Business Improvement Districts for Coastal Communities
Business Development
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Background - retail sales trends According to the Federation of Small Businesses, more than 50% of the turnover of independent retailers goes into the local community. Nationally sales in town centres have reduced from 49.4% in 2000 to 39.8% in 2014. While out of town sales have increased from 28.1% to 32.3%, the real transition has been to online sales, more than doubling from 5.1% to 12.2%.1 42% of English towns and villages no longer have a shop of any kind.2 1 Department for Business, Innovation and Skills (2011) Understanding High Street Performance 2 http://www.allthelittleshops.com/3-the-business-case
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Business Improvement Districts
What is a Business Improvement District?
The BID concept is similar to businesses within a shopping centre development contributing towards the centre management and promotion costs. It was developed and established in the UK following the Local Government Act (2003) and subsequent 2004/5 regulations. BIDs are typically set up to coordinate businesses, address declining footfall and visitor numbers, and actively promote a business area. By late 2014 there were more than 179 BIDs in the UK3, raising ÂŁ65.5m in levies, ÂŁ130m additional income, so representing ÂŁ195.5m investment into our business areas and high streets4. BIDs can cover any area and enable businesses to work collaboratively on common issues. They can work well on long, medium or short term challenges. BIDs may be more specialised than (for example) a Chamber of Commerce group which might operate for a whole district, BIDs may also have greater fundraising or financial powers. Though often used in retail spaces, BIDs do not necessarily need to be a town centre, they can be a collection of any type of business, including coastal communities, industrial estates, business parks or development areas. There are also Tourism BIDs, which are explained in more detail later.
3 http://en.wikipedia.org/wiki/Business_improvement_district 4 Nationwide BID Survey (2014) BritishBIDs
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Establishing a BID Identifying that an area requires additional focus and that collaborative working between businesses and local authorities would be beneficial, a BID proposal or Business Plan is constructed. This outlines the business priorities for the area as well as how the BID will be managed, funded and operated. THE PROCESS: 1. Workshops or open meetings encourage local businesses to highlight challenges or areas of improvement that could be addressed through a BID 2. Engage all businesses in the proposed area – ideally face to face, through existing networks, social media, letters or formal surveys and questionnaires (surveys can work especially well and establish a benchmark to measure BID success). 3. Once the priorities have been set, these will be outlined within a 5 year Business Plan. The Plan should outline objectives, how they will be achieved and measured, outline costs and details of the levy and exemptions, as well as proposed structure for the Board of Directors. 4. The BID Proposal / Business Plan must then be circulated to all registered businesses operating in/from the proposed BID area. 5. Postal ballot held for all levy payers. The ballot is operated by the local authority or third party to ensure impartiality. The ballot runs for 28+ days, and while there is no minimum turnout threshold, the ballot must be won on both of the following measures:
a. Majority of votes cast b. Majority of rateable value
6. If successful, the BID Proposal or Business Plan becomes legally binding. If unsuccessful, BIDs are free to re-run the ballot. The success rate is currently 84%5. 7. The BID is set up as an independent “not for profit” company limited by guarantee. 8. BID establishes a Baseline Agreement and an Operating Agreement with their local authority, to collect the levy funds via the existing business rates system. 9. BIDs have articles of association to cover election of Directors, AGMs and other aspects. Copies of template documents are available from www.britishbids.info
5 Nationwide BID Survey (2014) BritishBIDs
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CONSIDERATIONS IN SET UP: BIDs need paid members of staff to implement the agreed plan. Only 22 have just one member of staff, half of all the BIDs have 1-3 members of staff, and there are 14 BIDs that have >10 members of staff (and consultants)6. BID teams need to ensure that they carefully select the geographic area of the BID, to ensure that it is manageable, large enough to ensure sufficient funds are raised, but not too large that the benefits will not be tangible.
6 Nationwide BID Survey (2014) BritishBIDs
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What is a Tourism-BID? A Tourism Business Improvement District (TBID) is very similar to a BID. The legislation, setting up, ballot, management arrangements are all identical. TBIDs can cover a wider geographic area (crossing local authority boundaries), and can select the levy arrangements and activities to better focus on the tourism economy. TBID levies can operate in one of the following ways • • • • •
Flat rate per night occupied. % of rateable value. % of revenues, for example a 1% levy on room and admission ticket sales. A levy based on historical business performance data. A levy based on £/customer, possibly with different categories for hotels and attractions.
