Getting the Max for the Tax: An Examination of BID Performance Measures

Abstract

This article explores the issue of BID performance measures with the goal of enhancing their capacity as diagnostic and prescriptive tools. We examine the different kinds of performance measures in the context of BID designation and evaluation, paying attention to the needs of the varied stakeholders invested in BID performance. We develop a typology of the different kinds of indicators that are most appropriate for the mission and land uses within BIDs and discuss ways to institutionalize the use of these indicators. This research is based on survey data and case studies of the City of Chicago's Special Services Areas (SSAs) as well as an extension of theory in public administration on the appropriate use of performance measurements. We find that Chicago SSAs rarely evaluate their performance in a systematic manner. When they are required to do so, they tend to rely on subjective appraisals by stakeholders with conflicts of interest, confuse outputs with outcomes, and assume that renewal applications are accurate proxies of stakeholder satisfaction.

Keywords:

• accountability
• performance measurement
• program design
• retail revitalization

Notes

¹Denotes SSAs participating in authors' survey. SSAs listed were actively delivering services for all 12 months of 2003.

1. Briffault, R. A Government for Our Time? Business Improvement Districts and Urban Governance. Columbia Law Review 1999, 2, 366–425.

2. In Illinois, BIDs are referred to as Special Service Areas (SSAs). Throughout this article, the term “BID” will be used to refer to Business Improvement Districts generally while the term “SSA” will be used to refer specifically to those in Chicago.

4. Houstoun Jr., L. O. Are BIDs Working? Urban Land January 1997, 32–36.

9. Segal, M.B. A New Generation of Downtown Management Organizations. Urban Land, April 1998

12. The 1970 Illinois Constitutional Convention granted municipalities and counties the authority: “to levy or impose additional taxes upon areas within their boundaries in the manner provided by law for the provision of special services to those area and for the payment of debt incurred in order to provide those special services.” The process for establishing an SSA is outlined in the “Special Service Area Tax Law” (Article 27, 35 ILCS 200/27.).

14. Annual SSA budgets in Chicago for 2003 ranged from $65,000 to $665,000. A budget of this size can typically accommodate a cleaning program, marketing and promotions, and economic development initiatives.

15. Hinz, G. TIF Funds Bulging with Cash. Crains Chicago July 12 2004, 1.

17. Feldmann, L. Baltimore's BID for Safe streets Leads the Way. Christian Science Monitor Aug 21, 1997, 18.

30. Pack, J. R. BIDs, DIDs, SIDs, and SADs: Private Governments in Urban America. Brookings Review 1992, 18–21.

31. Occasionally states or municipalities will have “pass-through” restrictions on net lease agreements so that tenants do not also pay the BID tax.

32. For this reason the management agreement for Chicago SSAs states that those managed by a contractor are prohibited from co-mingling the BID tax levy with non-levy funding sources.

33. In Chicago, commissioners are recommended to the City by the service provider, reviewed by city agencies, appointed by the Mayor, and confirmed by city council. Most commissioners are also property owners or lessees of local property owners, and the service providers and the City try to ensure that the commissions reflect land uses, geographic coverage, and demographics the BID service area. Commissioner terms typically last two years with renewal possibilities.

38. Mitchell, J. Business Improvement Districts and Innovative Service Delivery. The PricewaterhouseCoopers Endowment for The Business of Government 1999, 9–17.

42. The questionnaire built on those administered by Mitchell (2001) and Houstoun (1997) and had eight sections: service evaluation; management practices; personal information and characteristics of the Service Provider/SSA; initial SSA formation; assessment; commissioners; and services.

46. In Chicago, SSAs eligible for renewal must go through the same establishment process as new SSAs, except the community outreach to gauge support may not be as extensive. If an SSA establishment ordinance specifies an ending authorization date, the service provider will typically submit a renewal application as this date nears. In the event of a “controversial” SSA, the City may request that the service provider and/or commission administer surveys to gauge property owner and elector satisfaction with the SSA. Aldermanic and municipal support will also factor in to the renewal decision. Local taxpayers do not vote on the renewal; rather, letters, testimony, and informal petitions reflecting opposition and support are assessed by the City. To address concerns of dissenters or acknowledge changes in district conditions, a renewing SSA may have to make changes to its mission or program goals.

47. In Chicago, there is one all-residential SSA and two industrial SSAs. Residential SSAs are less common because local residents tend to be larger in number, more diffuse, and harder to organize. Residents are typically unwilling to take on the burden of an additional tax to pay for special services beyond what municipalities already offer them. The two industrial SSAs have focused on transportation access issues, security (prevention of illegal dumping, drag racing), business expansion, and public way maintenance.