Struggles to form business improvement districts (BIDs) in Los Angeles

Abstract

Autonomous efforts to improve local business environments have become an increasingly important impetus for economic development. Business improvement districts (BIDs), as one of such autonomous organisations, have clearly demonstrated benefits for promoting commercial areas over the last two decades. When BIDs spread over a city, however, not every commercial district succeeds in establishing BIDs despite some initial efforts. This research examines the types of challenges that these neighbourhoods experience in order to form BIDs. This study is based on census data analyses and in-depth interviews with city employees, BID consultants, executive directors of BIDs and community stakeholders in Los Angeles. The results show that the areas with unsuccessful attempts of BID formation in Los Angeles are relatively low-income immigrant neighbourhoods. Some of these neighbourhoods have struggled with disengaged property owners, spatial conflicts among diverse ethnic groups, immigrants’ skepticism towards government and the chronic presence of informal economic activities. These findings suggest that some disadvantaged neighbourhoods are not adequately informed or organised to form BIDs. Public officials and community workers can support these neighbourhoods by providing direct assistance for the development of collective vision and action among community stakeholders.

Keywords

BIDs business improvement districts economic development immigrant neighbourhoods local governance unsuccessful attempts to form BIDs

Introduction

Business improvement districts, or BIDs, are local organisations that aim to revitalise commercial areas. BIDs are essentially public-private partnerships and self-help organisations in which property or business owners collect funds to improve and promote their retail corridors (Briffault, 1999; Houstoun, 2003; Hoyt, 2005; Lewis, 2010). The collected funds are spent on services including street cleaning, beautification of public spaces, reinforcement of security and transportation access and image improvement of particular areas to attract potential consumers and investors (Briffault, 1999; Mitchell, 2001a).

BIDs have clearly demonstrated benefits for promoting commercial areas over the last two decades. BIDs reduce rubbish, graffiti and deteriorated sidewalks in their domain (Mitchell, 2001a). BIDs increase property values and business transactions (Ellen et al., 2007) and promote residential development (Birch, 2002). Additionally, BIDs have been found to lower crime rate, youth violence and prostitution (Brooks, 2008; Cook and MacDonald 2011; Hoyt, 2005; MacDonald et al., 2009, 2010; Weidner 2001). Large and small, BIDs have multiplied rapidly: from about 400 in 1999 to about 1000 in 2010 across the United States (Cook and MacDonald, 2011; Mitchell, 2001b). As of 2011, all states except Wyoming have at least one BID (International Downtown Association, 2011).

One important characteristic of BIDs is their autonomy in the formation and management processes. BIDs are neither assigned nor planned by the government; BIDs are formed when the stakeholders in the commercial areas (i.e. mostly property owners or business owners) desire to pay additional fees to address collective problems. Although details differ depending on the state’s BID legislature, property or business owners must collect a considerable percentage of petitions in order to form BIDs. BID formation thus involves extensive outreach, persuasion and negotiation processes among the stakeholders, which require prohibitive time, money and human resources. Once a BID is established, all property owners or business owners within the delineated BID area pay assessment fees.¹ After a BID is formed, the advisory board or board of directors made up of stakeholders makes decisions about the budget and activities of BIDs.

The autonomy of BIDs is a critical factor when it comes to discussing the neighbourhoods that failed to form BIDs for the first time. When BIDs spread over a city, it is noticeable that not every commercial area forms BIDs. Some communities may not have BIDs because they do not have urgent collective problems to solve or because they do not want BIDs for certain reasons; however, some communities fail to form BIDs despite some initial interest and efforts to form one. In the latter case, if neighbourhoods fail to form BIDs without alternative measures to deal with collective problems (e.g. rubbish, crime), those neighbourhoods face potential risks for absolute and relative deterioration considering that BIDs provide services only to the areas within the BID boundaries (Gross, 2013). Critics of BIDs in fact argue that BIDs can lead to or exacerbate inequalities in service delivery and thus can eventually widen the socioeconomic gap between areas within and outside BIDs (Briffault, 1997, 2010; Pack, 1992). The term negative spillover refers to the possibility of BIDs pushing out social ills – such as crime, homeless and rubbish – into non-BID areas that do not have the capacity to address these issues on their own. The imbalance can result in concentrations of undesirable elements in relatively more vulnerable areas that are socio-economically marginalised, politically apathetic and physically deteriorated (Caruso and Weber, 2006; Hoyt and Gopal-Agge, 2007).

