Business, City Transformation, Development, News

The facts behind the Business Improvement Zone many Downtown businesses hope will guarantee long-term progress

CMP (20)
Campus Martius today

Campus Martius today

If you’re a long-time Detroiter and you’ve been coming downtown for years or if you’ve only been here a few years you’ve noticed a huge change. It’s cleaner, brighter, more walkable and just plain more fun. The streets and sidewalks are better maintained. Graffiti is for the most part gone.  The clutter is gone and it is easier to find your way from one place to another.

There’s a good reason. Leaders for Downtown companies came together with the Downtown Detroit Partnership (DDP) in 2005 to prepare for the Super Bowl and created a program called Clean Downtown that delivers those results. Since then those Downtown businesses have contributed $16.5 million for the program.

Just a quick note. The Clean Downtown program is separate from and in addition to city services and is not paid for by taxpayer dollars.

Campus Martius pre-2000

Campus Martius pre-2000

Clean Downtown operates 24/7 every day of the year and cleans 39 miles of sidewalks public spaces and entrance and exit ramps along the Lodge, I-75, and I-375 freeways as well as along Jefferson Ave. and the Detroit River.  The Clean team also picks up all trash from the North American International Auto Show, Detroit’s Winter Blast, the Tiger’s Opening Day, all Campus Martius Park events, the Detroit Belle Isle Grand Prix, Gold Cup Races, River Days, Target Fireworks, MLK March, Rockin’ on the Riverfront, Detroit International Jazz Fest and Thanksgiving Day Parade.

They also maintain some of the way-finding kiosks.

In 2013 the Clean team picked up nearly 700 tons of trash. Since it was created seven years ago the team has removed more than 3,700 tons of trash. And since 2005 more than $16.5 million in voluntary contributions from major businesses downtown have sustained the Clean Downtown program.

Today the program is vulnerable. Corporate funding is not reliable year after year and without a sustainable funding source this service may be eliminated or cut back.

“These services are the foundation for downtown Detroit’s ongoing revival,” said Eric Wilson, DDP planning and development manager.

There is an option and it’s called a Business Improvement Zone.

OK, so how does it work? What exactly is a Business Improvement Zone or a BIZ you ask?

Before Clean

Before Clean

It’s pretty simple. A BIZ is a self-assessing public-private partnership among property owners and businesses that provides services for commercial districts in a targeted area. It collects financial contributions (assessments) within that targeted area that must be used within that target area. It is modeled after the shared maintenance programs used in condominiums and shopping centers where tenants contribute to common area improvements.

In short, property owners (not owner occupied homes) agree to contribute an assessment in their property taxes to help keep the streets clean and safe, maintain and create landscaping, develop common marketing and promotions and create way-finding systems. A Business Improvement Zone supplements the basic services that city governments provide.

As you can imagine, given the bankruptcy and Detroit’s past financial condition, there have not been a lot of city dollars available to contribute.

Enter the BIZ.

A BIZ (or Business Improvement District as they are also known), is described by the Economist magazine as potentially “the best hope for getting parts of America’s cash-strapped cities working again,” Business Improvement Districts (BIDs) have generated a great deal of excitement among city governments and urban policymakers around the world.

BIZs are not unusual. They were created in 1970 and today more than 1,500 are operating in the US.  Nearby there’s one in Southwest Detroit, one in Ann Arbor and a similar organization in Birmingham. New York City may be home to more of these programs than any other city. The city’s BIDs annually contribute more than $100 million worth of services to more than 70,000 businesses in neighborhoods across the five boroughs.

Litter, graffiti, poster, sticker removal

Clean is responsible for litter, graffiti, poster, sticker removal

Here is what DDP, which is advocating for the zones, says a BIZ would do for downtown:

  • Encourage more growth downtown and ensure that services such as      cleaning, security and landscaping continue despite changes in the city      budget
  • Increase property values, boost overall retail sales, enhance      safety and give every business the opportunity to join as a single voice      for downtown businesses
  • Help guarantee a consistent clean, safe and inviting environment

A September 2012 survey of 4,000 downtown Detroit office workers found that a strong majority regularly enjoy strolling downtown and would shop downtown if more stores were available and would stay downtown longer if they felt safer.

Here’s how a BIZ would work.

There are 570 BIZ eligible parcels in the proposed BIZ boundary. Each owner of those 570 parcels must vote on creating a BIZ. Each parcel a weighted vote based on the size of their assessment. The assessment is calculated annually based on data from the city assessor. The BIZ budget and assessment formula is a blend of the total assessed value and building floor area in downtown Detroit.

Wayfinding maintenance

Clean is responsible for wayfinding maintenance

The BIZ assessment would only be charged to those 570 properties. To be clear, this would not be a city-wide to “pay for Downtown” and the assessment and would not apply to owner-occupied residences or non-profits and houses of worship.

If you’re into the details the annual assessment is $0.05809 per square foot of the building area and $0.00245 per assessable dollar for the property. That’s an average of $0.10 per square foot across downtown. No property would be assessed more than $150,000. About 68 percent of downtown property owners would pay less than $5,000 annually.

The BIZ assessment formula is calibrated so that the lion’s share of expenses are shifted to the largest property owners, including Rock Ventures, General Motors, Blue Cross/Blue Shield, DTE and MGM Grand Detroit. About 76 percent of the BIZ budget would be funded by the 30 largest Downtown property owners. Rock Ventures and General Motors alone contribute more than 25 percent of the BIZ budget.

Currently, many property owners benefit but don’t contribute anything.

The annual budget for the BIZ is estimated at $4 million. Anticipated annual expenses include the following programs. Actual expenses will be determined by the BIZ board of directors:

  • Clean Downtown — $2.4 million
  • Median landscaping and maintenance — $610,000
  • Riverfront operations — $300,000
  • Parks landscaping and maintenance — $290,000
  • Public safety ambassadors — $240,000
  • Administrative — $160,000

Hart PlazaThe BIZ must be fully accountable to property owners. A board of directors made up of large and small property owners, will be established to govern the BIZ. After two years the property owners can vote to keep or dissolve the BIZ and it must be re-authorized every 10 years.

“A BIZ increases property values and gives businesses and property owners direct control over how their BIZ contributions are spent,” said Wilson, “It is a fair way to distribute the costs and benefit of services.”

The Downtown Detroit Partnership is reaching out to downtown businesses, public officials and tenants to explain the BIZ and encourage them to sign the BIZ pledge to express their support. As you might guess, Emergency Manager Kevyn Orr would have to agree to the zone’s creation. If Orr approves, a vote would be conducted by the city’s elections office in March and April.

The BIZ will be adopted if 60% of the downtown Detroit property owners vote in favor.

More information on the BIZ proposal can be found at www.downtowndetroitbiz.com.

BIZ boundary

BIZ boundary

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