Institutionalization of Business Improvement Districts: A Longitudinal Study of the State Laws in the United States
Morçöl, Göktug, Gautsch, Douglas, Public Administration Quarterly
The institutionalization of business improvement districts (BIDs) is investigated with analyses of the state enabling laws in the United States. The results indicate that no distinct institutional BID form has emerged yet, but there is a process of institutionalization. This process can be observed in the names used for BIDs in the laws, their governing models and the methods of determining their board membership. The name "improvement district" has been used with an increasing frequency in the laws. Of the three BID governing models-subunits of local governments, autonomous public authorities, and nonprofit corporations-the last has been adopted more frequently in recent decades. The governing bodies of BIDs may be appointed or elected, but the elected board model was adopted more frequently in recent decades.
Keywords: business improvement districts; special districts; institutionalization
We gratefully acknowledge Dr. Carol Becker's contribution to this study by sharing with us the detailed results of the BID survey she and her colleagues had conducted in 2010.
Business improvement districts (BIDs) have been established in all states of the United States, most provinces of Canada, a few countries in Europe (United Kingdom, Ireland, Germany, and the Netherlands), and South Africa and a considerable size of BID literature has been built in recent decades. BID researchers investigated their implications for democratic participation and accountability (Barr, 1997; Briffault, 1999; Hochleutner, 2008; Justice & Skelcher, 2009), BID-local government relations (Morçöl & Zimmermann, 2008; Wolf, 2008), and their successes and failures in helping solve urban problems (Hoyt, 2005; Ellen, Schwartz & Voicu, 2007; Cook & MacDonald, 2011).
After two decades of research, there still is a need to formulate a common conceptualization of BIDs, however. An important problem is whether BIDs should be conceptualized as a distinct form of local government or a mixture of different institutional forms. There are two sets of conceptual issues within this problem. First, is there a single and coherent BID institutional form? Justice and Skelcher (2009) argue that it is possible to identify an ideal typical BID institutional form, despite the considerable functional and institutional diversity among the BIDs in the different states of the United States and other countries (p. 740). Second, are BIDs distinguishable from other forms of special districts? This is an important question, because BIDs are often defined in terms of their similarities with and differences from special districts (e.g., Kennedy, 1996; Briffault, 1999). To answer these questions, we analyzed the definitions and descriptions of BIDs in the enabling laws of the 50 states of the United States, Washington DC, and Puerto Rico.
This comprehensive study of the state laws is needed because the conceptualizations of BIDs in the current literature are based on limited empirical investigations and legal analyses. Mitchell's (1999) nationwide survey in the United States in the later 1990s identified BIDs in 42 states and Washington, DC. Becker and her colleagues' survey in 2010 identified BIDs in 48 states-the only exceptions being North Dakota and Wyoming-and Washington DC (Becker, 2010; Becker, Grossman, & Dos Santos, 2011). However, the empirical and legal studies typically focus on few selected cases and/or few state laws. This narrow focus in the studies does not constitute a sufficient basis for a comprehensive conceptualization of BIDs.
The empirical BID studies have focused primarily on six states and Washington, DC: California (Brooks, 2006, 2007; Cook & MacDonald, 2011; Lloyd, McCarthy, McGreal & Berry, 2003; MacDonald, Stokes & Bluthenthal, 2010; Meek & Hubler, 2008; Stokes, 2008), Pennsylvania (Hoyt, 2005; Stokes, 2006; Morçöl & Patrick, 2008; Dilworth, 2010)1, New York (Ellen, Schwartz & Voicu, 2007; Gross, 2008; Meltzer, 2011), Maryland (Baer, 2008; Baer & Feiock, 2005; Baer & Marando, 2001), New Jersey (Justice & Goldsmith, 2008; Ruffin, 2010), Georgia (Ewoh & Zimmermann, 2010; Morçöl & Zimmermann, 2008), and Washington, DC (Mallet, 1993; Schaller & Modan, 2005; Wolf, 2006). Some of the recent studies covered more states. Mitchell (2008) cites examples of BIDs from 15 states, but the main focus of discussions is the BIDs in New York City. Wolf's (2008) survey among BID managers in 11 states focuses only on their relations with local governments.
The BID state enabling law of New York has been the primary focus of the legal studies. This law was analyzed in detail by Kennedy (1996), Barr (1997), and Garodnick (2000). Briffault (1999) conducted the most comprehensive legal analyses of BID state laws, but his study includes only 38 states and he does not compare the state laws systematically in the crucial areas of BID governing models, authorities granted to BID governing bodies, or BID accountability mechanisms. In the other legal studies, authors did not analyze specific laws; instead they provided general commentary on possible implications of BIDs for democratic governance, accountability, and urban governance that are based on others' earlier findings (Davies, 1997; Hochleutner, 2003; Briffault, 2010; Garnett, 2010; Schragger, 2010).
WHAT IS A BUSINESS IMPROVEMENT DISTRICT?
There is no commonly accepted definition of BIDs among the authors of the above-cited empirical and legal studies, but there is a relatively common reference point used in them: special districts. Kennedy (1996) compares BIDs with special districts and concludes that "the BID" is a "fairly distinct entity" (p. 289). In Briffault's (1999) view, the "BID institutional form" is a continuation of older special district traditions, but he also stresses that the BID form is "unique" (p. 365).
Foster (1997, pp. 7-22) identifies two general forms of special districts in the history of local governments in the United States: public authorities and special assessment districts (or taxing districts). Public authorities appeared first in the early 20th century, but the roots of their financial and organizational principles can be traced back to the quasi-public corporations that were created for special projects by the colonial governments in America in the 16th century and the regional special districts of the 18th century. Their revenues are generated from fees, governmental allocations, and issuing bonds. Their managing boards are autonomous and the members of these boards are usually appointed by state or local governments. Special assessment districts emerged in the 18th century to allow municipal governments to collect additional revenues from designated areas within their jurisdictions to make special improvements (e.g., infrastructure improvements) in them. They are different from public authorities in two respects. First, their main source of revenue is taxes. Second, they may or may not be governed by autonomous boards; when they are, the members of these boards are usually elected.
