Photo by: Marc Fader

A customer chooses at Your Bakery, an institution on 86th Street.

When Robert Walsh—a veteran of the city’s first business improvement district, in Union Square—was tapped by Mayor Bloomberg to run the Department of Small Business Services, his marching orders were clear. “My first conversation with the mayor in January 2002 was ‘Grow the program, energize it, and get out of the way as much as you can and let these organizations develop,’ ” Walsh says.

Increasing the number of BIDs, as these groups are called, has been one of the centerpieces of the city’s small-business strategy. And under the city’s current leadership, the number of BIDs has grown from 44 to 64, with 18 of the 20 new groups outside Manhattan.

BIDs are coalitions of property owners in a common district who assess themselves a fee to provide services. The services tend to be custodial, providing janitors and wastebaskets; they may also include security, holiday decoration and lighting, trees and planters, and marketing and promotions. They may solicit new businesses to fill vacant spaces or negotiate with the city over issues that arise.

The Bloomberg administration has championed the BID as an ideal way to help property owners help themselves. Although many business owners and advocates say the BID fulfills an important function, some also believe the city relies too much on BIDs to provide services it should be offering itself. Critics also say the groups can disenfranchise merchants, since landlords wield most of the power and stand to gain the most from the district’s success.

“I think BIDs can be helpful, but they don’t have all the answers,” says Jonathan Bowles, director of the Center for an Urban Future. “I think it’s a mixed bag, and quite often their main goal is really to improve property values. There are all these pressures on small business in New York today, and I think the Department of Small Business Services could probably be doing more to help small business deal with some of these threats.”

Some BIDs have been profoundly unsuccessful, as in Washington Heights, where city officials said earlier this year they could find little evidence that the BID was functioning, and the executive director was removed by the board. For small BIDs with small budgets, the cost of overhead can keep the groups from carrying out their goals. And although business owners who rent their space tend to profit from the improvement of an area, the accompanying rise in property values can end up hurting them if it causes rents to rise out of their reach.

“All these BIDs, they basically represent the real es- tate interests in the neighborhood, not the merchant,” says Richard Lipsky, a lobbyist who has represented several small-business groups. “Today you can’t count on the BID to be an ally, because they’ve been totally co-opted by the city.”

Some of the larger BIDs in Manhattan, such as those in Union Square and at Grand Central, have multimilliondollar budgets. The BID of 86th Street in Brooklyn, which began 10 years ago, has never increased its original budget of $210,000.

BIDs in New York date back to the 1980s, when the city’s budget problems coupled with worsening issues like crime, graffiti and homelessness. Landlords could pool their resources to fix problems that might be keeping customers away that the city could not afford to address. “A lot of it is power of persuasion—getting the property owners to buy in to a vision of where you’re taking the neighborhood and getting them to believe in it,” says Walsh, who led the Union Square Partnership from 1989 to 1997. “It’s getting people together and saying, ‘What do we need?’ And we went out and got that.”

Nearly 30 years later, the transformation of Union Square is striking. Where there were once homeless people sleeping in the park and two dozen vacant storefronts, there is now a hugely popular greenmarket (which predates the BID), a holiday market, a bar-restaurant and new playground inside the park, and high-end stores like Nordstrom Rack and Trader Joe’s.

John Logue, president of the 86th Street BID in Brooklyn, says merchants who privately grumble about the BID should get involved with it. Then, he says, they would see just how much power they could have. Though it’s property owners who pay the assessments and, by charter, make up the majority of the board, other members of the BID are business owners, and one is a community resident. The BIDs can include both national chains and locally owned stores. “Any merchant that feels that it’s property owner–run has not been to a meeting,” says Logue, who owns property, but not on 86th Street. “Our purpose is to keep the area clean, keep it customer-friendly. … We’re all about community, not big business.”

Logue also says the BID has reduced the number of tickets issued to merchants by the city sanitation department. He says the agency understands that litter on the strip is an anomaly and may show more leniency in violations.

In addition to paying for necessary services, BIDs can also negotiate with the city for capital improvements. For example, on 86th Street, a 30-month street reconstruction project was painful, at times, for local businesses. Traffic was rerouted, and store entrances were blocked. Merchants were angry about the project, but Logue says the BID lobbied the city aggressively—and successfully—to do it as quickly as possible. “It was a very efficient reconstruction,” says Patrick Condren, executive director of the 86th Street BID. “BIDs work.”

Rosalie Drago, who received a city grant to do an economic survey of Bay Ridge’s Third Avenue and is now helping merchants on 86th Street in Bensonhurst form a BID of their own, says struggling business owners have a lot to gain from the program. “When there’s money put aside for marketing and streetscape improvement, your retail stores will do better, even the mom-and-pops,” she says. Others strongly disagree.

“By law the majority of every board has to be property owners, and by law they can pass all of these costs on to the little mom-and-pop shops,” says Steve Null, founder of the Coalition for Fair Business Rents. “BIDs were never intended to be on Main Street. This is more political than anything.”