The Business Improvement District (BID) model is one of the most exciting and popular placemaking models in the world. There are over 1,000 BIDs in the USA alone.
Business Lab has extensive experience in establishing new BIDs. Through that experience we’ve noticed two trends with BIDs in New Zealand:
The model does not enable representation from the wider community but more community members are wanting to get involved in BIDs.
Most BIDs in New Zealand have not secured additional resourcing beyond what they receive through the targeted rate.
We see an opportunity to strengthen the BID model by better involving the community in what BIDs do.
We’re tentatively calling this a Neighbourhood Improvement Model and we’re seeking expressions of interest from councils or existing BIDs who want to be part of exploring this innovative opportunity.
If that sounds interesting to you - read on
First, what is a Business Improvement District?
BIDs are private sector organisations that act to improve a business district. They’re different to voluntary business associations or chambers of commerce in one important way. They are funded through a targeted rate on commercial property.
That funding mechanism is what sets BIDs apart. It’s powerful. Once you’ve set up a BID, the organisation is financially sustainable. Nobody has to run around every year, cap in hand, asking for donations or grants.
This means the model has been successful in creating well-resourced organisations to represent business and commercial property owners in cities and town centres.
Compare that with community organisations who look with envy to the BID model.
A community organisation might struggle to get $3,000 from their council each year while their local BID automatically receives $60,000, or significantly more, from their targeted rate. The community organisation is still writing its funding application while the BID is already off and implementing its action plan.
BIDs are most popular in Canada, the USA, the UK and here in New Zealand. There are nearly 1,000 in the USA alone. And just recently Singapore included support for BIDs as one of 40 recommendations for the future economy of Singapore.
Image from The Mosaic Partnership.
Trends with BIDs in New Zealand
Business Lab has extensive experience with BIDs in New Zealand and we’ve noticed a few trends.
Community members want to get involved but can’t
The model does not enable representation from the wider community but we’ve seen more community members wanting to get involved in BIDs.
We saw this in a BID we helped to establish in Karori. Half of the group who helped promote the establishment of the BID were not business or commercial property owners. But they could see the benefits of a well-resourced organisation that was focused on creating a thriving town centre.
Most BIDs receive no funding other than their targeted rate
Most BIDs in New Zealand have not secured additional resourcing beyond what they receive through the targeted rate.
We aren’t aware of many BIDs that regularly secure funding through anything other than the targeted rate. Perhaps it’s because they don’t need to? Or perhaps it’s because they have a narrow focus and the leadership team lack a broader vision of what the BID could achieve? We’re not sure.
An opportunity to strengthen the BID model through community
We’ve been testing the waters on idea to strengthen and expand the BID model.
The concept is to match the money collected through the targeted BID rate with an equal contribution from the residential community.
You would reflect that sense of partnership in the governance of the organisation and the focus of its strategic plan. The organisation would serve both the business community and the residents of the community.
For the moment we’re calling this the Neighbourhood Improvement District.
Our thinking is influenced by Neil McInroy from The Centre for Local Economic Strategies (CLES) who emphasises the importance of private-public-citizen partnerships.
How would this work in practice?
Let’s look at the Karori Business Association as an example. This was the most recent BID we helped the Wellington City Council to establish.
The Karori Business Association has just over 100 members who together contribute $60,000 each year to implement the organisation’s strategic plan. On average, that’s $600 per business / commercial property owner.
There are 16,000 residents in Karori. If you aim for a budget of $120,000 for the organisation, individual residents would then need to contribute $3.75 each per year under the Community Improvement District model.
You would then ensure the Executive Committee has a balance of private and civic sector representation. And you would reflect the interest of each in the organisation’s strategic plan. All this would be formalised through an evolved council policy and guiding constitutional template.
Why bother?
Town centres are changing. Some would say they are dying. Leases are up for renewal as online shopping and indoor malls shift commerce away from town centres.
This means that town centres will become more important as services centres for their local communities. Not just a place to buy things. But also a place to meet and connect.
Plus, let’s face it. Residential communities are already a business’s primary customer base. Residents’ needs should always be a priority for a business community. Dividing people into “residents groups” and “business groups” only serves to strengthen the divisions.
The other factor is the resourcing challenges for community organisations. Resident Associations and the like struggle to get by on the smell of a few funding applications. A lack of resources and a shift away from voluntary efforts makes their existence even more challenging. They often struggle to get good staff because they can’t pay them properly. But they need good staff to secure funding. It’s a tough cycle to break.
With that context in mind, we see real potential in any model that creates a public, private and citizen partnership. The Neighbourhood Improvement District would provide a way for residents and business people to work together for their shared interest in seeing their town and community thrive.
Not more rates!
We understand that rates are a political hot potato. At the same time, we need to rethink how we support community wellbeing.
It’s a little like climate change - we know we need to look at new types of financial and behavior models. The reality is there’s deeply entrenched business-as-usual behaviour to break through. But if we dilly dally around with BAU, we will be too late to make a material difference. We may become the frog in the pot of boiling water.
We believe a strong Neighbourhood Improvement District value proposition, combined with effective engagement and political support, would stand on its own merit as a good investment proposition for residents.
Creating a well resourced collective voice for a community (landlords, business owners and residents) that is not reliant on grants and hand outs will foster innovation and create significant new opportunities for financial independence.
We believe the Neighbourhood Improvement District is a game changer that New Zealanders are ready for!
How could a Neighbourhood Improvement District work in your area?
We’re looking for a forward-thinking community to be the first-mover on this model. You might already be involved in a BID and you want to strengthen the community’s involvement. Or, you might be thinking about setting up a BID from scratch. Either way, let’s talk.