While the imbalance between the areas with and without BIDs has important implications, the existing literature has not fully examined the areas that failed to form BIDs. Therefore, this research examines whether the areas with inconclusive BID formation efforts are socioeconomically distinctive, and what types of challenges these neighbourhoods experience in order to form BIDs in the context of Los Angeles. In the following section, I explain the emergence of sublocal governance structures such as BIDs, provide a literature review on BID formation and discuss the context of BID formation in Los Angeles.

Review of policy and literature

The limit of municipal capacity in Los Angeles

The trajectory of Los Angeles offers a useful context to observe the struggle of city governments to provide public services. Severe inflation during the 1970s and subsequently escalated tax bills instigated the adoption by the State of California of Proposition 13, ‘the mother of all modern state tax revolts’ (Cain, 2009), which since 1978 has limited property taxes to a very low rate (Sears and Citrin, 1982) and has forced Los Angeles to compete with other cities in search of retail tax revenue (Sonenshein, 2006). The restricted tax, coupled with the 1982 recession, placed intense fiscal pressure on the city government. During this time the white population rapidly left the city, and families with school-aged children declined at even greater rates (Schneider, 2008). The percentage of white population decreased from 78 percent to 54 percent in Los Angeles between 1960 and 1980, which led to moderate sluggish growth in per capita income (Storper et al., 2015). More recently, the secession movements of the Harbor, Hollywood and the San Fernando Valley have caused apprehension for the city authority (Bowers, 2002; Sonenshein, 2004). The financial crisis from 2007 to 2008, affecting the entire nation, added insult to an already-injured city budget. The declining economy and home foreclosures tightened property taxes even further while the State of California itself suffered from a budget crisis (Arsenault, 2008).

These financial constraints have increasingly challenged the city to provide maintenance and improvements. Expenditure trends show that the budget spent on Public Works (which includes maintenance and improvements) was around 17–20% in the 1970s and 1980s but decreased to 5–6% by the end of the 1990s ( Los Angeles Almanac, 2012; The League of Women Voters of Los Angeles, 1986). As of 2013, the city does not provide regular services for street cleaning, bulky item removal, tree trimming or pothole repair. In December 2013, The Los Angeles 2020 Commission published a report titled A Time for Truth and asserted that Los Angeles is heading for a future in which the local government can no longer afford public services. Since 1993, building and safety, economic development, street services and sanitation have cut more than 1300 workers throughout the city. Between 2008 and 2012, the number of trees that were trimmed by the city had been reduced by 75%. Less than half the debris from neighbourhoods is cleaned up compared with four years ago. In the same report, Carol Schatz, the President and CEO of the Central City Association of Los Angeles, notes, ‘Investment dollars will not flow to neighbourhoods that suffer from crumbling sidewalks and pothole-filled streets’ (Los Angeles 2020 Commission, 2013: 16). These problems also correlate with the deterioration of commercial areas in the inner city where communities have experienced disinvestment, high crime rates and haphazard development (Loukaitou-Sideris, 1997). Maintaining commercial strips has been particularly challenging because the public and the government have had divergent views concerning who is responsible for street sanitation and management of public space in commercial areas (City employee, personal communication, 9 July 2013).

One of the major outcomes of the declining municipal capacity was a niche for the growth of neighbourhood-oriented initiatives and market-oriented solutions (Osborne and Gaebler, 1992; Savas, 2000). According to Briffault (1997), sublocal² structures tend to rise in big cities where and when the local government system is less likely to provide adequate benefits to every corner of the city. In big cities, localities tend to experience inadequate attention and delivery of services from the municipal government. The rise of submunicipal political institutions is an attempt to respond to this problem by decentralising and diversifying the service delivery. The sublocal governance structures satisfy the needs and preferences of sublocal stakeholders while still maintaining the position of big cities in the local government system. As a result, sublocal governance gives rise to greater territorial variance within large cities and diverse policies at neighbourhood levels. Some sublocal structures operate autonomously to provide for customised taxation, services or regulation to designated zones/districts or to designated territories (Warner, 2011). Among many institutions that represent the rising power of the sublocal governing capacity, this research focuses on BIDs.³

