BID-ding for more
Madison’s first and only Business Improvement District shines a beacon on downtown commerce, but it doesn’t need to stand alone.
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From the pages of In Business magazine.
Face it, Madison, we’re spoiled.
Thanks to the combined benefits of a world-class university and a state Capitol, among other attributes, Madison has been no stranger to accolades. So far in 2017 the city has been ranked in the top 10 of a variety of national surveys, from Best Small City in the U.S. (#10), to Super Cool U.S. Cities (#2), to Alternative Cities for Young Professionals to Live (#1).
There are dozens of others, and 2017 is no anomaly.
At the heart of the city, State Street connects the University of Wisconsin – Madison campus to the State Capitol on an isthmus that sits between Lakes Mendota and Monona. It’s hard to imagine a prettier setting, though some may argue about downtown’s best attributes: Is it the shopping, the restaurants and bars, the politics, the commerce, or the delightful quirkiness?
Indeed, it may be all of those, but beyond those characteristics there’s another force at work: Madison’s Central Business Improvement District, affectionately known as “the BID.”
A BID explained
Established by state statute, a BID allows the owners of two or more private and contiguous properties or businesses to cooperate and share costs to address problems or realize economic opportunities. BIDs can be any size and are governed by a board of directors. They have a budget and establish ongoing funding through special assessments to those within the BID. There are thousands of BIDS around the country, each tackling a variety of needs and issues.
Milwaukee, for example, has 32 business improvement districts, more than double the number of districts per capita as Minneapolis, according to a July story from Milwaukee Journal Sentinel writer Tom Daykin (“Milwaukee is No. 1 in improvement districts. But measuring their effectiveness is hard.”)
In Madison, there’s just one.
It took several years, but Madison’s first and only Central BID was approved by the City Council in 1999 and formed by private-sector leadership with a mission to keep businesses within its boundaries healthy, vibrant, and worthy of all those aforementioned accolades.
Sue Springman, senior project manager at Mullins Group LLC, was instrumental in its creation. “I’ve been involved in Downtown Madison Inc. (DMI) for years. Back then, I was on a committee to find the next executive director when Susan Schmitz was hired,” Springman explains. “I told her we needed to include a BID because I knew it could benefit the city.”
Schmitz, DMI’s current president, remembers it well. “I was told that within a year I had to form a BID. I thought, ‘A what?’” But as a former retailer, she quickly grasped the BID’s potential, and as a new DMI staff member she also had the time and resources needed to do the required legwork.
As Schmitz describes, BIDs are assessment districts where property owners go to the city (or other taxing authority) and say, ‘We want you to tax us this way.’ The city adds the clearly marked assessment to the property owner’s tax bill. When the city receives the tax payment, it redirects the dollars back to the BID where a board of directors oversees spending. “BIDs are really very simple. That’s the beauty of them and the city has no control over a BID’s money,” Schmitz emphasizes.
Madison’s Central BID encompasses the greater State Street and Capitol Square area, including the 100 blocks off the Square. It covers about 200 property parcels and approximately 370 street-level, consumer-oriented businesses. Property owners within the BID are taxed accordingly, even through ownership changes, because the assessment follows the property, not the owner. Residential property and nonprofit businesses do not pay an assessment.
“For the city to approve a BID, the private sector had to initiate the idea and vote to approve it. That was the key thing,” Springman says. With State Street and the Capitol Square being the heart of the retail district, she firmly believed that a BID would pump energy into the area. The question was, could the big property owners be persuaded to assume an additional tax?
Their first assignment was to approach all the property owners within the designated BID boundaries and try to convince them to pay an additional tax every year, based on their linear footage and street frontage. “They were like, ‘What? You want to tax us again?’” Springman recalls.
Schmitz was undeterred. “Back then, nobody knew what BIDS were, so that was a real challenge.” Most of her time was spent educating and sharing examples from other BIDs around the country at a time when she says there was some local pushback.
Springman offers more of a historical view. Back in the late 1960s and early 1970s, there was some tension around putting a lot of focus on the downtown, she says. Many people didn’t think it was worth it. “I used to go around the city speaking to service clubs and would get booed! But that was also a time of student unrest, and Madisonians were angry. Thankfully we moved beyond that years ago!”
“Some thought a BID was a conspiracy to bring in chain stores,” Schmitz adds.
In fact, a BID did the exact opposite because it encouraged business and property owners to be more locally involved.
“When we wanted to start an ambassador program, there was a voice out there that believed it was a conspiracy to have narcs on the street! I had to dispel that,” Schmitz laughs. “It was kind of funny.”
Springman and Schmitz argued their case all around town. “We went to all the property owners,” Springman said, “to make sure everyone was involved, from Urban Land Interests, to Hovde, Mullins, Fiore, Ripken and ma and pa shops. It was very important that the larger property owners be on board because they represented over 50% of the total ownership downtown and they would be paying the bulk.”
In the end, Schmitz said the businesses finally realized the benefits a collective voice would bring. “Frankly, I think they were tired of being approached every year by various organizations to support holiday events or other causes.” As is usually the case, 20% of the businesses would regularly participate, she explained, yet everyone would benefit. The BID ensured that every business would contribute a fair share and that all would benefit.
To sweeten the pot, Madison’s Central BID was designed with a five-year sunset clause. “We promised the property owners that we wouldn’t be around forever if they didn’t like what we were doing,” Springman says.
It has never been voted down.