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FAQ's about Business Improvement Districts and Tenafly Q: What is a Business (Special, Downtown) Improvement District? (BID, SID, DID are synonymous.)
Q: Why is the Borough of Tenafly considering an Improvement District?
Q: What can a BID do that the municipal government, the Chamber of Commerce or the Business Development Committee cannot? (program and manage versus “laissez-faire,” plus examples)
Q: How many Improvement Districts are in New Jersey?
Q: Who controls a BID?
Q: Who determines planning, programs and spending?
Q: What role do individual businesses have in determining and implementing BID plans?
Q: What examples can you give us that an Executive Director would do?
Q. Are there any other benefits to becoming a BID?
Q: How is a BID funded?
Q: What is Tenafly’s commercial zone tax base for the purpose of estimating potential BID assessment revenue?
Q: What say does the individual business owner have in setting the annual tax rate?
Q: Does the BID have a termination date?
Q: Is there a downside to creating a BID?
Q: Has Tenafly tried a BID in the past?
Q: Does it make sense to wait and see if passenger rail service returns to Tenafly before creating a BID?
Q: In what ways would our community benefit from a BID?
Q: How many of our commercial property owners reside in Tenafly? Can a BID plan succeed without the support of absentee landlords?
Q: What is a Business (Special, Downtown) Improvement District? (BID, SID, DID are synonymous.)
A: The improvement district (whether “business,” or “special,” or “downtown” or some other name) is a model for management of the municipal commercial corridor. It is authorized by state law (the Pedestrian Mall and Special Improvement District Act, N.J.S.A. 40:56-65, et seq.) to be formed by ordinance in any municipality in New Jersey. The improvement district provides a mechanism for the businesses of a community to organize as a single entity, to raise funds for activities that supplement municipal services, and to manage themselves to become an effective shopping/dining destination. Q: Why is the Borough of Tenafly considering an Improvement District?
A: There is a growing awareness that commerce in Tenafly does not function as well as it could; that we do not draw the number or variety of shoppers that we should; and that the quality of the shopping and dining experience in Tenafly is not as appealing as it could be for residents or for visitors to our community. In 2006 the Tenafly Chamber of Commerce approached the Tenafly Business Development Committee with the idea of asking the Mayor and Council for a budget to explore the feasibility of an Improvement District. The Borough was awarded a BID Challenge Grant in the amount of $10,000 and the Council approved $10,000 in the 2007 budget to investigate the feasibility of a business improvement district in Tenafly.
Q: What can a BID do that the municipal government, the Chamber of Commerce or the Business Development Committee cannot? (program and manage versus “laissez-faire,” plus examples)
A: The best way to illustrate this distinction is by example of the shopping mall: every mall is a collection of stores and eateries that were selected by plan based on their appeal to the local marketplace, and placed in their respective locations within the mall by careful design. They operate under common hours of business, they all contribute to an annual marketing program for which they all benefit, and they share in the costs of special events, improvements, provision of security (that supplements local police support), and even the maintenance of common areas. They can do this because the entire mall is owned by a single owner; the commercial buildings in a town like Tenafly are all owned by various owners. The BID allows the businesses of a municipality to operate more like the businesses in a mall, managed by a single group rather than by each individual merchant on his or her own. The BID operates with a funded budget, and pursues a strategy to grow business by managing the appearance, the marketing, the events, for the commercial corridor in ways that the municipality, the Chamber of Commerce or the Business Development Committee cannot do.
Q: How many Improvement Districts are in New Jersey?
A: Since enactment of the law allowing them in 1984, New Jersey has witnessed the formation of about 90 BIDs. Some of the earliest BIDs formed are among the most successful, and still very active in the program, more than 20 years later: Cranford, NJ was the first improvement district, and downtown Cranford is the epitome of successful revitalization. No one can deny the success that downtown New Brunswick has achieved in its attraction of stores, restaurants, and a hotel. Nearby Englewood was among the first 6 business improvement districts, and the commercial growth that they have experienced is nothing short of astonishing. Jersey City has formed several districts, and their waterfront district has grown to rival Manhattan in its offering of class “A” office space, great restaurants, great shopping, and beautiful brownstone homes that were restored by people who wanted to live in the new commercial environment.
Q: Who controls a BID?
A: BIDs are controlled by a District Management Corporation (DMC), a group of people from our community, who function as a Board of Directors. JGSC, the consulting firm that performed Tenafly’s feasibility study, recommended the Board should include one council member plus six other members: property owners, tenants and a homeowner. The DMC would hire an Executive Director to implement its programs. The Executive Director would be accountable to the DMC.
Q: Who determines planning, programs and spending?
A: The District Management Corporation would set policy for the BID, and direct all planning, programs, and spending. They would craft a budget each year for this purpose, and that budget would be submitted to the Tenafly Borough Council for approval.
Q: What role do individual businesses have in determining and implementing BID plans?
A: It is the owners and operators of businesses in Tenafly that will serve on the Board of Directors of the BID corporation. Also, the BID will operate in the open, with meetings that are open to business people (and other members of the public) to attend and participate. The BID will need to earn the cooperation of local business owners and operators, and will naturally want to operate with their consensus.
Q: What examples can you give us that an Executive Director would do?
A: The Executive Director would function as the full-time manager for Tenafly’s business district, carrying out the policy directives set by the board. He or she would create and implement the programs recommended for economic revitalization, which might include recruitment of new businesses, storefront façade and sign improvement, events to stimulate foot traffic, marketing programs, shopper parking initiatives, wayfinding signage development, public relations for the district, and more.
