Business Improvement Areas - Term Paper Example

Business Improvement Areas (BIAs) Business improvement areas can be described as funding mechanismsaimed at revamping business districts and management. In BIAs, businesses or even properties within a given locality are usually assessed and, depending on the assessors view, such areas are provided with funds to improve services. Usually, BIAs is often managed by the people who manage the assessments and it is a requirement that everyone within the locality/district pays their fair share. Simply put, the owners of businesses or property in a given area pool their resources together with the focus of improving services for their benefit. This paper focuses on BIAs in Seattle, in the US. The paper will discuss on BIAs in Seattle including BIA best practices; creating a BIA including the legal requirements and operating a BIA. Origin and Growth of BIAs The growth of American cities began around downtown and neighborhood main streets with majority of the people occupying them being independent businesses and local property owners. The rapid development of the infrastructure particularly the highway expansion provided an incentive for growth of Automobiles during the World War II. The availability of relatively inexpensive mortgages led to the rise in housing development.1 Outlaying shopping malls became the dominant feature especially in downtowns and other older relatively older commercial districts. These shopping malls became highly successful and part of the reasons for the same was: the ability to use a consistent design theme; ability to run different businesses within the same premises; and having and having an efficient decentralized management.2 The concept of business district management funded through mandatory assessments emerged in the 1970s, and grew to wide popularity during the 1990s. Under one name or another, well over 1,000 such districts exist today throughout the United States, with many more in Canada and throughout the world. BIAs Services & Budgets BIAs is involved in provision of different programs key among them being marketing; professional management; and beautification just to mention a few. The extent of the programs provided by BIAs is, however, subject to the availability of funds as dictated by the yearly annual budget. In the year 2011, for example, BIAs estimated budget was about $17 million whereas the median budget was set at $342,000. For efficient management, a budget of $200,000 or less is usually allocated to the management staff of up to 2 people and a modest budget for other services such as promotions and marketing.3 The Fundamental Reasons for BIAs Formation America has seen the number of BIAs increase substantially throughout its cities. The driving factors for this rise can be attributed to the recognition that involving in collaborative marketing, and initiation of various physical infrastructural improvements was necessary in sustaining the vitality of downtowns and neighborhood business districts. This was seen as long-term and consequently, the need for developing stable and continuous financing. Although getting involved in long-term payments is not quite easy, nevertheless, the business owners and property readily agree to make long-term payments to the district management organization. The main factors that are thought to be a motivating these people to commit to such long –term payments and creating a BIA include; Reduction in the rate of crime: The business and property owners want a safe environment free of criminals and criminal activities. As a result, they involve themselves in management functions which ensure that any cases of crime are acted upon to finality. As such, the funds are used to hire policemen to guard their premises and also provide any assistance as may be required.4 Cleanliness: BIAs has large responsibilities with regards to provision of cleaning services. Their services with regards to cleaning include sidewalk sweeping, removing graffiti from the walls and collection of litter to ensure that their business districts remain clean. Involvement in marketing activities: BIAs is also involved in promotional activities that are aimed at increasing sales for the different business established within their particular areas of interest. In order to achieve this, BIAs provides services such as promotional campaigns for the various business establishments simply by making the area more appealing to customers.5 Increasing rent: The BIAs is responsible for reviewing and increasing rent periodically. For one, BIAs are after ensuring economic growth of their districts and to achieve that they need more people to come and conduct their businesses and rent houses. This is the reason they engage in promotional activities in the bid to attract more people to their districts. Monitoring of Payments: BIAs’ activities also involve ensuring that every business owner and property owner in the district pay their fair share. In order to facilitate this, an equitable formula is set that guides payment and ensuring that no one is overcharged. By using the assessment formula, BIA ensures that a few motivated people do not pay for the bills of lazy people but rather for their services.6 BIAs in Seattle Seattle has a relatively long history of BIAs formation with the first BIAs having been formed in the early 1980s. Seattle’s BIAs included several districts that were located in the central city and close-in neighborhoods such as Pioneer Square, and Capitol Hill. It is argued that most of the early districts had their focus primarily on retail, and raising funds was done from businesses and organizing special events. Over time, the BIAs in Seattle changed with others merging to form a larger district, some opted to remain independent, and others were terminated all together. Currently, Seattle has eight BIAs in operation with many others being at different stages of formation.7 Some of the oldest BIAs still in operational today include the Pioneer Square, Capitol Hill, West Seattle Junction and Chinatown. In the year 2011, the different hotels within Seattle’s central city came together and created Seattle Tourism Improvement Area (STIA). The aim of this establishment is to assess the increasing leisure tourism in Seattle and was particularly created to monitor hotels only. Other BIAs in the pipeline includes two within the Central District. A closer look at the BIAs that are in Seattle shows that most of them vary widely based on their organizational structure, their services, the assessment formula, and the budget allocation. For example, smaller districts in Seattle have budgets that range between $ 50,000 and $ 250,000 annually. On the other hand, MID and STIA districts have budgets amounting to several million dollars each single year.8 Creating a BIA Creating a BIA involves a number of aspects; however, the primary and the legal and the practical aspects remain the most pronounced. While the requirements are perceived as being not quite complicated, getting to agree on who will pay and into the BIA in order to enjoy its benefits remains a critical challenge. Legal Requirements Fulfilling the legal aspects of creating a BIA forms an important part in the BIA creation process. It is required that the group of people planning to create a BIA must submit particular documents declaring their intention to create a BIA to the City for a formal review. Among the documents required include duly signed support petition, transmittal letter, and a description/ plan of the intended BIA. It is also a legal requirement to provide detailed list of the potential ratepayers to the relevant governmental agency. Petition and