For a full overview of the formation process, we recommend you read the Comprehensive Guide to BID Formation and Expansion, released by the Department of Small Business Services.

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What is a BID?

A BID, or Business Improvement District, is a specific geographic area established in accordance with New York State and City law. BIDs are partnerships between NYC government and the local stakeholders of a commercial district, and allow for property and business owners to make a collective contribution to the maintenance, development and promotion of their commercial district. The result is a cleaner, safer and more welcoming environment  for shoppers, residents and visitors. 

• 77 BIDs in NYC (23 in Brooklyn)

• $194.5 Million Invested in NYC Neighborhoods Annually

• 24,000 storefronts served 

• 193 Public Spaces Maintained

• 3.97 Million Trash Bags Collected Annually 

What do BIDs do?

BIDs create vibrant, clean, and safe districts. They deliver services and improvements above and beyond those provided by the City, increasing commercial business and solidifying the overall strength of their district. Working with the City and community, BIDs are a powerful voice for their districts. BID services do not replace those provided by the City. By law, City services cannot be reduced because of the existence of a BID. BIDs services can include:

• Street cleaning and maintenance

• Public space activation and maintenance 

• Public safety and hospitality

• Marketing and events

• Beautification and horticulture 

• Advocacy

• Business development and technical assistance

• Capital improvements

How are BIDs funded?

BID programs and services are funded by a special assessment billed to property owners within a district. Assessments are unique to each BID. In total, the BID assessments plus any additional revenue raised through grants and sponsorships equal the yearly BID budget, which is used to fund the program of BID services and improvements. The City of New York assists with the collection of the special assessment, which in turn, is distributed directly to the BID. The BID receives 100% of the money collected, which must be reinvested the local community within the BID boundaries. 

How are BIDs formed?

The process of forming a Business Improvement District (BID) is designed and overseen by the NYC Department of Small Business Services (SBS), and requires very specific milestones and touchpoints. The BID formation process is quite extensive – it can take anywhere from 3 to 6 years (or more!). There are 4 key phases of BID formation, as identified by SBS: 

Planning: During the planning phase, a Steering Committee is formed to guide the development of a BID proposal.  A BID formation Steering Committee is composed mainly of property owners and business operators within the proposed BID geography. It can also include district residents and community based organizations. Steering Committee members are expected to attend regular meetings, be publicly supportive of the BID formation and continuously share information and updates with stakeholders throughout the process. 

After forming a Steering Committee, the first step in the planning phase of BID formation is to circulate a District Needs Assessment. The Needs Assessment is meant to gather feedback and information from the community about what challenges the district faces, and is used to help determine potential solutions to those challenges. 

Once SBS determines that an adequate number of responses to the Needs Assessment have been collected, the Steering Committee then uses these responses to identify key components of the proposed BID, including the geographic area, organization mission, services provided, maximum assessment that will be billed to properties within the BID geography, and assessment formula (the formula by which the maximum assessment gets divided amongst properties within the BID’s boundaries).  Before moving forward to the outreach phase, the BID formation Steering Committee must finalize four key decisions: 

• Boundaries

• Programs and Services

• Budget

• Assessment Formula

It is in the best interest of the effort for the Steering Committee to put together a BID plan that responds to the needs of the local community. 

Outreach: Once these key decisions have been made, the BID proposal is summarized on the official support ballot, which is circulated to all property owners, business owners, and residents within the proposed BID geography. During the outreach phase, the Steering Committee is tasked with collecting support ballots in favor of the BID proposal. The Committee must mail the support ballot to every property owner, commercial tenant, and resident within the prospective BID’s boundaries, hold public meetings, and collect letters of support from elected officials. The duration of this phase can vary greatly, and many groups find this stage the most challenging and time consuming. The ultimate goal is to demonstrate broad-based support for the proposed BID from local stakeholders. 

Legislative: During the legislative phase, the new proposed BID formation goes through the approval process to become local law. Similar to the Uniform Land Use Review Procedure (ULURP), this stage typically takes 9-12 months. SBS will only introduce proposed BIDs into the legislative process if it believes the Steering Committee has followed the planning process correctly, solicited community input, and demonstrated broad-based support across all stakeholder groups (property owners as well as commercial & residential tenants).

Startup: Once a new BID has been signed into law, the Steering Committee will need to get the district management association (DMA) set up. The organization must be incorporated and registered, and systems must be set up to receive the BID assessment funding and begin providing services to the corridor. SBS will continue to provide support and guide the interim board of directors in their first major decisions and activities as a BID. 

Who gets to vote for the BID?

Only stakeholders within the district get to vote. "Stakeholders" are those that own or rent a mixed use, parking, commercial or residential space in the determined geography.

Once the BID is formed, who gets to make decisions about how the money gets spent?

Once the BID is formed, decisions about the BID, including the budget and any hiring decisions, will be made by a board of directors, who will be elected by the BID membership – property owners, business owners, and residents within the BID geography. Each member votes for their representative in their respective class, for example, commercial property owners will vote for their commercial property owner reps, and commercial tenants will vote for their commercial tenant reps. Any property owner, business owner, or resident within the BID geography has the opportunity to be on the BID board and be part of making key decisions about programs, services, budget, goals, policies, and staffing. The day-to-day operations of the BID are generally performed by paid staff, including an executive director. Paid staff are typically hired by the BID’s board of directors.

How is the BID assessment determined?

First, the BID’s maximum assessment is determined – the most that the BID can bill to the properties within its geography. Second, a BID assessment formula is selected in order to ensure that each property pays its fair share. The formula can be based on a property's linear front footage, lot size, commercial square footage, total assessed valuation, or some combination of these factors.

What is the difference between the “maximum assessment” and the “annual BID budget”?

The “maximum assessment” is the maximum amount that can be billed to properties within the geography. This number is generated with longevity in mind, with contingencies built in to account for cost increases in the future (inflation, cost of labor, etc). The board of a BID can, and very often does, choose to bill less than the maximum assessment, in the interest of not overburdening assessment payers.

When the BID is formed, the budget for each year is decided by a vote of the board. The amounts in different sub categories are not locked in, and the board can decide to move money around from year to year depending on need. 

Additionally, BIDs are adept at leveraging assessment funding to generate supplemental revenue through grants and sponsorships. Any funds raised are additional revenue for the organization, above and beyond what gets billed for the assessment. On average about 16% of BIDs total budgets are generated through grants and sponsorship, and do not come from the assessment. That speaks to how BIDs use their administrative capacity to direct additional revenue to their commercial districts.

Why doesn’t the City pay for this?

The City continues to provide its core services as required by law. City services are never reduced due to the presence of a BID. Rather, BIDs offer enhanced, locally tailored services that complement and go beyond what the City provides. These services help address specific neighborhood needs and raise the overall standard of maintenance, cleanliness, and public engagement. In fact, BID advocacy often results in more responsive and improved City services, creating a stronger partnership between the City and the community.