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A German Approach to Urban Governance with BIDs

Over the past years a noticeable increase in involvement by the private sector and by citizens has been observed in urban development in Germany. Public private partnerships (PPP) in the form of urban initiatives such as Business Improvement Districts (BID) are the most common.

By FRANK FRIESECKE

The instrument has become necessary in Germany due to the fact that several cities are not capable of taking over the financial burden of urban development.

WHAT IS A BUSINESS

IMPROVEMENT DISTRICT?

A Business Improvement District is a partnership between a municipality, property and business owners that develop and take forward projects and services that make a collective contribution to the stabilization and improvement of their commercial district. BIDs allow the private sector to provide additional and enhanced services to those provided by the municipality. The BID services improve the business environment in the district and usually include security, maintenance of public spaces, removal of litter and graffiti, economic development, public parking improvements, special events and social services.

LEGAL FOUNDATIONS

Since January 2007, a new paragraph in the Federal Building Code in Germany has been in place regarding “Private Initiatives in Urban Development” (§ 171f BauGB). On the basis of this paragraph the 16 Federal States now have the authority to introduce laws enabling private initiatives for area-based urban regeneration and development. A pioneer in Germany, the city of Hamburg established a “Law of Strengthening Retail Districts.” Hamburg uses the legislative model, which means that the Federal State – in this case the Free and Hanseatic City of Hamburg – makes a resolution by passing a decree-law to implement a Business Improvement District. Subject to the law, a BID is a temporary organization and lasts a predetermined period of time - generally five years, after which time the members vote to retain the BID.

CREATING BIDS

The establishment of an individual BID often comes from the impulse of the business or property owners. These owners need to establish a steering committee that has the ambition to work with the local authority. The committee needs to develop goals, measures and possible financing strategies for the improvement of the business area. The next step includes a revision of the strategy and the first consultation with the local authority. After these steps a decision process begins. In the City of Hamburg, the BID needs the support of 15% of the property owners; whereas the tenants of the districts have no right to vote. The positive vote of the property owners must represent more than 15% of the number of properties situated in the BID area, at the same time their area must represent at least 15% of the total BID area. The allowed maximum negative vote (veto) is one third. There is a great difference to the BIDs in the United Kingdom, for example, where a successful vote must meet two tests: More than 50% of votes cast must be in favor of the BID and the positive vote must represent more than 50% of the rate-able value of the votes cast.

The BID in Hamburg is funded by a tax based on the commercial space (local businesses) and the value of the properties. The tax is a product of the municipal rate fixed by the municipality and the rate-able value of the property (under the terms of the German Valuation Law). After a positive BID vote, a specially founded or even existing task manager is forced to realize the defined BID services under terms of a contract between himself and the municipality. The BID levy is collected and administrated by the municipality but then turned over in its entirety to the task manager. In Hamburg, the BID task manager mostly organizes physical and organizational improvements, e.g., management of the neighborhood, waste management, parking, street lighting, coaching of shopkeepers, marketing campaigns and events.

EFFECTIVENESS OF A BID

In short, BIDs allow the private sector to provide additional and enhanced services that improve the business environment in the district. Further strengths and opportunities are: • Developing partnerships between the public and private sector, strengthening private initiatives; • Predictable and reliable funding source for supplemental services and programs; • Encouraging corporate social responsibility, • Helping to decrease vacancy rates and to increase the value of the properties, and • Making the district more competitive with surrounding business areas.

However, some American critics suggest that “BIDs privatize city services and divert dollars from needy neighborhoods” (Houstoun 2003) or result in a “Disneyfication of downtown with uniformed sweepers and friendly safety ambassadors” (Levy 2001). In Germany, the threatening danger lies in the problem that the private sector could undertake more and more the task of regulating services which have to remain under municipal control, especially in times of scarce financial resources of the municipalities. Furthermore, some poor districts are or will not be able to establish a BID, because the shoestring

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Anthony Marques and Maxime Bouyon Copywriter, blogger and founder of «Fast Mood» (Creative Freelance Network), Anthony Marques often barters his keyboard for a camera. Thirsty for images, he slowly wanders, looking for a surprise, a memory, an emotion, to capture urgently. A student in mechanical Engineering, Maxime Bouyon learned to love photography by travelling around the world; Paris, Liverpool, Kuala Lumpur are some of his past playgrounds. Seeking new meetings and experiences, he is about to leave again, armed with his digital companion to capture his next temporary universe. 01 Flowers, Photo by Anthony Marques, 02 To the Sky, Photo by Maxime Bouyon, 03 The Field, Photo by Anthony Marques.

property and business owners have no funds for an additional BID tax (with the consequence that the vote in favor of the BID would fail).

IMPLEMENTATION STATUS

As of 2012, ten Business Improvement Districts exist in Hamburg. The first one (BID Sachsentor) in the center of the district of Hamburg-Bergedorf (bid-sachsentor.de) and the second one (BID Neuer Wall) in the exclusive and expensive shopping street Neuer Wall (www.bid-neuerwall.de) in the City Center of Hamburg. Each of these is very different in terms of location, budget and tasks. For instance, BID Sachsentor has a moderate budget of 150,000 Euro for three years, while BID Neuer Wall can spend nearly six million Euro over five years. Both budgets are completely privately financed. BID Neuer Wall realized a complete new streetscaping to reflect the exclusiveness of the place and the resident companies; street-cleaning services were enhanced and a private service and a security team was implemented. The BID Sachsentor is concentrating on small-scale marketing and cleaning activities, making the project quite similar to traditional Town Center Management programs.

SOME FINAL THOUGHTS

BIDs are not a remedy for all “urban illnesses” and undesirable urban developments. But, due to the farreaching processes of change, they can play a significant role in the downtown revitalization process. BIDs represent a fundamental basis for future urban planning policy as a contradiction to ongoing suburbanization and economic crisis. Today, six of 16 Federal States have enabled legislation that allows local governments to form BIDs. The concept has become popular in different types of cities (small, large), economic environments (stable, weak) and level of prosperity (middle-income and high-income neighborhoods).•