| Spectrum - Friday, July 9, 2010
Reassessing downtown's business district
As group's president departs, downtown Palo Alto's Business Improvement District needs a fresh look
Already facing the challenge of some businesses refusing to pay their required assessments, downtown Palo Alto's 6-year-old business-improvement organization should pause to consider its options — especially in the aftermath of the recent sudden departure of its president, Sherry Bijan.
Both businesses and city officials need to take a hard look at what can be learned from the first six years of the BID. Alternatives include (1) continuing but with a goal of building renewed support by the May 2011 reauthorization; (2) disbanding by majority protest of businesses in the district; or (3) becoming part of the Chamber of Commerce, as is being discussed.
The downtown organization is a quasi-official arm of the city government. It was created by the City Council in 2004 and it has the power to levy assessments against retail and professional businesses in specified areas of the downtown. It was just re-authorized by the council in May. The city's role is limited to being a fiduciary agent, collecting the assessments, while an essentially independent board of directors oversees policy, staff and programs.
Annual assessments of between $50 and $500 are levied against between 750 and 800 businesses (the number varies each year). The funds are used to hire staff to promote the interests of the downtown as a whole and of the businesses that exist there.
The BID has racked up some successes, notably creating the now-independent Downtown Streets Team of homeless and formerly homeless individuals who clean downtown sidewalks and pick up trash.
Recently the BID helped launch a weekday farmer's market at Lytton Plaza, and it earlier supported a renovation of the plaza itself.
But it also has had its critics, internal and external.
Some critics from downtown businesses say the organization is not doing enough visibly to promote the downtown commercial area, certainly not enough to justify the approximately $100,000 it collected in assessments last fiscal year, most of which went to the president's salary. The group's office space is donated.
Some criticism may be sour grapes from business owners who didn't think they'd benefit from an association and who simply declined to participate. Deputy City Manager Steve Emslie said non-payment of assessments is not a huge problem: Non-payers get sent to collections and most eventually pay, he said.
There also is a process whereby a simple majority of businesses in the district could file to disband the organization, although no effort to do that has surfaced.
But clearly there has been confusion about the BID's role and priorities, even its basic mission. This has been a decades-old problem for downtown, in which "marketing" leadership has fallen on a handful of individuals.
In addition, the BID leadership has not acted much like an organization subject to the state's Brown Act open-meeting law, and some board members complain about poor attendance of other members.
Downtown's roller-coaster economic history over the past half century has created strains that still linger. The opening of the Stanford Shopping Center in 1958 plunged it into a retail recession that lasted a quarter century. But the area's hyper-success in the 1980s and 1990s became a curse for many small businesses: Years of rising rents drove out many retailers as the downtown became a magnet for financial-services firms.
Departure of some large companies and the national economic crisis created a glut of office space and some softening of rents, but too late for many businesses. The emergence of the Internet as a competitor has also added pressure, along with the renovation of Town & Country Village shopping center nearby.
Today the downtown is known for its restaurants, and for its business survivors — who need community support if they are to remain part of the Palo Alto scene.
Exploratory talks are underway about the BID becoming part of the Chamber of Commerce. The city apparently could contract with the chamber to be the governance entity for the assessment district, while the city remains as fiduciary agent.
This could be a sensible approach, but until downtown businesses see a tangible plan they view as worthy of an assessment the controversy will continue.
While creating a consensus among the wide variety of tenants and businesses downtown is like herding cats, it's essential if the BID has any future.
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