The most immediate, expected effect is the rise in consumerism. With a more attractive and revitalized setting due to the improvements, the BID zone sees a noticeable increase in its number of customers. Overall, there is more foot traffic because walking around becomes a more pleasant experience. Furthermore, there is a decrease in crime in BID areas, thereby making people feel comfortable to stroll the area.

With more consumers comes an inevitable rise in revenue. It has been calculated that the Return on Investment (how much one gets back proportional to how much one paid in the BID assessment) was 5:1- quite an impressive return.  Additionally, depending on the area of the BID, there are other components to BID revenue besides for the assessments. While the percentage of these miscellaneous fees can vary, it has a clear positive impact: it enters the local economy and is spent on goods and services, thereby leading to a “multiplier effect”, in which businesses’ revenue increases exponentially, compared to the revenue that would result from regular customer purchases. (Spillover of this multiplier effect is frequent.) This revenue also benefits the community because it creates many jobs, and consequently additional regional income that can be reinvested in the BID zone.

As is shown in the graph, there is a sudden jump in commercial property value price as the BID is formed. The same is not true for residential property values.

Property values in the area are impacted by the BID (as are those in the nearby vicinity), but the level of impact depends on the type of property and the size of the BID zone. Commercial property values increase dramatically as a
result of the BID. Interestingly, the larger the BID, the greater the property value jump, particularly because of the greater political leverage and mix of services that the bigger BID has .

The matter is more complicated regarding residential properties. There is a significant increase in prices less than 5 years before the BID comes into fruition. Soon thereafter, however, the prices drop considerably; while they are still higher than their older prices as well as those of areas outside the BID zone, they are still much lower than they were immediately before the BID was officially established.

While a BID zone looks more revitalized and significantly nicer, the various services are geared more toward improving the quality of businesses, not the quality of residential life.

An interesting discrepancy between the two types of properties in regards to value change is that  commercial properties maintained their inflated value for a much longer time than residential properties did. One of the main reasons is that the services provided by the BID makes the area more attractive to business owners rather than to residents.

A concern of BID creation is that uncontrollable gentrification will result and consequently the lower income residents will be harmed. While commercial property values do in fact go up, the residential property values do not remain inflated for long, and in the long run, the improvements to the area and the increase in customers and jobs will benefit the residents.

Works Cited

1. Armstrong, Amy, et al. “The Benefits of Business Improvement Districts:Evidence from New York.” (2007).

2. Vasquez, Vince. “The Economic Impact of Business Improvement Districts (BIDS) in San Diego.” National University System Institute for Policy Research.

3. Ellen Ingrid Gould, Amy Ellen Schwartz and Ioan Voicu. “The Impact of Business Improvement Districts on Property Values: Evidence from New York City.” (2007).

4. MacDonalad, Heather. Why Business Improvement Districts Work. May 1996. 5 April 2013 <http://www.manhattan-institute.org/html/cb_4.htm>.