The Problem With Business Improvement Districts

Business Improvement District
A BID employee cleans a city sidewalk (credit: Soapbox Media)
Business Improvement Districts (BIDs) usually take on services, such as street cleaning, security, beautification and, sometimes, use of public space in an urban shopping district. If enough business owners in a district don’t oppose the creation of the BID, the city passes legislation to allow its creation.

On the surface BIDs sound great: streets are cleaned, storefronts improve, lighting and streetscapes are installed all in hopes to bring in more shoppers to the district. But there are a number of problems with BIDs.

For one, BIDs are an undemocratic, quasi-public nonprofit with a board typically made of business owners, some of which may not live in the district they control. Max Rivlin-Nadler’s scathing piece on BIDs for the New Republic points out, “Once the city passes legislation allowing the BID, the area affected exits democratic control, with major decisions—including street cleaning, homelessness outreach, and use of space—determined by the BID.”

What’s more, the effect that BIDs have on current shop owners can be devastating. BIDs can bring about some of the worst aspects of gentrification, like the proliferation of chain stores and restaurants. Rivlin-Nadler continues, “BIDs have been found to drive up commercial rents in the immediate aftermath of their formation; they also levy a mandatory fee from property owners every year, a cost that’s usually handed down to tenants.”

Even worse, BIDs, according to an study in the Journal of Planning Education and Research, “have indifferent impacts on economic growth,” and concludes that “BIDs may not always be the best policy for areas with significant levels of independent retail.”

BIDs are rapidly becoming the go-to tool for urban renewal across the United States. There are now more than 1,000 BIDs in almost every state. If this trajectory continues, we must democratize BIDs, protect small businesses and use them only where needed.

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