BIDS PART I
BIDS ARE WOLVES IN
BIDS Unholy Partnership: Property Owners, Banks, Lobbies, Overpaid Bureaucrats, Developers and Unethical Ambitious
BIDS Are Responsible for Creating NYC’s
“Empty Store Blight”
Business Improvement District, BIDS, are specific business areas that are self funded and managed usually as a not- for -profit private organization. From NYS legislation the first business district was the Fulton Mall Improvement Association created in 1976 in NYC. In 1982 the City Council, with state approval, passed legislation that set the guidelines and oversight for BIDS. In early 1980’s larger BIDS first appeared due to fiscal budget restrains which reduced basic services in many communities. Several property owners in Manhattan’s business and tourist district united to agree to pay added special taxes on assessments of their property. These funds were needed and earmarked to manage the supplementation of basic services, like sanitation and security, only in the special BID areas.
In 1990, under local Law No. 82 the City Council assumed responsibility for adopting legislation relating to Business Improvement Districts. All BIDS have 5 year contracts with the Department of Small Business Services, SBS. Tax assessment formulas are created based upon street level store frontage of businesses within a district. The SBS oversees the tax assessments and payments due from property owners. All property owners within the BID are responsible to pay these assessments regardless of their approval for a BID.
Merchants are never given fair warning that once a BID is approved, it can never be dissolved without the majority board’s property owners approval. Which in NYC has never happened and the unwarranted and undue influence BIDS give property owners in political matters and legislation, assure BIDS will never voluntarily end. The bias BID structure greatly favoring property owners makes getting a divorce from the Pope’s sister more likely than a BID ever shutting down.
In NYC, the huge success of the Bryan Park restoration made a strong case for other property owners to establish these quasi-governmental self funding BIDS to supplement basic services. Services which the cash strapped government was unable to competently and effectively provide at that time.
From their very beginning till today, BIDS are somewhat of a mystery to most as to how they are created, funded, managed, supervised and most importantly, assessed for their contribution and benefit to a neighborhood. Who determines if a BID is even needed in a shopping district? Who determines if a BID has spent their budget wisely and achieved some degree of positive outcome for the businesses and community they serve? Who determines if a BIDS’ influence with board member lawmakers is a conflict of interests or hampering good government and potentially harming the future of a community? Can the BIDS’ property owner board members make campaign donations to the BIDS lawmaker members? If the majority board members are property owners, are there rules on who they must make a priority to be a strong voice for and serve? Is the BID formed to benefit the property owners or the merchants? When testifying at hearings should BIDS state whom they are representing and speaking on behalf?
The community has little input into the formation, management or polices of a BID. In fact, in many cases the merchants themselves are not given the full truth of their rights and what they are getting into if a BID is created on their main street. The property owners themselves, with the guidance of SBS begin the step by step process of forming a BID. To the public and likely most merchants the BIDS look, sound, and act like a government agency set up to help their district’s small businesses. The local elected lawmakers, Councilmember, Mayor, Speaker and government agencies give credulity to the BIDS’ positive role and image in a community. The public only sees positive images of the BIDS, like with the city’s politicians cutting ribbons, holding press conferences, announcing new initiatives or when sponsoring local events. After all, what could possibly be wrong with an agency established to improve businesses in a district?
Nothing, if the law creating BIDS was done right, was needed, updated, properly supervised, and mandated proof of tangible benefits to the businesses and community. In NYC, the law was not written with these basic protections included and contained major flaws which never were corrected.
The two biggest errors in the law were: the majority members of the board of directors must be property owners and all elected lawmakers within the district ( Mayor, Council Member, Borough President, and Comptroller) would be on the BID board of directors. This unwise mandate opened the door for the property owners to pass along any and all costs of a BID onto their merchants, which is usually done.
