Author:Desai, Saahil
Position:Business improvement districts

To get to work at the Washington Monthly each morning, I walk west on P Street, past stately mansions and row houses that are home to well-to-do urban professionals, then cut south to Connecticut Avenue across Dupont Circle, a grassy roundabout with park benches surrounding a marble fountain. The neighborhood around Dupont Circle teems with wealth and history, but that's not what you see in the park. Water flows from only one of the fountain's three spouts. Especially on weekends, the trash cans fill to the brim, and excess garbage swirls in the wind like tumbleweeds. The park is infested with so many rats--by one measure, more than a thousand--that someone created a satirical Yelp page for the "Dupont Circle Rat Sanctuary."

For lunch I sometimes head two blocks farther south on Connecticut to Farragut Square, a park about the same size as Dupont Circle. There, flowers bloom in manicured beds, litter is quickly scooped up by workers in yellow jumpsuits, and local office workers on park benches type away on their laptops using the park's public wi-fi.

Just a half mile separates Dupont Circle from Farragut Square. So what explains the difference between the two parks? Different management. While Dupont Circle is directly overseen by the government (in D.C., that means the National Park Service, which has a $12 billion maintenance backlog), the city has handed the job of maintaining Farragut Square to a private entity called the Golden Triangle Business Improvement District. (Golden Triangle is the name that's been given to a forty-three-square-block section of downtown D.C. that surrounds Farragut Square.) Business improvement districts, or BIDs, are a form of governance that didn't exist fifty years ago but has spread across urban America with increasing speed. They are to commercial neighborhoods roughly what homeowner associations are to residential neighborhoods. That is, they are nonprofit entities controlled by local landlords that provide planning and supplemental municipal services to the area, funded by a tax-like fee that the landlords levy on themselves.

The building owners aren't spending this cash out of the kindness of their hearts--it's a thinly veiled scheme to jack up property values by making the area more desirable. Golden Triangle has succeeded at both: property prices have soared, and the quality of life in the area has improved. Golden Triangle spends upward of $2 million annually to hire street sweepers and "ambassadors" who roam the streets on Segways to guide lost tourists and keep an eye out for crime. Last year alone, the BID removed more than 64,000 bags of litter. To bring some character to this otherwise antiseptic slice of downtown D.C., Golden Triangle screens movies on the Farragut Square park lawn and installs public art: currently, six sculptures from Burning Man, the Nevada art and culture festival, are scattered throughout the area. From my office, I can spot landscapers planting flowers in the median and a woman in a "HOMELESS OUTREACH" T-shirt sitting cross-legged in conversation with a panhandler.

Results like these help explain the growing popularity of BIDs. New York City has the most, with seventy-five, more than half of which were created in the past two decades. D.C. has ten, and 70 percent of people who work in the city work in an area controlled by one of them. But BIDs aren't limited to the handful of thriving American cities--half the nation's roughly 1,500 BIDs are in cities of fewer than 100,000 people.

Despite their ubiquity and power, BIDs are largely invisible to the public--even to those who live and work in the zones they control. Part of the reason is that they tend to work so well. They are better able, or at least more willing, to make places more interesting and inviting than city governments typically are. But if you're like me, you're probably thinking that there's got to be a downside to outsourcing large swaths of cities to property-owning elites. And you're right. By hiking up property values, BIDs drive up rents, making office and retail space increasingly unaffordable for nonwealthy tenants. It's like gentrification, but with a crucial difference: whereas the people who lose out from gentrification are mostly low-income, minority residents priced out of their rental apartments, neighborhoods run by BIDs are largely commercial, so there typically aren't that many residents to displace. Rather, the main victims of BIDs are small businesses that can survive only if the rent on their offices or storefronts isn't too high.

In most cities, these businesses tend to be modest retail stores, like corner groceries, auto repair shops, family-owned restaurants, and neighborhood accountants and dental practices. In D.C., where the dominant industry is politics, the equivalent firms are modest nonprofits. These include obscure professional groups, like the National Assembly of State Arts Agencies (yes, a real entity, located a few floors above the Washington Monthly), or mission-driven outfits like the Washington Legal Clinic for the Homeless or the National Whistleblower Center.

For decades these operations have seen their rents climb from competition for office space with the creeping expansion of white-shoe law and lobbying firms representing wealthy corporate interests. BIDs have juiced that process by further helping elevate property values to the point where landlords-many of them multinational corporations--are vastly upgrading their properties with the aim of attracting higher-paying tenants and, ultimately, flipping the buildings for a nice profit. Each time an older, lower-rent downtown office building is converted to luxury status, it bumps up rents for the nonprofits competing over...

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