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The Oaklandside often reports about the business improvement districts operating in our city. We’ve chronicled their efforts to help small business owners stay afloat during the pandemic, written about their role in the city’s “flex streets” initiative, reported on their opposition to outdoor vending at Lake Merritt, and covered recent efforts to create a new business improvement district in Chinatown. Meanwhile, business improvement districts for East Oakland are being discussed, and small business owners in Fruitvale are contemplating life without one for the first time in 20 years.
Business improvement districts will continue to play a role in the local economy. But what exactly are they? What services do they provide, and how are they funded? Who decides which neighborhoods get one, and how are they governed? Are they universally considered a good thing, or do they have their critics?
Because we plan to continue reporting about business improvement districts, also known as BIDs, we wanted to answer these and other questions for our readers. If you have additional questions that we didn’t get to or reporting suggestions related to our city’s BIDs, you can email me at firstname.lastname@example.org and I’ll look into it.
What is a business improvement district?
Business improvement districts, also sometimes called community benefit districts, provide services in a specific commercial district or neighborhood. They are public-private partnerships because they are typically managed by a non-profit or for-profit entity composed of private business and property owners, but require local government approval to operate.
The state of California has allowed cities to create business improvement districts, formerly known as business improvement areas, since 1989. Oakland approved its own ordinance establishing guidelines for BID formation and governance in 1999. Since then, business improvement districts have been created in nine Oakland commercial areas: Lake Merritt-Uptown/Downtown, Fruitvale, Jack London, Koreatown-Northgate, Laurel, Lakeshore, Montclair Village, Rockridge, and Temescal-Telegraph. Oakland also has a citywide tourism BID managed by the nonprofit group Visit Oakland.
What do business improvement districts do?
Business improvement districts survey business and property owners in a neighborhood to identify what types of services they need. In Oakland, those often include things like litter removal, graffiti abatement, security patrols and other neighborhood safety efforts, and marketing support.
Savlan Hauser, founding executive director of the Jack London BID, said illegal dumping cleanups are frequently requested by property owners in that district. “We do thousands of pickups of illegal dumping a year,” she said. The group has also advocated for the creation of community cabins and a trailer to provide free showers to unsheltered persons living at encampments in the district.
BIDs sometimes also employ residents to perform tasks like litter removal, or even act as neighborhood safety patrols.
Carl Chan, president of the Oakland Chinatown Chamber of Commerce, which will manage the new business improvement district planned for that neighborhood, cited frustration over the city’s inability to provide basic services or address residents’ public safety concerns as the main reasons for forming the BID. “With the decline in services being provided by the city, we felt that other districts with BIDS were doing a much better job in terms of cleanliness, graffiti removal, and public safety,” Chan told The Oaklandside in July.
Business improvement districts are also information sources for local business owners. To help its members during the pandemic, the Fruitvale BID launched a “response and recovery” campaign with a small business helpline (510-535-6916, available Monday through Friday), offering referrals for things like tax filing, accounting, human resources, and legal services.
BIDs also host community events featuring businesses in their district. For example in Oakland, the Telegraph-Temescal BID made use of the city’s Flex Streets program to host a “Picnic on Telegraph” event last October, which closed off Telegraph Avenue from 39th Street and 51st Street for outdoor dining and retail. Since its inception in 2014, the Jack London BID has hosted an annual block party on Madison Street between 2nd and 3rd Street. The Koreatown-Northgate BID facilitates “First Fridays,” a popular outdoor market and street fair. The event has been shut down during the pandemic, but organizers hope to restart it this fall.
Some BID activities have been criticized
Although many of the activities performed by business improvement districts are uncontroversial, some BIDs have come under scrutiny in recent years for their political advocacy around public safety issues.
A 2018 legal study conducted at UC Berkeley found that some BIDs have used their resources and political influence to advocate for more policing and policies that result in the removal of unhoused people from public spaces. The report’s authors studied 189 BIDs, including the Uptown-Downtown and Jack London improvement districts in Oakland.
More than two-thirds of BIDs surveyed, including the Uptown/Downtown association, were found to use paid or volunteer security patrols. Over 80% of all BIDs surveyed identified “panhandling and loitering” as one of the most important safety and security issues they face.
Some critics of BIDs have argued that the benefits derived from them are unequally distributed. “Their promise of clean streets masks what they really do: serve the narrow interests of some groups at the expense of all the rest, with commercial tenants always ending up on the losing side,” wrote the economist Moshe Adler in a 2000 op-ed in the New York times.