It also put lawmakers in a position of making and influencing the policies and priorities for the BIDS. It also put the lawmakers firmly on the side of the property owners and administration and not on the merchant’s side. All the requests for BID increased funding through more tax assessments must be submitted to the Council for approval. This process is usually done by the Council BID board member, and always approved by the full Council. In NYC many lawmakers on BID boards were likely to have been influenced by huge campaign donations from real estate lobbies. A typical BID board meeting would be a room filled with property owners, politicians, banks, chain store owners, and maybe one merchant. BIDS empower property owners and politicians, at the expense of the merchants.
These major flaws in later years would contribute to the BIDS’ role in the unchecked destruction of many long established BID main street businesses. Flaws that would make it easy for BIDS to play a major role in denying economic justice to the desperate BID's small business owners. Flaws to allow BIDS to join in the rigging of our government to cover up the city’s small business crisis. A crisis the BID property owners helped create in the first place. Most reprehensible were the SBS and lawmakers conspiring with BIDS to play a major role in destroying the only real lifeline, Small Business Jobs Survival Act, Jobs Survival Act, a bill giving rights to business owners needed to save small business owners’ American Dream.
( This conspiracy, betrayal and collusion will be shown in Part III)
The original law never addresses the fact BIDS were never intended for main streets. Nor were they intended for those periods when our government had adequate budgets to provide “essential” services for all citizens, which include small business owners. Why should the merchants be “double taxed” for essential services that they should be entitled to receive and the government should be solely responsible to provide? The argument for creating a BID, “ they will supplement “essential services” that will keep the shopping area and community clean and safe” is 40 years outdated. BIDS give new meaning to “taxation without representation.”
Merchants already contribute more than their fair share to pay for our city’s essential services. SBS and BIDS do not want the public to know this vital role of our businesses. If the public became aware of the role of mom and pop as revenue collectors it would make their local businesses closings and leaving storefronts empty even more inexcusable.
One of the best kept secrets in NYC is the vital role our small businesses play as generators of revenue for our city’s budget. Taken collectively, our over 200K businesses are top revenue generating machines: income taxes on employees, sales taxes, corporation taxes, taxes on utilities, fees for permits and licenses, taxes on supplies and goods bought and of course cruel fines to feed the bloated City’s budget. They collect revenue every working day, yet in a BID they have no say in how much taxes will be demanded by the BID nor how their taxes will be spent. Yes, indefensible acts of BIDS.
Controlling the majority of a BID board permits the property owners, and not the merchants, the right to decide what is needed in services for their district. As well as the salaries, marketing budget, and policies of advocating or not advocating for merchants and virtually every decision impacting the merchants is in the hands of their property owners. If the merchants were the majority of BID boards the Jobs Survival Act would have easily passed into law in Aug 2009.
There would be NO empty storefronts on main street because every business owner would have the right to renew 10 year leases, rights to negotiate fair lease terms that allowed a reasonable profit for all, and protection from rent gouging and an end to paying their landlord’s property taxes. Businesses would be making more money and growing and creating more jobs and paying higher salaries. Prices would be lower for their customers as a result of lower rents and not paying their landlord’s property taxes.
BIDS were never intended for the main streets outside of downtown Manhattan or downtown Brooklyn. For BIDS to have enough funding to provide clean streets, added security or meaningful marketing exposure for their businesses, a bigger tax base of businesses is required. Property with denser businesses, many stories of businesses was needed to raise the funds to do a successful job of effective security and marketing. Most main streets contain mostly one or two stories of commercial businesses. Far short of a taxable base for a BID to do major marketing or security.
The justification for BIDS on main street as knowing how to revitalize a business district because they know what the businesses need is a ridiculous assertion. It was the risk of mostly immigrant families to invest their life-savings, hard work and sacrifices in a shopping district that revitalized main streets, not BIDS. Opportunists seeking easy jobs, high salaries, and political influence targeted stable and very vibrant shopping strips to create BIDS under a false pretense.
