Category: economics

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.

A recent quote about Akron, from the “62.4 Report” written by the Greater Ohio Policy Center, struck me: “While the city has done a good job of building and marketing itself as a great place to work and play, it has done less to boost itself as a good place to live.”

Akron, certainly, isn’t alone in the problem. Many cities, include Philadelphia where I live, focus a lot of their attention on boosting pop-up parks, a first-class restaurant scene, bike-share systems, and other programs to attract “millennials” (what I think is coded language for well-off, young, white professionals and not a generation as a whole).

City leaders and officials focus on these kinds of programs because they’re relatively cheap and easy to accomplish. Their quick to get done before the next election, and they make young so-called urbanists happy.

But, according to new research by Gary Sands of Wayne State University and Laura Reese of Michigan State University, these schemes may have little economic impact. What city leaders should focus on, instead, are things like education, safe drinking water, a good transit system, and public safety. If a city can’t get the basics right, it won’t be good places to live.

According to the Detroit Free Press, “[Sand and Reese] have completed new research that calls into question almost all of the economic development tactics that Rust Belt cities have thrown at decline over the years, including casinos and programs aimed at luring the so-called creative class. They found little or no relationship between those trendy investments and broader community-wide economic growth.”

The researchers aren’t arguing that pop-ups and bike lanes are bad, and neither would I. But it cities with a poverty or education crisis, they do little to improve the overall economy. I’m so happy to see city leaders and researchers starting to think longer into the future.

Sands and Reese are working on a book, which should come out in 2017, on this topic that I cannot wait to read.