BIDS as a Superior Innovation Tool

Posted on Categories Milwaukee, Political Processes & Rhetoric, Public, Tax Law

Cities, which were previously facing population decreases due to urban sprawl, are now facing an urban resurgence or revitalization. Millennials and retirees have found a home in many of the urban centers of America. In 2010, 83.7% of people in the United States and Puerto Rico lived in metropolitan area and a 10.8% growth in metropolitan areas from 2000-2010.[1] However, with a large number of people living in the suburbs in previous decades, cities have not updated their neighborhoods to fit the needs and desires of its new residents. One of the tools to meet this need is a Business Improvement District (BID)

Business Improvement Districts are areas inside a municipality created for the purpose of developing, redeveloping, or maintaining a business area.[2] New Orleans was the first city in the United States to implement a BID, and it saw great success. [3] There are now more than 1,200 BIDs nationally. In 1984, Wisconsin created its BID statute. [4] There currently 34 active BIDs within the city of Milwaukee. [5]

One of the unique aspects of a BID is that it requires that one business owner in this area to come forward with a petition for the BID.[6] The planning commission designs its special assessment method and the implementation of the collected funds. If the owners of at least 40% of land value inside the BID raise an objection, it is vetoed. If the landowners do not veto the plan, then it then goes through the city legislative process and the mayor can approve it. The BID members have to renew the BID on an annual basis, unless there is an outstanding debt.

One of the areas in Milwaukee that has benefitted from the creation of a BID is the Third Ward. The Third Ward BID has been responsible for building two of the major parking structures, the continuation of the River Walk into the Third Ward, and the construction of the Milwaukee Public Market. [7] The BID also maintains the neighborhood’s physical appearance with landscaping, upkeep, and hangs decor throughout the neighborhood during the holiday season. There are a number of arts related events throughout the year, which are designed to bring people to the Third Ward.

The Brady Street neighborhood has greatly benefitted from its Business Improvement District. Although the Brady Street group and the Third Ward group are both BIDs, they have provided vastly different its benefits to the community, such as the creation of the numerous unique festivals that Brady Street hosts throughout the year. These unique festivals have helped to bring a unique character to the neighborhood that has made it a desirable location to live in Milwaukee.

What differentiates Business Improvement Districts from Tax Improvement Districts (TIDs) is who needs to be requesting its creation and who will pay for the benefits created. In a BID, the communities who will benefit from the changes are the ones asking and funding the changes. In contrast, TIDs can be created at the impetus of anyone: neighborhood businesses or groups, or governmentally generated. There is also a loss of tax revenue to the city during the early years of its creation. State law also caps the number of TIDs that can exist at any given time.   Additionally, the process is hardly adversarial. It consists of five officials, one from each of the bodies that will be sacrificing tax revenues during a seven-year term, and a fifth person whom the other four elect. Frequently, it will be the same individuals representing each entity. They can be the same people each time there is a proposed TID. Generally, prior to assembling the committee there is a planning phase where many of the decisions are made. Very few changes are made during the committee.

While governmental collaboration is not necessarily a bad thing, a process that is not adversarial could prevent a neighborhood or a parcel of land from having a highest and best use. There could be a community member or already active business owner who could develop a better use than the committee has generated.

Business Incremental Districts result in a better outcome for a neighborhood because the changes are being instigated the members of the community who know its needs. It is business owners who understand the market and what would drive more people to live and spend money in their neighborhoods.

[1] Steven G. Wilson, et al. Patterns of Metropolitan and Micropolitan Change: 2000-2010, United States Department of Commerce (September 2012).
[2] Wis. Stat. §66.1109
[3] Patricia E. Matson, Wilmington Downtown hopes to emulate Big Easy’s success, Lumina News (February 17, 2011).
[4] Business Improvement District No. 2, Historic Third Ward Association, Architectural Review Board, The Who We Are Guide (April 2008).
[5] Id.; City of Milwaukee, Business Improvement Districts. http://city.milwaukee.gov/bids (October 30, 2015).
[6] Wis. Stat. §66.1109 (2)
[7] Business Improvement District No. 2, Historic Third Ward Association, Architectural Review Board, The Who We Are Guide (April 2008).

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