There is no service or function a BID can provide that cannot be easily provided by the merchants themselves and at very little cost to them. As just one example of this reality, in 2001 merchants from 207th Street in Inwood joined with merchants on Dyckman Street to raise $12,000 for Christmas lights on both shopping strips. At the same time the Washington Heights BID paid $23,000 for Christmas lights on their blocks. Then SBS Commissioner Walsh sent notice to all BIDS that they ( most BIDS) were grossly overpaying for Christmas lights and must now gain bids from several contractors. As for BIDS making Capital Improvements, every Council Member can get any one of a dozen community NFP to fund planting trees, flowers, or removing graffiti etc. in the district.
The reality for BIDS on main street is they are not needed and are the most wasteful spending organizations possible. The SBS is void of anyone with real business sense and instead the BIDS are structured by grossly overpaid bureaucrats with a profound ignorance of small businesses. All of the BIDS services are contracted out: sanitation, security, events, or graffiti cleanup can all be contracted out in one place by one person. Each Borough President’s offices can be used to manage an entire borough’s BID contracts. It makes no sense to have twenty or thirty salaried staff and administration overhead doing the same thing, contracting, that one person easily could do.
The first investigation of BIDS by the City Council in 1995 of the performance of BIDS showed their failures and abuses and should have ended the expansion of main street BIDS in NYC forever. Regrettably for our city’s small businesses, the Council ignored the findings and with the support of former Mayor Giuliani promoted BIDS for every main street in the city.
1995 BIDS Investigation by the City Council
The first City Council investigation of BIDS was conducted by the Council's Office of Oversight and Investigation and the staff of its Finance Committee. Then Councilman Herbert Berman, chairman of the Council's Finance Committee, stated that while he supported BIDS and believes the majority do effective jobs, the investigation concluded that some have abused their power and failed to deliver promised services. The lack of oversight of BIDS opened the door to such abuses as grossly overpaid salaries. As one example, in 2020 Mayor de Blasio’s salary was $258K per year. In 1995 Daniel Biederman, who ran the Grand Central, 34th Street and Bryant Park BID's, made $315,000. Biederman’s head of security made $144,999, more than the NYC Police Chief who made $110K. Biederman’s sanitation chief made $114,530, again more than the Sanitation Commissioner, who made $110,000.
In 1995, six BID districts paid their managers at least $100,000 in salary. The investigation showed some BIDS spent too much money on their operations. One BID spent half its budget on administration. The abuses exposed range from illegal loans to the shameful contracting of illegal immigrants making less than minimum wages and being paid in cash. The investigation showed poor management and little or no oversight.
As an example of mismanagement, the investigation showed the Church Avenue BID, hired a company to sweep streets and sidewalks, but the workers swept only the streets and solicited additional payments from merchants to do the sidewalks. Another, the East Brooklyn BID was so mismanaged that it was near bankruptcy.
Chairman Berman concluded, “requiring the BID's to be accountable to the public is revolutionary, right now BID's can do whatever they want." Twenty seven years later little has changed with BIDS in total control of huge budgets that provide few services, all being paid for by their merchants. But in reality being paid for by their customers. Like all taxes, the merchants must pass along tax hikes by charging higher prices. With BID property owners ripping off the BID merchants by demanding sky high rents, and the merchants paying their landlord’s growing property taxes, and paying the BID taxes passed onto the merchants, it is fair to conclude that BID property owners contribute more to inflation in a neighborhood than any other factor.
Another assessment of performance missed by SBS. As far as the SBS is concerned a BID gets a good assessment if they keep the sidewalks clean and touts the SBS worthless programs.
Chairman Berman said, "We're not going to blindly approve BID's and their assessment increase." Twenty seven years later the Council blindly approves BIDS and always approves their tax assessment increases. Even with every BIDS’ main streets filling up with empty storefronts where once thriving businesses were before BIDS. More long established businesses closing, more empty storefronts for longer periods, and more BIDS is a formula for disaster.
The truth is BIDS are property owners organizations that speak only for property owners who use the BIDS for their own self interests of maximizing profits and political influence for landlords while covering up the carnage they cause the merchants and community.
As the over two decade long record of the shameful acts of lawmakers, SBS and BIDS is exposed in these articles, the public can best understand the horrific consequences to their local businesses by understanding the root cause of the destruction caused by our city’s economic policy.
