Organization, Benefits and FormationEconomic and Property Development Department
333 W. Ocean Blvd., 3rd Floor
Long Beach, CA 90802
Long Beach’s current Business Assessment Districts grew out of the 1943 Vehicle Parking District Law and 1965 California State Assembly Bill 103, Parking and Business Improvement Area Law. These laws allowed parking assessment districts to be formed in order to fund parking improvements for the rapidly multiplying automobile. They have been amended and expanded over the years in response to new legal requirements and community needs.
Business Improvement Districts (BIDs) offer the chance for local businesses to join together and assess themselves revenue for agreed upon improvements in the business district. Based on the type of assessment district, collection methods and organization will vary.
BIDs fall into two broad categories based on funding source, and the key difference between the two BID types is centered around who is paying the self-assessment. They are:
PBIA, Merchant assessment area – The 1989 Parking and Business Improvement Area Law specifically authorizes beneficial self-assessments by businesses through an annual levy (e.g., business license assessment).
PBID, Property assessment districts – The 1994 Property and Business Improvement District Law authorizes establishment of a BID that assesses property owners whose parcel is located within the district boundaries.
Where to Start?
If you are a businessperson or property owner with a vision that includes better lighting, cleaner streets, more customers and more successful businesses, a Business Improvement District starts with you. If you are city staff working with businesses or business associations, it can also start with you by connecting businesses with City of Long Beach resources.
All it takes to start a business association is someone to begin looking for another interested businessperson and to tap the services available through the City of Long Beach Business Development Center.
Unless a beginning is made, it is impossible to know if a BID might be appropriate in a specific area. And, even with someone willing to make a start, the process will be long and challenging, but, as shown in the examples above, well worth the effort.
Why Form a Business Improvement District
The following reasons for forming a business district are provided by Main Street Group, a Long Beach BID consulting company.
1) To reverse a negative image.
Many urban areas are burdened with an image of being unsafe, unclean, and generally run down. Sometimes this reputation is well deserved and sometimes it is a perception—a holdover from an earlier time. An area’s overall image affects the individual businesses located in and around the area. A District can provide effective tools, such as maintenance and security programs to help dispel a negative image by changing existing conditions of blight and crime. A district can provide unified marketing programs to communicate the positive changes in the District, effectively eliminating old perceptions.
2) To attract new businesses and investment.
Many urban areas and other commercial districts continue to experience a high rate of vacancies and decrease in investment. A cleaner, safer, and more vibrant District will accelerate efforts to attract new businesses and investment back into the District. A Management District can provide results–oriented business retention and recruitment programs.
3) To establish private–sector control and accountability.
An advisory board consisting of property and business owners manages the District. This board may be the board for the management entity. Annual management district work plans and budgets are developed by the advisory board, ensuring that the District will be accountable to those who pay the assessment. Security, maintenance, and marketing programs are subject to private–sector performance standards and controls.
4) To create a unified voice for the District.
A Management District will provide the foundation for developing a viable and unified private–sector voice for the District. For most downtown areas and commercial districts, business interests are fragmented among a diversity of groups and individuals. One unified management entity, with reliable resources, increases a District’s clout and ability to work effectively with the local government and other civic and social organizations in the community.
Which is best – PBIA or PBID?
More importantly, it may not be necessary to choose. There is nothing that prohibits two overlapping districts being formed. Downtown Long Beach has both a PBID and a PBIA within the same geographic area.
PBID’s place assessments on property owners while PBIA’s assess merchants. Having both can mean the district has access to more funds. It also ensures all commercial entities that benefit from improvements in the district contribute to funding the improvements.
When business owners contribute to a BID under a PBIA, there is a clear benefit from the services and activities designed to improve business in the area. Property owners, however, also benefit through increased occupancy and rent revenue. Assessing only PBID property owners has the opposite effect. Property owners benefit, but so do business owners who don’t contribute. As unfair as it may sound on the surface most BIDs have a single assessment of either businesses or property owners. This is because it can be difficult to find the leadership and consensus needed to gain approval of the District. Approval is required by a simple majority – over 50% of the district assessment value. The steps and hurdles to forming a BID are detailed in the next paragraphs.
Forming a Business Improvement District
The process to form both types of districts is similar, but specific requirements vary between PBIA’s and PBID’s. The City of Long Beach and its consultants ensure all legal requirements are met during the formation process. Listed below are the general considerations for forming a BID. Additional detail is provided under
A core organization must exist to begin the BID formation process. This will mean at least two or three business or property owners willing to propose a district area, request City of Long Beach assistance and communicate the benefits to the businesspeople in the proposed district. This process is easiest where a business association already exists. Even if a business association is not in existence, the formation process can begin. Formation of a non-profit business association can be initiated any time during the formation process. After review and approval of the BID, either the City of Long Beach or a community organization may manage the district. In either case, an advisory board set the priorities and budget for the how revenue is spent in the district.
A Three-Step Process
The basic steps to form a BID are:
1) Prepare a Management Plan identifying the type of district and its geographic boundaries, assessment fees, beneficial activities and budget.
2) Submit the Management Plan to the City Council for scheduling of a public hearing on the formation. (For a PBID, a petition signed by owners representing at least 50% of the assessment value of the district must be submitted with the Management Plan).
3) Approval of stakeholders representing at least 50% of the businesses or property assessment value is required. For PBIA’s, approval would be denied if more than 50% of the businesses protest at the public hearing. For PBID’s, approval would be denied if the results of a Prop 218 ballot indicated that owners of properties representing over 50% of the assessment value object to district formation. Otherwise, the district will be approved with any additional changes made by the City Council. (Note, that large businesses and property owners are given greater weight by the state law. Since the voting is measured not by one owner – one vote, but by weighted percent of assessment paid)
The Management Plan
The Management Plan must include the following information:
- District Name
- Geographic area included in the district
- Types of businesses or properties to be assessed
- Beneficial needs and purposes of the assessment
- Term for the BID
- Method of calculation and total of the annual assessment
- A list of businesses or properties in the district
- Any other supporting information request by City Council
If you are interested in forming a Business Improvement in your area you can get more detailed information from:
Jim Fisk, Business Improvement Districts Project Manager
Economic and Property Development Department
333 W. Ocean Blvd., 3rd Floor
Long Beach, CA 90802