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and applications of complexity theory in ... best within a network governance framework. The research ... are as small as $40,000 (Frankford Special Services District; Stokes ... the owners of business and residential properties in their districts,.
Göktug˘ Morçöl Penn State Harrisburg James F. Wolf Virginia Tech

New Thinking About Grassroots Public Management Issues

Understanding Business Improvement Districts: A New Governance Framework

Göktug˘ Morçöl is an associate professor of public administration and policy at Pennsylvania State University, Harrisburg. His research focuses on metropolitan governance, business improvement districts, and applications of complexity theory in public policy analysis. E-mail: [email protected]

What is the current state of research on business improvement districts (BIDs)? What is an appropriate framework for analysis? What are key questions for advancing future BID research? BIDs can be understood best within a network governance framework. The research shows, first, a blurring of the line between the public and private spheres as a result of BIDs; second, BIDs are increasingly important actors in urban governance; third, BIDs engage in collaborative, conflictual, and co-optative relations with local and state governments; and fourth, difficult accountability and management problems are created by their interdependent relationships with local governments. Future research needs to focus on understanding the role of BIDs in urban governance and assessing their impacts on metropolitan areas, as well as their inherently complicated public accountability and management challenges.

James F. Wolf is a professor at Virginia Tech’s Center for Public Administration and Policy. His current research focuses on metropolitan governance organizations. Most recently, he has examined the roles of voluntary regional councils and business improvement districts. E-mail: [email protected]

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o some observers, the traditional boundaries between the theory and practice of public administration—boundaries that separated the domains of policy making and public administration and defined the latter in terms of service delivery by public agencies—have been blurred in recent decades (Kettl 2002, 4–25). Salamon captures important elements of the current public administration landscape when he notes that the practice has “leaped beyond the borders of the public agency and now embraces a wide assortment of ‘third parties’ that are intimately involved in the implementation, and often the management, of the public’s business” (2002a, 2). Both Kettl and Salamon argue that a new governance framework is needed to better understand this phenomenon. We will argue and demonstrate in this paper that business improvement districts (BIDs) are a manifestation of the expanded scope of the public administration problem, and that for a good understanding of their roles and relationships in urban areas, one needs to use a governance framework. BIDs entered the consciousness of public administration practitioners and academics through a series of publications and conference presentations in the 906

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last couple of decades. The first books on BIDs for practitioners (Feehan and Feit 2006; Houstoun 1997) and academics (Mitchell 2008; Morçöl et al. 2008), the book reviews in Public Administration Review (Banyan 2008; Justice 2009), the PA Times article on BIDs (Justice and Skelcher 2006), and the panels on BIDs organized at ASPA conferences (Newark, New Jersey, in 2001; Portland, Oregon, in 2004; Dallas, Texas, in 2008) contributed to this consciousness. The online certificate program for BID managers that Rutgers University–Newark, launched in 2007 (PA Times 2007), was a step in the institutionalization of these entities through the professionalization of their managers. In the following sections, we will make the case that BIDs are important actors in urban governance. We propose Salamon’s “new governance paradigm” (2002a, 2000b) to frame the discussion of the roles and relations of BIDs in urban governance, and point out the theoretical and practical problems they pose to public administration. BIDs: An Overview BIDs are important both theoretically and practically because of their organizational forms, their increasing numbers and geographic spread, and the governmental and economic powers some of the BIDs exercise. It is important to note that there are quite large variations among BIDs in their organizational forms and in the legally granted and de facto powers they exercise. Because of such variations, the BID phenomenon is quite complex, but there are sufficient commonalities that allow us to propose a framework for future studies. BIDs can be defined as self-assessment districts that are usually initiated and governed by property or business owners, enabled by state laws, and authorized by local governments to provide public services in designated urban and suburban areas. The term “business improvement district” is used in the literature to denote both the designated geographic areas and the organizations that manage them (Morçöl et al. 2008, 2).1

It is estimated that there are somewhere between 500 and 1,000 BIDs in the United States and Canada (Mitchell 2008, 57). Since the early 1990s, BIDs also have been established in South Africa, New Zealand, the United Kingdom, Ireland, Germany, Jamaica, and Serbia (Blackwell 2008; Houstoun 2003, 164–75; Hoyt 2008; Radcliffe and Ryan 2008; Rose 2006). In this paper, we will focus primarily on the BIDs in the United States, where they are most pervasive.

they are more like general purpose governments. In some states, they are authorized to provide various public services (such as trash collection and security) and exercise governmental powers (such as land-use planning, public space regulation, and operation of community courts); in others, they exercise such powers even though they lack the formal authority to do so (Briffault, 408, 419–20; Morçöl and Zimmermann 2008a, 41–45).