Factors related to BID formation

The major focus of the existing research on BID formation has been on identifying where BIDs form and what factors affect the formation result. These efforts are primarily econometric analyses that have examined the effects of socio-spatial factors on the BID formation result. These analyses generated findings at various levels. For example, at a state level, BID formation was found to be positively correlated with the presence of enabling legislation that requires less than majority approval (Billings and Leland, 2009). At a city level, BID formation showed a weak relationship with residential heterogeneity, meaning that the city condition in terms of income, education level, race and age was not a significant determinant for BID formation (Brooks, 2006, 2007). At a census tract or neighbourhood level, one New York City-based study found that factors such as percentage of commercial space, percentage of valuable commercial properties, household income and population density were positively related to BID formation (Meltzer, 2012). At a property level, mixed findings exist. Brooks and Strange (2011) found that larger properties are more likely to participate in the organisation of BIDs whereas smaller properties are less likely to support BID formation. Brooks and Strange assert that the existence of ‘anchor participants’ – key community players who are willing to bear the cost of BID formation – is crucial for the viability of BIDs. In contrast, Meltzer (2012) found that properties with higher values are less likely to opt into BIDs. Meltzer interpreted this finding that properties with relatively higher values do not welcome large assessment fees whereas properties with lower values prefer to be part of a BID as being because they could receive the same level of BID services while paying a smaller assessment fee. In sum, these mixed findings imply that the economic characteristics of a certain neighbourhood (e.g. presence of large properties) cannot be a determinant factor for BID formation; the voting process of BID formation still depends on the characteristics of the majority of property owners and the political dynamics among property owners.

Aside from the research based on economic analyses, few studies have mentioned the potential influence of social characteristics of communities on the outcome of BID formation. Ellen and colleagues (2007) suggested several social factors that can act as catalysts for BID formation, including the existence of long-standing neighbourhood problems (e.g. high levels of crime and poor infrastructure), the establishment of a local development corporation and local organisational capacity. On the other hand, several studies argued that certain socioeconomic characteristics of neighbourhoods impede or conflict with BID formation. For example, the case studies conducted by Schaller and Modan (2005), Sutton (2010) and Lee (2016) found that BIDs may not be readily implemented or welcomed in some neighbourhoods in which the interest and visions of low-income residents and small businesses compete with those that have financial power, or in which multiethnic groups share space and compete identities. The social factors suggested by these studies, however, have not been adequately examined in literature.

More importantly, to date, there have been few attempts in the literature to examine inconclusive cases of BID formation. The relatively higher weight placed on outcome or performance of already established organisations, and not the failed formation process of organisations, reflects the general patterns in the literature on community-based organisations. For example, the previous research on community development corporations (CDCs) has been limited to examining the emergence of, or successful management of, the organisations (Gittell and Wilder, 1999; Stoutland, 1999). However, very little information has been gleaned about the ‘smaller, younger, struggling, or failed’ organisations (Stoutland, 1999: 201). Likewise, most research only covers those BIDs in existence at the time of the study; less is known about to what degree or why some attempts to form BIDs failed. To address the knowledge gap, this research focuses on the areas that do not have BIDs, especially the areas that have shown interest in forming BIDs but could not form them for an excessively long time.

BID formation in Los Angeles and neighbourhood characteristics relative to BID statuses

The formation process of BIDs varies depending on the enabling legislation by state. In California, three sections of the California Streets and Highways Code enable BIDs; among them, two laws⁴ authorise currently existing BIDs in Los Angeles, established respectively in 1989 and 1994 (Meek and Hubler, 2008). Both laws enable the formation of a BID, but the 1994 law grants BIDs more functions such as ‘financing of streets, rehabilitation or removal of existing structures, and security facilities and equipment’ (Streets and Highways Code §36600 et seq.) in addition to the ones allowed by the 1989 law, including ‘financing of marketing and economic development, and various supplemental municipal services such as security and sanitation’ (Streets and Highways Code §36500 et seq.). The 1994 law also allowed taxation of property owners while the previous one had allowed only for the taxation of merchants (Brooks, 2008).

