Tuesday, April 5, 2011

Communicating the benefits of an Improvement District

Forming a new Business Improvement District (BID) can sometimes be a long slogging uphill battle where District advocates devote countless unpaid hours in conversations with businesses and property owners to gain their input and approval. Building support for an Improvement District often means educating stakeholders on the benefits of the District and ensuring that all District advocates have a clear and concise set of talking points to use during outreach and when speaking to the press. Think of this like a political campaign - develop a set of talking points that everyone uses and stick to the script!

Below are a set of suggestions for how to go about introducing and educating your local stakeholders on the benefits of an Improvement District.

Not everyone knows what an Improvement District is, so put it in context. Here are a few examples.

Define a BID. A BID is an organization of property owners within a prescribed area who assess themselves to raise money for services and improvements that enhance business profitability and property values.

Compare a BID to something they know. There are two options here. For residents, you can suggest that BID’s are similar to a Home Owners Association, whose fees are used to maintain the appearance of common area assets in order to maintain property values. For other audiences, you might say that BID’s are similar to Shopping Mall Common Area Maintenance (CAM) charges. CAM charges are used to maintain and enhance the shopping environment for the benefit of businesses in the center and to ensure the value of the asset over time for the owner.


Communicate the need to maintain and enhance the district. In some districts where imminent decline is a concern, you can share your belief that a failure to invest now in improvements to the district puts property owners and businesses at even greater risk for disinvestment and falling property values.
Communicate that the BID is a mechanism by which more funds can be leveraged. Professional staff in place mean that someone is able to apply for additional grants and advocate for additional funds, both public and private.

3. SHARE BID FACTS....here are a few....
  • There are over 1,500 BIDs throughout the United States and counting.
  • The problem with voluntary groups is that there is often a 'free rider' problem. A mandatory assessment ensures that everyone is required to contribute, keeping contributions modest and fair.

This story will differ by community, but find a local example of a similar district that will resonate with your audience. Arrange for a site visit and tour if possible.


In many cases, the assessment per property owner is modest. Breakdown the cost by month or day, and compare it to the return on investment should their property value increase incrementally.


The most effective BID's have developed a set of services and improvements that result from a consensus achieved through significant outreach, including focus groups, interviews, and surveys that allow for input from business owners, government officials and property owners. If you have done your homework, selling the BID services package will be more about telling people what they already want to hear.


Legislative Challenges to Special Improvement Districts in New Jersey

Improvement Districts (BIDs, SIDs, SSAs, etc) are seeing challenges in New Jersey, where a new bill [A-3859] has been proposed that would require the reauthorization of a special improvement district (SID), every ten years by the majority of affected property owners. According to a legislative update from the New Jersey Managed Districts Association, the bill was amended on the floor of the Assembly and will be posted again for a vote by the full Assembly at its next voting session sometime in May. The bill in its original form would make it easy to dissolve SIDs by effectively counting absentee ballots as 'no' votes. The ammendments to the bill, offered in the last legislative session, address this issue, but also shorten the reapproval timeframe to 5 years from 10 years.

For more information see: Legislative Alert, New Jersey League of Municipalities [3/11]

Monday, April 4, 2011

The "Small Box" Trend Requires Some Rethinking

It's exciting to see more and more news covering what I call the "Big Box to Small Box" trend. ["Big-Box Giants Downsize to Drive Productivity with Smaller, Urban Stores"; Retail Traffic, 3/30]. Clearly retailers are getting over what they once considered major obstacles to investing in urban markets. A 2004 survey by the International Council of Shopping Centers and the Business for Social Responsibility found that 88% of retailers cite 'insufficient concentration of your target customer' as a factor influencing the failure to establish stores in underserved markets. Seven years later, the growing interest in urban markets suggests that many retailers are rethinking this long-standing misperception. We can now add Old Navy, going from 25,000 sf to approximately 10,000 sf, and Sports Authority, going to a 12,000 - 15,000 sf model called S.A. Elite, to our growing list of retailers exploring urban formats.

Yet commercial district managers know that challenges remain. Big box retailers exploring "small box" opportunities in urban markets must overcome concerns that still keep them out of urban markets. As one Walgreen's executive shared with me a few weeks ago, their concern is less about product disappearing through the front door with customers, than about product disappearing through the back door, i.e. with employees at checkout or during shipping. Proper surveillance and inventory control can help to address these issues.

Retailers also have to get used to lack of parking. The ICSC survey found that 83% of retailers are concerned about 'inadequate parking'. Yet, the best locations in dense urban markets are not typically known for easy automobile access or ease of parking. Consider Bed-Stuy in Brooklyn -- the subway stop at the intersection of Nostrand Avenue and Fulton Street sees 12,800 boardings a day in a community whose retail leakage is estimated at $785 million a year. Yet amazingly, there is no national drugstore at this busy intersection.

And we all know that crime still scares away some retailers. 93% of retailers cite crime or the perception of crime as a reason for their decision to steer away from urban markets. This suggests that our jobs as commercial district managers will continue to play a significant role in improving the reality and perception of crime within our districts. Bed-Stuy Gateway Business Improvement District is tackling this challenge directly by establishing a Public Safety and Environmental Control program that identifies hotspots of criminal activity and works closely with law enforcement to develop strategic interventions, as Colvin Grannum, President and CEO of the Bedford-Stuyvesant Restoration Corporation notes in his regular Bed-Stuy Patch column.

As the retailing industry considers urban markets, they have got to realize that many issues related to the shopping environment are completely outside of their control, and that commercial district managers can play a role in maintaining the standards that many of these retailers have come to expect in more controlled shopping environments. Whether this includes managing public safety concerns, maintaining clean streets, or addressing the district vacancy rate, the role of commercial district managers will become increasingly critical to ensuring that the shopping experience inside the store is matched by the shopping experience outside of the store. Some industry experts posit that 30% of a shopper's desire to return to a store is based on what happens outside the store. If this is true, then retailers can ill afford to be lax about addressing the needs and participating in the efforts of their local commercial district management entity.