In Briffault's (1999) view, BIDs are a "union" of special assessment districts and public authorities (or "independent special districts," as he calls them). BIDs combine "the distinctive revenue stream of the former with the governance structure and relative autonomy of the latter" (p. 420). He stresses that special assessment districts are "a unit of territory, not of governance" (p. 417), whereas independent special districts have "institutional independence and distinctive decisionmaking capacity" (p. 420). Similarly, in their definitions of BIDs, Hoyt and Gopal-Agge (2007) and Mitchell (2008) stress that BIDs have organizational autonomy and provide supplementary services to distinct geographic territories and that they use mandatory assessments as their primary revenue sources.
Garodnick's (2000) and Grossman's (2010) definitions differ from the ones cited above in one crucial respect: They stress that BIDs are not necessarily governed by autonomous organizations; they may be "territorial subdivisions" of local governments (Garodnick, p. 1735) or "subgovernment units" (Grossman, p. 355). In other words, in their definitions, BIDs are primarily designated geographic areas, like the special assessment districts, and whether their governing bodies have institutional independence is optional. Although Briffault (1999) underscores the institutional independence of BIDs, as noted earlier, he too recognizes that BIDs may be managed directly by municipalities (p. 409).
An important conceptual issue is whether BID management organizations should be considered public or private. Hoyt and Gopal-Agge (2007) characterize them as "privately directed and publicly sanctioned organizations" (p. 946). Justice and Skelcher (2009) view BIDs as an example of "self-governance by private interests" (p. 741). Some researchers even call them "private governments" (Lavery 1995; Baer and Feiock 2005). Briffault (1999), Garodnick (2000), and Grossman (2010), on the other hand, recognize that many BIDs are governed by public bodies, local governments or public authorities.
Although there is no consensus in the above-cited conceptualizations, three common elements can be identified in them:
1. Business improvement districts are designated geographic areas.
2. Supplemental services are delivered to these areas.
3. Owners of the properties in the designated areas are levied special assessments, on top of the local government and other taxes they pay, for these special services.
BIDs and special assessments districts share these three elements. Then, is there a distinguishing feature of the BID institutional form, particularly in the way(s) they are governed? The authors cited above do not agree on the issue of governing BIDs. They differ particularly on two issues:
4. The designated areas may be managed by autonomous/independent/self-governing organizations, but they may also be subunits/territorial subdivisions of local governments.
5. BIDs management organizations may be public or private.
The different conceptualizations on these two issues indicate that there may be multiple forms of governing BIDs. They also indicate that these forms are not unique or original, but they may have evolved from the governing forms of the earlier public authorities and/or special assessments districts.
The conceptualizations cited above can help us answer tentatively the main research question of our study: Is there a coherent BID institutional form that is distinguishable from (other forms of) special districts? The literature suggests that there are common elements in the institutional forms of BIDs, but some variation should be expected, particularly in their governing forms. It also suggests that the institutional forms of BIDs have some commonalities with those of special districts. We studied the BID enabling laws in the individual states of the United States to answer the research question more specifically.
To frame our study, we developed the following two part definition: (1) Business improvement districts are designated geographic areas in which property owners are levied special assessments to finance the supplemental services delivered to the areas; (2) these areas may be governed by local governments or autonomous organizations that may be public or private in nature. We applied the first part of the definition in identifying the relevant laws for our analyses, as we discuss in the methods section. The second part was the basis of our conceptualization of the different BID governing models, as described in the aim sand scope section.
INSTITUTIONS AND INSTITUTIONALIZATION
We analyzed the state laws in the United States from an institutional perspective to determine particularly whether there is a distinct BID institutional form and whether there was a historical process of institutionalization.
Although there are multiple institutional theories and somewhat different conceptualizations, in general institutions can be defined as social norms and structures that bind and guide human actions (Frederickson & Smith, 2003, p. 71). They are relatively stable structures, but not static; institutions emerge and evolve over time (Giddens, 1984, p. 24; Turner, 1997, p. 6). In March and Olsen's (1989) conceptualization, institutional forms emerge through a process of convergence in structural forms, rules, and routines. They call this process "institutionalization." Similarly, DiMaggio and Powell (1983) observe that organizational practices may take on similar forms over time and they call this phenomenon "institutional isomorphism." This process does not exclude the possibility that some divergence exists within convergent forms, however (Beckert, 2010). Therefore, one should expect to find some variation among observed institutional forms.
Institutionalization, or institutional isomorphism, can be observed in both social practices and linguistic symbols (Giddens, 1984, pp. 28-34; Searle, 2010, pp. 12-13; Sillince & Barker, 2012, p. 8). It is a social construction process that is reflected and reproduced in both social practices and language. Institutionalized social practices leave their traces in language, particularly in texts (Phillips, Lawrence, & Hardy, 2004), and linguistic symbols used in texts can induce common forms of practice (Sillince & Barker).
The language of a law may be studied to understand the institutional forms codified in it. In political science there is a long-standing tradition of formal-legal inquiry that is based on the notion that the institutional forms that prescribe human behaviors can be studied in legal codes (Rhodes, 1997, pp. 65-67). In our study we looked for traces of the institutionalization of BIDs in the evolution of the state enabling laws in the United States.
AIMS AND SCOPE OF THIS STUDY
The institutionalization processes can be observed in BID enabling laws, particularly in the linguistic symbols used in them, such as the names used for these legal entities. It can also be observed in the provisions in the laws about BID governing models, how BID governing bodies are formed (elections, appointments), BID formation and termination procedures, and the accountability mechanisms for their governing bodies. In our study we focused on the first three: the names used for BIDs, BID governing models, and how BID governing bodies are formed. Because our goal was to study the institutionalization process, we conducted longitudinal analyses of the laws.