In the U.S. legal context, BIDs are considered a particular hybrid of special purpose governments (special districts) and special assessment districts (Briffault 1999, 414; Mitchell 2008). Special districts are “autonomous governments that provide single or limited services” (Foster 1997, 2). Foster identifies two types of special districts: “taxing districts,” which have the power to levy taxes and are governed by elected boards, and “public authorities,” which are government corporations that raise revenues through user fees, grants, and private revenue bonds and whose boards are appointed by local or state governments (7).

There are large variations among BIDs in their size, their powers, and the way in which they are structured. There are BIDs whose annual revenues are as large as $18 million (Center City District in Philadelphia; Center City District 2007), and those whose revenues are as small as $40,000 (Frankford Special Services District; Stokes 2006). A large majority of BIDs are not big or powerful, but the bigger ones are powerful enough to play important and, at times, controversial roles in urban politics, as the well-publicized case of Rudy Giuliani versus the Grand Central Partnership in New York City illustrates. By 1998, the Partnership had become, or was perceived to be, too powerful, to such an extent that Giuliani, then mayor, accused its president of “creating his own fiefdom” and forced him to resign (Pristin 1998).

Most BIDs do not entirely fit into these definitions. The BIDs in Georgia are the closest to the taxing district definition (their boards are elected and property owners in the districts are assessed), but local government organizations, not the BID management organizations, collect their assessments (Morçöl and Zimmermann 2008b). In New Jersey, most BID management organizations are incorporated as nonprofits and their boards are not elected (some BIDs in this state are managed by municipal commissions); local governments levy assessments for them (Justice and Goldsmith 2008). In Pennsylvania, under the older 1980 law (still in effect), BIDs are formed as public authorities and local governments appoint their board members, but their main revenue source is assessments, and at least one BID, the Center City District in Philadelphia, bills and collects its assessments (Kromer 2009, 64). Although BID special assessments and local government taxes are technically different from each other, they are practically quite close. Traditionally, special assessments were collected for capital improvements in designated areas and for limited periods of time (Briffault 1999, 416). In practice, BID assessments are not limited to certain periods of time; although in most state laws, there are sunset provisions for BID assessments, they are renewed periodically. In special assessment districts, property owners also traditionally were assessed an amount proportionate to the benefits they received from improvements; BID services provide diffused, not targeted, benefits (416). All in all, BID assessments are more like continual local government property taxes that are not tied to specific benefits that property owners receive.

Not surprisingly, BIDs have attracted both friendly and critical attention from academics as well. They are praised for being innovative problem solvers and efficient providers of services (see Ross and Levine 2001, 245). Some attribute this innovativeness and efficiency to not being hindered by urban politics and bureaucracy (Briffault 1999, 372). At the same time, BIDs are criticized for ignoring the needs and voices of residential property owners (Ross and Levine 2001, 245), creating social segregation in cities through differential provision of services (Briffault 1999; Lavery 1995; Ross and Levine 2001, 245), creating the conditions for businesses to withdraw from general taxation (Mallett 1993), violating the principle of the uniformity of taxation (Briffault 1999), and contributing to the loss of social capital in urban areas (Lavery 1995). Some authors also have criticized the lack of accountability of BID management organizations to city and county governments, the owners of business and residential properties in their districts, and the communities that surround their districts (Briffault 1999; Lavery 1995; Ross and Levine 2001, 245).

A Governance Framework for BIDs We propose that a network governance perspective is needed to understand the roles of BIDs in urban areas and their complex nature. Salamon’s “new governance framework” offers the most useful conceptual tools to frame the discussion on BIDs. His framework has five key concepts: We propose that a network (1) the unit of analysis should be “tools,” not Briffault’s observation that BIDs are a unique governance perspective is needed program or agency; (2) the relations among participating agencies and organizations combination of the principles of special assessto understand the roles of should be seen as networked, not hierarchiment districts and special districts, a combi[business improvement districts cal; (3) the blending of the public and private nation of “the distinctive revenue stream of (BIDS)] in urban areas and their spheres should be recognized; (4) negotiation the former with the governance structure and complex nature. and persuasion, rather than command and relative autonomy of the latter” (1999, 420), control, should be the bases of management seems to be the best legal characterization of philosophy; and (5) a new set of skills (enablement skills) is required them. But even this is not sufficient because, as Briffault and others (e.g., Morçöl and Zimmermann 2008a) demonstrate with examples, for managers. He suggests that the realities of new governance pose three major challenges to public administration: management chalunlike most other special districts that provide single or limited services (Foster 1997, 2), many BIDs are not limited to a single role; lenges, accountability challenges, and legitimacy challenges. Understanding Business Improvement Districts 907

