Wednesday, March 26, 2014

Beyond the Assessment: The Top 5 Alternative Funding sources for Business Improvement Districts

Business Improvements Districts (BIDs) provide valuable, stable funding  for commercial district management activities. Yet one critical, and often overlooked, BID function is the ability to raise additional funds beyond the assessment.  BIDs are effective at leveraging funds in part because the members of a BID – property owners, merchants and in some cases residents – make for a powerful and vocal constituency.
While the degree to which BIDs raise outside funds is very inconsistent (there are  BIDs both small and large that do not have alternative revenue streams) many do successfully find ways to raise additional money. Here is a quick overview of BID revenue streams, based on my experience with New York BIDs, with some suggestions for potential benchmarks for organizations both large and small.   

  1. Assessment: No discussion of BID revenue is complete with mentioning the assessment itself. The special assessment is what makes a BID a BID. Assessments for BIDs are mandatory contributions that property owners must make to the organization, or face penalties or even leans on their properties. These assessments are typically collected by a public agency (although Pennsylvania is at least one exception - there BIDs are responsible for collecting their own assessment) and redistributed back to the BID. State enabling legislation is required to form a BID, but once legislation has been passed, the assessment is assured. For most BIDs, the assessment typically makes up between 75% - 95% of a BID’s budget.
  2. Grants/Contributions: BIDs are non-profit organizations and can therefore apply for grant funding and solicit tax deductible contributions. Because of this, grants and contributions are another popular revenue stream. Bryant Park and the Time Square Alliance – both BIDs with budgets between $1 million and $5 million annually, raise nearly 20% of their budgets from grants and contributions. Smaller organizations (in New York) within CDBG-eligible areas often apply for city grant monies through a program known as Avenue NYC. These grants are typically between $5k and $40k. In some cases, federal or state funding can be secured through local political leaders. In the case of Sunset Park, Brooklyn, the local Congresswoman was able to contribute $180k in funding over a two year period to the program. 
  3. Fundraising/Special Events: Even very small organizations can raise money from special events. A successful BID can aim to raise between 10 – 15% of its annual budget from special events, or anywhere from $5k to $30k or more. Much larger BIDs, those with budgets between $1 million and $5 million, often have substantial additional resources coming from fundraising and special events. Two of New York’s largest BIDs, 34th Street Partnership and Bryant Park regularly raise between $1 – 2 million annually. Although to be fair, Bryant Park is able to host such storied events as Fashion Week – so it is admittedly a bit of an outlier.
  4. Investment Income:  Although investment income (interest on savings) is negligible, especially with interest rates so low,  interest income can make up to 1% of the annual budget.
  5. Special Contracts: In some cases, BIDs contract with outside entities to manage or run additional programs or facilities. One example is parking. Some BID’s have established relationships with local parking authorities and manage parking lots in return for the lot's revenue. And in some cases, the revenue is substantial. In the case of the Lower East Side BID, for instance, parking lot operations made up nearly 50% of the BIDs 2011 budget.     
These are the largest revenue streams for BIDs in New York - but we'd love to hear more about BIDs in other cities and states. Raising revenue is a challenge for all of us - and good ideas are great to share!

Monday, March 24, 2014

We're Hiring!

Larisa Ortiz Associates/The Commercial District Advisor is looking for a Summer Project Associate to join our team. Do you know a current graduate student (or recent graduate) who is crazy about commercial districts? If so, send them our way!

Wednesday, March 5, 2014

Why you can't afford to ignore the trend towards bicycle friendly business districts.

