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Item 4(b)
Business Improvement Districts (BIDs)
Purpose
1. This report seeks to inform the Urban Affairs Executive Group of the progress of Business
Improvement Districts (BIDs) since the Scottish Executive’s consultation paper that closed in
October 2003.
Recommendation
2. The Executive Group are invited to:
i. Consider the issues raised in this paper;
ii. Recognise the potential for BIDs to be a useful tool for urban areas and urban authorities;
iii. Support the work of COSLA as a member of the BIDs working group and in our work to
ensure that BIDs are a useful and effective tool for Local Authorities.
Report
Background
3. BIDs were first created in North America to tackle declining areas of cities and towns. There
have been notable successes within smaller communities and suburbs as well as schemes
such as the Times Square BID referred to by the Executive in its consultation paper. Pilot BIDs
have also been introduced into England following consultation, though a full BID is not likely to
happen until next year. Following the work and appraisal of the pilot BIDS, BIDs Regulations
have recently been issued and are now in force in England.
4. In a BID local businesses work in partnership with the Local Authority to provide services or
meet specific goals that are above and beyond an agreed baseline level of service or role of the
local authority. Examples of this include revitalising an underused park into a thriving social
area, increasing security measures (e.g. security wardens and extra CCTV) and increased
levels of street cleaning. There are currently over 2,000 BIDs in place in the United States in
major cities, towns and rural communities.
5. Businesses pay an additional levy over and above their rates in what is described by one
leading US advocate of BIDs as “businesses taxing themselves.” The Scottish Executive
proposes a BID should:
Be a partnership between the public and private sector. The Executive believes that
BIDs will be proposed predominantly by the private sector and, although in partnership
with local government, should be very much private sector led.
Provide the financial and management structure to take forward projects of benefit to
local businesses and communities.
Address a specific local concern and deliver specific, measurable benefits.
Provide services additional to the agreed baseline local authority services.
Be agreed by both local businesses and the local authority before it can go ahead.
Be agreed by the majority of businesses. Once agreed all businesses which are part of
the BID would be required to pay the agreed levy.
Have legislation that should be flexible enough to allow the development of local
solutions.
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The Current Position
6. In July 2003 the Scottish Executive published a consultation document on a proposal to
implement the BIDs concept into Scotland. COSLA had a draft response approved by COSLA
Leaders and submitted a response to this consultation that closed in late October 2003. In
August 2004 the Scottish Executive formed a BIDs working group to study the responses to the
consultation and look at the options for introducing BIDs into Scotland. Along with other
interested stakeholders COSLA has been invited to take a place on this group and have
accepted this. The BIDs working group has now met twice, in August and October.
Main Areas of Concern for BIDs
7. COSLA noted in our response to the consultation that, for some areas, BIDs may be a useful
tool but it was vital to ensure that it is the most practical and cost effective tool it can be. If the
Executive wants BIDs to be introduced then they must ensure that they have local authorities
on board and that their issues and concerns are addressed. As a key partner in any BID local
authorities will not support a private sector led bid or propose using a BID if a number of key
issues are not addressed. The following paragraphs are summaries of the main areas that the
Urban Executive should seek to ensure are addressed by any pilot BIDs or BID legislation.
8. Non-Domestic Rate Income (NDRI) Retention; COSLA believes that BIDs provide an
opportunity to again raise the issue of NDRI retention. Improvements to a business area within
a Local Authority will lead to an increase in NDRI, with local authorities currently only retaining
a small proportion of this rise. COSLA believes a Local Authority should be able to retain
additional NDRI received as the result of a BID process. COSLA has previously stated that
where a council’s rating base increases as a result of economic growth in its area, a
predetermined proportion of the increased NDRI could be fed into AEF calculations but the
balance retained by the individual council for local use. BIDs would appear to be a perfect
example of where this should apply.
