Strategic Frame Work For Commercial Revitalization--Phase III: Forming a Special Improvement District (SID)

STRATEGIC FRAME WORK FOR COMMERCIAL REVITALIZATION

Part II of an Exploratory Study to Establish a Special Improvement
District on Springfield and South Orange Avenues, Newark, NJ

Report to the Corinthian Housing Development Corporation and New Community Corporation

May 11, 1998

Phase III: Forming a Special Improvement District (SID)

"What makes these places work is that they're managed environments," explains Richard Bradley, president of DC's Downtown BID (Feldmann, 1997b). Special Improvement Districts provide more centralized, more professional marketing and promotion in an effort coordinate the efforts of the business community to to compete against other retail interests such as shopping malls. From establishing the district to choosing and funding neighborhood services and improvements, the goal is to increase businesses' "bottom line." Districts also allow merchants to lobby for city services as a group rather than as individuals, thereby facilitating improvements in commercial corridors.

Property valuation. Property owners may be charged as a percentage of the assessed value of their property. For example, Cranford's property owners annually pay 40 cents per $100 of assessed value (James, 1997). Owners in Trenton's SID pay an assessment equal to 4.5 percent of their structure's property taxes, an average of $600 per year.
Square footage. The assessment may be calculated as some value per square foot of a property. Grand Central property owners annually pay 12.4 cents per square foot of property. Owners included in the 34th Street Partnership pay 19 cents per square foot (Oser, 1993).
Street frontage. Owners may be taxed per linear foot of a property's street frontage. For example, the Moshulu BID charges $30 per linear foot of street frontage per year (Holusha, 1997); Journal Square's SID annually charges $40 per foot (Garbarine, 1994).

Assessments have proven to be the downfall of many SID plans. Property and business owners may oppose what seems to be an additional tax. Said Meryl Layton, an owner in Cranford's SID, "In the beginning property owners really hated it. They were afraid that the tax and the passing on of the tax would make it difficult to rent their properties" (James, 1997). Merchants, on the other hand, fear increased rents. The mayor and city council voted against plans for a SID in Fort Lee, New Jersey. They feared levying any additional taxes on local property owners. However, as reporter John Holusha notes, "Although the BID assessments represent additional taxation for services…they have an advantage over other levies; they are guaranteed to be spent locally, rather than commingled with citywide taxes" (Holusha, 1997).

Additional funding sources:

Funding from outside sources can be an invaluable source of additional revenue and provide funding above and beyond assessment income for expanding SID services and activities. The organizations and programs discussed in later sections of this volume are rich sources of both funding and resources. However, Grand Street's District Manager Leonard Battle notes the difficulties in applying for outside grants and programs, especially as a one-man office. Applications are often complicated, time-consuming, and success is never guaranteed. The process of matching a SID's needs with a funder's goals may be quite rigorous. Grant-writing is no easy task, and it will be necessary to solicit the assistance of individuals with both expertise and experience in the process. Sponsoring organizations and local government officials may have staff with such expertise who may be able to provide aid, resources, or referrals.

Management/Administration

New Jersey law requires SIDs to create a district management association to operate the program. Management may consist of a single manager, any number of part-time and full-time professionals, or a volunteer management association. Most SIDs operate with staffs of only two to four employees. For example, the Grand Street BID operates with the District Manager as its sole staff person. The position was initially part-time but was converted to full-time within a year of the SID's establishment. On the other hand, local business and property owners with the assistance of a secretary handle management of the Central Avenue SID in Jersey City.

The SID manager or management association is responsible for the district's day-to-day operations and administration, but its responsibilities stretch beyond these routine functions.

Identifier of needs. SID management must use its expertise both to identify needs and to aid owners in identifying area these needs. Managers must then facilitate the district's identification of the priorities among those needs.
Organizer. Once a district has determined its needs, management is a support mechanism for fulfilling those needs. It is management's role to find a means to the chosen end and to involve owners in the solution process. Potential solutions must be identified, evaluated, and discussed. A final choice can be then be made.
Liaison to neighborhood actors/resources. SID management must also create and maintain relationships with community players (i.e., local government officials, non-profit organizations) in order to match their support, advocacy, and resources with SID needs and goals.

However, David Schure and Leonard Battle, managers of the Trenton and Grand Street BIDs respectively, also stress the importance of cultivating relationships with the district's property and business owners. Managers must be visible within the neighborhood as well as available to merchants and owners.

