The Business Improvement District Movement

Contributions to Public Administration & Management

Seth A. Grossman

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781317212751
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: American Government
• Index: Politics & International Relations

This comprehensive book covers the theory and practice of Business Improvement Districts or BIDs – partnerships between local communities and governments established to revitalize neighborhoods and catalyze economic development in a region. In this book, author Seth Grossman demonstrates the ways in which BIDs work, pull stakeholders together, and acquire funds to manage the difficult process of community revitalization especially in urbanized, threatened town centers. BIDs also blur traditional lines between public and private organizations, and their governance raises critical new questions about democratic representation, accountability, transparency, and responsiveness.

As this book illustrates, BID managers act as public entrepreneurs, and management in the public realm requires community development skills (community planning, organization and leadership) and economic expertise (jobs, business development, housing and public infrastructure). Through an in-depth examination of Business Improvement Districts and their managers we begin to see that the future of public administration might no longer be contained behind the walls of formal government, with an increasing number of public administrators defining and creating public solutions to real life commercial problems. This book is essential reading for all practicing urban and regional administrators and government officials, as well as students studying public administration, public management, and urban and regional politics.

Part I

1

Foundations of the Profession of Business District Management

Public–Private Partnerships and Public Management

Participating, caring for, and being committed to our communities are time-honored concerns, and this certainly includes business communities (Berk, 1976). More and more communities are looking for and finding ways to build successful organized approaches to development, revitalization, and improvements by creating special (business) improvement districts (SIDs). But, do they work? Do they accomplish the intention of enabling legislation? Does this intention, and BIDs specifically, foster public management entrepreneurship? Do BIDs present an effective model for functions of social capital and the practice of public management entrepreneurship (Harvey, 1989)? Do BIDs prove Charles Tiebout’s theory that people are exceedingly concerned about their primary home-based investments (such as home and business), and choose governance programs and services that help manage these investments most effectively (Tiebout, 1956) by voting with their feet; that is, moving to places where their investments have a better chance of succeeding? In the case of BIDs, this concern is an extended reinterpretation of local governance apparently chosen, designed, and implemented by the entrepreneurial citizen as a collective response to asset management. Do BIDs sustain better business investment opportunities? As we delve into these questions, we look at the essential structure and purpose of BIDs, their public and private nature, and the impact of the management of collective and common interests that BIDs represent.

Without reliable resources and strong administrative support, volunteer efforts often are limited inadequate legal structures that do not sustain hard-earned plans. To address this, government often will attempt to work with communities to build lasting capability, but often is held responsible for economic trends it cannot control, services that are poorly designed, and service delivery systems that do not meet the day-to-day requirements of dynamic and changing environments. SIDs/BIDs are designed to remedy this problem, particularly in, but not limited to, business areas commonly known as downtowns or shopping corridors.

BIDs and SIDs are similar terms used for a type of public authority allowable in 49 states and many countries. State statutes regarding BIDs give authority to municipalities to create special BIDs to strengthen business in communities through PPPs, where in most cases the local private sector business community has significant authority to manage the district. Legislation establishing SIDs/BIDs throughout the world provide statutory authority to local governments to create tax-supported BIDs. The districts provides services to encourage and support retail/commercial economic activity, community development, and to utilize cooperative technologies similar to shopping malls.

These BIDs are designed to provide local governments with the ability to focus, elevate, and manage services specifically designed to enhance the economic viability of business areas and downtown business centers. The services that are provided are specific and unique to each business district, but tend to involve overall management, environmental clean-up and safety, streetscape redesign and upgrades, marketing and promotions, business development services and advocacy, and redevelopment.

The clear purpose of BIDs is to promote economic growth and employment, encourage self-help and self-financed business districts, designate professional management of the districts, and develop PPPs that implement self-help programs consistent with local needs, goals, and objectives. When a BID is enacted it empowers a District Management Corporation (a non-governmental organization (NGO) or municipal commission) to provide all variety of business management and economic development activities including administering district affairs (adopt by-laws), purchasing and managing property, and managing the provision of specific services and standards (design, promotions, marketing, rehabilitation, clean-up, security).

BIDs are usually private sector organizational entities, not-for-profit (NGO) corporations, possessing real public authority by offering a public–private partnership. Often credited with being the primary revitalization factor in towns where they are established, they are key partners with other economic development agencies and programs (e.g. enterprise zones, economic development corporations business and community development associations, and Chambers of Commerce (COCs)).

