Fall 2010 - Volume 3 Number 1 Articles


This symposium issue of the Drexel Law Review provides an in-depth examination of business improvement districts (BIDs) in Philadelphia, including case studies of each BID in the city, commentary on those case studies by law school faculty (Richard Briffault, Gerald Frug, Nicole Stelle Garnett, and Richard Schragger), and essays by three practitioners (Paul Levy, Lawrence Houstoun, and Dan Hoffman) who have worked closely in and around the world of BIDs, both in Philadelphia and elsewhere. In this introduction, I discuss the case studies and commentaries to provide a brief historical overview of the role of BIDs in Philadelphia, and I will suggest how one may see the role of BIDs in the city as part of a process of institutional evolution.

The Seductions of Form

Philadelphia has more than a dozen business improvement districts, entities commonly called BIDs. The papers in this Symposium describe each of them in some detail. This kind of study is both valuable and unusual. Although BIDs have been subject to academic analysis in general terms, this Symposium offers the first examination that I know of the different BIDs within a single city. It thereby enables a comparative view within one legal system of what a BID is and what it does. My focus here will concentrate on one question concerning Philadelphia's BIDs: in creating these kinds of institutions, whom exactly has the legal system authorized to tap precisely what kinds of resources to do what? As I argue below, Philadelphia's BIDs offer a wide variety of answers to each of the elements in this question. These differences generate for me a puzzle — why have so many different neighborhoods adopted the same legal form to accomplish such different objectives?

The Business Improvement District Comes of Age

It is difficult to say precisely when the business improvement district (BID) was born. BIDs emerged out of legal structures and concepts that date back many decades, but the specific BID form is a relatively recent development. By some accounts, the first BID in the United States was the Downtown Development District of New Orleans, which was established in 1975. Few BIDs were created before 1980, and in most places the surge in BID formation did not really get going until around 19902 — the year that Philadelphia's Center City District was first established. Although new BIDs were created on a regular basis around the country throughout the 1990s and 2000s, it is fair to say that 2010 marks the completion of two decades of what I will call the BID movement — that is, the development and spread of, and the academic and public debate about, this new structure of urban governance. The BID combines public and private, as well as city and neighborhood features, in novel and interesting ways, and it provides a useful means of maintaining and supporting the urban environment. Yet, as many critics have pointed out, the BID also raises troubling issues of urban service inequality, accountability, and the focus of urban governance. It is hard to imagine a better way to analyze the coming of age of the business improvement district than through the extraordinary collection of studies of Philadelphia's BIDs in this issue of the Drexel Law Review.

Governing? Gentrifying? Seceding? Real-Time Answers to Questions About Business Improvement Districts

Business improvement districts (BIDs) have become a ubiquitous feature of the urban development toolkit. An important — perhaps the most important — instantiation of the trend in urban governance toward the devolution of local authority to new "sublocal," quasi-governmental institutions, BIDs play an important role in urban re-development efforts, especially efforts to revitalize downtowns and satellite center-city business districts. It would be difficult to disentangle the remarkable resurgence of Center City, Philadelphia, for example, from the rise of the Center City District, a BID that spends millions of dollars each year on a wide range of public services, including sanitation, street beautification, capital improvements, business promotion, supplementary security, and even the operation of a community court. Despite (or perhaps because of) the apparent successes of high-profile BIDs like the Center City District, BIDs remain controversial, with some commentators praising them as an ingenious way to overcome the collective action problems that prevent neighbors from voluntarily organizing to address community problems and others condemning them as dangerously anti-democratic and privatizing.

Does Governance Matter? The Case of Business Improvement Districts and the Urban Resurgence

At the turn of the twenty-first century, the problem of urban economic development has elicited a kind of entrepreneurial, market-oriented response from city leaders. The driving assumption is that cities are competing with one another and with the suburbs for residents, firms, and consumers. According to many policymakers, cities can only compete with other places by creating a market-oriented environment that is responsive to both consumer and resident desires. Indeed, a central preoccupation of the turn-of-the-century city has been to provide particular consumption amenities to a highly mobile and increasingly demanding populace. In particular, cities have sought to attract individuals with high incomes and high levels of education. The argument has been repeatedly made that cities that create attractive and inviting areas in which to live, shop, eat, and recreate will win the competition for that demographic and will ultimately do better economically than cities that do not.