Additional Staffing

A district's activities may require assistance beyond what a single manager can provide, be it administrative or specialized assistance. However, additional staffing becomes a question of need as well as budget. The district must evaluate how much assistance it needs and how much it can budget for that assistance. Management must then consider staffing alternatives and their associated costs. Will the need require a full- or part-time staff member? Will it require a consultant? Can the need be outsourced or provided by a temp agency? Can staff be shared or borrowed from an allied or sponsoring organization? The district must then match that need and budget constraint with a cost-efficient staffing alternative.

In terms of staffing alternatives, the Grand Street BID maintains a unique partnership with St. Nicholas. Following the BID's successful 501c3 application, St. Nicholas suggested an administrative agreement in which they provide Grand Street's office space, secretarial service, and professional expertise at a nominal cost. It is a partnership which both Grand Street and St. Nicholas enjoy.

Board of Directors

A SID's Board of Directors serves in an advisory capacity to the district, establishing priorities and providing expertise and experience in decision-making. Board members also provide important links to funding, political actors, and other neighborhood resources. To that end, board members must represent the full array of neighborhood and district actors and voices:

Both business and property owners
Local residents
Local government
Non-profit organizations and institutions (i.e., religious institutions, CDCs)

For example, the Board of Peekskill's BID includes merchants, landlords, and business owners as well as the mayor, city manager, and comptroller (Ellis, 1996).

Representation of a neighborhood's full ethnic composition is also important to achieving the full voice of the community in a Board of Directors. Board composition should mirror neighborhood composition in an effort to capture the full range of human perspectives and experiences. For example, membership of the Board of Houston's Downtown Management Corporation is intended to represent the diversity of that community. It includes 30 percent ethnic minorities and an equal percentage of women. The Board is also equally representative of the area's cross-section of businesses ("Downtown Dynamics," 1990).

Services & Improvements

The goal of services and improvements is to make a district more attractive to potential customers, and, thus, to encourage spending. The services provided by SIDs are intended to supplement rather than replace city-provided services. SIDs can make themselves more attractive in a variety of ways: by making the area cleaner or safer, by beautifying the streetscape, by promoting the district and its activities, or by planning special events. Said Carl Weisbrod, a public service veteran and the first president of Lower Manhattan's BID:

What makes a business improvement district so attractive is that the community itself, the business community and the taxpayers in a smaller geographic area, get to determine their own priorities for providing supplemental services to improve the quality of life. (Redburn, 1994)

A district chooses which services it can and will provide. Consequently, the mix varies from SID to SID. The following are some of the most popular services and improvements:

Security:

Improved security measures may not only reduce crime but also increase a customer's sense of safety. Efforts often include area security patrols as well as the installation of additional or brighter streetlights. For example, the Grand Central district added high intensity streetlights every 30 to 60 feet at heights that bring lights closer to pedestrians. A staff of uniformed security guards patrols the area from 7 am to 11 pm seven days a week. Security personnel also assist traffic at taxi stands in an attempt to stop crooked drivers from cheating tourists (Oser, 1993).

Times Square's uniformed "public safety officers" also patrol seven days a week and are connected by radio to the New York Police Department. Between 1993 and 1997, it was reported that crime was down by 47 percent (Yenckel, 1997).

Security services for Los Angeles's Broadway BID (now defunct) included police patrols via bicycles, but they also included the addition of a police substation in the district (Torres, 1995).

The Downtown Dallas BID's 13 "goodwill ambassadors" patrol the area's sidewalks daily. The ambassadors, wearing red shirts and khaki shorts, have a security role but also give directions, advise tourists, and sweep up sidewalk trash (Scruggs, 1995).
Sanitation:

Said Councilwoman June M. Eisland of the Moshulu BID's sanitation priority:

Cleaning up the area will encourage more residents to shop locally and improve residents' self- image. Cleaning the streets, getting rid of the graffiti and keeping up the little parks all enhance the quality of life. It makes the area appear more secure and conveys the sense that the hierarchy of the community cares about what is happening here. (Holusha, 1996)

Sanitation improvements most often include additional trash receptacles, often sporting the SID logo. The Atlantic City SID's sanitation efforts include new receptacles as well as a foot patrol of trash pickers (Kent, 1995). The New York midtown and Times Square BIDs also provide sanitation forces (Oser, 1993).
Graffiti Removal:

In an effort to beautify and improve neighborhood image, many SIDs have chosen to provide graffiti removal services. Explains Harold Citron, who owned a hardware store in the Moshulu BID area for 51 years and now advises the district, "If people walk into an area that is dirty and has graffiti all over the place, they assume it is a seedy area and they will not shop there" (Holusha, 1997).

