A ROAD MAP FOR CREATING A BUSINESS IMPROVEMENT DISTRICT

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1 A ROAD MAP FOR CREATING A BUSINESS IMPROVEMENT DISTRICT SUMMARY OF FINDINGS In 2012, via Resolution No , the County Executive and the County Council directed the White Flint Downtown Advisory Committee (WFDAC) to provide recommendations on the feasibility and timing for the establishment of a new Urban District in the White Flint Sector Plan area. The WFDAC evaluated the Urban District model and other models for delivering enhanced commercial district services including the Business Improvement District (BID) model commonly found in the District of Columbia and Northern Virginia and the Commercial District Management Authority model found in Bethesda. 1 The WFDAC focused on questions of governance, minimum funding required for effective services, and potential revenue. In 2016, the WFDAC sponsored a series of focus groups that included 26 local businesses, individuals, and organizations. Individual interviews of representatives of 37 public and private entities were held in Summer The WFDAC and select partner organizations participated in a September 20, 2017 workshop to review the data collected. The results of the focus groups, interviews, and workshops shaped the content of this report. As a result of this process, WFDAC finds that: 1. A Business Improvement District (BID) is preferred over an Urban District, Urban District Corporation, or a voluntary model. The BID model is preferred for several reasons. Among the most important reasons: participants seek to exercise a high degree of control over who governs the organization, what menu of services are delivered, and to what degree staff are accountable to stakeholders. 2. Branding and place-making are the two highest priority service areas. 3. The preferred boundary for the district would be based on the boundary of the White Flint Sector Plan. This boundary has the advantage of being consistent with a designated County planning district, thus making data collection easier, and as a Sector plan area, several projects are already in the pipeline. 4. A Montgomery County law is needed to implement the MD BID law. It is our understanding the MD BID law is not sufficient on its own to implement a BID in Montgomery County. As with Urban District Corporations, it appears that a local law is needed to provide further guidance on the powers and structure of a BID and its relationship to the County. 1 See OLO Report: Case Studies of Local Business and Community Districts, February 24, 2015.

2 I. GOVERNANCE The issues of governance, structure and management are critically important. Stakeholders were clear and consistent in their preference for the BID governance model because of its independence from direct County oversight. Unlike an Urban District Corporation, the BID board of directors is appointed by members of the district not the County Executive. The appointment process however, would be authorized or approved by the County Council. Governance Options: (a) (b) (c) (d) A Business Improvement District with a governing board as specified in the current legislation (with five to nine members.) The method of appointment is to be determined by the local law approved by the County Council. 2 An Urban District similar to districts in Silver Spring and Wheaton, in which the staff are employees of the County and the board is subject to appointment by the County Executive and approval by the County Council. A Commercial District Management Authority similar to the Bethesda Urban Partnership, a public entity with a board of directors appointed by the County Executive and approved by the County Council. A voluntary organization or corporation, similar to the White Flint Partnership. The preference for option (a) was overwhelming. The reason most often given for this preference is a desire to rest decision-making with the stakeholders that pay the assessments. This means that property owners (and other stakeholders) will review, approve, and recommend adoption of a local BID law to the County Council and the County Executive. That law will specify the method by which the composition of the board will be determined. This board will determine, among other things, the method and rate of assessment, the services to be provided, and will hire and fire the chief executive. Property owners and other stakeholders want to be able to determine how much money is collected, how it is spent, and who staff and the executive director report to. 2 MD Code, Economic Development, and

3 II. PROGRAMS AND SERVICES Based on the interviews, work sessions, and other discussions with the various potential stakeholders and other interested parties, WFDAC recommends that a BID should focus on delivering the following programs and services (listed in the preferred order of priority): 1. Branding/Marketing/Identity 2. Placemaking/Beautification 3. Special Events 4. Clean and Safe The BID would also need a full-time administrative staff. The estimated annual costs below were determined by a consultant. These costs, reflecting a range of projected annual costs during the initial years, are based on reasonable assumptions about the programs and services to be provided. Branding/Marketing/Identity A branding program would include: Website/newsletter/social networking program Public relations/advertising/sales promotion campaign State of District report and event These projects and programs could be performed at various levels, e.g., the organization could develop a functional website, an interactive website or a comprehensive website. The State of the District report and event could be a project used to kick off the District or could be a goal for Year 2 or 3 or 4. Estimated cost: $100,000 to $150,000 Placemaking/Beautification While some private properties in the area are well-landscaped, many public areas are too often illdesigned, especially for an area that aims to be walkable and livable. The public areas also do not lend themselves toward identification of the area. The transportation capital plan for White Flint promises many improvements to public areas, especially along Rockville Pike. However, these improvements will likely occur over several years and will not be at a fine-grain level. In the short term, there are many projects and programs that could be undertaken to improve the public areas of the district, make it more walkable and livable, and announce the identity of the area. 3

