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Unveiling Hidden Districts: Assessing the Adoption Patterns of Business Improvement Districts in California

  • Brooks, Leah

I use the results of a survey on the adoption patterns of Business Improvement Districts (BIDs) in the state of California to begin filling a gap in our understanding of the role and prominence of the broader class of special assessment districts. A BID is formed when a majority of merchants or property owners in a commercial neighborhood votes 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. I combine the survey data with demographic, institutional and political data and find that BID adoption modestly increases in residential heterogeneity and more strongly decreases in a city's year of incorporation, which I interpret as a measure of the importance of the collective action problem in older commercial neighborhoods.

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Article provided by National Tax Association in its journal National Tax Journal.

Volume (Year): 60 (2007)
Issue (Month): 1 (March)
Pages: 5-24

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Handle: RePEc:ntj:journl:v:60:y:2007:i:1:p:5-24
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  1. Alesina, Alberto & Baqir, Reza & Easterly, William, 1999. "Public goods and ethnic divisions," Policy Research Working Paper Series 2108, The World Bank.
  2. James M. Poterba, 1997. "Demographic structure and the political economy of public education," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 16(1), pages 48-66.
  3. Helsley, Robert W. & Strange, William C., 1999. "Gated Communities and the Economic Geography of Crime," Journal of Urban Economics, Elsevier, vol. 46(1), pages 80-105, July.
  4. Epple, Dennis & Romano, Richard E, 1996. "Public Provision of Private Goods," Journal of Political Economy, University of Chicago Press, vol. 104(1), pages 57-84, February.
  5. Nora Gordon & Brian Knight, 2006. "The Causes of Political Integration: An Application to School Districts," NBER Working Papers 12047, National Bureau of Economic Research, Inc.
  6. Leah Brooks, 2006. "Volunteering To Be Taxed: Business Improvement Districts And The Extra-Governmental Provision Of Public Safety," Departmental Working Papers 2006-04, McGill University, Department of Economics.
  7. Eric D. Gould & B. Peter Pashigian & Canice J. Prendergast, 2005. "Contracts, Externalities, and Incentives in Shopping Malls," The Review of Economics and Statistics, MIT Press, vol. 87(3), pages 411-422, August.
  8. repec:hrv:faseco:4553034 is not listed on IDEAS
  9. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416.
  10. Alberto Alesina & Reza Baqir & Caroline Hoxby, 2000. "Political Jurisdictions in Heterogeneous Communities," NBER Working Papers 7859, National Bureau of Economic Research, Inc.
  11. Leah Brooks, 2006. "Does Spatial Variation in Heterogeneity Matter? Assessing the Adoption Patterns of Business Improvement Districts," Review of Policy Research, Policy Studies Organization, vol. 23(6), pages 1219-1234, November.
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