Business Improvement Districts

By Lawrence O. Houstoun and Howard Kozloff

This practical guide covers the best practices for planning, organizing, and financing BIDs; the services they provide; and how they are operated and managed. Includes case study examples.

• Language: English
• Publisher: Urban Land Institute
• Release date: Apr 1, 2012
• ISBN: 9780874202106

Book preview

1 | Introduction

Paul R. Levy

Something extraordinary has been happening in North American cities for close to 20 years: Normally tax-averse businesspeople—corporate leaders, property owners and managers, and small retailers—are choosing to be assessed an extra mandatory charge in order to finance business improvement districts (BIDs).

In the 1990s, U.S. town and city centers of all sizes rode the wave of national prosperity, many with the support of BIDs working to improve the area’s safety and appearance; to enhance its image and competitiveness; to boost office, hotel, and retail occupancy; to animate streets; and to foster a resurgence in city-center housing. Even in the recession that accelerated after the terrorist attacks of September 11, 2001, property owners across the country have continued to form, support, and renew these mainly private sector organizations, suggesting the durability of BIDs.

A 1999 survey, conducted by Jerry Mitchell, a professor at the School of Public Affairs of the City University of New York’s Baruch College, documented the existence of at least 404 BIDs in the United States that spend in excess of $100 million annually to improve commercial centers (see figure 1–1).¹ Industry experts estimate that there are another 400 improvement districts in Canadian cities, where BIDs were invented in the 1970s (see The Invention of BIDs on page 68).

As cities throughout the world experience the decentralizing effects of the automobile and sprawling development, interest in BIDs is growing. In post-apartheid South Africa, American style BIDs are being organized in an effort to stabilize urban centers that are confronting great political and economic change and white flight. In Australia and New Zealand, local authorities are imposing special rates or separate rates in the face of competition from new shopping malls.

Figure 1–1

In some countries without a legal basis for BIDs— including Holland, France, Belgium, Sweden, and Japan—local governments, businesses, and property owners are experimenting with town center management, including the coordination of sanitation, safety, transportation, parking, and promotional services for the city center in response to challenges from out-of-town malls. National legislation that is expected to be approved in the United Kingdom and Ireland will give British and Irish cities a legal basis for funding BIDs, which are currently being organized in London, Dublin, and other cities.

Definition of BIDs

Having originated in North America, BIDs are now emerging in countries with different political frameworks and approaches to taxation. Despite many differences in their details, all BIDs are fundamentally a legal mechanism to raise funds to enhance the management of a particular place. Bradley Segal, a Denver-based consultant who has helped organize many BIDs, offers the following definition: A BID is based upon the benefit district concept, which allows for an assessment on property within a defined geographic boundary. Revenues from this assessment are directed back to the defined area to finance a myriad of enhanced services, including security, maintenance, marketing, economic development, parking, and special events.² While BIDs in North America are usually funded by an assessment on real property, mirroring traditions of local taxation, in the United Kingdom they will be funded by a tax on businesses.

Grafton Street in downtown Dublin. Legislation enabling the formation of BIDs is nearing approval in both the U.K. and Irish parliaments. Lawrence O. Houstoun, Jr.

To broaden the definition to include trends emerging outside North America, Lawrence Houstoun, this book’s author, suggests five essential characteristics:

A BID is a system by which the owners of two or more private properties or businesses cooperate to share the costs of solving common problems or realizing economic opportunities associated with their place. BIDs represent systems of cooperation among private sector or institutional interests that may involve only a few or thousands of properties and businesses, in which representatives agree to a formula for cost-sharing and for managing the implementation of plans that they have helped shape. Private sector representatives lead in planning the BID for which they will have responsibility.

A BID has a sustainable funding system making possible formulation of multiyear plans and budgets. Unlike traditional voluntary merchant associations, BIDs in the United States are almost always grounded on an assessment on real property, while in other countries assessments are often levied on businesses. Once adopted and until repealed, the BID assessment is like a municipal tax, enforceable with the full power of government behind its collection. The strength of BIDs, as distinguished, for example, from North American, Australian, or New Zealand main street projects, is the assurance that funds will be available, depending on local authorization, for five, ten, or 20 years, providing confidence to owners and investors, enabling multiyear contracts with vendors and professional staff, and, occasionally, providing the ability to issue bonds for capital improvements.