In the following sections, we will highlight the roles of BIDs in blurring the line between the public and private spheres and their importance as actors in urban network governance and discuss the nature of their relations with local governments. We also will discuss the accountability and management challenges that BIDs pose. Both Public and Private

BIDs are examples of the blending of the public and private spheres. BID management organizations are primarily organizations of business interests, such as chambers of commerce and business associations. They are granted varying degrees of governmental powers in different states, or they exercise such powers even when they lack the specific authority to do so, as we mentioned earlier. The notions of public and private spheres get blurred even more in some states, because BID management organizations can and do leverage large amounts of public monies to fund projects in their districts. In Georgia, for example, BIDs make land-use plans and conduct feasibility studies for projects in their districts and, using these tools, leverage large amounts of state and/or local government monies to implement projects they have planned for their own districts; some BID managers in this state boast that they “attract public dollars at the rates of 1/6 or 1/10” using this method (Morçöl and Zimmermann 2008b, 360–61). Conceptualizations of BIDs

Variations in the legally defined organizational forms of BIDs and their legal and de facto powers make it difficult to find a simple theoretical lens that can capture the BID phenomenon in its entirety. In the literature, BIDs are characterized using four different conceptualizations: public–private partnerships, tools of government policies, quasi-governmental entities, and private governments. Each can contribute to capturing some aspects of the phenomenon, but we argue that the best characterization of BIDs is that they are actors in urban governance networks. BIDs as public–private partnerships. Grossman (2008) defines BIDs as public–private partnerships. This is a concept used with increasing frequency in the public administration literature, but its contents are quite vague. Lowndes and Skelcher (1998) point out that the term is used to identify modes of governance that involve private and nonprofit organizations at the local level. In that sense, BIDs are not partnerships, but their management organizations may be characterized as partners in the network mode of governance at the local level (e.g., some of them partner with local police departments in providing security). Still, the partnership conceptualization misses the role of power in urban governance networks, which we will address later. BIDs as tools of government policies. In Justice and Goldsmith’s view, BIDs are instruments of accomplishing broad public policy goals, such as “promoting the general welfare of municipalities” or facilitating the “joint provision and production of local public good of place” (2008, 187). This is an application of the “policy tools” concept in Salamon’s new governance framework (2002a, 9–11); in this framework, it is assumed that policy tools, not agencies or programs, should be the unit of analysis. A detailed discussion of Salamon’s conceptualization is beyond the scope of our paper, but we should note that the policy tools metaphor is limiting and 908

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somewhat misleading because it conjures up the image of a “tool user” and thus connotes a one-way power relationship between the government authority and the BID. Government–BID relations are more complex than this image. Contrary to the “tool-using government” image, in most cases, representatives of business property owners, not local governments, initiate the process of creating a BID, with the purpose of promoting their own commercial interests, which may coincide with the economic development goals of local governments. As Briffault points out, quite often “a private sector proposal . . . shapes whatever district the city government ultimately adopts” (1999, 381). Representatives of private interests also populate BID boards, and the boards and BID managers exercise considerable autonomy in their operations (Briffault 1999; Morçöl and Zimmermann 2008a). BIDs as quasi-governments. The “BIDs as quasi-governmental entities/authorities” conceptualization (Ross and Levine 2001, 244) is a variation of the policy tools metaphor. Sandra Van Thiel defines quasi-governmental authorities, or “quangos,” as organizations that are “charged with the implementation of one or more public policies and . . . funded publicly . . . without an immediate hierarchical relationship existing with a minister or a parent department’’ (quoted in Bertelli 2005, 241). This conceptualization is not applicable to BIDs: BIDs are not in hierarchical relationships with governments, and their main source of funding is self-assessments, not governmental funds (some of them do leverage funds from governments and use their resources, as we mentioned earlier, but the mechanisms are different). BIDs as private governments. Because, in many cases, private organizations that represent commercial interests, such as chambers of commerce, lead the creation of BIDs and sometimes even directly manage them (Briffault 1999, 409–10; Morçöl and Zimmermann 2008b), and because BID boards and managers use governmental authorities, some authors conceptualize them as elements of a “parallel state” (Mallett 1993) or “private governments” in their own right (Lavery 1995). Although it is important to stress the influence of private interests in the creation and operations of BIDs, we argue, this private government conceptualization is a stretch because it ignores their interdependencies with local and state governments. BIDs as actors in urban governance networks. We argue that it is better to conceptualize BIDs as actors in urban governance networks. The actor metaphor is one of the core conceptual tools of network governance theorists (Kickert, Klijn, and Koppenjan 1997, 1–3, 6–7; O’Toole 1997, 45; Rhodes 1997, 1–25). Milward and Provan (2000) and Kettl (2002) observe that in governance processes, governments are not the sole determiners of public purposes; other actors, such as private and nonprofit organizations, play roles in determining public policy goals and shaping collective action. This is particularly true for BIDs. We understand that the actor metaphor does not clearly or comprehensively characterize the roles and functions of BIDs in urban governance networks. Variations in the size and context of BIDs, mentioned earlier, do not allow a clear and universal characterization of BIDs, but the metaphor of “an actor in a network” has three important attributes or corollaries that can be