BIDs also often act as community development organizations and delivery systems that interface directly with business concerns at the point of direct customer interaction. Statewide businesses, commercial entities, non-profits, churches, and residences are also known to contribute to BIDs, and serve as a vital tool in negotiating private–public partnerships that facilitate the investment of social capital, provide targeted customer service programming, and essential capital and business development strategies.

In the late 1990s and early 21st century, academia became more and more interested in the phenomena of BIDs and a number of excellent studies were conducted chiefly in the field of public administration. I reviewed two of these doctoral dissertations (Justice, 2003; Stokes, 2002) that illustrate a contextual anxiety regarding public sector vs private sector partnering that seems to pervade the field of public administration. BIDs are looked at with suspicion or awe.

In this light, it is noteworthy that the Stokes (2002) dissertation is a result of the Urban Policy and Planning Development Program—Rutgers University–New Brunswick, NJ, and the Justice (2003) dissertation is a result of the Public Administration Program—Rutgers University–Newark, NJ. The approach and tone differences may be indicative of the academic intentions of these institutions. The Urban Policy and Planning Program approach in the Stokes dissertation seemed to be focused more on the success of privatization and equity and accountability issues from a public policy perspective. However, an anti-decentralization tone was present towards BIDs. The author, falling back on an unsubstantiated concern of public and private sector cooperation, projects BIDs as an anomaly rather than a reasonable evolution of governance.

The public administration approach in the Justice dissertation focused on collective action and decentralization issues of public process evolution, democratization, and community development functions from a social investment and participation perspective. Both approaches eventually focused on the concept of defining “place” (definable geography, market, and sense of community) as significant, and indeed, BID technology incorporates a field known as “place management.” However, neither addressed the role of BID management, therefore, professionalism at the BID level. This was true of virtually almost all research on BIDs until 2008. This was chiefly due to the fact that few researchers had any practical knowledge or prior experience of BIDs.

Justice does address normative and cognitive aspects of BID success and points to the pragmatic sensibility of BIDs as collective action and decentralization/privatization, which points to policy as well as management. Stokes helps clarify the purpose of BIDs and this lends itself to a clarification of BID management stating that, “the key to BID success has not been that they are private organizations per se; instead, it is that they endeavor to improve long-neglected areas with courteous, professional, and civic-minded staff” (Stokes, 2002, p. 235). Jerry Mitchell (1999), Loylene Hoyt (2001), and G. Morçöl and Ulf Zimmerman (2006) saw the impact of BIDs worldwide and attempted to describe what they were noting, that governance concepts and policies seemed to be changing from traditional top-down control government to non-traditional cooperative governance. Some were concerned about an erosion of democratic capacity; others considered it a remarkable expansion of public action. More in-depth examination of the role of the BID manager, the planning of BIDs, governmental interactional administration of BIDs, or the unique role of the BID Board of Directors came later (Grossman, 2008; Mitchell, 2008). This began to fill a fairly large hole in the discussion of PPPs considering the private/public dilemma posed. Both dissertations agreed that BIDs have unique public and private aspects impacting public administration and governance. Public entrepreneurship and entrepreneurship in general were not highly considered in favor of trying to discern the collection issues of BIDs, but entrepreneurship studies later became a key theme in pursuing how BIDs worked.

The reason for this may lie in the substantial community building aspects of BIDs, and the economic aspects of PPPs, particularly from a process and governance perspective. Most researchers, at the time, acknowledge that hard data about BIDs was hard to find. But, there is little inquiry into why this might be so. The point may be that both researchers were not considering economics or management, therefore found it less important to study. They were looking at what BIDs were (whether they were a good or bad thing), not how they functioned. Almost all missed the management dilemma of multi-sector partnering. They were interested in how BIDs functioned as governmental units. Certainly, market researchers and business development specialists who work for BIDs and provide this information might have better data and technical ability to analyze community economics. And, contributing to the confusion were the BIDs themselves that had little governmental guidance and relied on private consultants whose interests were not community benefit or descriptive accuracy. BIDs struggled with an identity crisis; were they public or private, or both? The answer to the economic success of BIDs lies in the difficulty of assessing economic data in the aggregate and applying it accurately to a community as a whole; that is, are we defining and managing our markets and the well-being of our communities? Public administration researchers tend not to ask those questions, even if it is the crux of the object to be studied, such as BIDs, unless they have an economic development background. A quest for appropriate data about BIDs might begin by asking related economic questions such as: How much accurate economic data is available for malls, shopping centers, industrial parks, or similar economic generators like BIDs?; or, How accurate are the other economic analysis models such as the GNP, property values, or employment data, in determining true economic success?; or, Who or what determines what signifies success? However, economic data will not always provide accurate community and quality of life data, or community organization, management, and participation, which also define BIDs.