4 These projects include: Wayfinding signage Banner program Gateway signage Public art program Urban design interventions around key areas, beginning with White Flint Metro station. The BID might budget for one of these projects per year over the first few years of its operation. Estimated cost: $50,000 to $100,000 Special Events A good way of making a splash while waiting for public and private infrastructure to be developed is to produce special events. The Pike District currently has a Fall Fest as its signature event, which should be continued, as should Pike & Rose s Farmers Market. A regular events calendar (that would include third-party events) also should be produced. A number of events could be produced or encouraged, including: Signature event Weekly music and beer events Quarterly major events Arts market Athletic events Estimated cost: $50,000 to $100,000 Clean and Safe The Pike District needs to be and be perceived as being clean and safe. Pike District constituents are cool to the notion of a large maintenance and eyes and ears force similar that in the Bethesda Urban Partnership. Constituents appear pleased with the Department of Corrections weekend team who regularly provide cleaning services and the landscaped medians managed by the BCC Regional Service Center. It could be that the Pike District BID takes over responsibilities for their management. In addition, there are other functions that the organization can take to improve cleanliness and public safety: Coordinating County police and private-sector security Coordinating county and private-sector maintenance Bird-dogging the punch list of needed public and private-sector improvements Contracting with maintenance/landscaping firm to maintain orphan parcels Estimated cost: $25,000 to $50,000 4

5 Administrative Costs The organization might best be managed by a small, three-person, full-time staff and a team of project- and program-based consultants and contractors. Salary costs are fully burdened, i.e., they include salaries and benefits. In addition, the executive director s salary can be spread over several program areas. Executive Director Manager of Operations Administrative Assistant Bookkeeping contractor Rent, insurance Legal, Accountant Board expenses Branding/placemaking consultant Special events contractor Estimated cost: $250,000 to $350,000 Grand total estimated cost: $475,000 to $750,000 5

6 III. REVENUES On average, BIDs around the country have a $350,000 annual budget (in FY 2015 dollars). The range varies dramatically from $11,000 to $18 million. Revenue operate a BID generally comes from: BID taxes, memberships, contributions, sponsorships, grants, and earned income. BID Tax The total tax base for non-exempt properties in the White Flint Sector Plan Area is $1.514 Billion. 3 A BID Tax would not count against the County s Charter limit on property tax revenue. Using the July 2017 assessment data, revenue projections at a $.02, $.04, and $.06 per $100 assessed value would be as follows: Rate $.02 assessment $.04 assessment $.06 assessment Approx. Annual Revenue $300,000 $600,000 $900,000 Memberships Exempt property owners, organizations outside the district, businesses and other stakeholders, and interested parties may wish to buy in to the BID services. For example, the US General Services Administration has a program to support BIDs where the Federal Government owns property. County Contribution The County supports urban maintenance and promotions in existing Urban Districts through transfers from Parking revenue and the General Fund. The County should consider similarly contributing towards a BID that provides similar services in this urban area. Sponsorships Events like the annual Pike District Fall Fest have the potential to raise income as it grows and generates more visibility. Partnerships with a PR firm and media outlets can greatly expand the potential for sponsorship income. 3 Existing condominium buildings are exempt from inclusion in a new BID, but may elect to opt-in. 6

7 Grants The key to grant seeking is to devise programs that include a charitable, educational, or scientific nature or that lessen the burden of government in some way. Grant sources include public agencies, foundations, corporations, and individuals. Earned Income Earned income can occur in a number of ways. The most common is through gated special events, where admission is charged, and where food and beverages are sold. Another way of earning income is to contract with a government agency to perform a service that the BID can do better, faster, or cheaper. Cleaning and maintenance services are good examples. 7

8 IV. TIMETABLE AND NEXT STEPS After this final report is received by the County Executive and County Council, property owners may wish to proceed to the establishment of a BID. The following is the timeline that would be followed. 1. Organizing committee forms to develop BID proposal, draft 3-year business plan, and gathers required approvals of parcel owners. 2. BID proposal formally submitted to County Council. 3. Within 45 days of receipt, the County Council must hold a public hearing on the proposal. At least 21 days before the public hearing, the County must publish notice of the hearing in a newspaper of general interest. The BID organizing committee must, within 21 days prior to the public hearing, send notice to all owners of non-exempt properties within the proposed district. The application must be made available for review during normal business hours at a location within the district. 4. Within ten days of the public hearing, the County Council, at its discretion, determines the proposal meets the needs of the district and approves a local law to create the BID. It is our understanding the MD BID law is not sufficient on its own to implement a BID in Montgomery County. As with Urban District Corporations, it appears that a local law is needed to provide further guidance on the powers and structure of a BID and its relationship to the County. 5. Within ten days of County Council authorization, the new BID corporation must provide the County with a preliminary tax roll. 6. The BID tax becomes law; the new BID corporation, based on a level-of-service agreement, operates. The BID corporation establishes a regular schedule of board meetings, determines how support services will be provided until full-time staff can be hired, and develops a job description and search process for CEO. 8

9 ABOUT THE WHITE FLINT DOWNTOWN ADVISORY COMMITTEE The White Flint Downtown Advisory Committee was established by the County Council to advise County departments on public services in the Pike District - a rapidly urbanizing community along Rockville Pike centered on the White Flint Metro Station. The committee is charged with coordinating community activities that promote business interests and a sense of community and with developing recommendations for an urban services district. Business Representatives Bob Daley (chair) - Marriott Eddie Snyder - Snyder & Cohn Property Owner Representatives Brian Downie - Saul Centers, Inc. Mickey Papillon - Federal Realty Investment Trust Francine Waters - Lerner Enterprises Chamber of Commerce Representatives Tom Murphy - Greater BCC Chamber of Commerce Andy Shulman (vice chair) - Greater BCC Chamber of Commerce Residential Representatives Paul Meyer Bernie Meyers Cliff Cohen - outside sector plan area Jordan Cooper - WMCCAB Non-Voting Cindy Gibson - County Council Ken Hartman - County Executive Peggy Schwartz - North Bethesda Transportation Solutions 9