How BIDs are funded
From a revenue standpoint, there are two kinds of business improvement districts. The most common type raises money from property owners through assessments, which are similar to a special tax. All but three of Oakland’s BIDS are funded this way. The amount each property owner is required to pay depends on the square footage of the land and buildings they own in the district. Even government entities like the city of Oakland, BART, and Oakland Unified School District are required to pay assessments if they own property in this type of business improvement district. In return, property owners have more control over what services are offered, and their votes determine whether the BID is established and renewed.
The second type of BID raises money directly from businesses operating in the district, instead of property owners. This could include small retail shops, gas stations, and restaurants. The three Oakland districts that currently utilize this model are the Montclair Village Association, Rockridge District Association, and the city’s tourism BID, which is managed by the non-profit corporation Visit Oakland.
The Montclair BID was one of the first established in Oakland in 2002, although the neighborhood previously had a merchants association, which was founded in 1948. Daniel Swafford, the BID’s executive director, said the group has always been business-led and the board of directors is composed of business owners rather than property owners. “I think there’s a lot of advantages to doing that if you think about who’s there everyday, who’s on the street, who best knows how to activate those resources—it’s the business owner,” Swafford said.
All property or business owners in a given district, depending on the type of BID, are required to pay assessment fees to support the BID.
How BIDs are established
Several steps need to be taken to establish a business improvement district in Oakland. First, a petition must be submitted to the city, signed by 30% of the property or business owners in the proposed district, depending on the type of BID. The petition must include a map showing the proposed district’s boundary lines, a list of all the properties that will pay a fee to fund the district, a summary of the proposed BID activities, improvement projects, and services provided, and a proposed first-year budget.
Once a petition is submitted, the City Council must pass a “resolution of intention” to establish the BID that includes the name of the proposed district, publicly owned parcels of land that can be assessed, the types of improvements and activities to be funded, and the total amount of money to be assessed. The council then must schedule a public hearing on the proposed assessment amounts.
Next, the city administrator will issues a preliminary report that includes the plans and specifications of the proposed activities and an estimate of the cost and expenses, along with a certified engineer’s report confirming that each parcel within the proposed district (if it will rely on property assessments) is being charged a fee in proportion to its size.
Any person affected by a proposed assessment on a land parcel can protest in writing to the city administrator’s office, and the City Council is required to set a time to hear arguments, according to the city’s ordinance governing BIDs.
Lastly, the City Council must adopt a resolution to establish the new BID, and every property or business owner in that district is given an opportunity to vote. If a simple majority votes to approve, then the process moves forward and the City Council gets to make the final decision during a public meeting. If a majority of voters are opposed, then the process ends and the BID isn’t established.
Once approved, BIDs must be renewed every 10 years. The nonprofit corporation or committee that runs the BID must again submit a petition showing support from 30% of property owners or businesses in the district. Next, 50% of property or business owners in the district must vote to approve the BID’s renewal.
Most of the time, renewals are non-controversial. But sometimes districts are shut down. This was recently the case in Fruitvale, where property owners voted in July to not renew the neighborhood’s 20-year-old BID, which is set to expire on January 1, 2022. Armando Hernandez, vice president of community programs at Unity Council, said it was a challenge over the past year to contact property owners and convince them to continue to pay for BID services such as litter and graffiti removal. This was especially true of landlords who own property in Fruitvale but don’t live there, according to Hernandez.
“We had a huge challenge because many of them don’t see the benefit, may not know the benefit, or may not want to pay extra,” Hernandez said. “They want to pass the extra cost onto the business owner.”
How BIDs are governed
Business improvement districts are governed by a board of directors that is typically made up of commercial property and business owners. Board members can also be neighborhood residents, depending on the specific bylaws of each BID. Board members hire staff to oversee the day-to-day operations of the BID.
Bylaws determine how board members are elected and dictate how funds for the district will be managed, and are drawn up and included with the BID petition when it’s first submitted to the city. Daniel Swafford, executive director of both the Montclair Village BID and Laurel District Association BID, said board elections are held annually for each of those two districts. A nominating committee is established to select candidates, then ballots are distributed to property owners or business owners, depending on the BID’s structure.
Although BIDs “are technically not a government organization,” said Swafford, “there is a use of public funds,” and as a result, BIDs are subject to the Brown Act, which requires that certain aspects of meetings be made public.