By focusing on the areas in the laws mentioned above and conducting longitudinal analyses, our aim was to answer the following specific questions about the institutionalization of BIDs: If there is a BID institutional form, is there a historical beginning to it? Is there a convergence in the evolution of the names used for BIDs? Is there a convergence in the evolution of the BID governing models? Is there a convergence in the evolution of the methods of forming BID governing bodies? Answers to these questions would help us answer our general research question: Has a coherent BID institutional form emerged from the evolution of the laws that is distinguishable from (other forms of) special districts?
Because institutions are signified and reproduced by linguistic symbols, if there is a process of institutionalization of the BID form, this can be identified and traced in the languages of the laws, primarily in the names used for BIDs in them (for precedents of this approach see Giddens, 1984; Phillips, Lawrence, & Hardy, 2004; Searle, 2010). We conducted analyses to determine if there was a pattern of convergence in naming the BIDs in the state laws over time, hence a process of institutionalization.
There are multiple definitions of the terms governing and governance in the literature, from managing and controlling corporate entities to networked relationships among multiple entities in a political system and market-oriented public administration philosophies, such as new public management (Rhodes, 1997, pp. 46-57). In this paper we use the term governing within a specific meaning: those structures and procedures that are prescribed in laws to enable making decisions about service delivery to designated areas and managing the delivery of these services. A governing model is a legally defined framework that prescribes which entity makes such decisions and delivers such services.
The review of the BID literature earlier in this paper indicates that there is no BID governing model that is commonly identified by researchers. Then how many different models are there? Also, was there a process of convergence toward a particular model over time? BID governing models can be defined based on the observations of researchers in the two areas that we mentioned earlier: (1) whether they are governed by autonomous organizations or the governing bodies of the local governments and (2) when they are governed by autonomous organizations, whether these organizations are public or private.
Organizational autonomy and the public versus private nature of organizations are complex issues (Bozeman, 1987). Autonomy is a matter of degree. In the conclusion we will discuss the subtle differences we observed in the degrees of the autonomy of BID governing organizations in the laws. We adopted Foster's (1997, pp. 8-10) conceptualization as the basis of our differentiation between the "public" and "private" governing forms of BIDs. She combines the degrees of powers granted to entities/organizations in the areas of taxation, regulation, and policing to develop a public-to-private conceptual dimension. Foster positions municipal governments, special districts, and nonprofit and private corporations from the most public to the most private on this dimension. We categorized public authorities as public and nonprofits as private organizations for the purposes of this paper.
In our reading of the laws, we identified three governing models that combine the dimensions of autonomy of governing organizations and their public versus private nature: BIDs as subunits of local governments, BIDs governed by autonomous public entities/organizations, and BIDs governed by nonprofit corporations. The first two of these three models roughly correspond to two of the three BID "service delivery models" Mitchell (2001) identified in his survey of BIDs in the United States in the late 1990s: nonprofit organizations, government corporations, or public-nonprofit partnerships (p. 205). The last model Mitchell identifies has no equivalent in the laws.
In the BID as a subunit of local government model, a local governing body (city council, mayor, or county commission) designates a geographic area within its jurisdiction (district). Then this body levies special assessments, and delivers supplementary services to it. Although no autonomous governing organization is formed under this model, in some state laws local governing bodies are given the option to create and appoint the members of an advisory board to help them govern the districts. The governing body is still the decision making authority, but there are variations in the ways these advisory boards are appointed (e.g., to what extent the property owners in a district have a say in the selection of board members) and the specific functions of the boards (purely advisory or given limited authority).
Under the second model, an autonomous board of directors, typically a public authority, is created to govern a designated district. In different states these boards are granted varying degrees of autonomy, charged with varying degrees of service delivery duties, and granted varying degrees of authority. The name "public authority" is used as the short name for this model in the following analyses.
Under the third model, a local governing body authorizes an autonomous private entity, most commonly a nonprofit corporation (alternatively a business association or local chamber of commerce), to deliver supplementary services to a designated district. In different states these nonprofit corporations are granted varying degrees of autonomy, charged with varying degrees of service delivery duties, and granted varying degrees authority.
There is no systematic study of the methods used in forming the boards of BID governing bodies, but the episodic evidence in the literature suggests that their members may be appointed or elected. Also, as mentioned earlier, Briffault (1999) observes that the roots of BID institutional forms are in the public authority and special assessment forms of special districts; this suggests that the appointment model, which is commonly used in public authorities, and the elections model, which is used at least in some special assessments, may have been adopted in the BID laws as well. We investigated the laws to identify the appointment and election methods prescribed in them and to determine whether there was a convergence toward the election method or appointment method.
In our study we included only the state enabling laws in the United States. As we mentioned earlier, BIDs have been established in several countries in the last few decades. A comprehensive study of the laws in all these countries could enhance our understanding of the BID phenomenon. We delimited our study to the laws in the United States, partly because of the practical difficulties in conducting a comparative analysis of the laws in multiple countries and presenting them in one paper, but more importantly because the United States is where BIDs originated (see the results section) and this country has the largest number of BIDs in the world. Also, there is a sufficiently long history of BIDs in this country and there are many BID enabling laws passed in this time period (see the following sections), which allowed us to conduct longitudinal analyses to observe the evolution in the laws. Because of the large numbers of BIDs in the United States and their long history, a study of the BID laws in this country can help us establish a good basis for understanding the BID phenomenon.
We collected all the pertinent BID state enabling laws in the United States in 2010 and 2011 and coded, tabulated, and analyzed the information in them. Identifying the pertinent laws was relatively straightforward for some states, but challenging for others. Particular challenges were: Not all state laws use the name "business improvement district," some states have multiple statewide laws under which BIDs can be created, some states use local laws to create BIDs, and states do not codify their BIDs laws in a uniform fashion (Briffault, 1999, p. 368).
