Advocating on Behalf of the Profession

Response by Larisa Ortiz

Principal, Larisa Ortiz Associates
Board Member, International Downtown Association

March 2016

Jackson Heights

Over the last thirty years, Business Improvement Districts (BIDs) have been lauded as useful and practical tools for improving our downtowns. Yet recently, they have come under attack from opponents who increasingly blame BIDs for rapid community change, i.e. “gentrification.” They say BIDs not only place an unfair financial burden on small businesses, they also prioritize the interests of property owners over all other players.

These arguments have been floating around for quite some time, but there seems to be an uptick in not-so-positive coverage these days. In October 2015, the documentary film “In Jackson Heights” was released. It explores the daily life of one of the nation’s diverse communities located in Queens, NY — where I happen to live. The film covered the critics of the local BID expansion effort, allowing for only a one-sided discussion of the links between BIDs and gentrification. A few weeks ago, The New Republic, a progressive commentary magazine, published an opinion piece that used the “In Jackson Heights” film as inspiration. The article’s title leaves little doubt as to where the author stands — "Business Improvement Districts Ruin Neighborhoods." And then in early March, John Oliver, the popular host of Last Week Tonight pointed his ire at "Special Districts," of which BIDs are a small subset.

As IDA members, we hear these arguments frequently. To be sure, there are ways in which the BID tool can and should be tweaked and improved to ensure transparency and accountability. But as an industry, we have a responsibility to stand up and respond when false information is paraded as fact.

First, I should state that the concerns of local businesses owners facing rapid neighborhood change are not without merit. When demographics shift, long-standing business owners sometimes struggle to meet the needs of a new customer base. However, in Jackson Heights, the new GAP and Banana Republic Outlets that recently opened are not the result of BID efforts. To suggest that a nonprofit organization, whose small $300,000 budget goes primarily towards cleaning, sweeping and graffiti removal, is the cause of dynamic shifts in the local economic conditions is beyond naïve. For those who know anything about this community, New York’s City’s affordable housing crisis is now at our doorstep. For the past few years, housing prices in Jackson Heights have increased rapidly as well-heeled middle-income households are being priced out of Manhattan and Brooklyn. People do not come to Jackson Heights for the quality of commerce on 82nd Street. They come here to avail themselves of the pre-war apartments at relatively affordable prices. Yet like any dynamic city, more people with higher incomes and different shopping needs are often reflected in an ever-evolving retail mix.

Unfortunately, many of the statements made by critics cherry-pick facts and statistics to suggest that BIDs are at fault for these kinds of demographic changes. For example, the New Republic piece simultaneously suggests that BIDs drive rapid gentrification while citing research that says the opposite. Columbia Professor Stacy Sutton published a piece a few years ago, wherein she found that small BIDs with limited budgets (and 82nd Street falls into this category) “tend to attract small independent retailers.” She comes to the conclusion that small “community” BIDs have limited impact when measured by employment and sales increases. Yet another BID study supports a very different conclusion. The study “uncovered evidence that BIDs…can help to protect Hispanic-owned businesses.”

These seemingly contradictory findings speak to two points. The first is that BIDs are only this — a funding mechanism. Ultimately, they are only as good as those who run and govern them, so in many ways they are the epitome of local governance. The second point is that BID impact varies considerably depending on the size of a BID’s budget, as multiple research studies have shown. Small BIDs with few resources have more limited impact while big BIDs with greater resources have more impact. Yet BIDs remain a valuable tool for even the little guys. In my own community I have seen this firsthand. The 82nd Street BID spearheads a festival called "Viva la Comida,” which spotlights the ethnic food niche that makes our community so special. This kind of marketing reinforces the appeal of Jackson Heights and the local businesses that make it unique.

This is not to suggest that the critics don’t have a number of valid points. The New Republic piece suggests that “once a BID is in place, it’s incredibly difficult to dissolve.” That may be true in New York, where dissolution can only be done by legislative measures (good luck with that), but it is patently untrue in many other states, where renewal is required on a regular basis. Renewal offers communities an opportunity to weigh in on the BID’s impact – much like elections allow voters opportunities to define the direction of their government entities. Unfortunately the author does not seem to be aware of the fact that BID-enabling legislation differs in every state, and in fact are subject to formal renewal in many places. This kind of regular check-in ensures BIDs remain motivated to monitor and share the impact of their efforts, while giving participants an opportunity to freely determine whether to continue their investment.

We should also keep this in mind: BIDs were a response to changing shopping habits that pitted well-organized single-owner shopping centers against aging downtowns. In this day and age, asking for heightened city services and public expenditures is akin to asking for a miracle. Yet districts that fail to remain competitive see disinvestment, business closures, and a shrinking tax base. As such, BIDs are a practical tool that ensures an even playing field. BIDs are a simple tool that offers property and business owners a say in precisely what kinds of improvements they need to remain competitive. The obligatory element is simply recognition of the challenges of freeloaders. Without a legislative solution that requires participation by all, which is what BIDs provide, there will always be those who seek to exploit the contributions made by others. This is the “tragedy of the commons” that we all know so well. Our downtowns — the civic hearts of our communities — deserve better than that.

As a member of IDA, I am proud to represent an organization that is spearheading better, more in-depth research into the impact of BIDs. As an industry, we must be at the forefront of research that informs best practices, develops and shares strategies for benchmarking impact in a way that ensures BID resources are wisely spent. We must also insist on good governance strategies that champion transparency and accountability among BIDs. So let’s not throw the baby out with the bathwater. Even the critics acknowledge that BIDs have the potential to play a positive role in community driven improvements.