With an estimated 700 improvement districts throughout North America, the BID phenomenon transcends New York City.(3) In New York State, the predecessors of today's BIDs were established in the 1970s, when several cities created special districts which collected assessments from property owners to pay for pedestrian malls and street improvements. Fourteen of these individual Special Assessment Districts (SADs), four of which were located in New York City, were created by the New York State Legislature from 1975-78.(4) New York City's SADs, which still exist, are very similar in operation to the current BIDs.(5)
In 1980, the New York State Legislature passed enabling legislation allowing cities to independently establish BIDs.(6) Pursuant to such legislation, in 1982 Local Law 2 was passed, which authorized the creation of BIDs in New York City.(x) Since the passage of this legislation no additional SADs have been created and the original four SADs have been joined by 29 new BIDs. In FY '95 these 33 BIDs and SADs, (hereinafter referred to collectively as "BIDs"(7), occupied approximately 550 blocks throughout New York City.(8) The charts on the following pages illustrate the growth of BIDs during the past 18 years and a borough breakdown of BIDs and their assessments.
See The Growth of BIDs
See BIDs: Breakdown by Borough
During FY '95, New York City's 33 BIDs budgeted approximately $42 million dollars to provide a range of supplemental services including sanitation, security, maintenance, and the promotion of local business.(9) In addition, the Grand Central and 34th Street BIDs allocated approximately $5 million in additional revenue from the sale of more than $54 million in bonds, and the Bryant Park BID allocated more than $4 million in additional revenue from a loan and contribution, to support and provide capital improvements within their districts.(10)
During the last several years, numerous groups have commenced the process of establishing their own BIDs. In July, 1995 the Sunset Park BID began operation, and, according to DBS, as of September, 1995 three additional BIDs were in the approval process, 18 potential BIDs were in the planning process and 18 other groups had expressed an interest in establishing BIDs. Thus, within the next several years New York City could be home to an additional 39 BIDs. Furthermore, during FY '95, 12 existing BIDs requested increases in their assessment levels for FY '96.(11) The maps on the following pages depict the locations, by borough, of the 34 existing BIDs and the additional 39 potential BIDs.
Note: The maps are unavailable to be reproduced herein.
The sponsoring party must participate in extensive local outreach, which normally takes longer than one year. This process is intended to make all property owners, commercial tenants, residents, and elected officials within the BID boundaries aware of the proposed BID and to provide them with an opportunity to participate in the planning process. According to DBS, this process commences with the creation of an outreach plan which lists the planned outreach activities and a time line for their completion. These outreach activities, which must be documented, include the creation of a data-base of properties, property owners and merchants within the proposed BID; noticed meetings; phone calls; letters; and door-to-door canvassing.(13)
The sponsoring party must demonstrate to DBS that all property owners and commercial tenants have been afforded ample opportunity to discuss the proposed BID including its budget, assessment, services, and boundaries. According to DBS, in many of the recently created BIDs, sponsoring parties have been required to provide signed letters of support from property owners. Although there is no formal vote required of property owners for the creation of a BID, according to DBS, outreach efforts must continue, "until enough support has been generated and there seems to be general consensus on the boundaries, services, and budget of the proposed BID."(14) There is, however, no threshold amount of property owners who must consent to the creation of the BID.(15)
As part of the outreach process, a district plan is prepared which contains a detailed description of the proposed BID including: boundaries, scope of services, budget, assessment formula, other funding sources, and management information.(16) The assessment levels and assessment formulas vary for each specific property type. However, BID boundaries are drawn to maximize the number of commercial property owners and commercial tenants -- those groups intended to primarily benefit from the BID. As a result, commercial property owners pay the highest assessment rates, with residential property owners in almost all cases paying nominal rates, and not-for-profit corporations and government facilities rarely paying any assessments.(17) Assessment rates are derived from several possible formulas which take into account the property's square footage, frontage, or assessed valuation. In no event shall the total assessment levied against the real property within a district be greater than 20% of the general City taxes levied in that year against such real property.(18) Property owners are allowed to pass this assessment along to commercial tenants if the lease contains a pass-along clause.(19) Beyond these assessments, BIDs acquire supplemental funds from surpluses being rolled over from one year to the next, or by obtaining grants, loans, or selling bonds.(20)
