Wednesday, January 4, 2012

To hire or not to hire...consultants for Business Improvement District formation

Approximately 2/3 of BID formation efforts used consultants to help with planning. Typically, consultants are hired to ensure that the effort is led or advised by individuals with expertise in BID formation...and to ensure that the local partners do not need to reinvent the wheel. Depending on the level of local capacity, consultants can be hired to lead the effort (effectively playing a role similar to paid staff) or they can simply provide guidance depending on the staffing and capacity of the local organization leading the effort.

Some typical consultant engagements include:
  • Formulating a District Plan or BID Business Plan
  • Defining, and helping to refine the proposed BID area
  • Running mock assessments
  • Facilitating focus groups and surveys with local stakeholders in an attempt to inform BID programmatic activity
  • Marketing, communication and public relations
Jumping into a consultant engagement is a significant commitment. A British study found that BID planning can take 1-3 years, and depending on the effort, ended up costing as little as $6,500 or as much as $500,000 for a full blown, multi-year planning effort. The media expenditure for BID formation was about $78,000 US Dollars.Note

 In the United States, funding for BID formation efforts have typically come from public sector sources, usually CDBG (which as we know are drying up). In other places, sources include private sector contributions. In El Salvador, San Salvador, where I was part of a team that just completed a BID formation effort, seven highly capitalized local property owners and developers came together to fund the effort entirely on their own.

So what you should know before starting a BID Planning Effort?
  • Look at your state enabling legislation. Take the time to find it and ready it. What are the obstacles to BID formation? Depending on the political environment at the time of passage, enabling legislation was sometimes designed to prevent BID formation, rather than encourage it. In Rhode Island, for instance, the BID law specifies that only municipalities with populations of 500,000 or more can form BIDs. Well guess what, only the capital, Providence, falls in that category!
  • Be prepared for the long haul. These things take time, on average 1-3 years. And inf fact, it is not uncommon for BID formation to fail the first time around. So take a moment to consider whether your organization has the capacity (read STAMINA) to launch a formation effort. Winning over property owners and business owners is a hands-on task - and no short cuts are allowed! This means one-on-one meetings with key players, lots of public meetings, and outreach, outreach and more outreach.
  • Successful BID formation often follows smaller efforts that have taken hold in the community. Are you building off of some small, successful project that has helped to garner goodwill? If not, consider starting there. Successful BID formation is often built on the message that the BID will continue to build upon existing successful efforts. The difference is that now, these efforts will have the staff and resources to make them even more successful than they already are. This helps reinforce the sense that the BID assessment will be well utilized and won’t result in waste.
  • Don’t just engage the public sector, partner with them. The early, active and engaged public sector is typically a critical component of BID formation efforts. BID formation is more likely in places where a local public agency is supporting BID development, through funding for planning and/or on-going technical assistance.
  • Keep your footprint tight, if you can. Is your business district well defined – both geographically and from the perspective of your typical customer? If your business district is spread out geographically, it may be more challenging to offer cost effective services like sanitation and maintenance. It can also be more difficult to establish a unique, unifying identity for visitors.
If you think you are ready to take the plunge, there are lots of resources out there to help you take the next step.


  1. Hiring experienced consultants with special, in-depth knowledge of a subject is the most cost-effective way any BID can establish itself and grow a neighborhood, downtown district or community. You get objectivity, wide experience across other similar situations, creative "out-of-your-own-backyard" thinking and contacts from professionals whom you could not afford to hire full time. And they come without the office space, benefits and other employment expenses. Consultants also get results, that's the way they get paid, retain clients and build their reputation so they have everything to gain from accomplishing your objectives. It's not just a comfortable salaried job to them in a nice office. In my own case I am a restaurant consultant with 30 years experience working in the business and opening restaurants so I know what it takes to make them successful. I am also a licensed broker specializing in restaurants and that's a business where you only get paid commission for results, doing deals. Also, restaurants and bars are the businesses that are in the vanguard of developing depressed neighborhoods and revitalizing downtown areas. After bars and restaurants have paved the way along come other retail businesses and real estate investment. It's a familiar pattern seen in many redeveloped urban areas. I consult currently for Bryant Park, 34th Street Partnership and Chelsea Improvement Company, all in Manhattan. Working with my clients we have accomplished a lot, for example going from one full-service restaurant in the 34th Street Partnership BID to over twenty now with many more casual eateries including national names. I have also advised my clients on developments involving restaurants in Boston, Philadelphia and currently in Newark, New Jersey, where a restaurant will spearhead the revitalization of the forlorn Military Park and ultimately, central Newark.

  2. I agree that hiring consultants is usually an effective strategy - but sometimes organizations hire consultants as an avoidance strategy (i.e no can agree on a plan of action and hire a consultant to put off or avoid decision making) and/or lack the capacity to act on consultant recommendations because of limited administrative capacity. As a consultant myself, it comes down to the fact that some clients are more poised to really use your services effectively than others!

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