Business Improvement District FAQs
What is a BID?
A Business Improvement District (BID) is a public / private partnership in which property and business owners elect to make a collective contribution to the maintenance, development and promotion of their commercial district.
The idea for BIDs is modeled on the shared maintenance program of many suburban shopping centers. Malls are typically single properties, managed by one entity that sublets the retail space to multiple tenants. Tenants pay a common area maintenance fee to underwrite services that enhance the appearance of common areas and provide cooperative advertising for the mall and its stores.
A BID works in much the same way. However, because the BID is set in an urban context, multiple property owners agree to the extra fee (assessment). Thus, stakeholders in a commercial district can align themselves in much the same way to improve their area.
What does a BID do?
Business Improvement Districts deliver a range of supplemental services in coordination with municipal services and invest in the long-term economic development of their districts.
What is a Special Service District (SSD)?
A special service district is “a defined area within the city where special services are rendered and the costs of the special services are paid from revenues collected from service charges imposed within that area.” An SSD may be established anywhere in a city but only business property (i.e., commercial, industrial, utility, or land zoned for commercial or industrial use) will be subject to the service charge. SSDs are commonly used in areas with a concentration of retail stores.
How is a BID different from an SSD?
BIDs are able to determine what contractor will be used for desired services; this is not the case in SSDs. For example, BIDs may also opt to hire non-city operated (third party) service providers. This may save the BID money overall.
Within SSDs, the city chooses which types of services may or may not be rendered. For example in Minneapolis, SSDs cannot spend assessed dollars on marketing or special events. Therefore, business owners have more of a say on the services provided within the BID over the SSD.
How is a BID operated?
BIDs are governed and operated by a board of directors that works for the businesses and with the city government. The board may be made up of various representatives of the businesses, residents, and city officials. BID members vote for directors. The majority of directors are typically property owners.
What services are provided by the BID?
- Street / sidewalk cleaning
- Graffiti removal
- Public Safety / Hospitality
- Public safety officers
- Visitor assistance
- Business Development
- Commercial vacancy reduction
- Business mix improvement
- Special events
- District public relations
- Promotional materials
- Holiday decorations
- Capital Improvements
- Improved streetlights
- Custom trash receptacles
- Directional street signage
- Custom newsboxes
- Flower boxes
- Planting trees/flowers
- Treepit maintenance
- Community Service
- Charitable events
- Homeless and youth services
How much is the additional tax?
Generally, the tax is assessed on the amount of frontage (along the main street) that the property has, it can also be assessed based on the square footage of the building, or the assessed value of the property. The tax is also levied according to the budget implemented by the BID operators. Overall, depending on the services that the businesses are in need of and/or willing to pay for.
Does the assessment increase every year?
This depends on the services that are needed within the BID. If the businesses within the BID feel they want/need more services, the budget will need to increase. Likewise, if it is felt that fewer services are needed, then the levied tax may remain the same or lowered.
What are the advantages that may result from this arrangement?
- a cleaner, safer and more attractive business district
- a steady and reliable funding source for supplemental services and programs
- the ability to respond quickly to changing needs of the business community
- the potential to increase property values, improve sales and decrease commercial vacancy rates
- a district that is better able to compete with nearby retail and business centers
Do different properties pay different assessments based on property type?
- Occupied commercial or industrial properties are assessed and pay the commercial rate
- Not–for-profit owned and occupied properties generally do not pay an assessment
- City, State and/or Federal government occupied properties do not pay an assessment
- Residential properties generally pay reduced assessments
- Vacant properties generally pay reduced assessments
Will city services be reduced if the BID is offering similar services?
No. The services provided by the BID are supplemental to the services provided to the district by the City. For example, if a BID provides sanitation services, it will still receive the same level of service from the Public Works as it did before supplemental services were added.