To identify the pertinent BID law(s) in each state, we used the first part of our definition as stated earlier in this paper: laws about designated geographic areas in which property owners are levied special assessments to finance the supplemental services delivered to the areas. This is a broad definition that includes special assessment districts as well. To narrow our selections, we used the specific references in the BID literature and the criteria we describe in the following paragraphs. We used the second part of our definition (whether these areas are governed by autonomous entities and whether these autonomous entities are public or private) to develop the BID governing models. We applied these models in our analyses, as explained in the previous section.
In our study we included only the general (statewide) enabling laws, not local laws. We excluded from our analyses the local enabling laws in Georgia, Louisiana, Maryland, New York, and Texas. We did not include Louisiana's Act 498 of 1974, which authorized the Downtown District in New Orleans-cited by Houstoun (2003, p. 19) as the first BID in the United States. Also excluded were the local laws that created the "community benefit districts" in Baltimore in the 1990s (Baer, 2008) and the four local laws that created "special assessment districts" in New York City in the 1970s. We excluded the local laws, primarily because, by definition, each local law is designed for the local context and including laws at both the state and local levels would introduce an additional layer of complexity to our analyses and create methodological problems. Also, our investigations showed that the local laws in Louisiana, New York, and Texas were superseded by more recent statewide laws.2 In Georgia there are general frameworks provided by the state's constitution and general BID law. Georgia is the only state that has a section in its constitution that is dedicated to BIDs (Article IX. Section VII). We included this section of Georgia's state constitution in our analyses.
We did include in our analyses the generic special district laws that are in effect in some states when we determined that there were no separate BID laws in these states and that BIDs had been created under these generic laws. Alaska's, Florida's, Vermont's, Virginia's, and Wyoming's laws are examples of this (see the appendix).
In some states there are more than one statewide enabling BID laws in effect. We included in our analyses the Alabama laws for the first- and second-class of municipalities. California, Kansas, Missouri, Tennessee, and Texas have different laws for different kinds of BIDs; we included them all in our analyses. Pennsylvania has four laws in effect that are pertinent to different classes of municipalities and different kinds of BIDs; we analyzed all four laws.
Florida was a special case. There is no specifically designated BID enabling law in this state. Different parts of four laws are considered pertinent to the creation and operation of BIDs in this state in the legal literature (for a discussion, see Briffault, 1999, p. 445). The four Florida laws that are cited in the literature are the Uniform Community Development District Act of 1980, the Safe Neighborhoods Act of 1987, Uniform Special District Accountability Act of 1989, and the Florida statutes Title XII, Chapter 170 (Supplemental and Alternative Method of Making Local Municipal Improvements). We decided to analyze only the Safe Neighborhoods Act of 1987, because this law had the most directly relevant and comprehensive provisions regarding BIDs in the state. In this act there are some general definitions of and provisions for BIDs and four different types of BIDs are defined in separate sections. We analyzed these four sections as four different laws because the differences between the four types of BIDs were significant in some key areas (see the appendix).
To identify the correct BID law(s) in each state, we applied multiple methods and verified our findings by cross-checking them with multiple sources and interpreting their contents. We conducted multiple and iterative searches using the Google search engine and the Lexis Nexis and the Westlaw databases. In these searches we used the keywords "improvement district," "special district," "municipal services," and "special assessment." We also verified the relevancy of the laws with the following sources: earlier publications by Kennedy (1996), Davies (1997), Briffault (1999), Houstoun (2003), Meek and Hubler (2008), Morçöl and Patrick (2008), Morçöl and Zimmermann (2008), Wolf (2008), and Billings and Leland (2009); the 2010 BID census results (Becker 2010; Becker, Grossman and Santos 2011); websites of several BIDs in different states; direct communications with the directors of BIDs in some states (e.g., Alaska, Arizona, and Florida); and legal opinions on some of the state laws (Crist, 2006; Dyson & Baker, 2011; Lauber, 2003).
The state laws included in this study and the coded summaries of the information in these laws are presented in the appendix. We coded and tabulated the contents of the laws in the following areas: the year the law was enacted, generic name of BIDs under the law, the legal status of the governing model of BIDs, and whether the governing bodies of autonomous BIDs are appointed or elected. When we coded the information in the laws, we agreed on the coding scheme and verified each other's coding for all the laws in the analyses. We had to make some simplifications in coding and thus some contextual information was lost. When the contextual information is important, it is added to the discussions of the numerical results in the next section.
Dates of the Laws
If BIDs have a distinct institutional form, there should be a beginning of this form in a particular law or set of laws. Hoyt (2008) cites the West Bloor Village Business Improvement Area in Toronto, created in 1969, as the first BID in the world. Houstoun (2003) cites Louisiana's Act 498 of 1974 as the first US BID Act and the New Orleans Downtown Development District (created in 1975) as the first BID in the US (p. 19).
Some of the state laws we identified predate the establishments of the BIDs in Toronto and New Orleans and the passage of the Louisiana law. The earliest pertinent state law that is still in effect is Virginia's Service District Act of 1950. This is a generic special district law under which BIDs may be created, so one may not consider it a real BID law. Nevada's General Improvement Districts Act of 1959,3 California's Parking and Business Improvement Area Act of 1965, and Pennsylvania's Business Improvements District Act of 1967 are directly pertinent to BIDs. These findings indicate that at least some conceptual elements of BIDs are older than what is suggested in the literature. They also indicate that there is no identifiable beginning of the "BID institutional form"; instead there is an evolution of institutional forms, as we discuss in the conclusion.
Names of Districts
"Business improvement district" is the generic name used in the literature, but it is not used in all state laws. The name business improvement district is used in only 26 of the 68 laws we analyzed (38%). However, variations of the more generic name "improvement district" ("business," "capital," "commercial," "community," "economic," "general," "municipal," "neighborhood," "public," and "special" improvement districts) are used in 51 of the total 68 laws (75%). This finding indicates that there is a considerable degree of commonality in naming the districts across the states.
Is there a convergence in the evolution of the names used for BIDs? Figure 1 shows an upward trend in the adoption of the name "improvement district" in the laws over the decades. This name was particularly popular in the laws that were passed in the1980s and 1990s (used for 78% and 81% of the laws passed in these decades respectively).