From my experience, it appears more a matter of perspective, an individual assessment, particularly in the idiosyncratic world of the independent entrepreneur. General sensibility regarding BID success appears in both dissertations to be linked more to quality of life and community-identity improvements than economics. “Overall, the success of BIDs … in producing positive quality of life results maybe … most generalizable” (Stokes, 2002, p. 228). This makes sense as BIDs are essentially and specifically community focused rather than individual business or regional economic focused. BIDs may take an entrepreneurial approach to public policy and we might expect that economic indicators would be the key measurement of success, but success was articulated in terms of the health and vitality of the community. This provides us with a public perspective on entrepreneurship.

Stokes looks for economic explanations without economic tools of inquiry and falls back on notions of privatization and equity anxieties to voice critical analysis. He is in each final analysis drawn again and again to the insight that BIDs, “restore a level of community faith in collective efforts …” (Stokes, 2002, p. 234). This is where Justice begins his research by looking at the individual motivations within a social realist model and community causations within the social constructionist model of human motivation in collective action. Indeed, this explains well the roots of the PPP anxiety that pits individual vs community needs: the social realist perspective of individual motivation and rights, and the social constructionist perspective of contextual causation and communal authority. Stokes seems to lament the erosion of the social realist perspective in the BID process, but is eventually drawn to the potential of community (collective) action to extract investment, particularly social investment.

This PPP dilemma is also at the heart of emerging public administration practices, which is, I believe, initially based on a post-Enlightenment sensibility that there is a dignity of collective occurrence that informs the role of individuals, and may supersede the individual thereby providing the rights of individuality by context rather than by content. In this way, it may not be the content of our character, but the context of our character that provides a workable reality, one that sustains our investments, and provides measurable benchmarks of success based as much on quality of life indicators as on economic indicators. Economic quantifiable analysis of cooperative business models may indicate relative success if all indicators are equal, but tend not to indicate precisely a sense of community success or opportunities for collective action potential that individuals can act on with confidence. An individual’s access to community success appears to require an understanding of contextual evolution in defining collective social formations. This realm of understanding is a strong investigative goal of today’s public administration professional.

A second component of public administration as it emerges into the 21st century is new forms of social entrepreneurialism. The value of investing one’s time, skill, and passion into community endeavors can be primary to capital investment and often precedes it when public–private partnering occurs in the development of communities. Justice noted that, “self-governing BIDs proved more effective in mobilizing and coordinating a variety of resources …” (Justice, 2003, p. 348). Self-governing BIDs tend to provide more transferred public authority to self-determining community-based BIDs. This may be due to “the recognition by property owners that the value of their asset (i.e., their property) depends to a significant extent on the surrounding environment” (Houstoun, 2003, p. 6—report of North American BIDs by researchers from the London School of Economics), including the physical, social, and economic environment.

Both dissertations had to identify and tract the decentralization movement that BIDs represent. It appears that the further the decentralization evolves and the greater the polycentric movement is captured in community agreements (law), then the more successful the endeavor is. The caveat is that decentralization must attend to normative governmental elements if it intends to succeed, and this means that structured democratic methods must be employed as part of, but separate from, governmental structures. Democratic methods employ citizen participation formalities: participation that is reconstituted as collective action and communal authority. Externally controlled BIDs merely are extensions of existing government; but self-governed BIDs, which represent the large majority of BIDs, are additions to the governance process. Apparently, they tend to tap new fields of democratic initiative. In these new fields:

economic and social variables might not be the most appropriate place to look. Instead, an examination of how BIDs contribute to the less concrete variables such as community spirit and citizen involvement as well as increasing usage of public areas might prove more telling.

(Stokes, 2002, p. 70)

The BID model is essentially based on the private sector providing funds and technical expertise, and the public sector providing political legitimization and taxing powers; essentially a classic PPP. However, as in all PPPs, these roles can be exchanged. The BID avoids the problem of free riders, addresses upkeep of common areas, and provides place management by being formal special districts created by law. They are not associations or clubs; membership is mandatory not optional. In this way, “BIDs formalize the interests of the local community” (Stokes, 2002, p. 228). At the level of governance, BIDs represent two forces that could define benchmarks of success: citizen participation and professional management. If we accept as a definition that citizen participation is “the role of self-governance in promoting institutional legitimacy, the formation of common understandings be...