- What’s The Difference Between a Main Street and a Business Improvement District (BID)?
In the world of community development we are often asked the same questions. This is the first in our blog series that will focus on trying to answer some of the most common questions we get from folks. Ranging from “What’s the difference between a Main Street and a Business Improvement District?” to “What exactly is technical assistance?” or “What exactly does District Bridges do?”
First up, we’ll explain the difference between a Main Street and a Business Improvement District (BID). Over the last 20 years, DC has utilized Main Streets and BIDs as the two primary models of community or place-based economic development.
MAIN STREETS work to revitalize communities by retaining, recruiting, and providing direct technical assistance to small businesses, improving commercial properties and streetscapes, and attracting consumers by organizing events and marketing the corridor. Main Streets utilize a Four-Point Approach – Organization, Design, Promotion, Economic Vitality – developed by The National Historic Trust in the 1980’s that takes a holistic, community-driven approach to revitalization efforts. Main Streets were originally developed to support the revitalization of older, more rural downtowns following the proliferation of shopping malls and suburban sprawl which left many downtown districts dilapidated and vacant. Main Street programs are part of the national Main Street network managed now by the National Main Street Center.
DC’s Main Street programs are funded through an annual grant administered by the DC Department of Small and Local Business Development (DSLBD). DC currently has 28 designated Main Streets. These grants are established by City Councilmembers and competed by DSLBD. Once the grant is awarded, the grantee receives the grant annually so as long as they remain compliant with the grant requirements.
BUSINESS IMPROVEMENT DISTRICTS (BIDs) are self-taxing districts established by property owners to enhance the economic vitality of a specific commercial area. The tax is a surcharge to the real property tax liability. The tax is collected and all revenues are managed by the nonprofit organization responsible for the BID. Business and property owners control the BID through a member board and determine how funds are spent.
BIDs primarily focus on maintaining the commercial corridors through litter and graffiti removal as well as landscaping, promoting the commercial district and the businesses operating therein, providing homeless services, and making capital improvements (i.e., street furniture, decorative lighting) to supplement city services. BIDs typically are found in high density areas where the self-imposed tax can be enough to support the function of the organization and the services provided to the commercial district.
Both of these models have proven successful, however, they also have their respective limitations and key differences. Here’s how those break down:
1. Who are they beholden to and how does that impact the services they are able to provide?
A BID is beholden to the property owners who make up its board of directors, while Main Streets are beholden to the broader community and the small business owners within the designated corridor as well as the granting agency, DSLBD.
- Because the BID is beholden to the property owners, they are not a resource to businesses when negotiating a favorable lease or managing a landlord/property issue.
- In contrast, Main Streets’ first priority is to serve the small businesses within its designated corridor. The Main Street Approach tends to be more holistic in nature and engages the surrounding community more directly through its reliance on volunteers. Main Street programs support businesses in improving their individual business practices and in achieving their business goals.
2. How are they funded and how does that impact the services provided by each?
Because BIDs are self-taxing districts funded by a surcharge to the real property tax liability, their operating budgets far exceed that of a Main Street program. As a result, BIDs excel at maintaining a clean and safe environment within their districts. Their clean teams are usually better funded than city-funded clean teams, which enables them to provide a higher level of service resulting in consistently cleaner corridors. Additionally, they are able to invest significant funding into branding, design, and marketing to more effectively promote an area, drawing customers to frequent the businesses within the corridor. Businesses and property owners within a BID benefit from the marketing and maintenance of the district.
In contrast, the annual grant award for a Main Street is only $150,000, which is the same for each Main Street regardless of size and complexity. For example, District Bridges’ Chevy Chase Main Street serves 67 businesses while our Columbia Heights Mount Pleasant Program serves 283 businesses. Both programs receive the same amount of money despite the significant difference in program size. Additionally, the current funding structure also does not take into account the complexity of a corridor. Using Columbia Heights | Mount Pleasant again as an example, this program serves a large immigrant population which requires both language and cultural understanding to address the key concerns. This type of technical assistance requires staff to have specific language and cultural qualifications and can be far more time consuming than a corridor that does not have these same needs.
3. How does the funding method impact the small business owners?
As mentioned above, BIDs are funded through a surcharge to the real property tax liability. However, most commercial lease agreements are “triple net”, meaning the business leasing the property is responsible for the rent as well as all the expenses of the property, such as real estate and BID taxes, building insurance, and maintenance.
The result is that small businesses shoulder the cost of the BID but reap few of the direct benefits. The BID tax can also be reassessed annually and increased to help cover capital improvements or other expenditures approved by the BID board, which can add an increased burden on small businesses.
4. How are BIDs and Main Streets staffed?
One of the starkest contrasts is the staffing structure of BIDs and traditional Main Streets. The traditional Main Street model employs only one full-time staff person as the Executive Director and relies heavily on volunteer and contractor support. The Executive Director is responsible for all programmatic and administrative activities which results in significant limitations in capacity, systems development, and sustainability.
Most BIDs have multiple staff members that support the operations and programmatic functions of the organization resulting in a more sustainable organizational structure.
The Evolution Of Community Development In DC
Over the last few years, there have been efforts to improve on these two models. In 2017, District Bridges developed the first multi-Main Street model in the nation. Our model makes launching new Main Street programs in DC a turnkey operation streamlining the operational setup of a new program, creating economies of scale, return on investment, increased staff capacity, and most importantly a strategic ecosystem approach to community development that looks holistically at the needs of our community and the existing stakeholders at play.
Since District Bridges’ development of the first multi-Main Street model, other organizations have followed suit to replicate our multi-Main Street approach to try to address some of the systemic challenges Main Street programs face. The BID model, in contrast, has seemingly not evolved. While there have been attempts to transition Main Streets into BIDs or to develop a hybrid model there has yet to be a local example of success.
The long and short of it is community development is a team sport. And while Main Streets and BIDs both have their strengths and weaknesses, each plays a vital role in the development and success of our city. These two models, however, are not the only ways we can approach community-based economic development. District Bridges believes that the future of this work is less about the individual entities on the ground but the strength and interconnectedness of the community development ecosystem…. but we’ll save that for another blog post!
Do you have any specific questions about BIDS or Main Streets? We’re happy to answer! Leave us a comment and we’ll dive deeper with you.