BID Governing Models
As we discussed earlier, there are three governing models stipulated in the laws: BIDs as subunits of local governments, BIDs governed by autonomous public entities/organizations, and BIDs governed by nonprofit corporations. Some state laws require that local governing bodies use only one of these three models; others allow them to choose from different models. Table 1 shows the breakdown of the models and model combinations defined in the laws. The public authority model is the most popular one: 28% of the laws require this model and additional 16% allow it as an option (numbers 3 and 5 in the table). All together 44% of the laws either require the public authority model or allow it as an option. This is followed by the subunit of local government model: 31% of the laws require it, with or without an advisory board, and a total of 35% at least allow it as an option (number 3 in the table). The nonprofit model comes third: It is required by 19% of the laws and a total of 31% at least allow it as an option (including number 5 in the table). These results show that there is no dominant model of governing of BIDs in the laws.
Some state laws allow local governments to mix the models when they create particular BIDs. The most typical example of this is when a BID is designated as the subunit of a local government and the local governing body is allowed to contract with a nonprofit corporation or a business association to manage the district (e.g., Idaho, Kansas, and Washington state laws).
We conducted a longitudinal analysis to answer the question: Is there a convergence in the evolution of the BID governing models? In this analysis, we added up the numbers of laws that either allowed or required the use of the subunit, public authority, and nonprofit models in each decade (i.e., some of the categories in table 1 were combined). These totals are shown by decade in table 2. Patterns emerge when these totals are plotted as percentages of the total number of laws passed in each year (figure 2). The trend lines in figure 2 indicate that the subunit model has declined over the decades, while the nonprofit model increased and the public authority model fluctuated.
Boards: Appointed or Elected?
We found in the laws that when an autonomous body is created to govern a BID, public authority or nonprofit corporation, the members of its board of directors may be appointed by the local governing body (governing body of the municipality, county, etc.) or elected by property owners or a broader electorate. When an advisory board is created, its members are typically appointed by the local governing body. We identified three general models regarding the appointments and elections in the state laws: board members are appointed by local governing body or a state agency, board members are elected by property owners or a larger electorate, and board membership is determined according to the state's nonprofit laws (usually current members selecting future members).
Table 3 displays the frequencies and percentages of the methods of determining board membership in the state laws. The laws that allow the creation of BIDs as subunits of local governments, with or without advisory boards, designate local governing bodies as the boards of BIDs. These are 32% of the total 68 laws. Among the remaining options, appointed boards are the most popular model (32%), followed by elected boards (12%) and referring to a state's nonprofit laws (7%).
The results presented in table 3 do not capture all the variations in the methods of determining board membership. In the Louisiana and South Dakota laws the members of the initial boards of BIDs are appointed; thereafter they are elected. (These two states are coded as "elected" in the appendix because this is the primary model and the initial appointments are for short periods of time.) In Michigan, a majority of board members are nominated by property owners and appointed by the local governing body. Missouri's "Community Improvement District Act" specifically requires that when a nonprofit corporation is designated as the governing body of a BID, the board members should be elected (§§ 67.1401. 1; 67.1421. 1). Under the Colorado law, when the nonprofit option is used, the "representatives of business community" who formed the nonprofit corporation are authorized to "appoint" the board of the BID (§ 45-59-5 (8)). In Puerto Rico the residents, commercial property owners, or tenants of properties in a district are allowed to form voluntary "residents associations" or "commercial district associations," which are empowered to share the authority to govern a district with the local governing authority. The boards of these associations are elected by their members (§§ 21-4753 and 4755).
Is there a convergence in the evolution of the methods of forming BID governing bodies (elections vs. appointments)? Table 4 displays the breakdown of the models of determining board membership of these governing bodies by decade and figure 3 shows the trends in the three basic models (local government's governing body as board, appointed BID board, and elected BID board) as percentages of laws adopted in the decades. The local-governing-body-as-board model declined over time. The appointment and election models display opposite trends: Whereas the former increased until the 1970s and then decreased after that, the latter decreased until the 1970s and then increased. Because of the small number of laws adopted in the 1950s and 1960s, the first segments of these trend lines should be interpreted with caution, but the decline of the appointment model after the 1970s and the increase of the election model in the same period are noteworthy.
The findings of this study help answer the question: Is there a distinct and unique BID institutional form, as Kennedy (1996) and Briffault (1999) suggest, or an ideal typical definition of BIDs, as Justice and Skelcher (2009) suggest? The findings indicate that a distinct BID institutional form has not emerged yet. They do indicate, however, that there is a process of institutionalization. The trend lines in the figures presented in the previous section indicate some degree of convergence, but variations still exist, as the literatures on institutionalization and institutional isomorphism would predict.
Our findings indicate that the historical markers identified by other authors as the beginnings of BIDs should be reconsidered. The earliest BID laws we identified (the laws of Virginia, 1950; Nevada, 1959; California, 1965; and Pennsylvania, 1967) predate the establishment of the West Bloor Village Business Improvement Area, Toronto, in 1969 (Hoyt 2008), Louisiana's Act 498 (Houstoun 2003), and the establishment of the New Orleans Downtown Development District in 1975 (Houstoun).
The picture that emerges from the earliest BID laws identified in this paper is one of experimentation with different forms: In the 1950s and 1960s different state legislatures were adopting and adapting some elements of special district institutional forms to create a new form, each in its own way. For example, under the Virginia, California, and Pennsylvania laws adopted in these decades BIDs were created as subunits of local governments, but under the Nevada law autonomous public authorities governed them.
In the following decades, state legislatures continued their experimentation by selecting some elements of the public authority and special-assessment district forms of special districts. They combined them in three BID governing models-subunits of local governments, public authorities, and nonprofit corporations-and two models of determining the membership of BID governing bodies-appointment and election. They adopted from the public authority form the principles of autonomy and appointed membership of governing bodies. From the special-assessment district form, they adopted the principle of self-assessment for the delivery of special services and elections for governing boards. As Briffault (1999) observes, BIDs combine some elements of special assessment districts and public authorities, but our findings show that no single governing model has emerged as "the BID model" yet.
