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Friday, May 20, 2022

Business Districts Facing Challenges as Renewals Loom

Business Districts Facing Challenges as Renewals Loom


Staff Reporter

A decade into the experiment of self-administered business improvement districts, three of the five property-based groups up for renewal this year are encountering problems ranging from charges if mismanagement to grousing over services.

All five must go through a series of renewal steps before their terms expire on Dec. 31, and some are in jeopardy.

In downtown’s Historic Core BID, dissatisfaction with management forced the executive director to step down last month and turn over the administration to a neighboring BID.

As a renewal vote approaches in the nearby Fashion District, a competing group of disgruntled property owners is trying to launch a rival organization.

And the Downtown Industrial District BID, which is attempting to renew this year, has been trying to expand its boundaries to the north and south in response to entreaties from property owners.

These troubles have led some property owners to call for tighter city oversight of BID finances and management, including instituting regular audits and uniform standards for electing board members.

But while the city council approves the formation and renewal of all BIDs, officials are reluctant to step in to regulate them.

“The BIDs are self-governing bodies, and, as such, the property and business owners themselves need to be involved to make sure they are happy with how their moneys are being spent,” said Jonathan Kevles, deputy mayor for economic development.

City Councilman Eric Garcetti, who as chair of the council’s Economic Development Committee oversees the BIDs, echoed Kevles’ views.

“Our first preference is to see the BIDs manage themselves better,” he said. “The city should not step in and mandate audited financials or anything else. That just adds another layer of bureaucracy. If the BID is run poorly, it will be voted out of existence.”

Competition arrives

That just might happen later this year in the Historic Core BID, where Executive Director Ken Aslan resigned last month amid allegations of poor supervision of maintenance contractors and security guards, among other things. With the management of the BID now in the hands of the Downtown Center BID, garnering the petitions and votes needed to renew the assessment district for another five years is uncertain.

In the sprawling Fashion District BID, which also needs to renew by the end of the year, property owner Len Fisch, frustrated by what he perceived as a lack of openness and poor services, circulated petitions to form a completely new BID. The proposed Apparel District BID would encompass about 90 percent of the existing Fashion BID territory.

Fisch succeeded in getting petitions from property owners representing more than a third of the total assessments, enough to launch the BID formation process in the area.

“We have no voice in the existing BID,” Fisch said. “I personally am paying more than $100,000 into this BID and I feel like I have no representation. There are no open elections to the board and it’s the board that makes all the decisions on how our money is spent.”

Kent Smith, executive director of the Fashion BID, said he is trying to address the concerns raised by Fisch.

Since two property-based BIDs cannot represent the same area, either a compromise will have to be reached or one of the BIDs will have to drop its formation or renewal effort.

Councilwoman Jan Perry, who represents the area, said last week she is trying to get the two sides to agree to enter a mediation process run by the City Attorney’s office.

A similar mediation effort may be required for another BID dispute on the east side of downtown, focusing on a straightforward boundary dispute.

The Downtown Industrial District BID’s effort to expand is running afoul of the Little Tokyo Business Association, which has been trying for 10 years to form a merchant-based BID for the entire Little Tokyo area. Only in the last few months did it garner a sufficient number of petitions from tenants to file for approval from the council.

Downtown Industrial BID executive director Tracey Lovejoy said more than half of the property owners in that five-block stretch have already signed petitions agreeing to be part of his expanded BID.

“My property owners are very concerned: they don’t like the programs that the Little Tokyo BID is putting forward,” Lovejoy said. “Those programs are more marketing and promotion-oriented and my property owners want maintenance and security services.”

In the middle are a couple of small shopping plazas and a medical building, which could face the prospect of being assessed twice for two different BIDs. A property-based BID and merchant-based BID can co-exist in the same area, since technically different parties are assessed. But in reality, much of the cost of property-based BIDs are passed on to tenants.

Garcetti said that if the mediation process fails to yield an agreement, a change in state law might be required to change the voting approval threshold for the merchant-based BID.

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