The business plan must clearly show which businesses will be included and exempt from a TBID as well as how the TBID funding levy is calculated. KPIs should be based on the tourism economy and need to outline what the local authority or tourism association(s) involvements will be. TBIDs are likely to be attractive to existing Destination Management Organisations (DMOs), perhaps needing to move to a new funding model, help prevent TIC closures or bridge the gap following reductions in local government spending on tourism. TBIDs will face many similar challenges to BIDs (see below). TBID can operates in similar areas to existing BIDs, so they need to work closely together to ensure they do not conflict their efforts and businesses are not double-charged levies. TBIDs are most likely to be successful where there boundaries are based on destinations, as seen by the tourist.
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Business Improvement Districts
What can BIDs or TBIDs do?
Benefits:
The following are a number of common examples
• T he average BID raises £390k per annum last year7. • BIDs can use their levy as “match funding” to make submissions to grant awarding funds for additional projects. BIDs can also accept donations and operate business activities to raise funds. • BIDs can help improve or restore civic pride and raise positive awareness of an area or district. • One benefit of BIDs could be seen as the establishment of the service level agreement, ensuring that the publically funded services remain constant over time8, with increased scrutiny and observation on the provision of these services.
• Market the area or destination to increase footfall and visitor numbers, including new branding to improve perceptions or events. • Improve staff awareness and training. • Undertaking customer or other research. • Establish loyalty schemes or joint offers. • Business cost reduction (e.g. joint procurement for services or goods) • Collective business voice and representation for issues. • Provide a welcoming environment. • Increase security eg. “Street Rangers”, CCTV. • Improving the street-scene, e.g. benches, floral displays, signage, maps and lighting. • Improve parking provision or implement price reduction schemes. • Developing and taking on the management of street markets. • Improving disabled access. • Improving or providing WIFI.
7 Eventbrite & Harris Research (July 2014) 8 Hoyt & Gopal-Agge (2007) The Business Improvement District Model: A Balanced Review of Contemporary Debates, Geography Compass 1/4 946-958
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Challenges START-UP’S AND FIRST TERM • S eeking sufficient start up funds. Some sources have indicated that it can take 6-18 months and cost between £15-50k9 to set up a BID. The Government has set up a fund to loan monies to BIDs to help overcome start-up costs prior to the business levy payments.10 • Engaging with sufficient depth and scope of businesses, across all the sectors present within the defined geographic area, to ensure support for the ballot to be successfully passed. • Setting up the Baseline & Operating Agreements with the local authority (authorities). • Defining and agreeing clear measurable outcomes within the Business Plan, and ensuring that the projects are achievable to enable sufficient support at re-ballot. • Working with existing business support networks or groups to prevent overlap and conflict. • Addressing concerns that the BID (through their success) may raise the rental value, due to successful activities increasing rateable values over the longer term. • Resistance from the larger chains who rely more on national marketing. • Incorporating views and support of smaller businesses that are not represented (often exempt from levy contributions) but are impacted by the BIDs activities.
9 Nationwide BID Survey (2014) BritishBIDs 10 https://www.gov.uk/government/news/new-support-to-help-communities-re-energise-their-high-streets
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SECOND TERM AND BEYOND • A ddressing tensions with street traders that benefit from the additional footfall, marketing and improved area reputation, but are not liable to pay the levy. • It is imperative that BIDs demonstrate a clear additional advantage/services for the BID businesses to prevent claims that the BID levy is double-charging for what businesses may see as “council services”. • Finding qualified, professional, capable staff can be a challenge for a BID which is a non-profit organisation, where budgets are tight and overheads take up a significant portion of expenses11. • Managing resident’s views and feedback, which is often different to the view of businesses, particularly within areas that include significant residential areas. • BIDs can currently struggle to tackle empty shops, as the levy is charged to the occupier rather than the freeholder. • ID Directors need to ensure they are transparent and accountable, to ensure confidence in the BID, the process and activities. Additionally good Chairmanship is needed to ensure that “grandstanding” does not occur and matters / accusations do not become out of hand. This is supported by audited published accounts, democratic voting of Directors and the re-ballot requirements. • Some critics suggest that BIDs can displace crime and other problems to outside the BID geographic area. Currently research results looking into this have had mixed finding12.