What do Austin, San Franscisco, Portland, Chicago and Washington D.C. have in common? Why, an expanding network of bike lanes, of course! Expanding the transportation options and improving access to commercial districts is gaining steam, and here at the Commercial District Advisor we are generally pleased with this trend. Creating and maintaining a network of bike infrastructure is one critically important way to help local businesses. But the issue is not always so clear cut in some places, and implementing interventions that may change the business environment for long standing businesses needs to be managed carefully. For many businesses whose customers historically arrive by car, the lack of immediately accessible and visible car parking, not to mention the challenges of managing deliveries when a bike lane takes us the space immediately in front of a store, are a legitimate concerns for some businesses. If  existing customers find it less convenient to patronize a store, and the business has not yet started attracting new customers, there will be inevitable growing pains. 

The fight in New York's Upper West side, where a 6' protected bike lane was installed after facing resistance from the local Community Board, is indicative of what happens in many cities. The owner of a local lingerie shop, in business for 17 years, said "It's one more piece of space it's taking up, people are not riding their bikes to go shopping." ("Business Owners Dish on Columbus Ave Bike Lanes: From 'Love it' to 'It Sucks'", West Side Rag, 1/8/13). A number of studies by bike advocacy groups suggest otherwise. They have found that local businesses do in fact benefit from customers who arrive on bike, but it can take a little while to change shopping habits. For some businesses whose offerings and clientele include older, long-time residents, the changes can be a little tougher to manage. In fact, much of the argument on the Upper West side was split by an age demographic. A blogger for Streetsblog who was covering the Community Board debate wrote "I was at this meeting, and was struck by the age divide: older people against a bike lane...and younger people in favor." But as the blogger noted, the changes have also created a safer pedestrian environment, which benefits those who do not ride bikes as well. 

Perhaps most significantly for our purposes, and the reason why on the whole bike lanes are great for commercial districts, is because they are just plain good for business. A recent study issued on bike lanes found that "in growing urban communities, protected bike lane networks encourage more people to ride bikes for everyday trips. And when people use bikes for errands, they're the ideal kind of retail customers: regulars. They stop by often and spend as much or more per month as people who arrive in cars." (For the full report, click here: "Protected Bike Lanes Mean Business: How 21st Century Transportation Networks Help New Urban Economies Boom"). Business owners sometimes express concern that bike riders don't spend as much per shopping trip, but studies show that they spend more total and return more frequently than the customer who arrives by car. In San Francisco, the study found that bike lanes and wider sidewalks on Valencia Street improved business for 66% of businesses. 4% indicated it hurt sales. 
From: Protected Bike Lanes Mean Business

One very important and less mentioned benefit of bike lanes and bike infrastructure (and one that we trumpet quite regularly) is the ability to draw more customers from a slightly larger trade area. This is our primary reason for supporting this effort. Enlarging a district's primary trade area - the geographic area from which 60- 80% of a district's customers come from - is a great strategy for helping businesses grow sales. In walkable urban communities, it is not uncommon for someone to walk 10-minutes, or about 1/2 mile at a leisurely pace, to patronize a local business. A 10-minute bike ride on the other hand pulls people from a 1.5 radius (again, assuming a leisurely pace). We ran the numbers for the neighborhood surrounding our office here in Jackson Heights, Queens and the results were astounding. The difference in trade area was the difference between 67,789 potential customers and 366,564 potential customers. Wow. 

Source: ESRI, Census 2010. Based on a radius drawn from 78-27 37th Avenue, Jackson Heights, NY
So while change can be a difficult pill to swallow from some businesses, the implications of installing and maintaining a robust bike infrastructure cannot and should not be overlooked as a vital tool in the commercial district managers toolbox. 

Tuesday, March 4, 2014

Event Announcement: Shopping Centers Today, LIVE!

On April 8th, 2014 I will be participating on a panel of accomplished government officials, developers and retailers as we discuss methods for fast tracking economic expansion. This event, hosted by Shopping Centers Today, is being held at the Chicago Marriott Downtown . If you are in Chicago, consider joining us part of the live studio audience. If you can't join us, you can live stream the event on your Iphone or smartphone and a podcast will be available after the event. To register and for more information click on these links for the program Brochure and Registration Page

My perspective (as usual!) will be how non-profit intermediaries, like Business Improvement Districts, can (and often do) play a powerful role in supporting and expediting development in urban markets. My fellow panelists (see below) will have alot more to say about how retailers, developers and government can also expedite the process. 