Two observations can be made on the three BID governing models we identified in the laws. First, 35% of the laws allow the subunit of a local government model at least as an option (table 1). This is remarkable, because most of the BID literature is based on the implicit assumption that they are governed by autonomous bodies. Only a few authors recognize the subunit model: Briffault (1999), Garodnick (2000), and Grossman (2010). In the empirical studies conducted to this date, this model has not been specifically investigated. Is that because the model is not used at all, although the laws allow it, or because it was simply excluded from the conceptual frameworks of the researchers? Mitchell (1999) did not identify any BIDs as subunits of local governments in his survey in the late 1990s. In their 2010 survey Becker, Grossman, and Dos Santos (2010) did not identify it as a distinct model either, but they did find that there were variations in the level of local government involvement in governing districts. This alludes to the possibility that there are some local governing bodies that may have been directly managing the districts. In their analysis of the BIDs in California, Meek and Hubler (2008) do mention that municipalities may choose to manage districts themselves (i.e., the subunit model).
One possible reason why neither Mitchell's nor Becker and her colleagues' surveys specifically identified any BIDs as subunits of local governments is that some of the laws allow the creation of "advisory bodies" and there are variations among the state laws in the degree of authority and autonomy granted to these bodies. As Briffault (1999) observes, these "advisory or management bodies" are "entrusted with some responsibility for determining and carrying out the BID's program" (p. 417). Then to what extent are these bodies advisory and to what extent do they have governing authority in practice? Another relevant question is: To what extent are the powers and functions of these advisory bodies different from those of the autonomous boards of directors of public authorities in practice? It is possible that the subunit-of-local-government and the autonomous public authority forms may have come close to each other in practice. As noted earlier, some state laws allow for mixing the governing models of BIDs (Idaho, Kansas, and Washington). What Mitchell (2001) identified as the "partnership model" in his survey is a mixed model as well. Future studies on these mixed models may help us understand BID governing processes better.
The second observation one can make is that there are patterns of convergence in the trend lines in the figures presented in the previous section, which are signs of institutionalization. The trend lines in figure 2 show, for example, that the subunit model declined over the decades, while the nonprofit model increased and the public authority model fluctuated. Overall the trend is toward BIDs with autonomous governing bodies. Particularly, the nonprofit corporation model has gained ground. This is in line with Mitchell's (2001) empirical finding in the late 1990s that 61% of the BIDs were governed by nonprofit organizations (p. 213).
One can observe a trend also in the methods of designating the members of the governing boards of BIDs (figure 3). Although the most common models overall are appointed boards and local governing bodies serving as the boards of BIDs, elected boards have gained more popularity in the laws passed in the more recent decades.
There is a process of convergence also in the names used for BIDs in the laws. Names are symbols and can indicate commonalities and differences in institutional forms and processes (Giddens, 1984; Searle, 2010). Not all state laws use the name "business improvement district," but a large percentage of them (75%) use some variation of the name "improvement district" and this name was adopted for larger percentages of the laws in more recent decades.
Overall, the analyses in this paper indicate that there are trends toward (1) using the name "improvement district" in the laws; (2) establishing autonomous governing bodies, particularly more private nonprofit corporations; and (3) designating the members of boards of directors by elections. If these trends continue into the future, the "improvement district that is governed by a nonprofit corporation whose board members are elected" may become the dominant BID institutional from. It is likely that some variation within this institutional form will continue to exist, because one of the primary characteristics of BIDs is their flexibility and adaptability to various local conditions. One should expect some variation within institutional forms anyway, as the literature suggests (Beckert, 2010; March & Olsen, 1989).
Future studies can help us understand the institutionalization process of BIDs, both in codified rules (laws) and in practice. The institutional convergence conceptualization of DiMaggio and Powell (1983) may help guide these future investigations. Researchers can answer the question: Did the process of institutionalization we observed in the laws happen "mimetically" (i.e., policymakers in different states simply imitating each other), or were there some process of "normative isomorphism" as well (i.e., policymakers learned "what works" from each other through professional socialization and adopted the best practices)? Equally important is to understand how BIDs work in practice (i.e., the informal, daily practices of BID managers, local politicians, and local government officials and their interactions). The findings of some of the earlier studies (Meek & Hubler, 2008; Morçöl & Patrick, 2008; Morçöl & Zimmermann, 2008; Wolf, 2006) indicate that the informal processes are more complex than what the laws prescribe. Future studies can shed light on the question: Has there been convergence in these practices as well and, if so, did that happen mimetically or normatively, or both?
1. The case studies of the 17 BIDs in Philadelphia that were edited by Dilworth (2010) are not cited individually here.
2. The New York City Council Resolution 693 (1992) placed the city's four special assessments districts under the 1980 BID law of this state. The effects of the 2010 business improvement districts law in Maryland on Baltimore's community benefit districts are not clear yet; we could not find any legal opinions on this issue.
3. The Incline Village General Improvement District, Washoe County, NV, was created in 1961 under this law. This district was authorized to "levy taxes to pay for improvements," and run by an elected board from the beginning (http://www.ivgid.org/about/history; accessed January 9, 2012). This is the earliest BID we could identify in our searches and it is still in existence.
Baer, S. E. (2008). Private governments: A polycentric Perspective. In G.Morçöl, L. Hoyt, J. W. Meek, & U. Zimmermann (Eds.), Business Improvement Districts: Research, Theories, and Controversies (pp. 51-70). Boca Raton, FL: CRC Press.
Baer, S. E., & Feiock, R. C. (2005). Private governments in urban areas: Political contracting and collective action. American Review of Public Administration, 35(1), 42- 56. doi:10.1177/0275074004271717.