11 http://commercialdistrictadvisor.blogspot.co.uk/2012/03/reducing-overhead-costs-for-business.html 12 Hoyt & Gopal-Agge (2007) The Business Improvement District Model: A Balanced Review of Contempory Debates, Geography Compass 1/4 946-958
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Measuring Success BIDs have various measures or key performance indicators to monitor their successes, which have included: • • • • • •
Customer surveys Crime rates Retail Sales Number of jobs created (or sustained) Pedestrian / Footfall counts / visitor numbers / occupancy rates / parking figures Gaining accreditation from BritishBIDs (see links below).
Case Study Examples of Best Practice in BIDs A number of coastal communities have successful BID teams, below are some examples of both BID and TBIDs and some of their activities… TBID LOCH NESS & INVERNESS (EST 2014):
BID GREAT YARMOUTH (EST 2014):
• O vernight tourism is worth £245m per annum to the area. The TBID includes 363 businesses, raising £170,000 annually via the levy, supplemented by grants and awards.
• T ourism is worth £532m, represents 30% of employment, with 638 self catering units, 32 holiday parks, 13 chalet parks and 162 serviced accommodation in the BID area.
• T he TBID provides “one strong voice to lobby on local and national issues that are of concern to tourism businesses”13.
• W hile the turn-out was less than 50% of the 1,200 levy businesses, 80% voted in favour14.
• T he TBID will develop new branding and website for visitlockness.com, set up to replace “Destination Loch Ness” and widen the partners, resources and geographic area to better promote the wider Loch and Inverness as a whole destination. • T he TBID is working on promoting awareness of the area and offer (including seasonality, photographic library and research), business tourism, improvements to tourism infrastructure (including new paths, opening up views, picnic areas), business development (cost savings, training, carbon footprint, networking) and new events.
• T he TBID replaced the funding model for the Tourist Partnership. • T BID will raise £525,000, and spend £304,000 on marketing and events, attracting group tourism, improving access and signage, maintaining a welcoming environment and business support15.
13 Inverness & Loch Ness (2014) Business Plan 14 http://www.greatyarmouthmercury.co.uk/news/i_ll_go_to_prison_before_i_pay_it_greater_yarmouth_tourism_bid_leaves_bad_taste_in_mouth_for_some_businesses_1_3857398 15 http://www.edp24.co.uk/business/tourism_tax_proceeds_will_be_used_to_market_great_yarmouth_1_3880632
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BOURNEMOUTH COASTAL BID (EST 2012):
SOUTHPORT BID (EST 2014):
• B ournemouth attracts 4.7 million visitors each year, contributing £501m to the economy and representing 14% of local employment.
• T he BID levy covers the main tourist areas, including shopping, golf course and beach.
• B usinesses voted 73% by number and 90% by rateable value in favour from the 760 eligible businesses within the coastal strip area from Hengistbury Head to Alum Chine. The BID will raise £3m towards improving business opportunities in the area over the BID term. • B usiness Plan concentrates on expanding marketing and promotion activities, alongside improvements in resort facilities, extending trip length, encouraging use of local hospitality, the rich diversity of eating and drinking establishments, encouraging repeat visits and developing customer service standards16.
• T he levy has helped set up new events, collective procurement, improve the streetscene including cleansing, marketing, safety/ security and parking – with the aim to promote Southport as a tourism destination. • T he BID employs an Operations Manager to focus on developing the NTE (Night Time Economy) alongside the 200+ venues with the aim to gain a Purple Flag accreditation.
Many BIDs that operate in coastal / tourist destinations appreciate the considerable value of tourism to their economy, and so while are not classified as a TBID, their BID activities include a significant proportion of direct or indirect tourism promotion and support activities, such as increasing the awareness of the destination/area, events and improving the street scene.
16 http://britishdestinations.net/annual-conference-2014/
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Further Reading Bodies and organisations that can assist with developing your beach management include: • • • • •
Government Pages on BIDs: https://www.gov.uk/business-improvement-districts British BIDs Website: http://www.britishbids.info/ ATCM National BIDs Advisory Service: https://www.atcm.org/programmes/uk_bids/welcometoukbids Confederation of British Industry: http://news.cbi.org.uk/ Mary Portas Report (2011): https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/6292/2081646.pdf