A BID is authorized by government through legislation that defines the organization’s purpose, governing structure, functions, and limits. While BIDs usually are led by private sector interests and function relatively independently from government, the legal basis for their existence and fundraising capacity is derived from government. They are enabled by government delegating certain powers and clearly signify a willingness, currently more prevalent in North America than elsewhere, of governments to let go and give the private sector greater responsibility for planning, financing, and managing the district.

BID personnel in downtown Columbia, South Carolina. Most BIDs starting out adopt clean and safe as a principal objective. City Center Partnership

A BID is authorized to provide business and property-related services within its geographic boundaries. Unlike traditional special-benefit districts, whose purposes are exclusively capital and infrastructure improvements, BIDs are authorized to perform a wide variety of management, administrative, and marketing services. Varying state, provincial, or national laws may define different parameters for their authority and mission, but all BIDs function as ongoing management companies.

A BID may be managed by an organization that is either a quasi-public agency or a nonprofit corporation. In either case, oversight is the responsibility of a board of directors that may reflect the diversity of the community, but whose membership is dominated by the business and property interests who are responsible for paying the lion’s share of the assessment or rate.

Why BIDs Are Created

BIDs represent a concerted effort by business leaders to establish well-funded, professional organizations that can work to change perceptions of their district, to surmount the limits of public resources, and to respond to challenges from regional malls or other competitive developments.

When business or institutional leaders decide to reach into their pockets to fund a BID, they are departing from business as usual. This decision can be motivated by a variety of events, but essentially what primes an area for starting a BID is either fear or opportunity.

Fear galvanizes commercial interests into action. It may be prompted by a large employer leaving town, the closing of a historic department store, the opening of a suburban mall that threatens to empty downtown streets, a gradual loss of amenities, widely held perceptions of crime and blight that reduce the area’s drawing power, or general concerns about chronic decline. Often the inattention of local government to the area’s problems—for example, its failure to create a budget to maintain recent streetscape improvements, its lack of response to an exploding bazaar of street vendors, or its inability to remove encampments of homeless people from alleys—spurs the formation of BIDs.

Opportunity also takes many forms. Sometimes the opening of a convention center, concert hall, or sports facility, or the scheduling of a major event such as the Olympics or the Final Four playoffs can prompt an epiphany among downtown leaders: Company’s coming, but we’re not ready for prime time.

These immediate causes for the formation of most North American BIDs play out in the context of development trends that have generally shaped metropolitan regions since 1960:

the movement of people out of cities;

the proliferation of suburban shopping centers, office campuses, theme parks, and entertainment centers; and

the steady erosion of downtown’s and main street’s share of shoppers and workers.

To Create a Sustainable Funding Base

In the days when downtowns dominated their regions, widespread participation of merchants and property owners gave their associations the power to shape urban investments. But with the dominance of national chains, real estate investment trusts, and absentee ownership, these voluntary organizations usually lack strong leaders and rarely can sustain themselves on member contributions. Without a BID, downtown’s diverse property owners have no legal means for acting in concert and no guaranteed base from which to fund a response to declining market share.

Jerry Mitchell’s 1999 survey found that 60 percent of BIDs in the United States had been created since 1990 and 28 percent since 1995. Obviously, business leaders have taken to heart the central dictum of the new federalism: If you want it, you are going to have to fund it yourself.

The founding chairman of Philadelphia’s Center City District, Ron Rubin, the downtown’s largest property owner in 1990, was clear that the motivation for forming the BID was business self-interest. Rubin, who also owns and manages suburban shopping centers, sold his peers on the concept of mandatory BID assessments with the following argument: I already provide cleaning, security, and promotional services for my 15 office buildings and shopping centers downtown, so I don’t need this for my properties. But if my buildings are islands of cleanliness and safety in the midst of a downtown that is widely perceived as dangerous and dirty, then I can’t succeed and neither can you.