Grand Street business and property owners overwhelmingly voiced graffiti removal as their top priority. The removal has been Grand Street's largest project. A contractor comes monthly to repaint "tagged" areas, and there is tremendous pride in the cleaner, brighter storefronts and walls. Residents, merchants, area police, and city officials have applauded its success.

Historic Midtown Elizabeth's business and property owners also made graffiti elimination a priority, and a special sealant was applied to exteriors in order to simplify removal. In addition, the SID employed a local college student and graffiti-style artist to complete a huge street mural with Elizabeth as its theme. The huge mural lines a pathway between area parking and streetfront and serves as a rich welcome to SID visitors.

Sanitation workers for the Alliance for Downtown New York have power-washed, solvent-coated, or repainted 215 blocks (including 429 buildings, 714 storefronts, and 35 subway stations) in Lower Manhattan (Halbfinger, 1997a).
Facade and streetscape improvements:

The Atlantic City SID made streetscape improvements and beautification its first task. Boardwalk enhancements include ornamental lampposts, decorative street signs and banners, and weather-resistant benches. The SID also constructed new information kiosks (Kent, 1995).

Cranford's SID installed new planters and filled them with bright flowers, replaced streetlights with Victorian-style lampposts, and installed new benches along new brick-paved sidewalks (James, 1997).

A BID in the Galleria/Post Oak neighborhood of Houston, TX also implemented aesthetic enhancements. However, the district additionally imposed strict standards for outdoor advertising ("Downtown Dynamics," 1990).
Marketing:

Marketing efforts are an important way to promote district activities and events and to target potential customers. For example, the Peekskill BID newsletter highlights and publicizes its arts and entertainment activities (Ellis, 1996). The Downtown Trenton SID has included World Wide Web users in its marketing efforts. The SID maintains a new website.

In an effort to decrease a downtown vacancy rate of 35 percent, the Red Bank, New Jersey SID initially focused on a marketing strategy that would promote the neighborhood both inside and outside the community. Explained Tracy Challenger, executive director of the management group Red Bank River Center, "We wanted to create a lot of internal excitement and also to create visible change on the street to stimulate investor confidence." In 1997, their vacancy rate was near zero (James, 1997).

New York's Orchard Street BID focuses almost entirely on marketing. It hopes to capitalize on the community's historic character. The Historic Orchard Street Bargain District, known for its bargains and spirited bazaar, is seeking to be included in New York City tour packages. A stop might include shopping and a trip to the Lower East Side Tenement Museum or a meal at one of the district's famous restaurants (Martin, 1993).
Special events:

Special events are an opportunity not only to attract additional customers, but also to bring the community together for celebration, enhance district image, and create community traditions. For example, many of the SIDs provide holiday decorations, celebrations, and lighting for their districts. Others hold seasonal sidewalk sales or designate Senior Citizens Discount Days. Des Moines' "Operation Downtown" plans to hire actors and musicians to brighten street life (Feldmann, 1997b).

The Annual Corestates Bike Race, sponsored by the bank's local branch, brings bike enthusiasts and spectators to the center of the Downtown Trenton SID. The district and the City also co-sponsor Heritage Day in celebration of the beginning of summer and the year-long efforts of local businesspeople.

New York's Peekskill holds several seasonal festivals in its downtown BID. The area benefits from a multicultural mix of residents and a strong arts community. The BID capitalizes on those strengths, sponsoring artists' studio tours, gallery shows, and arts and musical festivals for children and adults (Ellis, 1996).
Other services:

SIDs have chosen a variety of unique services to meet the needs and wishes of business and property owners as well as potential customers. Orchard Street BID merchants were concerned that a lack of parking in the area would deter area shoppers. The district chose to lease and improve two city-owned vacant lots that provide 180 free and secured parking spaces (Martin, 1993). New York's 34^thStreet Partnership provides a new shuttle service for commuters who work west of Penn Station. Buses offer free rush hour rides in a loop along Seventh Avenue, 31^stStreet, 10^thAvenue, and 34^thStreet (Halbfinger, 1997b). In a partnership with the Trenton SID, the Trenton Downtown Association offers classes to downtown merchants in developing customer service policies and in effective window display design.

Some SIDs have chosen to address the social service needs of their districts. The 14^thStreet-Union Square BID has partnered with local schools to provide jobs, internships, mentoring programs, and cash contributions (Lipsyte, 1995). The Times Square BID provides services for the homeless and for drug users (McKinley, 1991). New York's midtown districts provide outreach services and referrals to social services agencies. They also train and hire formerly homeless people (Oser, 1993).