Category Archives: BIDs

Downtown Multichannel Retailing

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DANTH, Inc. has just released a research paper I wrote on downtown multichannel retailing.  I prefer to think of it as backdoor retailing, with electronic and non-electronic variations. In any case, the topic is important because downtown retailing is undergoing an enormous change — one that will not be reversed even when the economy recovers from our Great Recession — towards multichannel/backdoor retailing. Downtown merchants and leaders who do not adapt to this new paradigm will be left behind, more dross produced by capitalism’s creative destruction.


You can download a free copy of the research paper at: 
http://danth.com/storage/pdf/Multichannel.pdf

N. David Milder

A CURMUDGEONLY VIEW OF BID STREET CLEANING PROGRAMS

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Can Clean Be Overrated?

An online article that recently drew my attention and got me thinking was “America’s Dirtiest Cities” (http://travel.yahoo.com/p-interests-40390415) by Katrina Brown Hunt. It begins by posing the question: “Can clean be overrated?” It then notes that a survey of the readers of Travel + Leisure magazine found that  “America’s dirtiest cities happen to include some very popular tourist destinations” (e.g., New Orleans, Philadelphia, Los Angeles, Memphis, New York City, Baltimore, Las Vegas, and Miami).  Hunt goes on to note that  “visitors gauge ‘dirty’ in a variety of ways: litter, air pollution, even the taste of local tap water.”

What drew my attention was not which cities were or were not on the “top dirtiest list” —  for such lists tend to be not very useful — but, the fact that a group of people who are evidently very interested in being tourists found very popular cities to be “dirty.” Hunt’s question “Can clean be overrated?” seems to me to be a very legitimate one to ask, especially by the leaders of downtown business organizations who spend huge parts of their annual budgets on street cleaning operations.  

Should Clean Streets Be A BID Priority? Are Dirty Streets That Big A Problem?

A few years ago while managing a Special Improvement District  in a city in New Jersey I gave tours of the district to many developers and savvy commercial brokers. Invariably, they would comment on how good the district looked and the lack of litter on the sidewalks. At the same time the city’s political leaders, especially the mayor, were pressing for cleaner sidewalks. How clean did the sidewalks have to be to be considered clean by the local politicos? I thought it was all a bit too anal and somewhat tragic: sidewalk sanitation was getting all the attention of the political leadership when their focus should have been laser beamed on bringing redevelopment projects into the district. Their priorities were all fouled up. Ultimately, we succeeded in getting the local UEZ to pay for the litter cleaning crew, though the SID still had to manage it. Later on the city’s public works department took on the entire street cleaning responsibility and cost burden.

Quite frankly, that was where I felt the responsibility belonged in the first place. Street sanitation was long a city government responsibility, but in hard fiscal times, many of them successfully off-loaded that function and its cost to special downtown districts. By the late 1980s, as the number of BIDs quickly grew, dealing with “crime and grime” famously became their primary programs — and budget lines. But, I never saw any real evidence or serious study proving that clean sidewalks resulted in either more shopper visits or a significant reduction in the fear of crime.

To the contrary, my own research at that time failed to confirm such relationships. In 1984, for example, I did a telephone survey for Regional Plan Association (RPA) of 600 residents in the trade areas of three outer borough downtowns in New York City — Downtown Brooklyn, Jamaica Center in Queens and Fordham Road in The Bronx. A Pearson correlation analysis found a weak .12 association between how clean the respondents rated their downtown’s sidewalks and how often they visited that downtown.

Clean streets are often viewed as one of the signs of social disorder hypothesized by James Q. Wilson and George Kelling in their famous Broken Windows article to foster the  fear of becoming a crime victim. While the RPA survey did find an interesting correlation of .26 between how clean respondents rated the sidewalks and how safe they felt in their downtown during the day, there were two other variables — the downtowns overall attractiveness and the types of people respondents expected to find there — that statistically had twice the explanatory power of the clean streets variable. Furthermore, the correlation between clean streets and how fearful respondents felt while downtown after dark, when fear levels are highest,  dropped to .15. 

My own conclusion at the time was that while the clean streets factor was one of many that, when aggregated, could impact on how attractive trade area residents felt their downtown was, it was getting a disproportionate amount of attention from downtown leaders and far too big a share of their BIDs’ budgets. I felt a lot of them would be better off if they shifted a lot of their street cleaning expenditures over to improving facades, stimulating nicer store windows, attracting quality business operators and developers, etc. Nothing has happened in the intervening years to change my views. If anything, they have been harden by my SID management experience that I described above and by my observations that some BIDs  were paying for sidewalk cleaning services they could not really afford, given that their budgets were less than $250,000/yr.