Or, as the business advocates for the Pittsburgh Downtown Partnership argued in a 1996 brochure in response to the asset-manager mentality of institutional property owners who initially opposed the district: The value of your property is not determined solely by the investments you’ve made in your property. Rather, a major portion of your property value is derived from how investors, businesses, and visitors view the entire downtown as a business, retail, and cultural center.³

A report based on an examination of North American BIDs by researchers from the London School of Economics explains the rise of BIDs as an exercise in self-interest:

The motivation for property owners to establish a BID and thereby impose a compulsory levy on themselves is that the expected commercial return will exceed their personal contribution. The growth in BID formations across the United States reflects the recognition by property owners that the value of their asset (i.e., their property) depends to a significant extent on the surrounding environment …. In promoting their commercial self-interest, property owners will be prepared to invest in their surroundings to the extent that it benefits their property. In practice this means that property owners will only be willing to join a collective scheme such as a BID if there is agreement on which aspects of local environmental decline need to be tackled and how this should be approached.⁴

To Respond to Declining Public Resources

Cities are facing not only stronger and more sophisticated competition from suburbs, but also a loss in political power that means diminished financial resources. More than half of the members of the U.S. Congress represent suburban districts, which has resulted in a cutback in federal dollars for urban districts. By the late 1980s, most urban mayors were confronting an explosion of social problems—AIDS, crack cocaine, teenage pregnancy, and homelessness—with declining resources.

Furthermore, the commercial areas of cities are getting a smaller share of the pie. Consider the case of Philadelphia. The downtown occupies just 3 percent of the city’s total land area, but contains 80 percent of the city’s commercial office space and 70 percent of its hotel rooms, provides 43 percent of the city’s jobs, and generates 59 percent of all parking-meter revenue and 30 percent of all real estate taxes. But this economic engine is home to just 2 percent of the city’s electorate. So it is understandable that when successive mayors and city councils lost general revenue sharing and other federal programs in the 1980s, they allocated scarce resources to neighborhoods where voters lived. Increased litter, more graffiti, and a rise in the number of homeless people in downtown were consequences. When the commercial office boom of the late 1980s ran headlong into this maelstrom of disorder and diminished public resources, local leaders like developer Ron Rubin saw a business improvement district as a necessity.

To Respond to Stronger Competition

When manufacturing was the mainstay of the economy, access to rivers and railroads or proximity to raw materials and markets mattered to the success of cities more than did the quality of the public environment and customer service. But in the highly competitive, postindustrial economy, quality-of-life issues have become paramount. Businesses, workers, residents, and tourists have many choices among locations and they will go where their options are greatest, the costs are competitive, and the amenities are best.

Suburban malls, office parks, and entertainment centers set the standards that customers now expect from city centers. They successfully compete with downtowns in large part because they are managed places with single owners. Retail tenants pay not only for the space they occupy, but also for common area maintenance (CAM) through a CAM fee. This surcharge pays for cleaning, security, the upkeep of interior public spaces, free and well-lighted parking lots, and a generous advertising budget. Equipped with upto-date surveys on customer preferences and with information on what their competitors are doing, mall managers dictate operating hours and storefront design, control the placement and mix of their tenants, and frequently rearrange stores to optimize a center’s performance. Suburban office campuses attract tenants with superior amenities, such as jogging trails, parklike landscaping, daycare, and athletic centers. Suburban or exurban theme parks attract families with their mix of uses, friendly staffs, and a high level of cleanliness.

Unusual Problem, Unusual Solution

Almost every BID has a clean and safe program, but sometimes the clean part presents a special challenge. In New York, the Bryant Park Restoration Corporation, the BID that maintains Byrant Park, faced such a challenge—pigeons. Adjacent to the New York Public Library, the six-acre park is a popular luncheon spot for more than 5,000 people a day, that is, until the pigeons arrive and land their droppings on business suits and dresses.