The stages of BID formation process in Los Angeles can be demonstrated as Figure 1.⁵ BIDs are usually proposed by a group of individuals (‘proponent group’), or a Councilmember, interested in establishing a BID in a given area. After the proposal, the proponent group, with public or private assistance, prepares planning or research documents necessary for district management. More than 50 percent of the property owners must sign supporting petitions and come to an agreement on the suggested plan which includes a tentative boundary, assessment formula and budget for the new BID. This process typically demands prohibitive time and finances. Upon receipt of the plan and petition, the City Clerk’s Office conducts plan evaluation and technical review to verify the content and procedures. After the review, the City Clerk’s Office recommends the plan to the City Council and related Committees for approval. This stage is considered the formation of a BID. The rest of the steps are largely legislative; the business community must adhere to numerous types of statutory deadlines and city requirements for public hearings, legal documentation and a return of a ballot vote in which 50 percent of the casted ballots, weighted by assessment, is required. This stage of institutionalisation is considered the establishment of a BID.⁶

Figure 1.

BID formation process in Los Angeles.

Of the major cities in California, Los Angeles has established the most BIDs. As of 2013, Los Angeles has established 44 BIDs since the 1990s, but five of them have expired (i.e. are no longer operating). Of the remaining, 34 BIDs are property-based and five BIDs are merchant-based. These types vary primarily by whether the assessment is levied against the merchant or the property owner, the life span of the BID and the petition thresholds for initiation of the BID (Meek and Hubler, 2008).

According to the list uploaded to the Los Angeles Office of the City Clerk website, Los Angeles has 44 established BIDs and 19 proposed BIDs as of 2013. ‘Proposed’ districts refer to ‘areas under consideration relative to feasibility and include areas which have begun the formation process’ as opposed to ‘established’ districts which refer to ‘areas that have completed the legislative process and are commencing or continuing operations (Los Angeles Office of the City Clerk, 2015). While many proposed districts on the list have become established, seven of the proposed districts did not complete BID formation. The Los Angeles City Council file records show that these districts have not formed BIDs several years after they submitted a motion to form a BID, which is excessively longer than the average of 18 to 22 months typically taken for BID formation (staff specialist at the Los Angeles Office of the City Clerk, phone interview, 22 January 2013). Since the progress of these cases is poorly understood, they are categorised as ‘unidentified’ proposed districts in Table 1 and Figure 2.

Table 1.

List of proposed business improvement districts (BIDs) categorised by status, 2014.

Established	Expansion/Renewal of existing BIDs	Unidentified
Century City Historic Sunset (Sunset and Vine) Panorama City San Pedro Westwood Village	Chinatown Expansion Crenshaw Greater Lincoln Heights Lincoln Heights Industrial Expansion North Larchmont Pico Corridor Wilmington Industrial	Cesar Chavez-Boyle Heights MacArthur Park Olympic Boulevard Pacoima Sun Valley York Boulevard Woodland Hills

Source: Los Angeles Office of the City Clerk.

Figure 2.

Existing BIDs and the areas with ineffective BID formation in Los Angeles, 2014.

The ‘unidentified’ proposed districts (i.e. the areas with inconclusive BID formation process) show distinctively different socioeconomic characteristics from the areas with and without BIDs. Table 2 shows the results for the comparison of three aspects – median household income, percentage of individuals below poverty and percentage of foreign-born population. The comparison shows that the areas that struggle with BID formation showed lower income, higher poverty and higher concentration of foreign-born population compared to the city average and the areas with established BIDs. The distinctive characteristics of the areas with inconclusive BID formation attempts prompt questions about the kinds of challenges these neighbourhoods experience to form BIDs.

Table 2.

Demographic characteristics by the status of BID formation, Los Angeles, 2000.

	City Average	Census Tractswith BIDs^a	Census Tracts with proposed BIDs that have not been established for 5+ years^b
Median Household Income ($)	42,769	32,727	27,824
Individuals below poverty level (%)	21	28	32
Foreign-born population (%)	39	46	56
N	989	157	56

Source: Census SF 3 Social and Economic Data (2000).

Notes: All BIDs (i.e. property-based and merchant-based BIDs) in the city of Los Angeles are included in the analysis. Since most BIDs were established in the 1990s and 2000s, the 2000 census data (SF 3) were used in order to minimise the long-term effects of BIDs on the neighbourhood condition that was tested in the analysis.

The areas with established BIDs were defined as the census tracts that intersect with the BID boundaries.

The areas with proposed BIDs were defined as the census tracts that intersect with the neighbourhood that proposed to form BIDs. In case the areas around the existing BID boundaries overlap with the areas with proposed BIDs, I categorised those areas as proposed BIDs because these areas are the neighbourhoods that struggle with BID formation. There were 13 census tracts that belonged to this case.