Baer, S. E., & Marando, V. L. (2001). The subdistricting of cities: Applying the polycentric model. Urban Affairs Review 36(5), 721-733. doi:10.1177/10780870122185064
Barr, H. (1997). More like Disneyland: State action, 42 U.S.C. S 1983, and business improvement districts in New York. Columbia Human Rights Law Review,28, 393-430.
Becker, C. J. (2010). Self-determination, accountability mechanisms, and quasi-governmental status of business improvement districts in the United States. Public Performance & Management Review,33(3), 413-435. doi: 10.2753/PMR1530-9576330306.
Becker, C. J., Grossman, S. A., & Dos Santos, B. (2011). Business improvement districts: Census and national survey. Washington, DC: International Downtown Association.
Beckert, J. (2010). Institutional isomorphism revisited: Convergence and divergence in institutional change. Sociological Theory 28(2), 150-166.
Billings, S. B., & Leland, S. (2009). Examining the logic behind the self-help, self-taxing movement: Business improvement district formation. Public Budgeting and Finance 29(4), 108-124. doi: 10.1111/j.1540-5850.2009.00945.
Bozeman, B. (1987). All organizations are public: Bridging public and private organizational theories. San Francisco: Jossey-Bass.
Briffault, R. (1999). A government for our time? Business improvement districts and urban governance. Columbia Law Review, 99(2), 365-477.
Briffault, R. (2010). The business improvement district comes of age. Drexel Law Review, 3(1), 19-33.
Brooks, L. (2006). Does spatial variation in heterogeneity matter? Assessing the adoption patterns of business improvement districts. Review of Policy Research 23(6), 1219-1234. doi:10.1111/j.1541-1338.2006.00255.
Brooks, L. (2007). Unveiling hidden districts: assessing the adoption patterns of business improvement districts in California. National Tax Journal, 110(1), 5-24.
Cook, P. J., & MacDonald. J. (2011). Public safety through private action: An economic assessment of BIDs. The Economic Journal, 121, 445-462. doi:10.1111/j.1468-0297.2011.02419
Crist, C. (2006). Neighborhood improvement districts' authority to borrow funds (Advisory Legal Opinion by Florida Attorney General (AGO 2006-49), accessed March 2, 2012, http://www.myfloridalegal.com/ago.nsf/Opinions/ 41E82484AAA92330852572430051F57C.
Davies, M.S. (1997). Business improvement districts. Journal of Urban and Contemporary Law, 52, 187-223.
DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48, 147-160.
Dilworth, R. (2010). Symposium: Business improvement districts and the evolution of urban governance. Drexel Law Review, 3(1), 1-372.
Dyson, D. A., & Baker, K. (2011, Jan). City special service districts (Information Brief, Research Department, Minnesota House of Representatives, accessed on March 2, 2012, http://www.house.leg.state.mn.us/hrd/pubs/cityssd.pdf.
Ellen, I. G., Schwartz, A. E., & Voicu, I. (2007). The Impact of Business Improvement Districts on Property Values: Evidence from New York City. Brookings- Wharton Papers on Urban Affairs, 1-39.
Ewoh, A. I. E., & Zimmermann, U. (2010). The case of Atlanta metro community improvement district alliance. Public Performance & Management Review, 33(3), 395-412.
Foster, K. A. (1997). The political economy of special-purpose government. Washington, DC: Georgetown University Press.
Frederickson, H. G., & Smith, K. B. (2003). The public administration theory primer. Cambridge, MA: Westview Press.
Garnett, N. S. (2010). Governing? Gentrifying? Seceding? Real time answers to questions about business improvement districts. Drexel Law Review, 3(1), 35-47.
Garodnick, D. R. (2000). 'What's the BID deal? Can the Grand Central Business Improvement District serve a special limited purpose? University of Pennsylvania Law Review, 148, 1733-1770.
Giddens, A. (1984). The constitution of society: Outline of the theory of structuration. Berkeley, CA: University of California Press.
Gross, J. S. (2008). Business improvement districts in New York City's low- and high-income neighborhoods. In G. Morçöl, L. Hoyt, J. W. Meek, & U. Zimmermann (Eds.), Business improvement districts: Research, theories, and controversies (pp. 221-248). Boca Raton, FL: CRC Press.
Grossman, S. A. (2010). Business improvement districts: Promise and performance. Public Performance & Management Review, 33, 355-360.
Hochleutner, B. R. (2003, April). BIDs fare well: The democratic accountability of business improvement districts. New York University Law Review, 78 (Spring), 374.
Houstoun, L. O. (2003). Business improvement districts. (2nd Ed.). Washington, DC: ULI-the Urban Land Institute in cooperation with the International Downtown Association.
Hoyt, L. M. (2005). Do business improvement district organizations make a difference? Crime in and around commercial areas in Philadelphia. Journal of Planning Education and Research, 25, 185-199. doi:10.1177/0739456X05279276.
a: The BID model and the role of policy entrepreneurs. In G. Morçöl, L. Hoyt, J. W. Meek, & U. Zimmermann (Eds.), Business improvement districts: Research, theories, and controversies (pp. 111-138). Boca Raton, FL: CRC Press.
Hoyt, L., & Gopal-Agge, D. (2007). The business improvement district model: A balanced review of contemporary debates. Geography Compass, 1(4), 946-958. doi:10.1111/j.1749-8198.2007.00041.
Justice, J., & Goldsmith, R. S. (2008). Private governments or public policy tools? The law and public policy of New Jersey's special improvement districts. In G.Morçöl, L. Hoyt, J. W. Meek, & U. Zimmermann (Eds.), Business improvement districts: Research, theories, and controversies (pp. 161-196). Boca Raton, FL: CRC Press.
Justice, J. B., & Skelcher, C. (2009). Analysing democracy in third-party government: Business improvement districts in the US and UK. International Journal of Urban and Regional Research, 33, 738-53. doi:10.1111/j.1468-2427.2009.00855.
Kennedy, D. J. (1996). Restraining the power of business improvement districts: The case of Grand Central Partnership. Yale Law and Policy Review, 15, 283.
