What is a BID? Business Improvement District Definition
Most of you may have heard about the term business improvement district or BID. However, how many of you know exactly what it means? Well, BID is basically a defined area within which all businesses have to pay an additional levy or tax with the sole aim of funding projects inside the boundaries of the district. Although a business improvement district is often primarily funded through the taxes, they can also draw on different private and public funding streams.
There are different names used for business improvement districts such as BIA or business improvement area, BRZ or business revitalization zone, SSA special services area, SID or special improvement district or even CID or community improvement district. These zones or districts fund those services that, according to some businesses, are inadequately performed by the government with the help of its existing tax revenues. These may include providing proper security, cleaning the streets, streetscape enhancements, construction of pedestrians, making capital improvements, as well as marketing the area.
Development of BID
The first ever BID happened to be the Bloor West Village Business Improvement Area that was initiated in Toronto in the year 1970. It was basically an initiative by the various local private business. On the other hand, the first ever BID in the US happens to be the Downtown Development District in New Orleans that was established in the year 1974. There are basically 1200 such BIDs spread across the country. Some other countries where you will find business improvement districts include New Zealand, Australia, Jamaica, Albania, South Africa, Serbia, Ireland, Germany, the Netherlands, Singapore, and the UK.
It is good to know that the process of creating a business development district may vary from one jurisdiction to the other. There are basically 3 steps involved in this process in the US. Firstly, some of the businesses in an area file a petition to the local government in order to create a BID. Secondly, the local government will determine the fact that a majority of the businesses wish to have a BID. Lastly, the local government will enact a legislation in order to create the BID. It is also important to know that state legislatures need to authorize local units to create BIDs.
The operating budget of a BID may range from a few thousand dollars to almost tens of millions of dollars. Any non-profit organization or even a quasi-government entity may operate a business development district. The governance of a business improvement district happens to be the sole responsibility of a board that comprises a combination of some businesses, property owners, as well as government officials. At the same time, the management of a BID is the job of a paid administrator, who also occupies the position of an executive director of a certain management company.
When you talk about BIDs in the US, there are approximately 1000 such business improvement districts in the United States. Out of all those, the maximum is in New York City totaling to around 74 BIDs. The BIDs of NYC invest around $134 million each year in neighborhoods spread throughout the 5 boroughs. There are BIDs in almost each of the 50 major cities of the US such as Chicago, Los Angeles, Philadelphia, Houston, San Francisco, Atlanta, Washington DC, Boston, and Minneapolis. When you consider the BIDs in smaller town, the state of Wisconsin happens to have the most number of BIDs totaling to around 90. Out of this around 25 are in the city of Milwaukee alone.
Going to Canada, there are almost 81 BIAs within the city limits of Toronto. On the other hand, Winnipeg has almost 16 business improvement zones or BIZs, the first of which was started in the year 1987. Business improvement districts are known as business revitalization zones in the province of Alberta. The cities of Calgary and Edmonton have 9 and 10 of such zones respectively. Some of the other cities and provinces in Canada that have BIAs are Saskatchewan, Regina, and Saskatoon to name a few.
The British have their own industry body that basically focusses on their business improvement districts. This organization primarily offers services and advices on BID development, renewal, and management together with a wide array of training services along with a Certificate in BID Management. All of the British BIDs carry out a nationwide BID survey every year. This survey basically covers all the fundamentals of BIDs such as types of businesses, number of businesses, and levy rate amongst many more. The survey also asks questions pertaining to the project delivery. They try to find out what the different BIDs are delivering and how they work with other key strategic partners along with other things.
Although BIDs have been considered as a major step towards improving the various trading environment, they have also faced their fair share of criticisms. BIDs have often been accused of being highly undemocratic and concentrating their power into the hands of a few chosen ones within a geographical area. There are several small scale businesses that fall below the BID levy threshold. These small businesses are not liable to pay any tax or levy. However, these businesses are often priced out of an area just because BIDs have a tendency of increasing their rental values. Normally, large scale businesses are capable enough to absorb these rent increases, especially those with multiple stores.
In the past, BIDs have also been criticized by some anti-poverty groups of being too harsh on the poor and the homeless who may sometimes congregate around businesses. BIDs are almost always opposed to street vendors, including those who are chip wagons and hot dog vendors. If you consider the example of the city of London, those street vendors, who sell small items to various tourists, are barred from the Oxford Street in London. Even the President of Civic Voice, Griff Rhys Jones had once criticized the formation of a BID in a central London neighborhood stating that it is highly undemocratic and not a good sign for the country.