Enter falconer Thomas Cullen. The BID hired Cullen for $15,000 to scare the pigeons away with his trained Harris hawks. The Harris hawk, which is about 18 inches long with a 45-inch wing span, generally preys on small ground animals. Cullen has trained some of them to swoop down and frighten the pigeons, which scatter in all directions. The program started in the spring of 2003. The plan is to encourage the pigeon population to relocate, and in the program’s first months the pigeon population was significantly reduced. Using five hawks and a falcon, the program will continue through the warm-weather months.

The Bryant Park pigeon relocation program is adapted from a bird abatement program that Cullen set up at New York’s John F. Kennedy International Airport in 1996, where as many as 18 hawks and falcons are used to control the gull population above the runways. Before the program started, bird collisions with airplanes had caused about $4 million in damage, and Cullen reports that such damage has been reduced by 60 percent.

The damage caused to clothing and dignity at Bryant Park is not nearly as costly, but the luncheon crowd will surely welcome the respite from a multitude of begging pigeons. The Bryant Park hawks work from 9:00 a.m. to 5:00 p.m. They are kept well fed, and thus scare pigeons for sport rather than for food and also generally choose to stay within the park. However, even the well-trained hawk will occasionally take off. One way-ward hawk named Galen ended up atop a nearby 18-story building, but a radio transmitter attached to his leg enabled his recovery.

Falconry is an unusual BID service that serves to illustrate the lesson that BIDs should tailor their services to the needs of their districts and constantly evaluate what services they need to provide.

The Bryant Park BID has transformed a derelict urban park into a popular gathering place and asset for the district. Bryant Park Restoration Corporation

Source: Adapted from an Associated Press story, Washington Post, 21 April 2003.

Noting the widespread failure of new pedestrian malls in downtowns, the late urbanist William H. Whyte advised cities to focus on the management, not the architecture, of shopping malls: Some cities are trying to compete with the shopping malls by copying the physical form of them…. What they should be copying is the centralized management of them: their ability to coordinate tenant selection, promotion, leasing, and market research.⁵

Management rather than service delivery is the appropriate lens through which to view BIDs. Within their boundaries, BIDs overcome the disadvantages of fragmented ownership and are to the district’s public spaces what mall managers are to mall common areas. BIDs share the costs of common area maintenance and advocate for downtown’s interests. In small cities like Milburn, New Jersey, they organize retailers to cooperate in promotions. In downtown Denver, the BID coordinates the pick-ups of private trash haulers and public sanitation agencies. In New York City, the Bryant Park Restoration Corporation worked through meetings with recreation, sanitation, police, and transportation agencies to develop a unified response to a troubled place and create in its stead an award-winning park.

What BIDs Do

BIDs gather under one roof the diverse disciplines of crime prevention, public area maintenance, marketing, landscape architecture, and urban design for a coordinated approach to district improvement.

Most BIDs are organized to supplement, not replace, municipal services. Many BIDs start with a narrow focus—usually on clean and safe services or on consumer marketing. But as BIDs have matured, grown more sophisticated, and evolved in very different settings, the range of typical BID services has expanded dramatically. Among the wide assortment of programs that a BID might undertake, according to a list compiled by Richard Bradley, formerly president of the International Downtown Association and now executive director of the Downtown DC Business Improvement District in Washington, D.C., are the following:

District Maintenance. Includes the removal of litter and graffiti, the power-washing of sidewalks, shoveling snow, cutting grass, trimming trees, and planting flowers in public places.

Security. Includes the deployment of uniformed security personnel for extra eyes and ears on the street and uniformed hospitality personnel (sometimes called ambassadors or guides), the installation of electronic security equipment, and cooperative arrangements with the police—for example, contributions of special police equipment, such as bicycles, or joint participation in the operation of computerized crime-tracking systems.

Consumer Marketing. Includes festival and events programming, coordinated sales promotions, the publication of promotional materials (brochures, maps, newsletters), image enhancement and advertising campaigns, signs directing drivers and pedestrians around the district, and promotional banners.

Business Recruitment and Retention. Includes market research, compilation and distribution of market reports, financial incentives for new and expanding businesses, and marketing to investors.

Regulatory Advocacy and Enforcement. Includes assistance in the enforcement of laws governing sidewalk vending, street performances, vehicle loading and unloading, and taxicab queuing; and advocacy for municipal action on such issues as street furniture standards, building code compliance, and standards of public behavior and civility.

