Reducing Overhead Costs for Business Improvement Districts

A building along Fulton Street in downtown Brooklyn, NY. The district is managed by the Fulton Mall Improvement Association, one of three BIDs run by the Downtown Brooklyn Partnership.

The challenge of running a successful Improvement District is like that of any other non-profit. Finding qualified, professional, capable staff can be a challenge when budgets are tight and salaries, particularly among smaller Improvement Districts, are low. Yet staffing costs and overhead take up a significant chunk of expenses - and the smaller the organization the bigger the payroll cut.

One New Jersey city is taking a bold step to reduce these overhead costs by absorbing their Special Improvement District (SID) into another public agency. According to the City of Bayonne's Business Adminstrator Steve Gallo, the Town Center Management Corporation, the entity that runs the SID, "spends over half its budget on administrative costs such as employees, and consultants. By downsizing and combining operations with the Bayonne UEZ, more resources will be available for more programs within the district." Read more: "City consolidates agencies that oversee business districts"

There are pros and cons to this approach. Absorbing the Improvement District into another entity reduces overhead, but there is also the risk that it will reduce the independence of the downtown organization to advocate for downtown interests without competition or conflict of interest. When staff is shared with other initiatives, the focus on downtown can shift depending on the political winds.

Other cities are also looking at ways to reduce overhead for small BID's as well, testing concepts that would allow multiple these organizations to exist under a single non-profit umbrella, what we might call a "BID light" approach. One example is the Downtown Brooklyn Partnership which manages three Business Improvement Districts located in close proximity to one another. This allows for the sharing of contracts, overhead and staff in a way that results in improved services, at a lower cost, for all three districts.