Over the past few decades, New York City and other major cities have fostered the development of business improvement districts (BIDs) to finance services and streetscape improvements in commercial areas. Despite their increasing use as an economic development tool, little work has been done to evaluate the impact BIDs have on the communities they serve.
Over the past few decades, New York City and other major cities have fostered the development of business improvement districts (BIDs) to finance services and streetscape improvements in commercial areas. Despite their increasing use as an economic development tool, little work has been done to evaluate the impact BIDs have on the communities they serve. To fill this gap, New York Universitys Furman Center for Real Estate and Urban Policy completed an extensive study measuring how BIDs in New York City affect the value of commercial and residential properties in their districts.
The study found that, on average, the presence of a BID increased the value of commercial properties collectively within its borders by roughly 15 percentage points, indicating that BIDs are helping to increase the business vitality and commercial attractiveness of their communities. However, when the impact was measured separately for different groups of BIDs, the study found no change in property values in the smaller BIDs (those with budgets under $263,000), which make up about half of all BIDs in New York City. On the other hand, the large BIDs (those with annual budgets greater than $1.2 million) provided a tremendous boon to the commercial property values in their district.
BIDs are widely touted as a way to increase business activity and boost the commercial success of a neighborhood, said Ingrid Gould Ellen, co-director of the Furman Center and an NYU Wagner Graduate School of Public Service professor. We wanted to test how much of a difference BIDs really make, and whether their investments were being reflected in the property values of the communities they serve. While we expected we might find positive impacts, we did not expect that large BIDs would generate such substantial impacts, nor did we expect to see such a significant difference between the impacts of large and small BIDs.
In addition, the report looked at what effects, if any, BIDs have had on the value of residential property and whether they had generated spillover effects on the neighborhoods just outside of the BIDs. In both cases, no long-lasting impact was found.
The report examined the 44 BIDs that were in existence in 2002, and evaluated the sales prices of commercial and residential buildings in each BID before and after the BID formed. It compared changes in the sales prices of properties within the BIDs to changes in the sales prices of comparable commercial buildings in the same neighborhood but outside the BID footprint.
About the Furman Center for Real Estate and Urban Policy
The Furman Center for Real Estate and Urban Policy is a joint initiative of the New York University School of Law and the Robert F. Wagner Graduate School of Public Service at NYU. Since its founding in 1994, the Furman Center has become the leading academic research center in New York City devoted to the public policy aspects of land use, real estate, and housing development. The Furman Center is dedicated to providing objective academic and empirical research on the legal and public policy issues involving land use, real estate, housing and urban affairs in the United States, with a particular focus on New York City.