Beyond Public and Private

Business improvement districts don't fit our ordinary categories.


Walk down Charles Street, Howard Street, or Park Avenue in downtown Baltimore, and you'll see signs announcing that, "for your safety," the block is "a Video Recorded Area." Each sign bears the logo of the Video Patrol, and each is located just a few feet below an actual camera, diligently surveilling everything that passes. There are 48 such electronic observers in this army, and more will be added soon.

There are people who don't mind government cameras but object to such devices on private property, where the owners face fewer legal limits on what they can do with the images. There are people who don't mind private video surveillance but object to cameras in the hands of the government, which might be interested in stopping much more than vandalism and theft.

Yet these eyes don't fit neatly into either category. They are operated and substantially funded by a group called the Downtown Partnership, a nonprofit corporation that administers the Downtown Management District. The latter is a business improvement district, or BID, a relatively new form of social organization that is alternately praised as a form of decentralized self-help and damned as a miniature model of the unaccountable corporate state.

There are over 1,000 BIDs scattered throughout the United States. While some cities try to establish a business-friendly environment by cutting local taxes, BIDs invert the formula: Property owners pay extra taxes and in exchange receive extra services. The typical district pays to clean up trash, beef up security, renovate infrastructure, and advertise the district's amenities; in different places they have done everything from putting up Christmas lights to installing wireless Internet access to lobbying for stricter porn laws. In some states, it's theoretically possible for a city to create a BID without consulting the enterprises that exist there and then to micromanage everything the body does. In practice, though, one is created when a substantial number of property owners asks for it; once established, it generally enjoys a lot of leeway to do as it pleases.

In other words: BIDs aren't really voluntary, but they're a lot more consensual than most forms of public administration. And they aren't really governments, but they're a lot more autonomous than most civic associations.

Writing in the Columbia Law Review in 1999, Columbia law professor Richard Briffault observes that business improvement districts, frequently regarded as a form of privatization, exist instead in a hazy territory between public and private—and that this is actually typical of local government.

Small towns and suburbs are "public" in the obvious sense, he explains, but at the same time their autonomy "fragments states into hundreds of jurisdictions, each focused narrowly on the well-being of the constituency within its boundaries rather than on the state or region as a whole, each struggling with its neighbors for the resources it needs to satisfy its constituents' demands."

The public/private muddle runs even deeper than Briffault suggests. The country includes many purely contractual "governments"—condominiums, residential community associations, private towns such as Reston, Virginia. It also includes some "public" units of government that exist purely for the protection of private associations. The Reedy Creek Drainage District in Florida, for example, is essentially a front for Walt Disney World, while Irvine, California, is a Reston-style town that incorporated as a city. (Muddying matters further, places like Irvine wield powers, such as annexation and eminent domain, that would not be available if they were completely private.) But even regular, coercive municipalities have an element of consent that larger units of government often lack.

"Municipalities, historically, were not created in this country by the state legislature slicing up its territory into little pieces and erecting new governments on it," observes George Liebmann, executive director of Maryland's Calvert Institute for Policy Research and author of several books on local and sublocal governments. "They were created in most states by an incorporation process, in which any 25 or 100 or 500 people could petition for the creation of a municipality and the state legislature would then authorize it." Conceptually, he argues, BIDs are essentially "very small municipalities."

Until the 19th century, there was no legal distinction between private and municipal corporations. And early on, most towns refused to incorporate, regarding the institution as aristocratic or simply unnecessary. As Harvard law professor Gerald Frug has observed, it is possible to view many colonial towns as associations rather than as creatures of the state.

Two centuries later, city hall looks a lot less voluntary. But a local government still gives you much more power to vote with your feet than a state or national government does, though that isn't much use if it suddenly decides to condemn your property or criminalize your behavior.

When a business improvement district is formed, all this interplay between public and private, coercive and voluntary, occurs again. Not everyone affected or assessed by a BID is necessarily happy about it. If you're a street vendor, a vagrant, or a small-business owner who'd rather not pay the fee, you might wish the district weren't there.

Nor does opposition come only from the poorer portions of the community. As Briffault notes, the owners of big office buildings—the people who frequently face the largest assessments—are often already "providing the supplemental sanitation and security services that the BID would offer." The Oregon Downtown Development Association, which helps BIDs get off the ground, describes "large, property-owner occupied buildings" as "the most dangerous group" standing in the way.

But BIDs seem more benign compared to other sorts of urban development programs. Briffault lists several significant ways they differ from their predecessors:

• They're "not necessarily downtown-oriented." Where other programs bleed outlying neighborhoods for the sake of the central business district, BIDs help neighborhood enterprises help themselves.

• Instead of pouring money into the usual civic white elephant projects—"hotels, convention centers, sports arenas and other megastructures"—BIDs focus on "street-level services and small-scale improvements."

• Rather than diverting public money from the rest of the city, BIDs generate most or all of their own income.

The biggest problem with BIDs may be the values embedded in them: They're closer in spirit to a theme park than to a bustling urban plaza. It's one thing to crack down on litter and crime. It's quite another to do battle, as BIDs do routinely, with sidewalk vendors, leafletters, and other elements of a festive street life. The conflict becomes more acute when it turns one property owner against another. For evidence, examine Times Square in Manhattan. Its transformation from sex district to sanitized tourist haven was accomplished in part by the direct and indirect efforts of the local BID.

Political power should be as diffused and decentralized as possible, to give us both more of a voice in public decisions and more freedom to exit when our voices go unheeded. So it isn't a problem when cities devolve power to districts that want to model themselves after malls. It's a problem when they fail to grant similar toolkits to areas whose denizens prefer bazaars—or which aren't shopping centers to begin with. Washington, D.C., has four BIDs and 37 neighborhood commissions. The BIDs have the power to tax themselves to provide additional services. The neighborhood commissions don't, and thus don't have much reason to exist; they're widely regarded as one more joke in a city that's full of laughs. (And no area has the power both to tax itself and to exempt itself from the city government's levies.)

A vibrant city would have both theme parks and bazaars, self-governing business districts and self-governing neighborhoods, well-kept malls and grungy community gardens. BIDs can be a step in that direction, but if they're the only step a city takes, the town is bound for blandness.