WTF: Business improvement districts

Ask most city residents how to improve downtown Asheville and you’ll hear a range of answers: enhanced lighting, increased litter-reduction efforts, a 24-hour restroom, additional street festivals and so on. Every one of those requests comes with a price tag, however, and at this point in the process of preparing the city’s 2022-23 budget, there is little indication that additional funding for downtown services and maintenance is likely to make the cut.

One potential solution is a special type of tax vehicle known as a business improvement district, which promises a steady stream of revenue to fund much-needed services downtown. In the latest edition of Xpress’ WTF feature — short for “Want the Facts?” — we explore this sometimes controversial concept and revisit Asheville’s initial attempt to establish a BID.

What is a business improvement district?

According to City Attorney Brad Branham, a BID is a designated area within a city, often in the central business district, in which the local government levies an additional property tax to fund specific benefits or services.

BID boundaries are typically drawn so they include only properties that will benefit from the supplemental services provided.

The N. C. General Assembly statute 160A-536 empowers all of the state’s municipalities to create BIDs within their borders. A 2017 report by the International Downtown Association listed 49 such districts across the state.

What kinds of things could a BID pay for?

Money raised through a BID tax can be used to provide various types of services. One of the permitted categories, downtown revitalization projects, can include everything from enhanced maintenance of streets, sidewalks and other public infrastructure to boosting security or even sponsoring festivals and markets. According to the UNC School of Government, cities with BIDs can choose to appoint a citizen advisory board or contract with another governmental or private agency to oversee the use of the funds, but city leaders retain final authority over spending decisions.

Does Asheville already have a BID?

Yes and no. The city first started pursuing the idea of a BID in 2012, and a Downtown Commission subcommittee proposed a tax rate of 7 cents per $100 of property valuation within the district. With a total estimated budget of $700,000 to $900,000 a year, local leaders said the BID would fund efforts to keep downtown “clean, green and safe.” A significant portion of the money would be used to pay for up to 12 uniformed “downtown ambassadors” who would assist visitors and generally operate in support of those goals.

Asheville City Council eventually approved the BID in October 2012, creating a 13-person citizen board consisting solely of downtown property owners and residents. Charged with overseeing the district’s funding goals, the board agreed to delay setting the tax rate until a later date. That never happened, however, after tensions ensued between the board and city government over how to proceed. By 2014, the board had dissolved, leaving Asheville’s BID legally in place but essentially dormant.

Pros and cons

At the time, proponents said the additional funding the BID would provide could address many downtown needs. The Asheville Grown Business Alliance maintained that the district would enable the city to pursue long-term goals, and the Asheville Downtown Association said it could make downtown safer.

Not everyone was behind the idea, however. Some downtown property owners felt the board put too much power in the hands of too few. Others argued that the tax amounted to “misappropriation of public funds for private gain.”

Should Asheville resurrect the BID?

Mayor Esther Manheimer says the idea might be worth exploring again, but only if a majority of downtown business owners and residents supported the move. (Manheimer was vice mayor the last time Asheville debated a BID, and she voted in favor of it back then.)

“It’s a great concept for managing a downtown,” she tells Xpress, “but I would need to hear from downtown residents and business owners that this was something they are interested in. It needs to be a partnership.”

In the meantime, continues the mayor, the city should keep pushing for other sources of revenue, such as a portion of the room occupancy tax dollars that, under state law, can be used only for tourism-related marketing and capital projects.

“Before the city looks at options that increase property taxes for downtown residents and businesses, I support the passage of the pending legislation that would increase and give more flexibility to hotel tax spending. Room tax revenues from tourists are a better source of funds to address the needs of the downtown.”