Data collection methods

In order to understand why certain areas struggle with forming BIDs, I conducted in-depth interviews in Los Angeles between April 2013 and April 2014. I interviewed city employees, BID consultants and a number of executive directors of BIDs, all of who are knowledgeable about BIDs or the neighbourhoods that have shown slow BID formation processes. City employees were interviewed from the Office of the City Clerk, Bureau of Street Services, Department of Neighborhood Empowerment, Planning Department, the City Council Office and Los Angeles Police Department. BID consultants include those who consulted BID formation in many parts of Los Angeles and some across California. A number of interviewees confirmed that three neighbourhoods near downtown in Los Angeles have struggled with BID formation, including Cesar Chavez-Boyle Heights, MacArthur Park and Olympic Boulevard. Several residents, business owners and community organisers participated in the interview. Semi-structured and open-ended interview questions were used to examine the key questions, including why some neighbourhoods are not successful in forming BIDs while some are, what are some important factors for BID formation and what are some characteristics of successful BIDs. A total of 30 interviews were conducted. Most interviews were conducted in person, and several interviews were conducted through phone and email conversations. In-person interviews lasted approximately one hour. Twenty-two interviews were voice-recorded upon the verbal consent of interviewees.

The struggles of low-income immigrant neighbourhoods with BID formation

The in-depth interviews identified several factors that can hinder BID formation. One of the common challenges that city employees and BID consultants mentioned was disengagement of property owners in BID formation efforts. There are broadly three factors that can impede the process of engaging property owners. The first factor is simply not taking property owners into account. If a BID is initiated at the city level without engaging property owners, the BID formation efforts could fail even after the BID is officially proposed to the city council. One of the BID consultants said:

In the city of LA, the definition of failure is that they started the process to establish and didn’t complete. In most of those incidences, BIDs were kind of imposed upon the community. The council districts decide, ‘we need a BID in this area’ and they try to talk to property owners into it. So it’s top-down from the city. And then because the city clerk’s office has money, they put out a RFP and hire a consultant, and when they go there, and what they find is that the property owners didn’t necessarily think that they wanted a BID. They didn’t see the need. To succeed the BID establishment, it needs to be need-based. It’s got to be some need that didn’t get addressed by the community. And the property owners have to see that need and then obviously want to invest their money to address the need. (Personal communication, 22 July 2013)

This comment suggests that the fundamental question – who has a stake in the payment and whether they want to pay assessments to form a BID – is often overlooked in the early stages of forming BIDs, which then leads to the failure of BID formation. One of the city employees who oversees the BID formation process commented that low-income areas might be more susceptible to such top-down approaches:

In lower-income areas, it seems that it’s even more difficult to get a BID started. It’s usually someone else trying to start a BID, rather than the community. For instance, there is a BID that they wanted on Cesar Chavez Ave, and it was a council-initiated, the councilman wanted the BID. It would probably benefit the area. But you’ve got a lot of mom-and-pop businesses who aren’t aware, probably don’t really know much about what a BID is, and very little chance of success because it’s not driven from inside the community, it was coming from outside. (Personal communication, 16 August 2013)

Another factor that may impede engaging property owners lies in the difficulties in identifying who they are. Generally, tracking property owners requires a considerable amount of time because the county property record is not up to date. One city employee who has worked with the county data for a number of years mentioned that the information on ownership, the sales records and the contact information are often wrong and slow in updates. He commented, ‘The information that they [the BID consultants and engineers] are getting is not so great lots of time. Ownership is wrong, number is wrong. We deal with this all the time. Consistently … pretty much every day. It’s very, very onerous’ (personal communication, 28 June 2013). One of the BID consultants also shared that dealing with property records is challenging. He said, ‘Oh, to find property owners? That’s very, very difficult. That’s the hardest part of the process. Trying to find a person who can actually make a decision and figure out how to communicate with that person’ (personal communication, 22 July 2013).

Moreover, the challenge becomes greater when there is a high percentage of absentee property owners because their absence may signify owners who are apathetic about what is happening in the neighbourhood and have loose relationships with their tenants. The absentee ownership was brought up many times during the interviews with residents and business owners in the neighbourhoods that showed inconclusive BID formation. Some residents mentioned, ‘You see nice cars driving around. They [property owners] only show up when they collect rent, and they leave right away’ (public meeting, 2013). Some business owners mentioned that they have never seen the landlord because they collect rent electronically without showing their identities. They would not know how to reach the property owners. Although this may not represent the perspective of the entire business community, many responses showed that property owners are neither present in the community nor engaged in dealing with the problems in the community. The gap in the relationship and communication thus creates difficulties in reaching out to property owners.

