Public-Private Partnerships in Urban Development in the United States



33

and local law, which permits property owners and merchants to band together to use the city’s tax collection
powers to ‘assess’ themselves. These funds are collected by the city and returned in their entirety to the BID and
are used for purchasing supplemental services (e.g., maintenance, sanitation, security, promotions and special
events) and capital improvements (e.g., street furniture, trees, signage, special lighting) beyond those services
and improvements provided by the city. In essence, the program is one of self-help through self-taxation.”
(Houstoun, L. O., 1997:9)

In California, the establishment of BID’s is authorized by two state laws: one which allows
for the creation of merchant based special assessment districts and one which allows for
property based districts. In both cases, a majority of business owners or commercial property
owners in a given area decide to acquire special benefits and to pay for those benefits by
themselves. In a BID as geographically defined area, supplemental services and activities as
well as area-specific programs are provided. Supplemental services and activities are those
which are not provided by the city. Mostly, BID’s pay for maintenance such as street furniture
that cannot be paid by the city due to budget constrains. The city requires that a nonprofit
corporation be designated as the agent responsible for procuring the BID improvements. The
organization is obligated to provide to the city financial reports over the use of the assessment
funds. The city is also authorized to audit and review the financial conditions of a BID. In this
way the city assists the BID with review, thus that the special assessment is used according to
the budget.4 Consequently, the city has a determined role in the BID program. In this regard
the relationship between a city and its business association(s) can be describe as a formal
public-private partnership with low public sector involvement. Cities provide primarily
administrative support for business associations and their BID’s. The intertwined relationship
between the public sector and private interests in a BID program is shown in figure 6.

Figure 6: Organizational Chart of a BID

Source: Own draft

4 I gathered information form the Los Angeles City Clerk Administration Services Division and several internet
resources



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