of the BID calls for the vote of 51% of the district's assesed value. Even if such a vote
was made, a BID that still owes debt must remain intact--other BIDs across the country
have actually intentionally incurred debt as a safeguard against being dissolved! Those who
opt into the BID will be locked into the contract in perpetuity unless they opt out after 30 days.
Why Detractors Criticize BIDS
Detractors have called BIDs a burden on the city, unfair to workers, and even anti-democratic. Among the accusations:
1. Undemocratic: Residents in a district vote for the BID’s board of directors, but there are specific slots for local public officials, as well as representatives of property owners, business owners, and tenants, and public officials. But the system is weighted towards property owners, a fact that has inspired lawsuits. One such case occurred when residents in the Grand Central Partnership BID argued that the board violated the one person, one vote clause of the Constitution. A court ruled that such consideration does not apply to the limited function of a business improvement district â€“ restoring and promoting business activity. Residents have recourse through their elected officials, who oversee the BID.
But the dismissal was not unanimous: District Judge Jack B. Weinstein issued a dissenting opinion , announcing that "Granting a more powerful vote to some because they own real property constitutes such a derogation from constitutional principles, such a denigration of equality of political rights, such a diminution in the practical political power of citizens, that I must respectfully dissent."
2. Unfair Treatment of Workers: Moshe Adler, a frequent critic of BIDs and senior economist at the Fiscal Policy Institute, has argued in testimony to the City Council that BIDs have contributed to a deterioration in wages and benefits for workers. He contrasts workers employed by BIDs who get paid minimum wage and no benefits with city employees who perform similar work for wages starting at $13 an hour with full health and pension benefits.
In one instance, the Grand Central Partnership was one of two BIDs embroiled in a scandal over its hiring practices. In 2000, they paid $816,000 in back wages to settle a lawsuit that alleged that they violated minimum wage laws.
Robert Walsh, the Commissioner of Small Business Services, disagrees, and points out that the BIDs directly employ over a thousand people. "These jobs provide opportunities to many workers who otherwise may not have found employment, and almost all of these jobs pay a decent wage with benefits." Walsh says.
3.Too Much Debt, Too Little Oversight: A 2002 report by Cornell University's Department of City and Regional Planning catalogs the debate surrounding BIDs and their potential pitfalls. It notes that a BID's debt counts toward the city's debt ceiling, and that BIDs' borrowing has the potential to crowd out investment in other parts of the city. It also points out that government oversight "decreases dramatically once the district is established." The formation process mandates numerous public hearings and approval by a series of public officials, but once it is approved, oversight is limited. And halting the formation of a BID requires that a majority oppose it, rather than a majority show support, and as a result, the report posits that many of them are created due to a lack of knowledge, rather than by active support.
4. Unclear Support While it has always been required that a BID take a survey to show that adequate support exists within a proposed district, the creation of the Madison Avenue BID is an example where this process failed, according to the City Council. When significant opposition to the BID's creation surfaced after the approval process, the Council conducted its own survey to see how the the BID's survey did not account for it. After using methods similar to that of the Madison Ave BID survey, and only being able to contact about 5 percent of commercial property owners in the district, they concluded that the inability to account for support "places the entire BID approval process in question." Of the small number actually contacted, half had heard about the BID only after its approval. Only one proposal for a BID has ever been denied, the Manhattan Ave. BID, in Brooklyn, where a majority of property owners opposed it.
So what is the record for BIDs as a whole? The only comprehensive analysis of the city's BIDs was published in 1995 by the City Council's Finance Committee. It concluded in its executive summary that while "overall, BIDs have had a positive impact on many New York neighborhoods, BIDs nevertheless require additional oversight and in some cases serious operational restructuring." Two years later, it issued a supplemental report detailing legislative proposals to begin addressing the concerns that surfaced in the two reports.
In response to that report, the Department of Business Services - the agency that dealt with the BIDs at the time - instituted some reforms
. It required, for example, that renewal of a BID's contract be based on a performance evaluation and be accompanied by a survey of constituents that shows continued support.