The third factor that may impede engaging property owners simply lies in the economic struggle that the neighbourhoods go through. Several BID consultants and community organisers mentioned that when businesses are barely making ends meet, it is challenging to convince property owners or business owners to pay extra money to form a BID. One community worker who has been working with a BID in one of the low-income neighbourhoods in the Central Los Angeles area advised that in order to form BIDs in other neighbourhoods with similar socioeconomic conditions, it is important to understand the reality of these businesses and not charge high assessments. She commented, ‘Don’t expect to pass the BID if you charge a high assessment. In this type of neighbourhood, they are not going to pay for it. […] The neighbourhoods where there is first [immigrant] generation, first time business owners, don’t expect to get a high assessment’ (personal communication, 21 January 2014). Overall, these responses show that requiring even a small amount of money would not appeal to the property or business owners who manage tight budgets.

In addition to the challenges of engaging property owners, organising collective action among immigrant communities was identified as another challenge for BID formation. First, some community workers mentioned that they experienced difficulties in marketing BIDs to immigrant property and business owners because they equate BIDs with government initiatives. In particular, recent immigrants seem to be indifferent or even doubtful of the concept or the activities of the government due to their negative, even traumatic, experiences back in home countries (e.g. local governments’ inability to respond to violence and gang activity, weak rule of law, high poverty, drug trafficking) (United States Government Accountability Office, 2015). Other immigrant property or business owners mentioned that they are doubtful because of their previous experiences participating in short-lived city programs that never returned any benefits. These factors suggest that it is important to understand immigrants’ perceptions of and past relations with the government and other city programs.

Another issue that came up regarding engaging immigrant stakeholders was related to neighbourhood identification and boundaries. Some BID consultants and city employees argued that cultural conflicts could impede BID formation efforts. They specifically mentioned a conflict between the Korean and Latino communities. One of the organisers who tried to form the Olympic Blvd (Koreatown) BID commented on his experience of attending the community meeting in the mostly Latino adjacent neighbourhood, ‘It was not the price, but it was racism, it was anti-Korean racism, so no, you can’t come across Koreatown, you can’t come into El Salvadorian community, so they voted me out of there’ (personal communication, 24 June 2013). One community worker in MacArthur Park also echoed this response and commented, ‘There is tremendous cultural clash between the Latinos and the Koreans because there is really very little communication, if not at all […] it’s not only a cultural gap, but an economic gap, too’ (personal communication, 5 June 2013). These responses suggest that the competition and lack of communication among immigrant communities can interfere with the BID formation process.

In some cases, sublocal conflicts emerge even within the Latino community when diverse ethnic groups desire to create their own cultural districts. In the Los Angeles Times article, ‘Advocates seek to carve out official Latin American areas in L.A.’, Bermudez (2014) summarised that the Latino Economic Empowerment Round Table is eager to create several Latino ethnic districts, emulating what Asians achieved with Thai Town, Little Tokyo, Historic Filipinotown and Little Bangladesh. As shown in Figure 3, many of the currently proposed Latino ethnic districts are located around MacArthur Park (Westlake) and the BLQ (Pico-Union) areas. On a positive side, these diverse groups could bring synergies for multicultural community development, but on the other hand, they could also present challenges for creating a collective identity for the community. Hutchinson (1999) once summarised the essence of this kind of challenge as ‘propinquity without community’. One community organisation staff member who has worked for the Pico-Union areas (and the Byzantine Latino Quarter BID) shared that ethnic conflicts have impeded creating a collective identity for the BID (personal communication, 12 July 2013). The dense coexistence of multiethnic groups could generate issues against creating agreeable boundaries, brands and goals for BID formation.

Figure 3.

Proposed designations of official Latin American areas (Los Angeles Times, 2014).