Business Improvements in Philadelphia: A Practitioner's Perspective

With this volume, Philadelphia can reflect on twenty years of experience with business improvement districts (BIDs). When the city first authorized the Center City District (CCD) in 1990, there was nothing like it in the region. Property owners in a high-tax city, mired in a severe national recession and municipal fiscal crisis, agreed to pay even more. For the press, it was the equivalent of a "man bites dog" story, providing the CCD with more than its share of coverage during both formation and launch. At the time, a BID existed nearby in Allentown, Pennsylvania, but that was beyond the region's horizon of awareness and in a smaller setting than anyone thought comparable to Philadelphia. BIDs were still a new national phenomenon, so it was to cities like New York and Portland, Oregon that the CCD planners had to look.

Business Improvement Districts as a Tool for Improving Philadelphia's Economy

There are an estimated 1500 business improvement districts (BIDs), most of them in North America. Their fundamental purpose is to improve business profitability and property values. BIDs are unusual among economic development tools in that the private sector beneficiaries are also the entities principally responsible for planning, managing, and financing the BID. In these ways, BIDs incorporate the concepts of sharing costs, responsibilities, and the benefits of district management.

The most effective BIDs overcome problems and capitalize on economic opportunities specific to the jurisdiction in which they function. Successful BIDs are not off-the-shelf products; the management and services of one rarely fit another. BID success and popularity is largely reliant upon the BID's ability to reflect private-sector priorities and generate, or otherwise obtain, reliable and sufficient financial resources so as to be able to address these priorities.

Case Studies on Philadelphia Business Improvement Districts

Privatized Government in a Diverse Urban Neighborhood: Mt. Airy Business Improvement District

The Philadelphia City Council formally approved the plan establishing the Mt. Airy Business Improvement District (Mt. Airy BID) on June 14, 2007. The service area of the Mt. Airy BID encompasses an almost-two-mile stretch of Germantown Avenue — the historic main thoroughfare bisecting the Philadelphia neighborhood of Mt. Airy — as well as certain commercial properties on select intersecting streets. Germantown Avenue also marks the unofficial boundary between East and West Mt. Airy, the two major subdivisions of the neighborhood.

The Chestnut Hill Business Improvement District: Learning from Other BIDs

Located in Northwest Philadelphia, Chestnut Hill is bounded on its south and west by Wissahickon Park, on its north by Montgomery County, and by Mount Airy to the east. The area's population is a quaint 9500. Chestnut Hill's streets are lined with stone houses, parks, and a shopping district that has stores ranging from Robertson's Flowers to Talbots to Ten Thousand Villages. Such attractions mark Chestnut Hill as the most desirable Philadelphia neighborhood outside of Center City — indeed, Forbes even lists Chestnut Hill as one of its top urban enclaves, along with Beverly Hills and Park Slope in Brooklyn.

Manayunk Development Corportation: The Search for Sustainable Gentrification and a Parking Spot

In 1985, local business and civic leaders formed the New Manayunk Corporation to "encourage economic development that benefits the entire community" of Manayunk, a now-gentrified neighborhood in the northwest section of Philadelphia that sits beside the Schuylkill River. The New Manayunk Corporation's portfolio included capital projects and parking management in the neighborhood. Seven years later, influenced by national models of urban regeneration, the scope of the organization expanded considerably when it took over neighborhood marketing and promotion from a business association that had managed Manayunk's many weekend festivals. The organization was renamed the Manayunk Development Corporation (MDC). Presently, the MDC acts as a "local chamber of commerce," liaises between business owners and residents, and manages the Manayunk Special Services District (MSSD), a governmental entity created by the city of Philadelphia in 1996. The MDC's major task as a nonprofit organization is to manage and maintain the neighborhood's reputation as an interesting place to shop, dine, and work.

The Sports Complex Special Services District: Thirty Million Dollars for Your Trouble

The Sports Complex Special Services District (SCSSD) in South Philadelphia serves the neighborhoods that surround the Sports Complex. The Sports Complex itself includes four sports and entertainment venues: the Wachovia Spectrum (recently closed), the Wells Fargo Center (home to the National Hockey League's Philadelphia Flyers and the National Basketball Association's Philadelphia 76ers), Lincoln Financial Field (home to the National Football League's Philadelphia Eagles), and Citizens Bank Park (home to Major Leagues Baseball's Philadelphia Phillies). Like other business improvement districts (BIDs) in Philadelphia and around the coun-try, the SCSSD meets the definition of a BID in that it is a "privately directed and publicly sanctioned organization[] that supplement[s] public services within geographically defined boundaries" and is funded by local businesses. At the same time, the SCSSD differs from traditional BIDs in two key ways — only three businesses are involved in funding the special services district, and the impetus for the creation of the district came not from the businesses themselves, but from their residential neighbors and the City of Philadelphia. In fact, the executive director, Shawn Jalosinski, suggests that the SCSSD is more accurately described as a "neighborhood improvement district" (NID).

