Business Improvement Districts

Abstract

Business improvement districts (BIDs) are a form of special purpose government that utilize special assessments on real property to deliver services to a spatially defined commercial area. The first BIDs emerged in North America in the early to mid-1970s. They grew tremendously in the early 1990s, with some current estimates exceeding 1,500 BIDs globally as of 2018. While the legal and administrative process to create and govern BIDs varies in the United States based on state laws and local ordinances, they are typically created through a vote of affected property owners after some period of public disclosure and hearings. BIDs vary widely in their geographic size and capacity for assessment collection, ranging from $20 million-plus annual budgets and covering entire central business districts, to sub-$100,000 budgets with service areas that cover a few blocks of a neighborhood commercial strip. Assessments are typically collected by local governments and then passed on to BID operating organizations, which are usually governed by nonprofit organizations. Many BIDs also augment their assessment budgets through gifts, grants, contracts, and fees for services. These funds are used to support services that often include some mix of common area sanitation, security, marketing, and landscaping. Many large US cities have extensively used BIDs as an economic development tool, with cities such as New York, Chicago, and Los Angeles each having over forty BIDs. The growth of BIDs has been linked to set of larger of fiscal, social, and economic problems that cities faced during the era of economic restructuring and deindustrialization. BIDs filled a void left by many city governments’ inability to organize, fund, and manage services directed toward the problems facing many commercial areas, which often included crime, homelessness, and disorderly public environments. As BIDs have matured and are now a common feature of the urban landscape, they have grown in their capacities as organizations, with some comprehensive organizations fulfilling more ambitious functions related to infrastructure provision, social service coordination, urban planning, and public space management. Academic work around BIDs has been pursued by researchers and theorists across law, social science, and public affairs literatures. The dominant themes in academic work on BIDs has been organized around their various forms and functions; their accountability to the public; their effectiveness, especially in the areas of crime prevention and economic development; and social equity issues, with special attention often given to their interaction with homeless populations.