9. Cornseed Funding; The initial set-up costs of a BID are not discussed in the Executive’s
consultation paper. In London the cost of setting up the BID partnership as a legal entity alone
was roughly £0.25M. No indication is given of how such cornseed funding might be raised,
indeed when speaking on BIDs in September 2003 the then Finance Minister Andy Kerr said
that this was not for discussion at this time but regardless it should not be a matter for delaying
on delivering BIDs. The cornseed funding costs of a BID are a sizeable investment. If it is
proposed that businesses should raise this money it may be a large enough sum to potentially
deter them from a BIDs proposal. Given the need for best value a Local Authority may be
unlikely to fund these initial costs unless they can be sure of a successful BID. There are also
such issues as determining which businesses are included within the BID area. In all the pilot
schemes in England the BID area changed between the proposal stage and the establishment
of the BID. Ensuring all businesses are included, as the Executive proposes, will incur further
additional costs. Further, if a property becomes vacant during a BID’s life the additional BID
levy may deter other businesses from taking up the tenancy. The initial set up costs may mean
that an authority could not undertake more than one BID and businesses proposing BIDs may
have to compete for funding.
10. Local Decision Making; The Scottish Executive expects that the private sector and Local
Authorities will embrace the BIDs process. The BIDs process will therefore require primary
legislation and will receive media focus and attention. When launched its high profile may lead
the private sector to see the BIDs process as the best way forward. Local Authorities may not
agree that a BID is the best option and this could create a problem. COSLA will reinforce that
the Local Authority is a body of locally elected members who are elected to deliver local
solutions to local situations and, accordingly, must have the power of veto. Whilst the Executive
states that BIDs can address “specific local concerns” Local Authorities must be in a position to
decide on the best tool for tackling local issues. This is not to underestimate the dialogue which
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must take place between the Local Authority and business representatives. It is only through
effective dialogue and recognition of respective roles and responsibilities that areas of
“concern” will be identified and to allow the process of establishing the best tool to address this
to be taken forward.
11. Linking With Current/Proposed Executive Initatives/Local Authority Initiatives; There is a need
to see how BIDs fit in with existing and proposed Executive policy. Andy Kerr, MSP in his
former capacity as the Minister of Finance and Public Services stated that the BIDs initiative
was another “tool in the toolbox.” Given that it will come with legislation and a high level of
publicity at its launch, COSLA will raise concerns over existing town centre management
projects or town centre initiatives losing focus and support as they are not the new tool in the
toolbox. There is no indication of how this ties in with Urban Regeneration Companies another
current Executive proposal, which has a number of similarities. If an authority has undertaken
something similar to a BID of its own accord how will this then reflect in comparison to BIDs?
An example of this would be the Buchanan Street regeneration project in Glasgow’s city centre.
12. Base-level of Service Provision; If BIDs are to deliver services above and out with the baseline
service provided by a Local Authority, it must be for each Local Authority to set the baseline for
the level of service provision and COSLA will reinforce this point. The Executive Group will
realise that some businesses may be involved in BIDs in different BID areas and under differing
Local Authorities. Potentially this could lead to comparisons of the baselines set.
13. Collection of BID levies; No indication is given of who will administer the collection of BID levies
and what process should be put in place for those who don’t pay. BIDs are to be a catch all
process and the Executive need to demonstrate how this will be ensured? If BIDs are a legal
entity then will they have different powers to ensure collection than an authority and what
guarantees will be in place to ensure that the collection policies employed by the BID are not
working against Executive and Local Authority priorities and commitments such as reducing
debt levels. It also needs to be established where the responsibility for making up non-payment
shortfalls will be met. With Scottish Water any payment for water and sewerage charges not
collected is still passed to Scottish Water by the authority. The Executive Group should seek to
ensure that this principal is not used with BIDs and any shortfall in BID levies is not the
responsibility of the Local Authority.
Conclusion
14. It would appear that BIDs legislation will be brought in for Scotland. While BIDs are merely one
tool in the toolbox available to Local Authorities the Urban Affairs Executive Group can take this
opportunity to seek to ensure that the BIDs concept is as useful and effective tool as possible.
15. The Executive Group are asked to note the position to date and to endorse the issues raised
within this report as key areas to be addressed before any BID or pilot BID is introduced into
Scotland. The Executive Group are asked to support and aid the continued work of COSLA in
this area.
James Thomson, Policy Manager
0131 474 9235 jamest@cosla.gov.uk
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