Signatures: The US law dictates that the people enlisted as potential ratepayers should sign a petition of support. The content of the support petition include: the agreement that the ratepayers will pay at least 60% of the proposed assessment: it defines the boundaries of the proposed BIA; it details the assessment methodology that will be applied in the BIA; it shows how the funds will be managed, and the people who will be responsible for its management. Transmittal letter: Following the successful signing and submission of the petitions, the state law requires that a letter of transmittal accompanies the petitions. The letter should detail the following; the way the petitions were circulated; the ratepayers who will be affected directly; and the annual assessment that will most likely be collected, the affected properties and the contacts of the proposed ratepayers among other requirements.9 Proposed BIA description: The law also requires the people creating a BIA to submit detailed description of the proposed BIA. In the description, the applicant(s) should endeavor to show the following; the assessment methodology that will be applied in the BIA, the rates that will be applied, and a map showing the exact boundaries of the proposed BIA. The Review Process: On receiving the above requirements, usually the city will start processing them; a process that often lasts up to between 3 and 6 months. Processing often entails the city staff sending the applicant feedback on the work plan, the assessment methodology and this is critical as it assists to rectify issues before the commencement of the formal review. The formal review process will often scrutinize the information submitted to determine its accuracy. It undergoes various stages and once completed, the ordinance is signed by the Mayor after it becomes effective after 30 days.10 Practical steps in the BIA Creation Process The City of Seattle has a fairly easy process of creating a BIA with clearly defined steps which are pegged on the local circumstances. Getting Organized: In the process of creating a BIA, it is highly significant that a small group is formed which will act as the link between potential ratepayers and the BIA management. Usually the calculation of the 60% BIA support is done in consideration of the amount likely to be assessed annually from each ratepayer. It is argued that for the BIA to succeed there is need for a strong relationship between the core group and the potential ratepayers. A properly constituted group should include between 5 and 10 people whose mandate is to offer representation of key ratepayers and have relationships with others that are perceived to have substantial influence with the district. It is required that the core group members work together in harmony and for the mutual benefit of the district. Accordingly, the core group members are required to convene meetings regularly over several months as they move through the BIA formation process.11 Fundamental Concepts It is often the case that the state statute and other city policies related to BIAs are indefinite. The reason for this is in order to allow for flexibility especially to the organizers and ratepayers of each district. Most of the policies, however, largely focus on the working and perception of the BIA in the community. It is of essence that the core group is pro-active in addressing the fundamental concepts earlier enough and propose how perceived issues should be addressed in their BIA proposal. Some of the fundamental concepts in BIAs include the following: Organizational structure: A BIA can conduct its operations either as an independent organization, as a program within a broader organization or in some cases, as a corporation under an umbrella organization. As an independent organization, a BIA is usually organized and headed by a board of ratepayers who are entitled to enjoy various benefits of the organization including the funds derived from the assessment. As a program within a broader organization, a BIA is made to be part of an existing business organization. For instance, it can exist as a program of an organization such as downtown association. Unlike an independent organization, this model is structured to have a Ratepayers’ Board that oversees the operations of the BIA program. The board in conjunction with the management of the particular business organization takes part in staffing of the BIA and also consults in other areas deemed important in the BIA. As one of the several Corporations under the umbrella BIAs, a BIA operates as a single entity alongside other corporations that fall under the umbrella. In this arrangement, the BIA is mandated to have its board, staff with the umbrella organization taking the role of co-coordinating the various programs. It is argued that form of arrangement is often the cleanest legally, however, it is also the most challenging due to many complicated processes involved in its formation. Operating a BIA A BIA can be looked in the context of a business and its operation is more like a non-profit corporation. There are, however, some particular requirements that have to be fulfilled in order to ensure smooth operation. Since the local situations are not exactly the same, it means that operations of a BIA also tend to vary across different locations thus no one operation procedure is defined for BIA operations.12 Organizational Structure As the BIA conducts its operations, it is essential that there is a smooth flow of information across all the members of the BIA including the local constituents. In particular, communication regarding the accomplishments of the BIA, work plans, sources of funding and other resources should be communicated to all members effectively and in a transparent manner. BIA Ratepayers Advisory Board It is a requirement that a BIA has in place an Advisory Board whose composition includes its current ratepayers. The Advisory Board members serve as representatives of the different ratepayer classes and geographic diversity in the district. The selection process of the Advisory Board, however, is done at the discretion of the locals’ decision. In the case of the City of Seattle, it is the city that is responsible for approving or rejecting the initial Ratepayers Advisory Board. In addition, the City has the authority to add more members to the board in the event that the chosen appears to be unrepresentative of the different ratepayer classes and the geographic diversity in the district.13 Bibliography Morçöl & Wolf, “Understanding business improvement districts: A new governance framework.” Public Administration Review, (2010). 70, 906-913. Mitchell Jerry. Business improvement districts and the shape of American cities. (Albany: State University of New York Press, 2008), 112. Seattle, “Business Improvement Areas: At Work in Seattle,” [Online]. (2012) Available at http://www.seattle.gov/economicdevelopment/business-districts/business-improvement-areas (Accessed 12th April, 2015). McMullan James. ‘Social surveillance and the rise of the "police machine," Theoretical Criminology 2(1) (1998), 93-117. Grossman Seth “Business improvement districts: Promise and performance.” Public Performance & Management Review, (2010): 33, 355-360. Hoyt & Gopal-Agge “The business improvement district model: A balanced review of contemporary debates.” Geography Compass, (2007), 946-95. Wolf James “Urban Governance and Business Improvement Districts: The Washington DC BIDs”. International Journal of Public Administration (2006) 29(1–3): 53–67. Briffault Richard, “Government for Our Time? Business Improvement Districts and Urban Governance.” Columbia Law Review (1999) 99(2): 365–477. Read More