generalized to all BIDs: they are autonomous from governments, they exist in relationships with other actors (e.g., governments), and they participate in collective action to determine policy goals in urban areas. Relations between BIDs and Local Governments

Co-optation may not be a pervasive form of BID–local government relations, but it is the most interesting form theoretically. The importance of potential co-optation is amplified by the fact that many BID management organizations are closely intertwined with other organizations of business interests (Briffault 1999; Morçöl and Zimmermann 2008b). And, perhaps, co-optation is more pervasive than what has been observed; by definition, co-optative relations are not legally sanctioned or immediately visible, and thus it takes specifically designed studies that go beyond legal analyses to uncover such relations.

Very few researchers have studied BID–government relations (Morçöl and Patrick 2008; Morçöl and Zimmermann 2008b; Wolf 2008). These studies indicate that although the existence of a BID depends on legal authorization by a local government, in reality, BIDs are both autonomous and interdependent with governments. BIDs cannot exist without governments, but the fact that BIDs are taking over some of the BIDs cannot exist without responsibilities of local governments suggests governments, but the fact that that local and state governments are becoming BIDs are taking over some more dependent on them for the delivery of of the responsibilities of local local services.

governments suggests that

Accountability Challenge

The multiorganizational, fragmented, and complex nature of governance networks exacerbates the practical and theoretical accountability challenges (Agranoff 2007, 190–91; Kettl 2002; Rhodes 1997). The traditional “top-down approach to rational-legal accountability” does not work in these networks (Kettl 2002, 72). According to Salamon, governments have to recognize that they cannot determine the rules of accountability unilaterally and that they should adopt new rules of negotiated and cooperative rulemak-

