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Around the World in 80 Ideas |
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ENVIRONMENT 66: BID to improve Business cleans up the inner cities The problem: dirty, unsafe city centres How does one tackle inner-city neglect - a neglect made worse by a spiral of decline as residents and business flee to the suburbs? The idea: business improvement districts Some cities have addressed the problem by getting local businesses to agree to establish business improvement districts (BIDs) in which they will provide additional public services to the retail and commercial districts, funded by a levy on themselves and other local property owners. Example: stateside cities As a first step, BIDs should examine the most significant reasons why people do not use an area, whether they are residents, employees or customers. The United States experience suggests that this is typically linked to a lack of clean and safe public areas, due to poor-quality public-service provision by the local authority. Accordingly, BIDs provide additional street cleaning and maintenance, graffiti removal, promotional campaigns, and uniformed security guards (who provide a reassuring presence to passers-by, as well as helping to guide visitors and act as the eyes and ears for the local police). In establishing a BID, property owners must devise a district plan that sets out the purpose of the BID, its geographical boundaries and the scope of proposed services. This plan includes a detailed business plan for the BID, including income and expenditure projections. BIDs require the support of business, tested by an initial vote in the relevant district. If there is sufficient support - there must be a simple majority in favour - BIDs can raise a mandatory levy from property owners, normally collected by the local authority. BIDs are governed by a board of voluntary directors, elected by property owners. The precise composition of the board is laid out in the enabling legislation: it normally provides for a proportion of board members to be drawn from city representatives and local residents. But property owners hold a majority, so those who are actually paying for the improvements are well represented in the decision-making about how the money should be spent. In the United States, where they were pioneered, BIDs range from large downtown organizations with budgets excceding $5 million per year, to small neighbourhood schemes with budgets of $70,000 or less. They are established for a period of five years, but can be renewed for further five year terms. New York's Manhattan offers some of the best examples of successful BIDs. The Times Square, Union Square and Grand Central Station districts are just three of the three-dozen city neighbourhoods transformed by BIDs. Whereas these areas used to be infamous for street crime and drug trafficking, they are now notable for their clean streets, the absence of garbage, and the flowers and young trees growing in the parks and verges. In other American cities, BIDS have extended across the entire central area, as with Baltimore and Philadelphia. In Baltimore, the Downtown Partnership has enhanced the city centre's commercial strengths. Crime rates in central Baltimore fell by 7 per cent in the first year that the BID security guards were introduced, and 10 per cent in the second. Assessment: successful BIDs BIDs promote urban regeneration by making neighbourhoods safer, cleaner and more prosperous. This is achieved by tapping into the resources of private property owners. There must be a sufficient degree of common interest between property owners in the target neighbourhood. They are likely to support a BID project if they can perceive a direct financial benefit to themselves in doing so - and by making business districts more attractive to tourists and shoppers, there is a clear potential benefit in terms of increased trade. Cleaning up New York Since it was founded in 1993, the Times Square BID has made the neighbourhood - previously a magnet for the pornography and prostitution trades - clean, safe and friendly. The mandatory levy on businesses is approximately 0.3 per cent of the assessed value of commercial buildings, while residential owners make a contribution of $1,000 a year. In return, the BID hires fifty sanitation workers, all recruited from a rehabilitation programme for the unemployed, to sweep, scrub and paint street furniture from 6.00 a.m. to 10.00 p.m., seven days a week. The BID has also helped to raise $2.5 m to pay for a multi-disciplinary team of clinical social workers, nurses and drug counsellors who provide various therapy services on the street to drug addicts and the mentally ill. In the BID's first seven years, street crime fell by almost 59 per cent, while illegal peddling fell by 37 per cent. It is essential that property owners are in the majority on BID boards, since this leaves them in control of how their levy revenues are spent. Since the problem of free-riders is removed, the proportion of property owners who vote in favour of BIDs is typically very high - the range is usually 75 to 90 per cent. In the US, local authorities must give their approval before a BID can be set up. They must also pledge not to reduce their own services in the neighbourhood - which property owners and businesses have already paid for through their property taxes. BIDs have proved such a success that there are moves to try out the idea in other parts of the world. In the United Kingdom, a private Bill was introduced in the House of Lords to promote interest in the concept. Potential BID projects include Park Royal, on the outskirts of London; Broadmead in Bristol ; and Fitzrovia in central London. The Corporation of London, in whose area the leading financial services institutions are located, has given enthusiastic support to the idea. For futher information:
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Copyright 2002: Adam Smith Institute
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