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Business Improvement Districts Ruin Neighborhoods

To pave paradise and put up a retail parking lot, try founding one.

David McNew/Getty

In Jackson Heights, director Frederick Wiseman’s latest documentary, focuses on the western Queens, NY neighborhood of the same name. While the film addresses immigrant rights, local politics, and the vibrant queer community, it also follows activists opposing the creation of a Business Improvement District they believe will spell an end to many small businesses. Speaking inside of a salon, Frank Rafalian, a property owner sympathetic to the needs of small businesses, warns the community about how the Business Improvement District will make their neighborhood unrecognizable. “What’s happening in Williamsburg and Astoria, they want to happen here,” Rafalian tells the room, alluding to the rapid gentrification of both neighborhoods over the last decade. 

Rafalian’s fears aren’t unfounded. Business Improvement Districts are a favored neoliberal practice that transforms mixed-income neighborhoods into the same chain stores one can find at any outlet mall across the country. And once a BID is in place, it’s incredibly difficult to dissolve: either a majority of property owners must turn against the BID, or there must be a direct decree from the City Council or Mayor. During the week The Gap opened in Jackson Heights—in one of the few blocks where a BID already exists there—it offered 70 percent discounts. Within a year, a low-end discount chain across the street had been replaced by a Banana Republic. 

The battle over who controls the future of urban spaces rages on, with politicians and planners trying to keep up with a growing population’s demand for affordable housing, plentiful and safe public spaces, jobs, cheap transit, and well-maintained parks. It’s a constant tug-of-war, but it’s beautiful, and it’s the reason why people love living in cities, even if they’re not the sanest, most peaceful, or most beautiful places on earth. 

The first Business Improvement District was founded in Toronto as a local initiative; by 1974, they had made their way to the U.S. Today there are more than 1,000 BIDs in America—New York City alone has 67, the highest number of any city in the country. Originally intended to take over certain services that down-on-their-luck cities were no longer delivering, like trash collection and aggressive policing, BIDs have transformed in into a tool that displaces small businesses and heavily favors property owners. These days, BIDs are one of the most popular ways to advance urban renewal, a vision for cities that favors large businesses that immediately mark a neighborhood as meriting a Starbucks or Dunkin’ Donuts. They’re also wholly un-democratic. Because of BIDs, entire swaths of cities have effectively been placed under private control.

A BID’s creation is fairly straightforward. After petitioning a municipality to create a BID, the city government determines if a plurality of business owners are against the BID, a much lower hurdle than a majority of positive votes. Some business owners might never respond to the ballot, while others might support it, fed up with how the city is taking care of their neighborhood. Once the city passes legislation allowing the BID, the area affected exits democratic control, with major decisions—including street cleaning, homelessness outreach, and use of space—determined by the BID. BIDs can hire its own security to patrol an area, effectively control who is offered retail space, kick out street vendors, and influence legislation and expansion efforts. A Board of Directors, made up mostly of commercial landlords who sometimes don’t even live near the area where the BID is calling the shots, generally manages the districts. 

While many boards have token directors consisting of community members and small business owners, these local stakeholders are never a majority. BIDs have been found to drive up commercial rents in the immediate aftermath of their formation; they also levy a mandatory fee from property owners every year, a cost that’s usually handed down to tenants. And BIDs are growing at a dramatic rate. As of 2011, the date of the last BID census, California led with 232 BIDs, with New York in second at 115. All of this growth has happened as researchers have begun to question the effectiveness of BID’s: A 2014 survey found that the districts actually negatively impact areas with significant levels of independent retail.  

This month, the New York City Council voted to drastically increase the amount of funding for nine Business Improvement Districts across the city, including areas of Brooklyn, the Bronx, and Manhattan, placing an even larger financial burden on small businesses. (It’s important to note that New York City has no form of commercial rent control.) Advocates for BIDs, which include conservative think tank The Manhattan Institute, as well as former New York Mayor Michael Bloomberg, and the progressive current Mayor Bill de Blasio, argue that the safety and aesthetic improvements the BID undertakes benefit business in the first place. There’s some merit to advocates’ claims: A 2015 survey found that Hispanic-owned businesses in New York, which are suffering badly across the city, have fared better in areas closer to BIDs than other businesses. 

What was once an emergency measure by business owners in cities with a diminished tax base has become a power play for the future of urban space. By removing the interests of small business owners as well as community members from the equation, property owners can remake a neighborhood as they see fit. Already these actors wield enormous power, but have had to deal with democratic mechanisms that would temper their vision. If the BID model continues to proliferate, the commons that make a city great could be completely at the disposal of a single class, one that’s inherently opposed to discourse and organizing. And while cities like New York, Raleigh, San Francisco, and Phoenix are all in a rush to expand these spaces under the impression that BIDs help jumpstart the neighborhoods that are primed for development, it might be time to reconsider. 

It’s theoretically possible that a Business Improvement District can help a community and help small businesses grow through actions like improving garbage collection, putting on public events, and providing the tools small businesses need to navigate bureaucracy. But too often BIDs have turned against the businesses they were meant to serve, making the cost of entry into a new area even higher for local merchants, or lacking the transparency needed to instill trust from the community. 

Wiseman’s film, which was made during the summer of 2014, showed local businesses and activists rising up against a BID expansion that would change their neighborhood forever. Since then, the activists have won several victories against the expansion, including a community agreement that gives community members and small business owners more of a say. But the BID is still short on votes, showing wide distrust for an effort that began several years ago. For once, a community has recognized a BID for what it is: a concerted effort to further empower the powerful.