A wealth of anecdotal evidence suggests that, in the wake of tax revolts, cities have responded with a proliferation of special assessment districts which directly link taxes and their local public good beneficiaries. Despite this, there is no systematic evidence on the adoption patterns of these districts, likely because they are not surveyed by the U.S. Census of Governments. This paper begins to fill this gap by reporting the results of a survey on the adoption patterns of one class of special assessment districts, Business Improvement Districts (BIDs), in the state of California. A BID is formed when a majority of merchants or property owners in a commercial neighborhood vote in favor of a package of local taxes and expenditures; once passed, assessments are legally binding on all members of the commercial neighborhood. I find that roughly half of all larger cities in California have at least one BID; among the universe of cities in four Southern California counties, that figure falls to about one-fifth. On the demand side, theory and evidence suggest that BIDs should be adopted in heterogeneous cities to supplement local public goods to neighborhood taste. On the supply side, theory argues that BIDs solve the collective action problem arising in the provision of public goods when the number of group members is large. In particular, older commercial neighborhoods have many landowners who may have trouble coordinating the provision of local public goods, in contrast to the single mall developer who can write contracts to internalize externalities. Combining the survey data with demographic, institutional and political data, I find strong support for the supply-side story, and some evidence that the interaction of supply and demand explain BID adoption.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by McGill University, Department of Economics in its series Departmental Working Papers with number
2006-03.
For technical questions regarding this item, or to correct its listing, contact: (Shama Rangwala).
Related research
Keywords:
Find related papers by JEL classification: R5 - Urban, Rural, and Regional Economics - - Regional Government Analysis H7 - Public Economics - - State and Local Government; Intergovernmental Relations
This paper has been announced in the following NEP Reports:
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)