BID proposal would corral landlords

The Legislature is trying to tighten the state’s business improvement district law, sending Gov. Deval Patrick an economic development bill that includes a little-noticed provision preventing commercial landlords from opting out of an approved BID. Officials say the change, if accepted by Patrick, could provide a financial lift to business improvement districts across the state, including one at Downtown Crossing in Boston and one proposed for the Rose Fitzgerald Kennedy Greenway.

Business improvement districts are private groups of commercial property owners who voluntarily agree to subject themselves to property tax surcharges that are used to fund maintenance, security, and marketing initiatives above and beyond the levels municipalities typically provide.

The Legislature’s BID bill, passed in the flurry of activity that accompanied the end of the Legislature’s two-year session, eliminates the ability of property owners to opt out of a BID after one has been created. If Patrick signs it, the bill would require participation from all commercial properties inside new a BID district. In BIDs that are already operating, non-participants would be forced to accept surcharges when district members pass renewal votes, as they’re required to do every five years.

“I heard, from all over the state, that businesses that had joined a BID initially were, at a later date, opting out,” says Sen. Gale Candaras, the lawmaker who inserted the BID language into the Senate’s version of the economic development bill. “There were businesses benefiting from the work of the BID, from dues others were paying. If they’re benefiting, they should be participating.”

Under state law, would-be BIDs need the support of at least 60 percent of the commercial owners in a proposed BID district, and owners representing more than half the commercial property value in the district. However, after hitting those thresholds, the state allowed commercial owners to opt out of paying the BID surcharge.

The system, Candaras argues, enables free riders to benefit from BID programs without paying for them. In Boston, for instance, prominent landlords like Equity Office Properties and Tishman Speyer don’t participate in the Downtown Crossing BID. Boston Mayor Thomas Menino lobbied the Legislature to eliminate the BID opt-out provision.

By contrast, New York’s BID law forces participation from every business located inside a BID district, whether or not the businesses supported the BID’s creation. New York takes it a step further, putting the onus on BID opponents to produce the votes to stop a proposed BID.

Candaras pushed the BID language at the request of her Springfield constituents, but it would dramatically alter the calculus surrounding the proposed Rose Fitzgerald Kennedy Greenway BID in Boston.

The Rose Kennedy Greenway Conservancy, the nonprofit that maintains the state-owned Greenway, is under intense pressure to ramp up its fundraising, and end its reliance on state funds. The Conservancy is counting on a proposed BID to contribute nearly $2 million per year in revenue toward its strained budget. The Conservancy has run into opposition to a BID, though, and has lowered the amount it hopes to raise from a BID by $500,000. The Greenway BID model remains highly volatile, as the values in the proposed district are extremely top-heavy, concentrated among a handful of perceived BID skeptics. Under the proposed changes to the state BID statute, these landlords could be forced into participating in the Greenway BID.