BID-ding on success

Business Improvement Districts in Wisconsin

By Michael Bayer

Once known as Milwaukee's second downtown, the Historic King Drive commercial district fell into disrepair after race riots roiled the neighborhood in the late 1960s.

Today, the blocks surrounding the intersection of North Avenue and Martin Luther King Jr. Drive (formerly North Third Street) are filling with new stores and offices. Property values in the district have risen 41 percent in six years.

A few miles to the southeast, renovated storefronts entice shoppers to Brady Street, once the epicenter of Milwaukee's hippie culture. Victorian-era commercial buildings shimmer under new coats of paint. The Passagio, a new two-story mixed-use development, stands on what had been a vacant lot.

Along the street, property values have risen nearly 48 percent in five years. By comparison, the average assessment of commercial property in the city of Milwaukee climbed 13 percent during the same period.

Brady Street and Historic King Drive share more than higher property values. They are two of Milwaukee's 16 Business Improvement Districts and examples of what such districts can do to spruce up neighborhood commercial strips.

"In general, BIDs are a good thing," says Bob Trimmier, the City of Milwaukee's coordinator of neighborhood commercial revitalization, or "The Neighborhood Guy" as he's known to some.

"In areas of extremely low value, they may not be the right tool," Trimmier said. "In those areas, BIDs are almost punitive. There has to be enough [property] value to have it make sense ... But we have enough examples where they work very well; in some cases, beyond our wildest dreams."

Indeed, an increasing number of Wisconsin communities are finding Business Improvement Districts an effective tool in revitalizing and supporting neighborhood shopping areas.

According to the University of Wisconsin-Extension's Local Government Center, the state has more than 50 BIDs in three dozen communities. Four have been established in Milwaukee alone this year, and more are in the planning stages across the state.

All have been created since 1984, when Wisconsin Act 184 allowed municipalities to establish one or more Business Improvement Districts in their communities.

Restricted to non-tax exempt commercial and industrial properties, BIDs collect annual assessments to support programs aimed at promoting, managing, maintaining and developing the district.

"In short, the BID mechanism picks up where city services leave off," said Charles Law, a Community Planning and Design Specialist with the Local Government Center.

In all, Wisconsin's BIDs represented more than $889 million in assessed value in 1996, according to the Local Government Center.

As news of flourishing BIDs has spread, the tool has come under closer scrutiny by city officials and business owners who want to duplicate the success found elsewhere. But Law, who receives a telephone call a day about BIDs, cautions planners that BIDs aren't for every business district.

"The number one thing I tell communities is that, before you talk about creating a BID, you should think about how those BID funds are going to be used," Law said. "You don't want to talk about the (tax) assessment level without first figuring out what you want to do."

If business districts are considering a one-time project, such as installing decorative lighting or window treatments, a special assessment might make more sense, Law said. On the other hand, if the project will continue over months or years, a BID can be an ideal way of supporting it, he said.

Law counsels communities across Wisconsin on how to set up BIDs. The Local Government Center provides a sheet summarizing the seven-step BID Creation Process and also has up-to-date information on its web site (http://www.uwex.edu/lgc/cp&d/bidpage/bid.htm).

The idea for a BID often originates among business leaders. Once they have determined why they need a district, the next step is to build consensus among owners in the district. Then proposed districts form a planning committee to draft an initial operating plan and petition the local unit of government for permission to create a BID.

Districts generally levy assessments on a proportion of a property's assessed value. For example, the average assessment was $2.90 per $1,000 of assessed value for 25 bids surveyed by the Local Government Center in 1996.

Districts also may assess levies based on parcel sizes or frontage footage. Individual BID boards make the decision on which method to use.

In general, Law said, BIDs have become more sophisticated as communities have become better acquainted with them. In some places, districts are now using BID money to support business recruitment strategies, business partnerships, Internet web sites, even discount cellular phone programs for participating businesses, he said.

"The major positive aspect of BIDs, unlike other programs with strict regulations, is that the funds can basically be used for anything," Law said.

Many BID managers are sharing ideas individually and through the Local Government Center, Law said. The Local Government Center is attempting to help the process along by developing one-page biographies on Wisconsin BIDs that will be available on its web site and through its regular ETN (Educational Teleconferencing Network) series titled, "Issues Affecting Business Improvement Districts."

Although a number of communities offer anecdotal evidence that BIDs can be quite beneficial, measuring success can be tricky, Law concedes.

It is difficult to compare one BID with another, even when districts register similar increases in property value, Law said. BIDs are created for different reasons, Law said, and it's usually left up to the community itself to decide whether a BID has accomplished its goals.

The Local Government Center is forming a study committee to develop a formula to measure the impact of Business Improvement Districts. The formula likely will include some combination of property values, occupancy rates, parking occupancy, as well as qualitative measurements like public perception, Law said.

Milwaukee's Department of City Development is also trying to determine how to evaluate BIDs, Trimmier said, in light of the success stories along Brady Street, Mitchell Street and Historic King Drive.

"When people ask whether (BIDs) really work, I say, `Don't ask me, ask them,'" Trimmier said. "One of the really neat things about enthusiasm and success is that they're contagious. If someone says, `Can you make this street a better place to live and invest in?' I say, `If you believe you can, you can.'"

The districts that haven't fared as well in Milwaukee have struggled with how to spend the BID money, Trimmier said. Organizers might have had a general goal for the district but lacked a thorough plan, he said.

"I tell people, don't let the first time someone hears about the BID be a public hearing," Trimmier said.

The businesses along Historic King Drive petitioned the city to create a BID in 1992. In five years, the district has provided physical improvement and soft-cost grants, a graffiti-removal and daily street clean-up program, an intense, six-month "Business Builder" program to help businesses get off the ground and such special events as bicycle races and retail seminars.

"If a property owner is sophisticated, we're here to help them move through the process and cut red tape and act as a liaison with the city and community groups," said BID manager Randy Roth. "If the property owner has no experience, we do everything from financing to finding a tenant. And if they're completely new to the business world, well even help them find a location."

The district levies an assessment of $4 per $1,000 of assessed value, generating about $103,000 a year. The district also receives $21,000 from the city, in addition to money from the state, Roth said.

Although he concedes the Business Improvement District isn't the only reason why Historic King Drive has turned around after two decades of business stagnation, Roth said the district's resources are a key factor.

"There's no theoretical reason, given our location and the underserved market in this area, why development should not occur and why it wasn't occurring," he said. "The time is right and the market is right. The perception of the area has changed, and now people are seeing the locational and marketing strengths we have. From now until the year 2000, I see a tremendous interest in our area."