The Aramingo Avenue Shopping District: Stakeholder's Bridge or Border Divide?

Business improvement districts (BIDs) have been the subject of heated debate. As private entities with taxing and service provision authority, operating in subsections of the urban core, they raise questions concerning equitable representation of community interests. What happens when such an entity forms between two distinct and different ethnic communities? Can a BID serve as a bridge or is it destined to bolster historic divisions? The Aramingo Avenue Shopping District case illustrates that BIDs can serve to unify public and private interests, with appropriate attention to the democratic process and community building during the early stages of formation. However, in the absence of formal institutional provisions ensuring representation of residential interests, there are no guarantees that division will not resurface in the future, stymieing a BID's efforts to enhance the quality of a given area.

Whose Neighborhood is it, Anyway? The South Street/Headhouse District

The Philadelphia City Council authorized the South Street/Headhouse District (SSHD) in 1992, and it formally began business in 1993. The SSHD is the second-oldest business improvement district (BID) in Philadelphia after the Center City District. Its area of operation covers approximately sixty square blocks at the eastern-most end of South Street. The SSHD serves one of the most well-known shopping and "bright lights" districts in all of Philadelphia — South Street has had an identity as an entertainment and retail district for more than two hundred years.

Clean, Safe, and Pretty: The Emerging Planning Role of the Old City District

On May 8, 1997, the Philadelphia City Council enacted a bill authorizing the creation of the Old City Special Services District (the Old City District or OCD). Philadelphia's then-Mayor Edward G. Rendell signed the bill into law on May 17, 1997. The OCD began operations on June 23, 1998, when Mayor Rendell signed a second bill authorizing the plan, budget, district boundaries, and property levy to fund the district. The OCD encompasses a twenty-two-block area of Old City, the historic core of Philadelphia that contains some of the city's most important historic resources. Independence National Historic Park is in the district and is home to the Liberty Bell, Independence Hall, and the Constitution Center. Smaller historic attractions in the district include the Betsy Ross House and Elfreth's Alley. Old City has emerged as an important tourist and entertainment destination for Philadelphia, offering a mix of restaurants, bars, art galleries, and shops along with the historic attractions and drawing nearly seven million visitors each year.

Moving On: The East Passyunk Avenue Business Improvement District

The East Passyunk Avenue Business Improvement District is a business improvement district (BID) first designated by the City of Philadelphia in December 2002 for a seven-year term and renewed in September 2009 for ten additional years. The district is a mixed-use community-commercial corridor in South Philadelphia encompassing 289 properties. The district's transforming commercial occupancy and current activities reflect the ongoing gentrification of the surrounding community. District management is the responsibility of the East Passyunk Avenue Business Improvement District, Inc. (EPBID), which commenced operations in May 2003 with an annual budget of $125,000. The EPBID has also participated in Philadelphia's Main Street Program since 2006. Its program and administrative budget for the 2009 calendar year was about $230,000.

Finding Opportunity While Meeting Needs: The Frankford Special Services District

Considered a "great historic district" by many locals, Frankford is a large neighborhood in the lower northeast section of Philadelphia, situated about six miles from Center City. The Frankford Special Services District of Philadelphia (FSSD or the "District") sits in the 19124 zip code, encompassing census tracts 293, 294, 300, and 301. This area includes both sides of Frankford Avenue and certain side streets from Torresdale Avenue to Bridge Street, which is the center of commercial activity in the District.

The Port Richmond Industrial Development Enterprise: A Successful Model for Preserving Urban Industry

The Port Richmond Industrial Development Enterprise (PRIDE) touts itself as the first urban industrial neighborhood improvement district (NID) in Pennsylvania. An alliance of industrial businesses located in the Port Richmond neighborhood of Philadelphia, its mission is to improve the business environment for its members and for the surrounding community. The story of PRIDE's development and achievements since its inception in 1998 provides an example of a successful effort to preserve urban industrial jobs through the cooperation of nonprofit economic development organizations, business owners, residents, and city and state government.

