Funding Projects in a Business Improvement District: Does Everyone Have to Benefit?

<p>A city establishes a business improvement district (BID) in its central downtown area. The central downtown area encompasses the properties located along approximately one mile of the city’s main street. It also includes the properties on adjoining and parallel streets located within a five-block radius of the main street. The city levies a $0.05 BID tax per $100 in assessed value on all real and personal property subject to taxation within the defined district. (The town also levies a general ad valorem property tax of $0.39 per $100 assessed value on all taxable real and personal property in the town. That means that real and personal property owners within the BID pay a total of $0.44 per $100 valuation.) Town officials justify levying the additional tax within the BID because the town performs certain targeted services and projects only in its downtown area. For example, the town used BID tax revenue to install sidewalks and street lighting along the one mile section of Main Street located within the BID. It also used BID tax proceeds to fund a marketing campaign to attract residents and non-residents to the downtown businesses, most of which are located on Main Street. The city recently launched a new program to attract new businesses to fill several empty building spaces, whereby the city provides up to a $15,000 grant to a new entity that locates in its downtown. The grants are funded by BID tax revenue and may be used to make building façade improvements. The city intends to [...]</p>