Lastly, immigrant street vendors present a complex problem for BID formation, particularly in MacArthur Park. Many people who were interviewed pointed out the difficulty of forming a BID without tackling the chronic existence of vendors. And it is difficult because the vendors are linked to gangs: vendors pay rental fees to the gangs and gangs provide protection for the vendors. Since the local vendors are protected by gangs, the local business owners are afraid of reporting the vendors to the police or cleaning their storefront (Parker and Poe, 2006; Police officer, personal communication, 12 December 2013). Furthermore, the vending activities are difficult to regulate. One of the police officers at a public meeting said, ‘When we ticket them, they can give a fake name and address, which then makes the ticket no use’ (public meeting, 2013). In other cases, some of the vendors make such high profits that they would not fear to pay for the ticket even if they get ticketed every day (Police officer, personal communication, 12 December 2013).⁷ Whether to permit street vending is currently being discussed among the Vendors’ Alliance and two Los Angeles City Council members along with the issues on the enforcement, licensing and health codes (Saillant and Linthicum, 2013). If new policies are adopted, they will present unique potentials and challenges for areas such as MacArthur Park where many immigrant residents’ livelihoods are closely linked to street vending.

Conclusion

In examining the challenges of BID formation, this study demonstrates that the areas with unsuccessful attempts at BID formation in Los Angeles are relatively low-income immigrant neighbourhoods. Interviews with city employees, BID consultants, executive directors of BIDs and community stakeholders have identified several factors that may have impeded BID formation in some of those neighbourhoods in Central Los Angeles. In summary, these neighbourhoods revealed two challenges: (1) engaging property owners and (2) organising collective action in immigrant communities. First, this study found that property owners are difficult to engage when the BID is introduced from outside the community and when the neighbourhood experiences high absentee ownership and struggling businesses. Second, some characteristics of immigrant communities could hinder BID formation, such as immigrants’ skepticism towards government, spatial conflicts among multiple ethnic groups and the presence of informal economic activities.

These findings engender important implications for understanding economically marginalised and ethnically diverse neighbourhoods that do not have BIDs. It is important to acknowledge that ‘areas without BIDs’ do not necessarily mean that those areas have no problem to solve. As demonstrated in this paper, some areas do not have BIDs despite some initiating efforts to form BIDs. If these areas struggle with organising collective action, creating a collective vision for the community and engaging the right group that has a stake to form BIDs will be a critical step for BID formation. More specifically, public officials and community workers can assist BID formation in low-income immigrant neighbourhoods more effectively by diversifying the types of assistance. The Los Angeles City government has been assisting communities that are interested in forming BIDs by providing a lump sum fund for hiring a consultant who can lead the BID formation process by providing various technical and legal services (e.g. survey the business community, outreach to property owners, collect a required level of petitions and prepare planning documents to submit to the City Council). This kind of assistance works well for the areas that have strongly motivated and organised communities. However, in the areas with weak motivations and resources, the funds usually run out before a BID forms because of slow progress in outreach and petition collection. In order to assist these communities to overcome barriers, the city can provide more direct assistance for raising awareness of collective problems and developing a collective vision and motivation to solve those problems.

Moreover, it is important to examine the suitability of BIDs. This study leaves unexamined the question of whether a BID is a universal solution for all communities that need urban revitalisation. This study as well as in Schaller and Modan’s (2005) study on Mount Pleasant BID in Washington, DC suggest that (1) BIDs have limitations for ensuring equal and fair representation from marginalised multiethnic groups to the decision-making process, and thus (2) the success of BID formation may not only be a matter of community capacity but also be a matter of suitability and timing. Further research can focus on areas in which communities have developed mechanisms other than BIDs to protect businesses and improve business environments. This line of research can elucidate the type of community development practices that can be effective either when communities are not ready to establish a BID or when they prefer alternatives to improve their business environment. In practice, public officials and community workers should carefully examine the necessity and suitability of a BID before determining the direction of the community organising. These areas could better be served with alternative or more incremental approaches (e.g. merchant association, residents action group) in order to revitalise commercial areas while incorporating the voices of local residents and merchants. Public officials and community organisers can assist economically marginalised and diverse neighbourhoods by facilitating community meetings or social events that can raise awareness of collective problems and cultural diversity in the community.

Footnotes

Acknowledgements

The author thanks the support and guidance of the Los Angeles community. The author also gives thanks to Dr Joe Grengs, Scott Campbell, Gavin Shatkin, Jorge Delva, and David Bieri for their mentorship, and the anonymous reviewers for their helpful comments.

Funding

This study was partly supported by the Rackham Graduate School and the Center for Public Policy in Diverse Societies Gerald R. Ford School of Public Policy, University of Michigan, Ann Arbor, MI, USA.

Notes

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