Center City District: A Case of Comprehensive Downtown BIDs

The Center City District (CCD) is one of the most comprehensive Business Improvement Districts (BIDs) in the United States — and possibly in the world — in terms of the size of its total revenues, the range of public services it provides, and the functions it fulfills. Its total revenues were $18.8 million in 2009. The services that the CCD provides span a wide range, from sidewalk cleaning to security to capital improvements. Its functions include land-use planning, marketing, and assisting in the creation of, and ongoing funding for, a community court. This Case Study will describe the increasingly important roles BIDs play in metropolitan governance, and the macroeconomic conditions that led to the creation of hundreds of BIDs throughout the United States. This Case Study will specifically focus on the CCD's founding period, successes, and shortcomings.

There is No Line: The City Avenue Special Services District

The City Avenue Special Services District (City Avenue SSD) began operations in 1999 after nearly a decade of planning, brokering, and partnering between officials in the City of Philadelphia (spearheaded by then-Councilman Michael Nutter), Lower Merion Township Commissioners Joseph Manko and James Ettleson, and State Representative Lita I. Cohen. The primary objectives propelling the creation of the district and guiding initial operations included fostering a spirit of cooperation between the city and its neighboring suburb, reducing crime, and promoting business, commerce, and physical improvements along the corridor. These objectives align with national trends related to the creation of business improvement districts (BIDs). BIDs "can provide a neighborhood with an institutional means for crafting and implementing strategies for area development, marketing, and attracting new investment."

Roxborough on the Rise: A Case of Generating Sustainable Buy-In

In an ever-globalizing, networked society, business improvement districts (BIDs), as network actors in metropolitan governance, are increasingly becoming subjects of study. BIDs are "publicly sanctioned special districts," providing a "wide range of services," and commonly relying upon assessment of members as the primary revenue source. Often nestled in metropolitan regions, BIDs are beginning to play a vital role in urban entrepreneurial governance. Urban entrepreneurial governance is a market-driven approach that invokes collaboration between the public and private sectors with the goal of fostering economic development. At its core, it is about strategic policy planning. To compete in a global political economy, cities will have to shift from managerial to entrepreneurial governance. BIDs, such as the Roxborough Neighborhood Improvement District (RNID) in Philadelphia, Pennsylvania, can help metropolitan areas facilitate that shift.

The Challenges of Using BIDs in Lower-Income Areas: The Case of Germantown, Philadelphia

In April 1995, Mayor Edward Rendell signed the bill that created a special services district for the Central Germantown community. The process that created the Germantown Special Services District (GSSD) had been neither easy nor fast — initial discussions of the district began in 1992. The GSSD was the fourth district to be approved in Philadelphia. The first two districts, the Center City District and the South Street/Headhouse District represented a more common use of business improvement districts (BIDs), by providing additional services in central business districts as well as entertainment and tourism areas with healthy real property tax and customer bases. Germantown, along with the Frankford Special Services District (the city's third approved district, located in the city's lower northeast neighborhood of Frankford), represented a novel use of the BID model in areas with significant economic, social, and physical challenges. As the BID model largely relies on a self-help model of urban management and service delivery, districts with little resources typically struggle to reach their goals. This is especially true when those goals go beyond simple place management and maintenance functions to include larger initiatives related to the social and economic transformation of urban communities.

New Boundaries of Urban Governance: An Analysis of Philadelphia's University City Improvement District

Formerly a "first suburb" of Philadelphia, University City is a neighborhood situated west of downtown Philadelphia. It is today one of the most diverse areas of the metropolitan area in terms of race, ethnicity, culture, and socioeconomic status. University City is home to two major research universities, the University of Pennsylvania (Penn) and Drexel University (Drexel), which provide an immense economic base for the neighborhood in the scientific, medical, and technological sectors. The neighborhood features distinct historic housing, tree-lined streets, and a variety of restaurants and cafés. Additionally, the neighborhood provides many options for local shopping, museums, and theaters. Just as metropolitan Philadel-phia's economy and socioeconomic structure grew more diverse, so did University City's.

The Greater Cheltenham Avenue Business Improvement District: Fostering Business and Creating Community Across City and Suburb

The Greater Cheltenham Avenue Business Improvement District (GCABID) is a partnership between Cheltenham Township and Philadelphia, created through enabling ordinances in both municipalities. Both ordinances include a sunset provision requiring the termination of the GCABID in five years unless the township and city reenact their ordinances. Before renewal, each municipality must review "the District and the programs and services provided by" the GCABID. Sunset provisions and review requirements are two of the best tools that governments can use to insure BIDs are held accountable.