BIDs
By Thomas M. Keane Jr.
Boston City Councilor

This article was first published in The Beacon Hill Paper, December 1998.

In a few months, the businesses around downtown Washington Street hope to create a business improvement district — a BID. It's an idea that has been tried, with success, in nearly 1,200 communities around the nation. It's an idea that Boston should approach with caution.

A BID is like a mandatory trade association. In the case of Washington Street, the entire downtown area will form itself into a BID which will provide a wide variety of services to the businesses in its territory, including security, advertising, cleanup and maintenance.

What makes a BID unique, however, is that it taxes businesses for this service. Properties usually pay a tax based upon their square footage. The tax is mandatory. Businesses can't opt out and, in the case of Boston, the new fees are actually collected by the city. Failure to pay the new levy is treated in exactly the same way we would treat failure to pay one's property taxes.

The attractive thing about the BID, however, is that all of the money raised is used for the businesses themselves. The downtown businesses currently pay over $65 million a year in property taxes. How much do they receive back in city services? No one is willing to come up with a number, but there's no doubt it's vastly less.

Moreover, BIDs allow businesses to provide for their own needs without the vicissitudes of government funding. Even during good times, city governments typically underfund business services because (to be blunt) businesses don't vote. During bad times, BIDs have been particularly effective when local governments try to make do with lessened resources by cutting so-called nonessentials like street sweeping. BIDs will help keep those services in place.

Sounds great, doesn't it? Yet there are a few nagging concerns.

BIDs are, by their nature, quasi-governmental entities. Like governments, they run themselves democratically through voting. Like governments as well, they have the power to impose taxes. Thus, in the Washington Street BID, a 75 percent vote of property owners is required to establish the BID. Those who don't want the BID are still governed by it, however, and still have to pay it fees.

The problem, of course, is that we already have a government — the City of Boston. Why a new one? BIDs were invented because downtown business districts believed existing local governments were failing them. In a sense, the Washington Street BID is an indictment of Boston's government itself.

More worrisome, BIDs are a challenge to traditional government itself. If businesses can band together into a BID, why can't a neighborhood do the same? Indeed, in some places, people are doing just that, creating gated communities that have their own police, maintenance and rules. Left unchecked, the notion of a common government serving all the people deteriorates into a rash of fragmented, isolated principalities that serve only some.

Finally, a concern unique to Washington Street: those who pay for the BID are not the same as those who create it.

The BID itself will be created by a vote of the property owners in the area — there are fewer than 300. There are literally thousands of businesses within the BID, however. It's those businesses that will pay for the BID. That's because most of the landlords in the area have "pass through" clauses in their leases, so that any tax increases get passed through directly to the tenant. It's an odd disjunction, particularly since at one point in Boston's past a lot of tea was thrown in the harbor over just this issue.

The world won't collapse when the Washington Street BID is established. Indeed, the downtown business district will almost certainly benefit. I view this BID as an experiment — that's why I voted in favor of moving forward with it — but an experiment that should be watched with great care and great concern.