Parking and Transportation Management. Includes planning and advocacy for public parking improvements, management and promotion of public parking facilities, maintenance of transit shelters, operation of ridesharing programs, and promotion of existing public transit.

Urban Design. Includes the development of urban design guidelines, the development of lighting guidelines, and the management of facade and storefront improvement programs.

Social Services. Includes homeless assistance, job training, and youth programs.

Visioning. Includes district visioning initiatives and strategic planning for the district.

Capital Improvements. Includes pedestrian-scale lighting, street furniture, trees, planters, and park and public space enhancements.

To be sure, few BIDs provide all these services. As the examples in this book demonstrate, an incredible diversity of BIDs has emerged in response to local challenges. In large American cities, the most visible aspects of downtown BIDs are their colorfully uniformed crews engaged in cleaning sidewalks, removing graffiti, or providing supplementary safety services. In small retail districts, BIDs are known more for their consumer marketing, the festivals they stage, the decorative plantings they install and maintain, or the traffic-calming measures they undertake.

However, the civic entrepreneurs who create and lead BIDs are not motivated by a passion to run innovative janitorial or security programs or to supplant highway engineers and parking planners. They seek, rather, to make their districts livable and competitive again. Cleaning, safety, marketing, and parking programs are only a means to this end.

Figure 1–2

Context Matters

What a BID does depends on the size of the city within which it functions and the size of its budget, which can range from $20,000 to $15 million per year. BID activities also depend on at least two other important variables: 1) the scope, competence, and preferences of the local government and 2) the architecture of business organizations in the city and region.

Local Government Context

Europeans, Asians, or Australians visiting a BID in the United States invariably burst out in dismay about halfway through the PowerPoint presentation: But what does your government do? In their countries, cities are a higher national priority and government is expected to deliver more and does so. They are unaccustomed to the private sector’s assumption of such an active civic role.

But within North America, the scope, competence, and preferences of local government vary greatly from city to city. BIDs tend to fill gaps in municipal services or compensate for what municipalities do not do well. Where government is competent and effective, BIDs rarely need to tread. In Boston and San Diego, for example, the public redevelopment agencies are professionally run and they focus on planning, reinvestment in downtown, and market-rate housing. By contrast, in Philadelphia publicly funded redevelopment efforts focus only on affordable housing in low-income neighborhoods. Thus, Philadelphia’s Center City District has worked on encouraging market-rate housing both in downtown and, recently, in other city neighborhoods.

Many BIDs, including those in small cities, become involved in providing assistance to homeless people. Downtown San Diego Partnership

BID programs evolve according to needs. In affluent Santa Monica, California, where the city delivers high-quality services, the Bayside District, the management entity for the Third Street Promenade, oversees vendor carts that augment the promenade’s storefront mix. In Portland, Oregon, there is little need for the BID to make streetscape improvements because the city government is committed to a high standard of streetscape design and enforces the requirement that property owners use only approved materials when repaving sidewalks. In poorer cities, code enforcement officials are likely to be preoccupied with collapsing buildings, toxic brownfields, and other conditions that make the enforcement of such quality-of-life standards seem a frivolous luxury. For this reason, a BID in New York City, the 34th Street Partnership, developed a sophisticated and well-funded program to assist in the enforcement of the city’s storefront design and sign codes.

Civic Architecture

In the United States, the freestanding BID is more the exception than the rule. In cities as diverse as Portland (Oregon), Los Angeles, Des Moines, Pittsburgh, Baltimore, and Tampa, BIDs operate within a partnership model. In these cities, the downtown BID is but one arm of a centrally managed complex of business-supported organizations that deal with various issues that affect the downtown, such as planning and research, housing development, or transportation management. In Houston and in some cities in Florida, BIDs also manage the city’s tax-increment financing programs.

In Portland (Oregon), Denver, and Phoenix, each city’s business community is still dominant in the region and the downtown BID exercises a broad reach, weighing in, for example, on regional transportation decisions. Portland’s regional chamber of commerce was subsumed recently by the downtown BID, the Association for Portland Progress (now called the Portland Business Alliance).