Q. Are there any other benefits to becoming a BID?
A. Yes; in addition to the results that the BID will obtain for commercial revitalization, Tenafly would now become more eligible for State grant funds, as the State favors the formation of improvement districts, and will give grant award priority to a BID applicant over a non-BID applicant for grants related to economic development. The State also has an interest-free loan program (the Downtown Business Improvement Zone Loan Fund, or “DBIZ”) that is offered only to business improvement districts.
Q: How is a BID funded?
A: A BID can be funded in a variety of ways; one method provided by State law is through assessment on commercial properties within the district. Some communities fund their improvement district through an appropriation from the municipal budget, without creating a separate assessment. Communities that have an Urban Enterprise Zone (Tenafly does not) are entitled to Zone funds that match the amount of other funding that they raise each year. JGSC Group has recommended a three-tiered combination of funds: 1. An assessment on the properties within the BID (as commercial property owners and the merchants who lease from them will derive a direct benefit) 2. An appropriation from the municipal budget (as all residents of Tenafly will see an improvement to their quality of life with a revitalized business district), and 3. Grants from the State of New Jersey (each year the BID could apply for grants regarding specific projects, and only act on those projects in the event the grant is awarded).
Q: What is Tenafly’s commercial zone tax base for the purpose of estimating potential BID assessment revenue?
A: The 2007/2008 Total Assessed Value of Tenafly’s 222 properties in our commercial zones is $173,979,700. The Average Assessed Property Value is $733,692.34.
A BID Tax Rate of 1% ($.01/$100) on the Average Assessed Property Value = $78.37 or Total Net Revenue of $17,398. A 5% BID Tax Rate would provide Total Net Revenue of $86,990. If a BID were formed in Tenafly, the District Management Corporation selected to manage it would determine a budget each year. Their budget would have to be approved by the Borough government, which would have the right to strike or modify any or all of the budget terms. A Preliminary Budget was developed by JGSC to give a conservative estimate of what a BID might require. They anticipated a first year budget of $354,000. Of that total, they estimate $100,000 could be available through State grants leaving a Net Revenue Requirement of $254,000. They propose that this net amount be raised by a combination of assessment against commercial property, supplemented with an appropriation from the municipal budget.
Q: What say does the individual business owner have in setting the annual tax rate?
A: Business owners will sit on the Board that sets the BID budget. Other business owners may speak to the budget and the related tax assessment both at the BID Board meetings, and at the Borough Council meetings in which the budget and tax rate are considered. Both of these are public meetings, and the business person has the right to voice an opinion there.
Q: Does the BID have a termination date?
A: No, a BID is created by ordinance, which is local law, and that ordinance will not come with a termination date. However, it is also true that if the Borough finds that the BID is not meeting its expectations, then the Borough always has the option to modify or even refuse to fund the BID’s annual budget. Moreover, the Borough could terminate the BID by subsequent ordinance.
Q: Is there a downside to creating a BID?
A: Whenever a suggestion is made to make a new appropriation of money for a new expenditure, it’s reasonable to question whether that expenditure is really necessary. People who feel that business district management is not necessary would probably consider the allocation of money for a BID to be a waste. We do not. Our committee firmly believes that there is no question but that our business district needs to be managed in order to become more effective. It needs to pro-actively recruit new businesses; it needs to plan for a specific mix of retailers and restaurants rather than sit by and wait to see what comes along; and it needs to market Tenafly as a place to come to shop, to dine, and be entertained. We need a BID to make all of that happen.
Q: Has Tenafly tried a BID in the past?
A: Tenafly has never formed a BID. In the late 1990’s the town initiated a number of infrastructure improvements in the central business district that are sometimes part of a BID program e.g., new sidewalks, curbing and street lights. However, an ordinance to create an Improvement District was never enacted.
Q: Does it make sense to wait and see if passenger rail service returns to Tenafly before creating a BID?
A: No. The BID is can be an effective management mechanism, whether or not we gain rail service. However, should passenger rail service return to Tenafly it would be better to have a BID in place to take advantage of that opportunity: the BID would serve as an advocate for Tenafly businesses.
Q: In what ways would our community benefit from a BID?
A: There are many ways, but undoubtedly the most satisfying would be the improvement in our quality of life. The BID will provide us with a greater variety of stores, carrying the merchandise that we want and need, in an attractive, comfortably walkable setting that also provides a good variety of places to socialize and have a bite to eat. Family-oriented events will increase in the district, and attract people to shop and enjoy themselves. Of course, the more appealing our shops become, the more of a destination that Tenafly will become to outsiders who will want to partake in our traditional downtown shopping experience. The increase in business that results will make our businesses prosper, and serve to increase property values. As property values increase, so will tax revenues to the Borough, enabling us to enjoy a return on our investment as taxpayers.
Q: How many of our commercial property owners reside in Tenafly? Can a BID plan succeed without the support of absentee landlords?
A: Absentee landlords are a real minority in our business community. There are 222 commercial property owners. Only 18 of them (8%) live outside of the State of New Jersey. 132 of them (59.5%) reside in Tenafly, and the remaining 72 (32.5%) live in New Jersey, in communities near Tenafly. Further, their approval is not required in order to implement BID plans within the district. To the extent that they disregard BID requests for action to maintain their property, or to adhere to merchandising standards, those standards may, if necessary, be enforced against their properties. Also, with the funding mechanism that we have proposed with a tax assessment, absentee property owners will be supporting the BID through their tax payment, regardless of whether they support BID plans.
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