How to Increase the Formation of Bids in the Inner City

Written by Amanda Maher

Despite a municipality’s best efforts, a downtown commercial district often requires extra resources to remain clean, safe and economically strong. Sometimes Chambers of Commerce step up to make improvements; sometimes Main Streets organizations do the same. But in the absence of an organization solely devoted to such efforts, these organizations often lose steam as they lose funding.

That’s what makes Business Improvement Districts, or BIDs, so appealing. In these geographically defined areas, landowners or business owners are levied a special assessment to fund projects within the district’s boundaries. With local government increasingly less able to fund necessary improvements, BIDs are growing in popularity: in the past decade alone, more than 600 new BIDs have been established in cities throughout the country.

But BIDs, which usually require the consent of the majority of property owners to agree to the additional tax, can be difficult to establish. For her doctoral dissertation at the University of Michigan, Wonhyung Lee analyzed why certain neighborhoods fail to form BIDs and what factors can facilitate successful BID formation in low-income, multiethnic neighborhoods.

“It is an important question for equitable urban management because disadvantaged communities that struggle with social problems as well as with the establishment of economic tools such as BIDs could grow even more isolated in service delivery and economy development,” Lee wrote. “I specifically examined the possibility that areas with inconclusive or ineffective efforts for BID formation may disproportionally be marginalized neighborhoods, which can greatly benefit from BIDs.”

For the study, Lee takes an in-depth look at the MacArthur Park and Byzantine Latino Quarter (BLQ) commercial districts in Los Angeles. Despite strikingly similar demographics, which include high rates of poverty and immigrant populations, BID formation in each neighborhood was drastically different. The BLQ BID was first established in 2003 and renewed in 2014, while the BID in MacArthur Park still struggles to get off the ground.

Her study, which was recently published in the Urban Affairs Review, attributes the districts’ BID experiences to four primary differences:

(1) Leadership. In BLQ, a strong grassroots effort to form a BID was led by the religious community as far back as the 1990s. The impetus for the MacArthur Park BID was a City Council effort in which consultants were hired to launch a community engagement strategy—a process that failed to secure the buy-in of local property owners.

(2) Organizational resources and connections. The BLQ BID benefited from strong local ties, including the support of the Pico-Union Neighborhood Council and the Los Angeles Neighborhood Initiative, which now manages the BLQ BID. MacArthur Park lacked organizational capacity and community leadership.

(3) Residents’ activism. BLQ’s grassroots strategy created a welcoming atmosphere for residents to participate in local community development; MacArthur Park had few venues for resident participation in community affairs. What’s more, the knowledge gap between community groups led to disparate participation in local governance.

(4) Attitudes toward diversity and ethnicity. The BLQ BID had an explicit goal for engaging those from diverse backgrounds which included multilingual outreach, while MacArthur Park did not. “Although both MacArthur Park and the BLQ are multiethnic immigrant neighborhoods, the BLQ has been more active in creating an environment that embraces the multiethnic groups of the community,” Lee writes. MacArthur Park experienced conflicts over ethnic identity, which prohibited collaborative, participatory planning.

Lee’s analysis confirms that it’s not only economic characteristics of the property and property owners within a BID that matter, but also the social and political atmosphere. The structure of community organizing matters just as much as the organizing itself. The BLQ BID experience provides a framework for organizing multiethnic community stakeholder to cooperate around a shared vision to achieve a collective goal—such as improving local commercial districts.

If efforts are most successful when driven at the community level, what is the role of the public sector? Lee suggests that public officials support community building efforts by investing in leadership training, developing meaningful relationships with community organizations and holding educational sessions or social events to raise awareness about the problems the community efforts hope to address.

Doing so will enable BIDs to expand their economic development roles and serve as an intermediary for community development in inner city neighborhoods.