On the other hand, if there is an existing civic organization—a chamber of commerce or a CEO organization—that acts on the regional scale or if there is no metropolitan consciousness at all, a downtown BID may focus only on downtown issues. Or if the city or region lacks a tourism bureau, the BID may engage in tourism marketing. BIDs may borrow from each other, but the best evolve programs tailored to place.

Focus on Place Management

BIDs are best thought of as place managers as opposed to program managers. Thus, although, as Mitchell’s survey found, very few BIDs outside of large cities directly provide social services or job training, many are concerned with the issue of homelessness. As place managers, BIDs often take the lead in forging a comprehensive and compassionate response to the challenges posed by homeless people and panhandlers. Even in small cities, BID managers often find themselves at the helm of undertakings to coordinate the efforts of a fragmented world of social service agencies, advocates for the homeless, business leaders, and the police to deal with homeless people.

In New York City, board members of the Times Square Business Improvement District were instrumental in the formation of the now widely replicated Midtown Community Court, one such place-oriented collaborative product. The Midtown Community Court is a program administered by the city that blends law enforcement, social services, and community sentencing in an effort to better address so-called quality-of-life crimes and keep minor criminals off the path that leads to a life of crime. Under this program, offenders may be sentenced to work on the BID’s sanitation crew as a community service.

Tampa’S downtown BID operates Within a partnership model. Tampa Downtown Partnership

A program run by the MetroTech Business Improvement District in Brooklyn, New York, to identify and report problems in the district’s public environment offers another kind of example of place-oriented coordination. Capitalizing on the staff’s good relationships with municipal departments and knowledge of exactly whom to call in what agency, the BID periodically directs volunteers with hand-held computers and cameras to fan out through the district in order to identify problems— for example, defective traffic signals, missing signs, potholes, or utility construction projects that seem to drag on forever. Information on problems is e-mailed to the responsible municipal agency. To encourage prompt follow-up, the BID is able to produce reports on reported problems—organized geographically or by the department responsible.

Focus on the Customer

The very structure of a BID compels a focus on the customer—the property owners and businesspeople who pay the assessments. Assessments on properties or on businesses are meant to fund services that directly benefit those who are paying. Many enabling laws require periodic reauthorization from benefiting owners. So there is hardly a BID manager who has not been asked: What have you done for me lately? Or has not encountered some variant of: Sure, I’m pleased that my sidewalk is now clean, but what are you going to do about the skateboarders ruining my granite benches?

Many BIDs are created to develop and maintain streetscape improvements. Downtown Dayton Partnership

Focus on Competitiveness

Nearly every large district that has started with a limited focus on clean and safe programs has quickly diversified into lighting, signs, storefronts, landscaping, homelessness, parking, or business retention and recruitment. In Mitchell’s survey of BID chief executives, a plurality defined their primary role not as public servant or supervisor, but as entrepreneur (and most came from the private sector before joining the BID).

In the mid-1990s, William Mosher, then-president of the Downtown Denver Partnership, stated a new definition for his organization’s function: strategic place marketing.⁶ The role of the downtown organization, he suggested, was to assess in a regional context the competitive strengths and weaknesses of the city center and to improve not only its safety and appearance, but also its business mix and cultural offerings.

Organizations like the Downtown Partnership of Baltimore or the Downtown Seattle Association now undertake research on downtown housing and employment trends and conduct surveys of office workers and business owners to benchmark their downtowns against the competition. Litter and safety concerns represent only the most blatant barriers to competitiveness, and once those easy problems are solved, BIDs can take on harder challenges like outdated regulations and codes that prevent putting housing above shops. BIDs in places as diverse as Washington, D.C., Norfolk, Roanoke, Charlotte, and Dallas have led or participated in the updating of city or regional plans that guide public investment decisions.