Some of the conceptual tools developed by local and state governments are network governance theorists can be used becoming more dependent on to characterize BID–government relations them for the delivery of local more specifically. These theorists suggest services. that relations among network actors may take one of three forms: collaborative, dominating, or co-optative. Common values, shared purposes, ing (2002b, 604–5). and trust among actors are the bases of collaborative relations among them and the relative stability of a network (Agranoff BIDs both illustrate the general accountability challenges in gover2007, 119–22; Koppenjan and Klijn 2004, 10). A network can nance networks and pose more specific challenges. Their intertwinebe stabilized also by its dominant actor(s), who can use their veto ment with other business organizations and the general governmenpowers or impose their frames of reference (culture and custal powers they use remind us of three accountability questions: To toms) on network participants; in that case, the relationships are whom or what are they supposed to be accountable? Exactly what characterized as dominating (O’Toole and Meier 2004; Schaap organization or persons should be held accountable? And how can and Van Twist 1997). O’Toole and Meier point out that power their accountability be operationalized, measured, and monitored? relations in networks may play out in more subtle ways: “indiAccountable to whom? From the perspective of rational-legal vidual network nodes can work to bias the [network’s] actions accountability, BIDs should be held accountable to the local in ways that benefit the [network’s] more advantaged clientele” governments that created them. But some authors point out that (2004, 681). Thus, network operations can be co-opted by more they should also be held accountable to the property owners in their powerful actors. districts and other communities in metropolitan areas whom their decisions and policies affect (Briffault 1999; Lavery 1995; Ross and The researchers have observed that most BID–government relations Levine 2001, 245). fall into the category of collaboration. Wolf (2008) found among the 12 American BIDs he studied that a large majority of them had Hochleutner (2008) and Briffault (1999) represent the two opposcollaborative relations with governments. Some of them had some ing views on the issue of BID accountability to local governments. conflicts with governments, but their relations evolved toward more collaboration over time. Morçöl and Patrick (2008) and Morçöl and Hochleutner does not think that the BID accountability issue is problematic, because they are created by local governments, and Zimmermann (2008b) report that mostly collaborative relations therefore are simply subject to them. Briffault (1999) points out exist between BIDs and governments in Pennsylvania and Georgia, that it is not clear whether governments actually hold BID governrespectively. ing bodies accountable. He sees problems particularly in two areas: in the ways in which their boards are elected or appointed and The prevalence of collaboration in BID–government relations is whether they report their activities to governments. not surprising, because quite often the two parties have a common purpose: economic revitalization. Also, the arduous process of Briffault (1999, 375) observes that the enabling laws in most states creating a BID (it takes one to three years and versatile political and leadership skills to create one) and the structural intertwinements of exempt BIDs from the democratic representation rules for general purpose governments, with the assumption that they are legally local governments and BIDs in collecting BID assessments (usually governments collect assessments and turn them over to BID manag- special purpose districts. This is problematic because of the increasingly larger governmental roles that BIDs play, as we mentioned ers) and service delivery (many BIDs share their offices and resources with municipal police and cleaning services) create the conditions earlier. Empirical studies show that even in legal systems that give the full authority to appoint all the BID board members to local for collaborative relations. Understanding Business Improvement Districts 909

governments, as in the case of the older 1980 law in Pennsylvania, local governments actually let the local business leaders pick their board members and simply rubberstamp their selections (Morçöl and Patrick 2008). Local governments are supposed to oversee BID operations. The state enabling laws usually require BID boards to submit annual reports to their local governments, and local governments are supposed to approve their annual budgets. Also, the sunset provisions in many state enabling laws require that BID charters be renewed by local governments periodically. Some local governments do use their oversight authorities seriously, but in most other cases, annual BID reports and sunset provisions are mere formalities that local governments ignore (Morçöl and Patrick 2008; Morçöl and Zimmermann 2008b; Wolf 2006). In some cases, BIDs use their legal reporting obligations to engage city governments and to put issues on their agendas (Wolf 2008). Only when BID–local government relations turn contentious, as in the case of the Grand Central Partnership versus Giuliani in New York City, local governments actively look into the affairs of BIDs boards and managers. They may even terminate BIDs, but that rarely happens (Briffault 1999, 388–89). If the accountability of BIDs to local governments is problematic, their accountability to their constituencies is even more so. Who are their constituencies? One possible basis of defining BID constituencies is taxation. The question is, should there be a direct linkage between taxation and accountability? There are differences among the states in the United States and between different countries in their BID taxation systems;2 in many states, residential properties are either exempted from taxation or taxed at lower rates. Then, should BIDs be held accountable to residents, even though they may not pay any BID taxes? Even if residents are excluded, what should be the basis of the accountability of a BID to its tax payers? For instance, should it be based on the economic value that the BID generates for the business property owners in the district, like the basis of accountability of a chief executive officer to the shareholders of his or her company? If so, how should the differences in economic value to different property owners be measured? It is also legitimate to ask whether BIDs should be held accountable to other groups, such as visitors to their districts, the homeless, and the residents and business owners of entire metropolitan areas. The activities of BIDs may have direct effects on the lives of the homeless in their districts (as in the case of forcibly removing the homeless to improve the attractiveness of the Grand Central Station area in New York City for shoppers by the security personnel of the BID; see Barr 1997, 399–406). These activities may also have spillover effects beyond BID boundaries. It is argued, for example, that “the declining crime rates claimed by BIDs simply move crime across the district border” and they “may exacerbate the perception of inequality in the delivery of public services” (Pack 1992, 20). Some claim that BIDs may also create social segregation in cities through differential provision of services (Briffault 1999; Lavery 1995). How can all of these diverse groups of interested parties be taken into account when BID activities are concerned? Exactly what organization should be held accountable? The fact that many BIDs are intertwined organizationally with other 910

