While business improvement districts can generally be effective, we have significant reservations about the proposal under consideration for Old Town.
The first reservation stems from the state code to which an Alexandria BID would be subject, as that legislation is poorly written, contradictory, vague in some places and overly prescriptive in others.
The state code allows for special tax districts of all kinds, a concept that in general we find inappropriate and unfair. Establishing an Old Town BID would be a step in that direction, and we fear the temptation would be great for future city councils to routinely take this route to fund improvements that should come from general funds.
State law forbids diverting special district funds to cover schools, police and general government services. Yet the code contradicts itself by saying BID funds can be used for trash and snow removal, which we view as basic general government services. We are not encouraged that Alexandria’s BID proposal cites this particular section.
Another concern is the portion of the approximately $2 million of the annual revenues that will go to salaries and administrative expenses. The proposed BID staff of six seems excessive.
While the proposed budget only lists $280,000 for salaries and overhead, it also notes that some of the budgeted amounts for actual services will go toward salaries. Given this, it’s likely that salaries and overhead will consume upwards of one fourth of the amount raised. Is that really what business owners want to spend their money on?
And that question — what business owners want — is ultimately the make-or-break issue here.
The existing BID proposal correctly states that Virginia code, unlike D.C., does not require affected businesses to approve a BID via a vote. But the law doesn’t expressly prohibit one either. The city attorney’s office should determine whether the Dillon Rule allows localities to hold a referendum of affected businesses.
If it does, a referendum should be held that requires a majority yes vote by the almost 800 affected property and business owners. If a majority votes no, or if there’s no legal way to get the consent of the affected businesses, then we think an Old Town BID is a non-starter.
Further, we think the BID, if enacted, should be reviewed every three years instead of five, and it should be renewed or disbanded based on a vote by affected businesses as well as city council.
When done right — developed from the ground up rather than imposed from the top down — BIDs can be useful tools for businesses to enhance the appearance and offerings of their neighborhoods.
If the businesses themselves opt in and run their own BID, then it would also be an example of direct democracy at work. However, if the city simply imposes this tax on unwilling businesses, then it could wind up a case study in government arrogance.
In the end, it may be better to pass than to make the wrong BID.