The Alliance for Downtown New York defines its mission as business attraction. With a former city development professional at the helm, the BID started in the early 1990s as an effort to fill buildings, not manage public spaces. Wall Street was facing vacancy rates of 30 percent, and the BID was formed to diversify the financial center, repopulate vacant streets, and reposition Lower Manhattan in the metropolitan market. The BID encouraged targeted municipal tax and utility abatements that stimulated the conversion of vacant office buildings to apartments and investment in the infrastructure of other buildings to attract information technology firms. By the late 1990s, people were filling the streets again, and the BID had to allocate resources to cope with a growing litter problem. Following the terrorist attacks of September 11, 2001, the BID continued to play a leadership role in Lower Manhattan’s revival, even as federal and state agencies were created to oversee redevelopment.

To become competitive, many downtown BIDs have sought to diversify the district’s economy through the promotion of entertainment and sports venues as well as housing. They are working to transform CBDs from monocultural office districts with empty streets after 5:00 p.m. to mixed-use, 24-hour centers of diverse activities. A study of 44 cities across the United States by Eugenie Birch, chair of the Department of City and Regional Planning at the University of Pennsylvania, found that between 1990 and 2000 the downtown population in three-quarters of those cities increased, and that a downtown organization or BID was actively engaged in funding or promoting a housing strategy in nearly three-fifths of the cities.⁷

Where BIDs Are Heading

Criticisms of BIDs

Some critics suggest that BIDs privatize city services and divert dollars from needy neighborhoods. But Mitchell’s survey found that 87 percent of BID revenues nationally come from self-imposed assessments, not city contracts for privatized services. Clearly, assessment income represents new money, not diverted money, that is augmenting city services. Several years ago, Carl Weisbrod, president of the Alliance for Downtown New York, suggested that what may be happening is less a revolt against taxes in the business community and more a creative response to diminished service. BIDs, he argued, prove that owners will pay for services that they can see and that respond to their needs.⁸

Other critics decry the Disneyfication of downtowns that field crews of uniformed sweepers and friendly safety ambassadors. But what is wrong with commercial districts that are blessed with historic architecture and real civic spaces borrowing back from the mall the innovation of the CAM charge? Were city centers more authentic when they were abandoned at night, slathered with graffiti, and plagued by crime?

Indeed, there seems to be a bit of a double standard among critics of BIDs. While research on the effectiveness of BID programs is clearly needed, few who are clamoring for it express a desire to evaluate the economic effectiveness of similar common area programs—high standards of cleaning and maintenance, fountains, extensive plantings, and costumed theme park characters—at malls and theme parks. Nor do BID critics worry that mall security guards may be displacing crime into adjacent strip centers. The critics of BIDs deem assessment districts problematic, while they simply accept CAM charges at malls and office parks as a necessary cost of doing business and delivering a high-quality experience.

A Vital Leadership Role

Large-city BIDs can provide more focused and flexible forms of place management and service provision than can the various departments of municipal bureaucracies. Because they are close and accountable to their customers—those who pay the assessments—BIDs can adapt quickly and creatively to new opportunities, take calculated risks, and try new approaches.

Alan Ehrenhalt, author of books on community and executive editor of Governing magazine, suggests that we may be witnessing the obsolescence of traditional municipal boundaries as governance migrates upward to respond to challenges best addressed on the regional level, and at the same time downward to handle opportunities best realized through a local focus.⁹ This certainly is the case for the cities and regions responding to the open borders and single currency of the European Union. The downward and upward migration of governance may also explain why BIDs are thriving at the micro scale in places where there is also a movement toward regional governance—for example, San Diego, Atlanta, and Toronto.

An intriguing realignment is occurring in some U.S. metropolitan areas, where downtown organizations have started to play what regionalist David Rusk calls the outside game in their metropolitan areas by allying themselves under the banner of smart growth with suburban or rural interests concerned with sprawl. They are seeking to change metropolitan land use and tax policies in order to direct investment back to the central city.¹⁰

It would be wise not to inflate the BID’s management role by describing its function as governance. BIDs are not elective bodies and their leaders do not stand for office in the traditional sense—and little aggravates local elected officials more than referring to a BID manager as the mayor of downtown. Nonetheless, many BIDs are clearly exercising a vital leadership role in their communities, articulating strategic alternatives, forging coalitions for change, and successfully implementing entrepreneurial solutions to chronic urban problems.