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organizations of business interests and local governments brings to our attention the question, exactly which organization should be held accountable? The Center City District in Philadelphia shares its staff and offices with the Central Philadelphia Development Corporation, a membership organization of mainly businesses, and the two publish performance reports jointly, but they have separate boards of directors (Center City District 2009). In Phoenix and San Diego, umbrella organizations manage BIDs (Stokes 2008, 254; Wolf 2008, 277); in Phoenix, the organization manages two BIDs that are formally accountable to the city government, but under two different state enabling laws and with two different accountability provisions. The difficulty of defining the constituencies of BIDs and the intertwinement of BID organizations with others make the principles of rational-legal accountability inapplicable. Another approach is to look for accountability in assessing the performance and/or impacts of BIDs. Accountable for performance? Frederickson and Smith point out that as the governance process becomes less hierarchical and bureaucratic, accountability becomes more about performance (2003, 208). How, then, can we assess the performances of BIDs? A few researchers have proposed models to evaluate BID performance using certain sets of criteria; others have conducted evaluations of the impacts of BID activities using statistical models. Bigger BIDs issue reports on the state of the economy in their districts and implicitly or explicitly tie economic outcomes to their own performances (e.g., Center City District 2009). Caruso and Weber (2008) and Mitchell (2008) offer conceptualizations of the criteria that BID managers can use to assess the outcomes of their efforts. Mitchell identifies four sets of criteria: the number of tasks that BIDs perform (festival organization, etc.), tangible impacts such as attracting new businesses to their district, responsiveness to the needs of property owners (measured with surveys), and contributions to city life (broad category and difficult to assess) (2008, 95–97). Mitchell highlights an important methodological problem in assessing the impacts of BIDs: it is very difficult to isolate the specific impacts of BIDs on revitalizing downtowns because they work collaboratively with local governments and business associations and because there are many extraneous factors that affect the economy in an urban area (e.g., macroeconomic and demographic trends) (2008, 95). A small group of researchers has attempted to isolate the impacts of BIDs using multivariate statistical models. In her study of crime rates in Philadelphia, Hoyt (2005) found that BIDs made a difference in reducing thefts of cars and other property in their areas. She did not find that crime spilled over into the neighborhoods adjacent to BIDs. In their study of New York City, Ellen, Schwartz, and Voicu (2007) found that BIDs contributed to increases in commercial property values in their areas, but not in residential property values. Despite the methodological challenges in evaluating the performance and isolating the impacts of BIDs, it seems that the performance/impact evaluation approach is viable in establishing a system of BID accountability. We are not suggesting that the performance/

impact evaluation approach is the ultimate solution, but given the fact that the network governance process is complex and network actors are interdependent, the concepts of procedural-legal accountability face serious limitations in network governance in general, and in the case of BIDs in particular. Management Challenge

Traditional organizational management skills are insufficient for meeting the requirements of network governance (Salamon 2002a, 6–17). This is particularly true for BID managers and the local government officials who work with them. There is very limited research on the management challenges that BID managers and local government officials face or the skills they need (Grossman 2008, 301–3). Based on what is known, we can offer an assessment here.

of the relations as well. There has been no research on the use of modulation skills in BIDs.

Directions for Future Research We think that future research on BIDs will need to address three general issues that emerge from our discussion: how to characterize the role of BIDs in urban governance, how to assess their impacts on urban areas, and how to define the accountability and management challenges they research on BIDs pose.

. . . [F]uture will need to address three general issues: . . . how to characterize the role of BIDs in urban governance, how to assess their impacts on urban areas, and how to define the accountability and management challenges they pose.