Once DBS conducts its review and concludes that the district plan is appropriate for an area and has strong local support, the plan begins a structured approval process involving City and State entities. According to the City's BID legislation,(21) the district plan must first be submitted by DBS to the City Planning Commission, which forwards a copy of the plan within five days to the City Council, to the Council Member or Members representing the Council district(s) in which the proposed BID is located and to the community board(s) in which the proposed BID is located. If the district plan involves properties located in two or more community districts, it is sent to the respective Borough Board and Borough President. Each community board must notify the public of the proposed district plan in accordance with the requirements established by the City Planning Commission and may conduct a public hearing and submit a written recommendation to the City Planning Commission not later than 30 days after receipt of the district plan. The City Planning Commission reviews these recommendations, holds a public hearing, and issues a report certifying its unqualified approval, disapproval, or qualified approval with recommendations for modification, of the district plan. The City Planning Commission must submit its report to the Mayor, the affected Borough President, the City Council and the Council Member or Members representing the Council district(s(x) in which the proposed BID is located together with any community board recommendation, within 60 days from the expiration of the community board's period for reviewing the plan and submitting recommendations. A copy of this report together with the original district plan must be transmitted for filing with the City Clerk.
After the filing of the district plan in the City Clerk's office, the City Council may adopt a resolution setting the date, time and place for the public hearing on the local law establishing the BID. The resolution also directs that all notices required under the BID law regarding such resolution be properly given by DBS and the BID's District Management Association (DMA). Any owner of real property deemed benefited, and therefore within the BID, objecting to the district plan must file an objection at the City Clerk's office within 30 days of the conclusion of the hearing held by the City Council.
If owners of at least 51% of the assessed valuation of all the benefited real property situated within the boundaries of the BID, as shown upon the latest completed assessment role of the City, or at least 51% of the owners of benefited real property within the BID, file objections to the district plan with the City Clerk within the 30 day objection period, the BID will not be established. If the number of objections required to prevent the establishment of such BID are not filed, and the City Council concludes that (i) all notices of hearing required under the BID law were properly published and mailed; (ii) all the real property within the BID boundaries benefit from the establishment of such BID, except as provided for in the district plan; (iii) all the real property benefited by the BID is included within the BID; and (iv) the establishment of the BID is in the best interests of the public, the City Council may adopt a local law approving the establishment of the BID.
Within 30 days after the full City Council has adopted the local law establishing the BID, the Mayor signs such local law. The Mayor must then submit an application for the BID to the State Comptroller for review and approval. Within 60 days of the receipt of such application, the State Comptroller must issue its determination. If the State Comptroller approves the establishment of the BID, the BID becomes effective.
After the entire approval process is completed, which typically takes 18 months to two years, a contract, generally for a term of five years, is executed between DBS and the DMA.(22) Under the terms of this contract, the DMA is considered the contractor which is responsible for providing the supplemental services listed in the district plan, and DBS is required to oversee and monitor the activities of the BID.
The DMA is permitted to sub-contract out any services, including managerial services, to other organizations, and a district manager is hired to supervise the day-to-day administration of the BID. In all cases, however, the board of directors of the DMA, which is composed of local property owners, merchants, residents, and appointees of the Mayor, local Council Member (or the Speaker of the Council if the BID is located in more than one Council district), Borough President, and City Comptroller, must retain control over all BID funds.(23)
Once operational, BID assessment bills are mailed annually by DOF to property owners. Properties whose assessed value is less than $40,000 make quarterly payments -- July 1st, October 1st, January 1st, April 1st -- while properties whose assessed value is greater than $40,000 make payments twice a year -- July 1st and January 1st. The collected money is provided by DOF to DBS which distributes bi-weekly disbursement checks to all the BIDs.(24) BIDs use these funds to perform the services agreed to in the district plan. Additionally, the BIDs are required to hold an annual meeting at which the budget is presented, and must provide an annual report and annual audit to DBS.(25) The chart on the next page details BID assessments and budgets for FY 95.
Note: the chart is unable to be reproduced herein.