Steven M. Elrod, ESQ.
Executive Partner - Holland & Knight

Lawrence E. Kilduff, CRX, CDP, CSM
Senior Vice President, Retail Market Lead
Jones Lang LaSalle, Chicago, IL

Lyneir Richardson
Chief Executive Officer
Brick City Development
Newark, NJ

Sue Walker
Director, Economic Development
Richardson Economic Development Partnership
Richardson, TX

See you in Chicago! 

- Larisa

Larisa Ortiz is Principal of Larisa Ortiz Associates, Commercial District Advisors. 

BID Tips for Snow Removal

This winter has been a brutal one. Many businesses and commercial districts have struggled to keep up with snow removal. Contributor Chris Bernardo, Principal of Commercial District Services LLC, a provider of supplemental services to managers of outdoor public spaces, offers our readers a few valuable tips for dealing with these snowy challenges. 

As we enter the last few weeks of our most recent winter of discontent and the snow banks scattered around our commercial districts begin to decrease in size and fill the sewer drains with slush water and thawed pieces of litter and debris, it seems like a good time to look back and share some thoughts on snow management in commercial districts.

As cities struggle to maintain sufficient levels of police and sanitation services, most Business Improvement Districts (BIDs) have adopted programs that fund supplemental services to provide increased police/security patrols and sanitation/litter removal. In almost all cases, these supplemental services are superior to those that the public sector could provide given the available resources and City budgets that are already stretched to the limit.

Similar to Police and Sanitation services, many BIDs are finding that supplemental Snow Plowing and Snow Removal services are necessary in order to free up parking spots and to keep roadways from becoming too narrow. For those districts that find themselves faced with this option, there are some things to consider when planning out your snow removal strategy:

  • It’s important to determine if the main commercial strip can accommodate snow piles, if so, you may be able to simply plow the snow from the parking spaces into piles at the end of each block. If there is no room for snow piles or they create too much of a hazard, then it will be necessary to physically remove the snow from the district, which increases the cost and coordination needed.
  • Does your city prohibit parking on snow covered roadways? If not, you will need to coordinate an emergency “no-parking” strategy with the City, which needs to be planned for well in advance of the winter. It is advisable to draft a plan and distribute it to property owners and tenants at the beginning of the winter season so that they are prepared to move their vehicles, before being ticketed and towed. Not having a “no parking” plan in place can make or break a successful snow removal strategy. Getting the necessary approvals and coordinating the enforcement of prohibited parking can take longer than is practical. A solid “no parking” plan should include a local ordinance which identifies those specific streets within the BID where prohibited parking will be in effect, an MOU between the BID and local Police Department/Parking Authority stating the mutual commitment of each party to enforcing the ordinance and the understanding that Police personnel/power will need to be deployed in order to enforce the ordinance, ticket/tow vehicles and enforce traffic/street closures.
  • Where will the snow be placed once it is removed from the district? Carting snow is a slow process, a large dump truck with a 20 cubic yard roll-off can take a while to get from point a to b…if it takes 15 minutes to fill the truck and 45 minutes to transport the snow it’s gonna be a long night. It’s important to find a location in close proximity to the district, so that the least amount of time possible, is used to transport the snow.
  • Go big or not all…don’t make the mistake of underestimating the amount of snow that is actually on the street. A large loader is going to remove more snow in a shorter period of time than a Bobcat. In order to have the biggest impact possible for your stakeholders, consider using at least two large loaders and no less than four dump trucks.
  • Be ready to spend between $10K-$15k on an 8-10 hour session, overnight, on private snow removal services in order to have a sufficient impact on the district.
Hopefully the tips above will help you plan out the best possible snow removal program for your district!