Among New York City’s BIDs, those with revenues under $250,000/yr allocate a higher proportion of their annual expenditures on street cleaning, 32%, than the other BIDs, followed by those in the $250,000 to $499,999 revenue category (see the table above). The largest BIDs, with revenues over $5 million/yr only allocate about 20% of their expenditure dollars on sanitation. Furthermore, among the BIDs with the lowest revenues, about one in four of them are allocating 40% or more of their annual expenditures on sanitation. To my mind, they seem to be more like a sanitation department than an economic development organization. What in the world are their leaders thinking? I use the New York data because they were readily available. The pattern of small BIDs overwhelmingly focusing on street cleaning operations also can be readily found elsewhere.

Why Are Street Cleaning Programs Still Big With BIDs?

Though relatively expensive, these programs:
  • Do not require rocket scientists to design and implement. There are existing programs to replicate and service providers to hire
  • Quickly provide visible evidence of the BID’s presence and ability to do things. Lots of staff in identifiable uniforms provide a presence and cleaning up the litter is proof of efficacy. These are important program impacts for new BIDs
  • Have been implemented by the largest and most prestigious BIDS. Unfortunately, too many of the other BIDs have fallen into adopting programs because their prestigious peers are operating them rather than asking whether such programs can really achieve their organization’s economic growth objectives.
  • Are seldom terminated because most BIDs seldom, if ever, engage in real program evaluations
  • Have developed an aura within the downtown revitalization community that they are always beneficial. After all, how can one be in favor of dirt and litter? But, that is not the real question.

For most downtowns, the real issues are will cleaner streets:

  • Bring more shoppers downtown?
  • Increase property values?
  • Increase investment?
  • Produce positive impacts commensurate with the cost of the street cleaning program?
  • Have a bigger economic impact than if its operational dollars were diverted to other programs?

I am not against all BID street cleaning programs. Just those that have no proven impact on customer traffic and economic growth.

The Often Slow Pace of Implementation

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Last week we were in Garden City, NY. Back in 1996, DANTH had recommended that the site of a gas station on the very important corner of Franklin Avenue and Seventh Street would better serve the community’s needs if it were redeveloped by a project having retail on the ground floor and residential units above. I was happy to see that our recommendation finally was being implemented (see photo on right).


The fact that close to fifteen years had passed between recommendation and implementation strongly reminded me that downtown revitalizations seldom occur quickly and usually require patience. Some downtowns have been in the revitalization business for 40 or 50 years. For example, the formal revitalization effort in the Jamaica Center commercial district in Queens, NY, started back in 1968. The improvements have been steady over these years, with the total amount of investment attracted to this district totalling well over $1 billion by 1987 and the investment flow continuing on to this day.

Other downtowns seem to be overnight successes, but years of unnoticed hard work usually precede their rocketing economic upswings. In the mid 1990s, for example, downtown Englewood, NJ, attracted a significant number of national retail chains and eradicated a 20% retail vacancy rate. Many outside observers noted how quickly this downtown had turned around. Mayors and council members in other NJ communities envied this quick success and wanted to replicate it in their downtowns. Few of these observers knew of the 10+ years of prior planning, improvement projects and coalition formation that enabled Englewood’s “overnight success” to occur. 


One of the most important things that Englewood’s political leadership did was to form a common strategic outlook among the city manager, mayor and city council. This took time to forge and energy and attention to maintain. Unfortunately, many local political leaders in other communities do not understand the need for such a strategic coalition and/or do not have the political time or patience to create them. 


Sadly, the need for a revitalization effort to have some patience can slip into lassitude, inaction and redevelopment doldrums. Then, impatient local political leaders can give the downtown revitalization organization a badly needed kick in the butt.


As a general rule, DANTH recommends that clients treat a downtown revitalization effort as never ending, not something that in a few years they can strike from their To Do lists. Success not only has to be won, but then also maintained.   
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An Audacious Small Town BID

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For over a year now, as a response to our current recession, I have been urging downtown organizations to focus on repositioning their districts for future growth and encouraging them to take on new financial activities.

The Washington BID in Warren County, NJ, is a good example of a district organization that is doing this. Also, it is in a town, Washington Borough, with a small population of 7,000 people.

The BID is borrowing money from a nearby community bank, Skylands, to build a badly needed downtown parking lot. Few BIDs, large or small, borrow from banks for capital improvement or program purposes.

The BID obtained a USDA loan guarantee that made the private bank loan possible. This was a smart move and tapped a government source many other BIDs might not have thought about.

Impressively, the BID will bring in a completed project for about half of Washington Borough’s estimated project cost.

I can think of many BIDs around the country that would benefit from emulating the Washington BID’s audacity to assume financial risk and willingness to play a lead role in a downtown redevelopment project. Too many BID managers and board members are straight jacketed by a comfort with reliably safe programs such as street sanitation, security and promotional events. But, by their very nature –and usually by their state’s enabling legislation– BIDs are tasked with economic development roles. Unfortunately, too few perform them.

N. David Milder