RETAIL ENVIRONMENT
Farewell Big Society, Welcome BID Society
Why Europe Is Bidding for the BID Movement
We have all seen the dramatic outcomes of the so-called “Arab Spring” across the Middle East and North Africa. These people-power movements calling for greater democracy, less corruption, and a drawing back of state control have acted as mirrors of the glasnost years of the late 1980s when Cold War politics suddenly thawed and the Berlin Wall crumbled under the feet of millions of marching protestors.
At that time, the geographical map of Europe that was originally drafted in a post-World War II world by an uneasy alliance that included Churchill, Eisenhower, and Stalin, was re-drawn as the former Soviet Union ceased to exist. In more recent times, we have seen these new boundaries challenged in former Soviet territories including Ukraine, and the rest is a living and dynamic history that continues to unravel.
While the map lines hold, these alliances have one thing in common: the people want to have a greater say in the way their affairs are run, and this transparency serves as a benefit to all. Less is more in terms of reducing centralised control and complexity, and in the UK, Prime Minister David Cameron tried—but failed—to introduce a concept of “Big Society” where the state is rolled back to allow charities to run more of our public services. In addition, in 2012 the Government introduced its much-vaunted Police and Crime Commissioners (PCCs), the mandated individuals who were to be more accountable than the previous unelected Police authorities and were heralded as the future of holding the chief constables of the forty-one Police forces to account. However, the elections attracted an average turnout of just 15 per cent and were not a glowing endorsement of local democracy in action.
However, enter the BIDs—the Business Improvement Districts—that have succeeded where the Big Society has not. They have in the majority of cases developed a working, funded model of local democracy that proportionally represents the interests of its constituents and the business communities that represent the retailers and night-time economy. Failure to carry out what they were elected to do means no second term. Those mandates have covered diverse subjects and needs from street cleaning and “furniture”—benches to street lamps—to reducing anti-social behaviour and shoplifting. All are directed at entrepreneurial ways of making their towns distinct and more attractive to inward investment and greater footfall through initiatives including food, flower, or music and arts festivals. We are now in our second and third terms of the 197 BIDs across the UK, and in most cases, the ayes have carried it forward.
British BIDs is an industry body that oversees around 200 town and city-led BIDs. Of those BIDs, the new order has been re-elected in 91 per cent of renewal cases. Where they have not succeeded is where the conditions were not quite right in the first instance and had more of an industrial rather than a service-led economy, for example.
What Is a BID and Where Are They?
Business improvement districts are not a British phenomenon; they were first established in Canada and the US in the 1960s when urban life was seen to be in serial decline and they now exist across the globe, including in South Africa, Germany, Japan, New Zealand, and Australia. Europe is now also looking to embrace the concept or already has its own equivalents. In the Netherlands there are currently 113 informal BIDs that form part of non-legally binding agreements, but there are plans to enshrine the principle in Dutch law. In Germany, membership in the chambers of commerce is obligatory and performs many of the functions that the BIDs carry out in other countries, but six of the sixteen German Bundesländer (federal states) have introduced the requisite legal framework to create BIDs, including Hamburg, Bremen, Hessen, North Rhine-Westphalia, Saarland, and Schleswig-Holstein. So far, BID projects exist only in Flensburg and Giessen. Spain, Italy, and Poland are also now looking into the concept. All BIDs differ in their focus, some to a greater extent. In South Africa, for example, they are called City Improvement Districts (CIDs) and are more akin to a private security force.
In Ireland, a country that has seen its own troubled history, BIDs operate in Southern Ireland, whereas Northern Ireland has the legislation established (2014) but has yet to establish any official BIDs, although a number are developing. In Dublin, more than 2,500 businesses have been part of a BID for the last five years, during which time the body has been working closely with the Gardai to reduce crime and anti-social behaviour, including thousands of euros spent on removing graffiti from the city centre.
Indeed, in terms of loss prevention, many BIDs have focused on specific crime-reducing strategies even to the point of funding their own Police resources seconded from the local force.
Establishing a BID
A town cannot simply decide to set up its own BID. There is a formal legal process that ensures that they are transparent, democratic, and representative.
A BID can only be formed following consultation and a ballot in which businesses vote on a BID Proposal—the business plan for the area that sets out the priorities and improvements to be undertaken if the BID proceeds.
The ballot is then run by the local authority or outsourced by the council to a third party. A vote then takes place among the BID area businesses, those who would be affected. There is no minimum threshold for turnout.
In the UK, for a BID to go ahead, the ballot must be won on two counts; there is a straight majority and a majority of rateable value. This ensures that the interests of both the large and small businesses are protected and that they all have a voice.
The BID proposal or business plan sets out businesses’ priorities for improvements for the area and its services, as well as how the BID will be managed. This document becomes legally binding once a ballot has been won and becomes the framework within which the BID will operate.
