercial buildings among small BIDs.

Another formerly drab and rundown business district (Maplewood, New Jersey) has been lifted by its bootstraps in large measure because of a top-flight BID-funded marketing effort. The dollar value of construction investment (the value of permits issued) in the Village Special Improvement District area has grown steadily since 1995, when the BID was established, from $83,905 in 1995 to $201,316 in 200l.

A surge of BID formations in small Georgia communities has produced a new and essential source of local funds to match transportation grants allocated by the state transportation department. BIDs often invest in planning for physical improvements, such as parking or new lighting, as a means of securing local consensus and leveraging capital improvement funding.

BIDs in older industrial areas, including those in Milwaukee, tend to emphasize mobile security services to cover nights, weekends, and holidays, when such sites are especially vulnerable. Landscaping and better lighting are other goals pursued by industrial BIDs, including one in; Philadelphia and another in Paterson, New Jersey.

Small BIDs in New York City neighborhoods often provide limited security and cleaning services, which are major expenses for individual businesses. A trained, fully equipped, unarmed security staffer can cost around $30,000 annually. Small BIDs in suburban and small town commercial areas typically spend their service budgets to attract customers and strong, new businesses.

Staffing and Budgets

Staffing varies with revenues. A BID with around $250,000 can often afford a full-time director and at least a part-time assistant. Smaller BIDs depend on a part-time manager alone to operate the system and provide oversight. Some very small BIDs function without staff, relying on board decisions. A few assign BID management to a local government staff planner or to another organization, often the nonprofit that took responsibility for forming the BID.

The BID in Netcong, New Jersey, spent $25,500 in 2001 and had revenues of $35,000. Of that amount, $30,000 came from assessments and $5,000 from the municipality.

BID directors with budgets in the millions have difficulty imagining one generating less than $50,000 per year. Yet BID sponsors in small communities see their responsibilities in a scale appropriate to the number of businesses or properties affected, perhaps 100 or less. Sponsors invest in small BIDs because they cannot imagine where else they could raise $250,000 or even $100,000 over five years to improve business profitability and property values.

Most BIDs in the U.S. and Canada (where BIDs began) are small, and the overseas pattern is similar. BIDs are well established in New Zealand, Australia, and South Africa. In the latter Country, where there are more than 30 BIDs, security problems in small communities have led to armed security employees and closed circuit television as BID counter measures. Great Britain already has nearly 300 commercial area organizations providing BID-type services. Most non-U.S. BIDs rely on a tax on businesses, rather than an assessment on commercial properties.

Britain’ s Association for Town Centre Management reports that of the 300 BID-type organizations there, 106 are located in towns of 50,000 population or less (corresponding to the size of Main Street communities in the U.S.). Forty-six of these organizations, mainly the small ones, receive all their funding from local governments and essentially operate at public entities. British town center management programs are similar to American Main Streets in their dependence on voluntary contributions. By next year, however, Britain will have a compulsory business tax option available to BIDs.

In the U.S., BIDs necessarily rely on private sector responsibility, while the Main Street organizations produce more diverse community-wide constituencies. Small BID are far more likely to operate in urban neighborhoods or industrial areas. Main Street programs are organized around four principles design, promotion, economic restructuring and organization-an approach that has the advantage of providing structure for participants. BIDs plan, organize, and operate according to state laws and local priorities.

The overall objective-producing better commercial centers is common, although BIDs define this more in terms of economic benefits and Main Streets more on appearance and design. The fundamental difference is financing. BIDs have a predictable funding source with the power of the local government behind it. Main Street programs must divert time and energy annually to voluntary fundraising. Seeking voluntary contributions can absorb a third of staff time, according to a former Main Street board chairman. Kennedy Smith, head of the national Main Street program, estimates that as many as 20 percent of Main Street projects receive financial support from a BID.

Voluntary funding

The recent tendency of state and local governments to reduce or eliminate lower priority expenditures has produced a cash crisis among many Main Street programs including the following. .

In McMinnville, Oregon, service cuts are the order of the day. The State Main Street office in Virginia is advising existing programs to explore formation of BIDs throughout the state, looking to a more reliable source of funding.

The Ambler, Pennsylvania, Main Street program, faced with reduced funding, worked hard to establish a BID to enable it to continue operating. The program manager, Bernadette Dougherty, had been successful in securing grants to improve the appearance of the principal street. Yet, there was grumbling by side street business operators, whose properties would be assessed, complaining that they had not earlier received the full benefits of the Main Street improvements, And one long-time merchant appeared to be determined to change the manager.

Still, there was a lot of rank and file support for the BID, including from the largest property owner. The municipal governing body approached the decision: to form a BID cautiously. Faced with opposition, the proponents withdrew the BID plan.

Great Britain’s Town Centre Management programs have relied on voluntary contributions from business and governments to provide BID services for more than a decade. The continued problem of “free loading,” however, has led the British government to propose new compulsory charges on all benefitting businesses.

What’s ahead for small BIDs

BIDs should be regarded as essential adjuncts to the municipal planning process. They can and do help communities implement · many economic and redevelopment objectives. Sometimes BIDs also underwrite the planning needed to secure community commitment for improvements to the ‘public realm and to private properties. BIDs occasionally act as formal or informal advisors to planning bodies on design issues in town centers, and that experience should be more widely emulated. Finally, BIDs should be encouraged to help prospective new businesses through the local permitting processes.

There appears to be no slackening in the formation of small BIDs in the six nations where they are well-established. Further, there is good reason to believe that the present growth will continue for at least another decade. Britain’s and Ireland’s legislation will produce substantial small BID growth and there will be modest growth in industrial area BIDs in the U.S.

Small BIDs tend to be professionally and sometimes geographically isolated, unable to take advantage of the technical assistance opportunities available to large BIDs with ample budgets for travel. There needs to be more technical assistance accessible to small BIDs. Nonprofit organizations such as Downtown New Jersey have served BIDs for a dozen years.

A university model exists in the Wisconsin extension service. The Pennsylvania Downtown Center, principally formed for Main Street, also helps small BIDs. And the state of Pennsylvania Main Street office appears to be encouraging Main Street leaders to look at BIDs. Still, there is little help available for the sole staff member managing a small BID in a small town, lacking funds for travel or conference-related costs.

The current difficulties facing Main Street programs are simply an exaggeration of the financial crises facing them even in the best of times. Time spent soliciting contributions distracts staff from pursing productive activities, and, with the passage of time, such fundraising depends increasingly on promises that can’t be filled, Municipal governing bodies cannot commit funds from general taxation into future years; Main street programs have to take their chances in every budget along with police, street repairs, fire, and other essential activities. BIDs, on the other hand, can assure multi-year funding through use of state assessment legislation.

In consequence, we can expect more hybrid entities formed in small business districts, linking BIDs as core financing instruments, with Main Street principles. Modified boards of directors will need to include more property owners and local officials as required under many BID laws and the result of agreements required to secure necessary business support for assessments. While the marriage may not everywhere be applauded, the necessity is great and the prospects favorable.

Many BIDs, small as well as large, invest in improved retail facades.

Many suburban BIDs keep a constant flow of entertainment to attract customers.

One of the features that makes the mile long pedestrian mall successful is the responsibility undertaken by three contiguous BIDs to keep the place clean.

Making sure people understand all that may interest them.

Chart illustrates changes in University City District's budgets.

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