Lauber, J. G. (2003). Public-private partnership in community development: Applying constitutional standards for implementing the Missouri Community Improvement District Act. Journal of the Missouri Bar, 59(2). Accessed March 2, 2012. http://oldsite.mobar.org/8174c453-4bf0-4283-8ab0-924c676d26d5.aspx.
Lavery, K. (1995). Privatization by the back door. The rise of private government in the USA. Public Money & Management, 15(4), 49-53. doi:10.1080/09540969509387895.
Lloyd, M. G., McCarthy, J., McGreal, S., & Berry, J. (2003). Business improvement districts, planning and urban regeneration. International Planning Studies, 8(4), 295-321. doi:10.1080/1356347032000153133.
MacDonald, J. M., Stokes, R., & Bluthenthal, R. (2010). The role of community context in business district revitalization strategies: Business improvement districts in Los Angeles. Public Performance & Management Review, 33(3): 436-458.
Mallett, W. J. (1993). Private government formation in the D.C. Metropolitan Area. Growth and Change, 24,385-416.doi:10.1111/j.1468-2257.1993.tb00132.
March, J. G., & Olsen, J. P. (1989). Rediscovering institutions: The organizational basis of politics. New York: The Free Press.
Meek, J. W., & Hubler, P. (2008). Business improvement districts in the Los Angeles metropolitan area: Implications for local governance. In G. Morçöl, L. Hoyt, J. W. Meek, & U. Zimmermann (Eds.), Business improvement districts: Research, theories, and controversies (pp. 197-220). Boca Raton, FL: CRC Press.
Meltzer, R. (2011). Understanding business improvement district formation: An analysis of neighborhoods and boundaries. Journal of Urban Economics, 71(1), 66-78. doi10.1016/j.jue.2011.08.005.
Mitchell, J. (1999). Business improvement districts and innovative service delivery (Grant report). The PricewaterhouseCoopers Endowment for the Business of Government, accessed March 2, 2012, http://www.jj0955.com/PdfFiles/MitchellBusinessImprovementDistricts.pdf.
Mitchell, J. (2001). Business improvement districts and the management of innovation. American Review of Public Administration, 31(2), 201-217. doi:10.1177/02750740122064929.
Mitchell, J. (2008). Business improvement districts and the shape of American cities. Albany, NY: State University of New York Press.
Morçöl, G., & Patrick, P. A. (2008). Business improvement districts in Pennsylvania: Implications for democratic metropolitan governance. In G. Morçöl, L. Hoyt, J. W. Meek, & U. Zimmermann (Eds.), Business improvement districts: Research, theories, and controversies (pp. 289-318). Boca Raton, FL: CRC Press.
Morçöl, G., & Zimmermann, U. (2008). Community improvement districts in metropolitan Atlanta. In G.Morçöl, L. Hoyt, J. W. Meek, & U. Zimmermann (Eds.), Business improvement districts: Research, theories, and controversies (pp. 349-372). Boca Raton, FL: CRC Press.
Phillips, N., Lawrence, T. B., & Hardy, C. (2004). Discourse and institutions. Academy of Management Review, 28, 635-652.
Rhodes, R. A. W. (1997). Understanding governance: Policy networks, governance, reflexivity, and accountability. Maidenhead, UK: Open University Press.
Ruffin, F. A. (2010). Collaborative network management for urban revitalization: The business improvement district model. Public Performance & Management Review, 33(3), 459-487. doi:10.2753/PMR1530-9576330308.
Schaller, S., & Modan, G. (2005). Contesting public space and citizenship: Implications for neighborhood business improvement districts. Journal of Planning Education and Research, 24, 394-407. doi:10.1177/0739456X04270124.
Schragger, R. (2010). Does governance matter? The case of business improvement districts and urban resurgence. Drexel Law Review, 3(1), 49-70.
Searle, J. (2010). Making the social world: The structure of human civilization, Oxford, UK: Oxford University Press.
Sillince, J. A. A., & Barker, J. R. (2012). A tropological theory of institutionalization. Organization Studies, 33(1) 7-38.
Stokes, R. (2006). Business improvement districts and inner city vitalization: The case of Philadelphia's Frankford Special Services District. International Journal of Public Administration, 29, 173-187. doi:10.1080/01900690500409021
Stokes, R. J. (2008). Business improvement districts and small business advocacy: The case of San Diego. In G. Morçöl, L. Hoyt, J. W. Meek, & U. Zimmermann (Eds.), Business improvement districts: Research, theories, and controversies (pp. 249-268). Boca Raton, FL: CRC Press.
Warner, S. B. (1968). The private city: Philadelphia in Three periods of its growth. Philadelphia: University of Pennsylvania Press.
Wolf, J. F. (2006). Urban governance and business improvement districts: The Washington DC BIDs. International Journal of Public Administration, 29, 53-67.
Wolf, J. F. (2008). Business improvement districts' approaches to working with local governments. In G. Morçöl, L. Hoyt, J. W. Meek, & U. Zimmermann (Eds.), Business improvement districts: Research, theories, and controversies (pp. 269-288). Boca Raton, FL: CRC Press.
The Pennsylvania State University at Harrisburg
Lebanon Valley College
Correspondence concerning this article should be addressed to Göktug Morçöl, School of Public Affairs, The Pennsylvania State University, Middletown, PA 17057.
(ProQuest: Appendix omitted.)…
Questia, a part of Gale, Cengage Learning. www.questia.com
Publication information: Article title: Institutionalization of Business Improvement Districts: A Longitudinal Study of the State Laws in the United States. Contributors: Morçöl, Göktug - Author, Gautsch, Douglas - Author. Journal title: Public Administration Quarterly. Volume: 37. Issue: 2 Publication date: Summer 2013. Page number: 238+. © Southern Public Administration Education Foundation Winter 2008. Provided by ProQuest LLC. All Rights Reserved.
This material is protected by copyright and, with the exception of fair use, may not be further copied, distributed or transmitted in any form or by any means.