Every lawmaker, agency staff, or organization spokesperson when making a statement concerning small businesses will always say, “they are the backbone of our economy…creators of jobs… energy of our neighborhoods.. etc. “ All are disingenuous and will never call for a vote on any legislation to actually give rights to business owners when their leases expire, rights that are needed to survive or make a reasonable profit. The truth is, our city’s economic policy is not about promoting local businesses, their futures do not matter, only money matters.
Instead, our economic policy is based up a global economic policy of promoting real estate investment in NYC. Ambitious career politicians have abdicated full authority to lobbies and power brokers to control our city’s economic policy. For over two decades NYC has been the worldwide epicenter of real estate investment by creating the most government friendly pro real estate environment possible.
Dirty money, drug money, oligarchy money, or laundry money are all welcome in NYC. The hyper real estate speculation on steroids has created victims of this profiteers’ economy. The greatest victims are our small business owners. The world’s largest and longest commercial rental bubble was created. This in turn created the greatest transfer of wealth from our city’s entrepreneurs to landlords. The most landlord abuses targeting mostly immigrant owners took place because of this speculation.
And so, the most closings of successful long established businesses was taking place, and still is today. The most denial of economic justice for small business owners was taking place, and still is today. The greatest charade orchestrated by lobbies to cover up the small business crisis, was taking place, and still is today. The reality then and today is that the nation’s most powerful lobby was in place to see that this “perfect real estate environment” would not be regulated or checked. That our small business owners were “second class citizens,” expendable “collateral damage” to keep our city’s real estate economy making the rich even richer.
If there was any doubt the role BIDS played in this grand Machiavellian scheme to reap windfall profits from the small business owners then walk down any BID area and count the empty stores, empty prior to the virus crisis. If not totally convinced of BIDS bad intentions then know that for 10 straight years the NYC Courts evicted on average over 500 businesses each month and on average between 1,200-1,300 businesses voluntarily closed each month, with the vast majority located in BIDS and not one effort was ever made by any BID to find a solution to save even one BID business; BEFORE COVID!
BIDS Toxic to Neighborhoods
BID property owners top reason for higher rents.
BID property owners top reason for long established businesses closing.
BID property owners top reason for jobs lost.
BID property owners top reason for empty storefronts.
BID property owners top reason for more taxes for business owners.
BID property owners top reason for contributing to increasing inflation.
BID property owners top reason for ignoring extortion of cash from immigrant owners.
BID property owners top reason for ignoring cruel shorter term leases of month to month or one/two year.
BID property owners top reason for stopping a vote on Jobs Survival Act.
BID property owners will likely be the top reason when the Jobs Survival Act is killed and substituted for by a real estate lobby created bill.
BID property owners top reason for the immigrant family owned businesses being treated as second class citizens.
History will show BIDS on main street played a major role in killing the American Dream for entrepreneurs in NYC.
BIDS the biggest conflict of interests organizations in NYC
BIDS – anti-immigrant and anti-small business.
Will expose the true cost of BIDS on the local economy.
The one fact BIDS or SBS refuse to ever mention or acknowledge
but should have been the main factor in assessing BID performance
is the record of successful long established businesses closing.
NYC Courts warrants issued for evictions of commercial premise.
Shameful record exposing the sad state of small businesses caused by City Hall’s pro real estate economic policy. A policy carried out by SBS and the BIDS they are responsible for creating.
Part II will detail the event that exposed the crisis covered up by SBS and BIDS. The event that triggered the largest survey of Hispanic Businesses. A survey that triggered a cry from progressive lawmakers to pass the Small Business Jobs Survival Act.
David Yassky, “What alarmed me most about the survey was the loss of our job creators, our small businesses, that is what is at stake here, if we don’t keep our small businesses we are not going to keep those jobs.
. “Franklin Roosevelt, when he was President said, try something, if it does not work, try something else. But you have to try something.
The one thing we cannot do in the face of this Crisis is nothing”.