An operating agreement is entered into between a BID and its local authority governing how the BID levy monies are collected and administered and passed over to the BID. The BID then must also formally establish a baseline agreement with its local authority and other service providers, which specifies the level of service provision in the area. These agreements ensure that any services the BID provides are additional to what the local authority already delivers.
Localism and Levies
A BID is funded through the BID levy, which is a small percentage of a business's rateable value. The majority of BIDs charge 1 per cent of rateable value; however, some have opted for higher levies, particularly in smaller locations with lower rateable values and industrial areas.
Once a ballot is successful, the BID levy is mandatory for all eligible businesses. BIDs can, however, hear evidence and choose to exempt certain businesses from paying the levy (and therefore from voting in the BID ballot). However, these exemptions can only be written in ahead of a ballot; once balloted, exemptions cannot be made. Many BIDs exempt the smallest businesses, and some exempt certain sectors.
BIDs are often successful in attracting additional funding from outside the BID members’ levy. Local authorities, property owners, and businesses outside the BID area can all provide additional income for BIDs through voluntary agreements.
The levy from the contributing businesses ensures they have a voice in issues affecting the area. While many critics have referred to the levy as a tax on their businesses, it is not a tax. The levy makes the BIDs both accountable and transparent. They are elected for a fixed term and operate on deliverables on the ground. If the BID does not deliver, they won't be voted in again. There is a strong logic to it.
Governance and Management
Part of the transparency agenda is the fact that the vast majority of BIDs are not-for-profit companies limited by guarantee. They set out how they will be governed not only in their BID proposals, but also through company articles of association.
Not unlike many schools, BIDs are managed by a board of governors made up of levy payers who represent the BID area and who have specific management skill sets.
BID management teams vary with the size, focus, and budget of each BID but will generally encompass management, administration, business engagement, marketing and communications, and project management, all of whom run the operation but also communicate with the wider world about what the BID is doing. British BIDs also provides training development and networking forums for BID staff and board members as part of the continual professional development programme.
Performance Measurement
It is important for BIDs to measure performance to demonstrate the return on investment to levy payers through activities in the area.
All BIDs run along the lines of most democracies—a five-year term and then they are judged on their performance at the ballot box if, after that time, there is an appetite for the BID to continue.
BIDs restore your faith in democracy. They are not quangos. They are focused bodies that inform and educate their constituents in order for them to make informed choices. In some cities it is the retailers only that are charged, rather than commercial office occupiers, if that is what the focus is. On Birmingham's Broad Street in the UK, the focus is the night-time economy, so the bars and restaurants pay the levy to ensure their stake—their voice.
People really do vote for BIDs, whereas most did not vote for PCCs because they did not know what or whom they were voting for. It is all about localism and a local affinity where people can make a difference and be accountable. In most cases the town centre needs more than it gets, so BIDs have a role to play as a great model that is lobbying for better.
The focus is determined by the origins of the BID. In some cities the need to fight crime has served as the midwife to the birth of the BID, and it has embryonically grown out of the town centre or crime reduction partnership that already exists, such as Kingston, Croydon, and Manchester in the UK. The Angel area of Islington, north London, is another such example where their resources are focused upon footfall and making the affluent area feel safe for shoppers, a fact that in its first election created its own nine-strong Police force seconded from the Met, all paid for by the business levy.
The difference between business rates and levies is that the latter is hypothecated or ring-fenced for use only in the BID area, whereas business rates are paid in to and redistributed by the Government. What the levy is spent on depends upon the complexion of the BID and what is set out in its BID proposal or business plan—the priorities for improvements for the area and its services, as well as how the BID will be managed and operated. This is the document on which its term will be judged. However, most BIDs also have generic objectives including increased footfall, improved staff retention, business cost reduction, area promotion, facilitated networking opportunities, and assistance in dealing with the council, Police, and other public bodies.
Because they are all different in the democratic make-up, tensions have existed where retailers do not want to pay the levy if it does not include a radio link to fight crime; they simply do not want to pay twice.
In the UK, the majority of BIDs exist in town centres; however, they are also in industrial, commercial, and mixed-use locations. The BID mechanism allows for a large degree of flexibility and as a result they vary greatly in shape and size with the average size being 300 to 400 hereditaments (rateable properties on which the levy is based). Annual income is typically €270,000 to €800,000, but can be as little as €60,000 per annum in smaller BIDs and over €2.6 million for large cities.
The European BID movement is evolving as the world continues its constant state of political and economic flux. Austria is looking at the issue as state control recedes out of the austerity that has impacted the rest of Europe.
Necessity is the mother of invention. As state control recedes, BIDs grow because someone has to do the work to make urban areas safe and pleasant places to do business. This is a growing organism, and when towns and cities get to their second term, they are truly beginning to create a brand for that area, which is all tied up with the sense of civic pride. This is because the people who live and work there want to make things better and have the power to do something. The BID is simply the standardisation of the management of that process.
