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Understanding Business Improvement District formation: An analysis of neighborhoods and boundaries

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  • Meltzer, Rachel

Abstract

Business Improvement Districts (BIDs) provide supplemental services to urban commercial corridors using funds from member assessments. They have become a very popular urban revitalization tool, but their formation is still largely unexplained. Theory implies that BIDs will form if they add to aggregate welfare and if the marginal net benefit of membership is positive. I test this for the neighborhood overall and at the BID boundary. Using unique, micro-level and longitudinal data from New York City, I employ survival analysis methods to estimate the likelihood of a neighborhood forming a BID. I then estimate the likelihood of the marginal property’s BID membership by comparing the characteristics of properties located immediately inside and outside of the BID boundaries. I find that BIDs are more likely to form when there is more commercial space over which the BID benefits can be capitalized and when there is homogeneity in service and spending preferences across properties. BIDs also tend to form in neighborhoods that possess signs of appreciation and growth. Generally, BIDs are more likely to form in neighborhoods with higher valued properties with the exception of very wealthy areas. The BID boundary, however, is comprised of relatively less valuable properties.

Suggested Citation

  • Meltzer, Rachel, 2012. "Understanding Business Improvement District formation: An analysis of neighborhoods and boundaries," Journal of Urban Economics, Elsevier, vol. 71(1), pages 66-78.
  • Handle: RePEc:eee:juecon:v:71:y:2012:i:1:p:66-78
    DOI: 10.1016/j.jue.2011.08.005
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    References listed on IDEAS

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    Cited by:

    1. Miller, Mark V., 2013. "Valuing local collective goods: the case of business improvement districts," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150635, Agricultural and Applied Economics Association.

    More about this item

    Keywords

    Business Improvement Districts; Private governments; Public good provision; Urban revitalization; Economic development;

    JEL classification:

    • H - Public Economics
    • R - Urban, Rural, Regional, Real Estate, and Transportation Economics

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