We should first note that during their daily activities, BID managers and local government officials face relatively routine operational issues typical of any organization with a similar mission: human resource management, financial management, contracting, facility maintenance, and the like. Each side also needs to attend to the legal-procedural requirements for BID–local government relationships. Although, as we noted earlier, researchers have found that legal-procedural accountability requirements were merely pro forma in many examples they studied, those requirements can still be activated, and therefore competencies for skillful management of such requirements are needed. These traditional managerial and legal competencies are not sufficient. As we noted earlier, BID–local government relations take on various forms, from collaborative to conflictual and co-optative. Local government officials and BID managers should have a combination of political skills and adapt them over time because, as Wolf (2008) found in his research, BID–local government relations tend to shift from one form to another (e.g., from conflictual to collaborative). The network governance literature provides conceptualizations that can be used in future research on the management skills and competencies needed for BIDs. Salamon’s (2002a, 16–17) argument that in new governance “enablement skills” are needed to engage partners in horizontal networks is particularly relevant for BIDs. He cites three types of enablement skills: activation skills (to initiate network relations), orchestration skills, and modulation skills (assigning rewards and penalties). The research to this date indicates that two of these three types of enablement skills are employed in creating and operating BIDs (Bradley 2006; Joncas 2006; Meek and Hubler 2008; Morçöl and Patrick 2008; Morçöl and Zimmerman 2008b; Wolf 2006). It takes general leadership skills and political skills to navigate the relations among property owners and those between them and local government officials to activate a BID. The activation period, the research shows, is the most challenging and demanding one. Similar leadership and political skills are needed to “orchestrate” the maintenance

Public administration is not merely an instrument for public service delivery; it is a system in which actors play for political and economic gains as well. BIDs should be viewed as actors in this system; they are not simply extensions or policy tools of local or state governments. States do not grant extensive legal government authority to their BIDs, but there is more in the operations of BIDs than what one can find in the statutes. Many BIDs enjoy considerable leeway in their operations. The degree of their autonomy and impacts on urban policy and politics need to be further investigated empirically. Future research should also focus on the complex system of relations among BIDs, local governments, and other business organizations. It is important to understand, for example, whether and to what extent BIDs play roles in enhancing the power of business interests in shaping public policies in urban areas. Molotch’s (1976) and Stone’s (1989) theories of urban power structure can be particularly useful in future investigations. Both authors acknowledge that cities are heterogeneous and complex, but there are some patterns discernable within this complexity. The economic essence of urban life and the commonality of interest among business owners force them to join urban “growth machine” coalitions (Molotch) or “urban regimes” (Stone), which structurally enable them to dominate, or co-opt public policy decisions. It is reasonable to ask whether or to what extent BIDs are the elements of the structures and mechanisms of co-opting local and state governments for the narrow interests of businesses. BIDs emerged in their present form primarily in response to the decline of urban cores and in-town neighborhoods in the United States and Canada (Briffault 1999; Hoyt 2008; Morçöl and Zimmermann 2008a). It is important to ask, then, to what extent have they been successful in alleviating the decline of the urban cores? BIDs are praised for being innovative problem solvers and efficient providers of services (Ross and Levine 2001, 245). Is this praise warranted? It is also important to know whether BIDs have had any adverse effects. They are criticized for ignoring the needs and voices of residential property owners (Ross and Levine 2001, 245), creating social segregation in cities through differential provision of services (Briffault 1999; Lavery 1995), creating the conditions for businesses to withdraw from general taxation (Mallet 1993) and violating the principle of the uniformity of taxation (Briffault 1999). The validity of each of these claims should be verified with empirical studies. Future empirical studies should also address the issue of accountability. Our observation that the measures of legal-procedural Understanding Business Improvement Districts 911

accountability are difficult to apply to BIDs leads us to conclude that the best solution to the BID accountability problem is assessing their performances and impacts. Although there are conceptual and methodological challenges in isolating and measuring the impacts of BIDs, some of the early conceptualizations and studies have yielded noteworthy results, as we mentioned earlier. We also noted that BID managers and local government officials need both traditional management skills, such as human resource management and financial management skills, and “enablement” skills, and we cited the limited empirical research on this topic. More focused and systematic research is needed to find out which specific skills BID managers and local government officials need and whether these are unique needs or general needs of all managers in governance networks. The findings of such studies can help answer the question, are specialized programs like Rutgers University’s Business District Management program necessary, or could BID managers be trained in general public administration programs? More research on BIDs is needed not only because their numbers are continuing to increase and they have become a multinational phenomenon, but also because this research can open a window into better understanding the larger phenomenon of network governance. Acknowledgments We want to acknowledge the three anonymous reviewers whose comments and criticisms helped improve this paper significantly. Notes 1. 2.

We use the term “business improvement districts” in both meanings in this paper. When necessary, we will make distinctions between areas and organizations. Typically, BIDs assess properties owners in their districts. In some cases, such as alpha BIDs in California (Meek and Hubler 2008) and BIDs in Ireland (Ratcliffe and Ryan 2008) business owners, not property owners, are taxed. The system of taxation by BIDs in the United Kingdom is complicated because “hereditament” is used as the unit of taxable property (Blackwell 2008).

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