Civility Made Possible

The growth of BIDs since the 1980s has coincided with a significant shift in public policing strategies. In response to corruption and organized crime in the 1930s, police departments in U.S. cities moved away from the traditional cop on the beat. Seeking to professionalize, agencies placed officers into cars, rotated them frequently from sector to sector, and focused on the FBI’s list of serious part one crimes (murder, rape, arson, and armed theft). Urban disorders in the 1960s furthered these trends, as departments concentrated resources on highly mobile, tactical teams to be rapidly deployed to scenes of unrest. But officers behind the windshield of air-conditioned cars, outfitted in riot gear, and rushing between 911 calls, became ever more insulated from the communities they were meant to serve.

A countertrend began with a community policing experiment in Newark, New Jersey. As James Q. Wilson and George L. Kelling reported in a seminal article, when officers in the experiment actually asked residents what they wanted the police to focus on, the responses were about quality-of-life infractions— teenagers drinking on street corners, smashing beer bottles on walls, and intimidating residents on the sidewalks—more than about FBI part one crimes.¹¹

By the mid-1980s, commanding officers in police departments across the country came to understand that one broken window left unfixed served as an open invitation to more adventurous crimes. Furthermore, as police made arrests for petty crimes, such as subway turnstile jumping, they caught suspects wanted for more serious crimes. When police paid attention to lower-priority infractions, the incidence of more serious crimes declined.

Some departments moved away from a reactive, 911-response mode to become more proactive and diagnostic in their policing. By tracking crime patterns and interviewing residents and merchants, police officers found themselves better able to anticipate problems and catch perpetrators. They also gained the confidence of neighborhood residents and businesspeople, whom they began to call customers.

This trend in policing dovetailed with the focus of emerging BIDs on small signs of urban incivility: litter, graffiti, and inadequate lighting. In many cities, BIDs and community-oriented police departments have worked together, sometimes, as in Philadelphia’s Center City District, sharing facilities. By addressing the little details, these collaborators have dramatically altered the bigger picture in many downtowns.

An epidemic, wrote journalist Malcolm Gladwell, can be reversed, can be tipped, by tinkering with the smallest details of the immediate environment….[T]he streets we walk down, the people we encounter play a huge role in shaping who we are and how we act. It isn’t just serious criminal behavior that is sensitive to environmental cues, it is all behavior.¹²

Clean, safe, and friendly public spaces do not happen on their own. Producing them is a full-time job. Almost four decades ago, architect Charles W. Moore, drew from a visit to Disneyland a simple, but powerful lesson that has become the mantra for BIDs: You have to pay for the public life.¹³

Though a relatively new actor on the urban scene, BIDs have moved quickly from tinkering with small details to working on the big picture through a focus on competitiveness and strategic, regional repositioning. As a new century begins, Americas downtowns are back in business with new office towers, convention centers, sports and entertainment venues, housing, parks, stores, restaurants, and outdoor cafés. Across the country, revitalized commercial centers are alive day and night. BIDs are contributing new energy, new resources, and new leadership. For the first time in a long time, optimism is in the air..

Notes

1. Jerry Mitchell, Business Improvement Districts and Innovative Service Delivery (PricewaterhouseCoopers Endowment for the Business of Government, November 1999).

2. M. Bradley Segal, ABC’s for Creating BIDs (Washington, D.C.: International Downtown Association, September 2002).

3. Say Yes to Higher Property Values (Pittsburgh, Pennsylvania: Downtown Pittsburgh Partnership, 1996).

4. Tony Travers and Jeroen Weimar, Business Improvement Districts (New York and London: The Greater London Group and London School of Economics, 1996), p.5.

5. William H. Whyte, City: Rediscovering the Center (Garden City, New York: Doubleday, 1988), p. 323.

6. The phrase and idea come from Philip Kotler, Donald Haider, and Irving Rein, Marketing Places (New York: The Free Press, 1993). This book was the focal point for discussion at the 1994 spring meeting of the International Downtown Association meeting in Denver.

7. Eugenie Birch, Having a Longer View on Downtown Living, Journal of the American