Program Profile: Business Improvement Districts (BIDs), Los Angeles (Calif.)

This is a nonprofit organization created by neighborhood property owners or merchants to provide services, activities, and programs to promote local improvements and public safety. The program is rated Promising. The treatment areas experienced statistically significant reductions in overall crime, serious crime, less serious crime, and arrests compared with the matched control group areas.

A Promising rating implies that implementing the program may result in the intended outcome(s).

A Promising rating implies that implementing the program may result in the intended outcome(s).

Program Goals

A Business Improvement District (BID) is a nonprofit organization created by neighborhood property owners or merchants to provide services, activities, and programs to promote local improvements and public safety. The BID is a discrete geographical area, and all property owners or merchants within that area are charged an assessment to fund BID–determined services and activities. The amount of the assessment largely depends upon what the BID collectively decides are the activities that will best meet its priorities. More than 1,000 BIDs have been formed in communities around the country.

Services Provided

In areas where problems such as crime and disorder are evident, BIDs represent a means for facilitating collective action. Through levied assessments, BIDs enable groups of property owners to pool their resources and contribute to the cost of services that they may not be able to afford by themselves.

BID expenditure is largely dedicated to paying for services that contribute toward improvements to the outside environment of the locale in which they are situated. Such services include security patrols, maintenance of sidewalks, graffiti removal, marketing of local businesses, parking and transportation management, and capital improvements, such as improved lighting. The precise package of services contracted by any one BID will vary, as the services selected should be tailored for local problems. These activities are intended to have positive effects on crime and disorder and the prosperity of businesses in the area.

Program Theory

Studies that have evaluated BIDs discuss a number of relevant theories of crime causation, including broken windows theory, opportunity theories, social disorganization theory, and collective efficacy, as well as theories of collective action (Brooks 2008).

Additional Information

The formation of a BID is voluntary, but there can be a legal process associated with its establishment. BIDs are usually chartered by State legislation, and local governments regulate them. For instance, California passed a law in 1994 that allows for the taxation of property owners to fund neighborhood improvements. The city of Los Angeles then set up an administrative infrastructure to oversee BIDs; the city provides district formation activity guidelines, and organizations must complete a three-stage process in order to become a BID. To form a BID, the majority of property owners must agree to it, but once formed, there is additional taxation for all property owners in the area. This is legally binding. The city reviews mandatory financial reports and has the right to shut down a BID if it is out of compliance with its proposed service plan.

BIDs are not permanent institutions. Often, an advisory committee of property or business owners provides governance to the organization.

Study

Brooks (2008) used a quasi-experimental design to assess the impact of Business Improvement Districts (BIDs) in Los Angeles, Calif., on crime rates. In this study, using a fixed effects regression approach, yearly counts of crime and arrests for Los Angeles as recorded by the police—aggregated to the police reporting district level—were modeled against membership of the treatment group or control. Different regression models were tested, using a series of control groups to examine the robustness of the study outcomes. These control groups were defined in different ways, so that:

1. Treatment groups were compared to all other police reporting districts, of which there were a total of 1,009.
2. Treatment groups were compared to those areas that nearly formed a BID (that is, they began the process but did not complete it).
3. Treatment groups were compared to those police reporting districts that were contiguous to BIDS.
4. Finally, control groups were identified—using propensity score matching—as areas that would have a similar demand for BIDs as the actual BID areas, based upon a range of pre–BID characteristics that included levels of crime, physical layout, and sociodemographic variables, as measured by the Census.

For the CrimeSolutions review of this study, the focus was on the outcomes that compared the BIDs treatment areas with control groups identified through propensity score matching. There were 30 BIDs, comprising 124 police reporting districts. In the regression model, the unit of analysis was the count of crime per year for each reporting district. Data was available for the period 1990–2002. For the entire interval, there were 1,612 observations at the reporting district level for the treatment group (620 before and 992 after intervention). The number of observations ranged from 1,716 (the comparison with those police reporting districts that were located in areas that were almost BIDs) to 11,505 (the comparison with all reporting districts.)

The units of observation were not aggregated to the periods before and after intervention, or for a long series of time periods, but were instead aggregated for each of the yearly intervals between 1990 and 2002. Thus, the observations were for each police reporting district for each year for which data was available. The length of the evaluation period varied, depending on when the BID was formed, from 1 to 8 years.

Study

Cook and MacDonald (2011) used a quasi-experimental design to assess the impact of BIDs in Los Angeles on crime rates and provide a cost–benefit analysis. In this study, using a fixed effects regression approach, yearly counts of crime and arrests for the city of Los Angeles as recorded by the police—aggregated to the police reporting district level—were modeled against membership of the treatment group or the remainder of reporting districts in Los Angeles. There were 1,072 police reporting districts in this study. Data was analyzed for the period 1995–2004. The analysis primarily dealt with robbery, assault, burglary, and auto theft, as these crimes are more likely to occur in public settings.

The study analyzed data on 30 BIDs; these were reported to cover 179 police reporting districts. The unit of analysis was the count of crime in the reporting districts per year. As data for 12 years was analyzed, there was a total of 2,148 observations for the treatment areas. All reporting districts that did not contain a BID comprised the comparison group; there were 893 such reporting districts. For these areas, there was a total of 10,716 (893 districts x 12 years) observations over the 12-year interval. A fixed effects model was used to estimate the influence of unmeasured variables, but the comparison group was not formed in such a way as to ensure equivalence with the treatment group.

The authors conducted a dose-response (and other) analysis to test the issue of causality; the results support the interpretation that observed effects may be attributed to the intervention. The length of the evaluation period varied depending on when the BID was formed, and varied from 3 to 8 years.

Brooks (2008) estimated that Business Improvement Districts (BIDs) spent $21,000 to avert one violent crime; this amount is substantially lower than the social cost of a violent crime ($57,000). This is a conservative estimate, since it attributes all BID expenditures to the reduction of violent crimes, and thus ignores the impact of BID spending on quality-of-life crimes.<br><br> Cook and MacDonald (2011) conducted a cost–benefit analysis of BIDs in the Los Angeles, Calif., area. The authors found that an additional $10,000 per neighborhood spent by BIDs on private security reduced the average number of crimes per neighborhood by 3.37 and the number of arrests per neighborhood by 1.65. They calculated that the social benefit of crime reduction is a large multiple (about 20) of private expenditure.

Diffusion and Displacement

Brooks (2008) compared the change in crime in the treatment areas with the changes in the adjacent areas that were not a part of the Business Improvement Districts (BIDs) and in the rest of the city, to determine if crime had just been displaced from the treatment areas to adjacent areas. The change in the treatment areas relative to the adjacent areas was not statistically significantly larger than the comparison between the treatment areas and the rest of the city, suggesting displacement was unlikely to have occurred. Cook and MacDonald (2011) also examined whether the timing of implementation was associated with changes in counts of crime in the police reporting districts that surround the BID areas. No statistically significant differences were observed, suggesting that crime was not displaced by this type of intervention.

These sources were used in the development of the program profile:

These sources were used in the development of the program profile:

City of Los Angeles Office of the City Clerk. N.d. “Business Improvement Districts.” Accessed Feb. 23, 2011.

Cook, Philip, and John MacDonald. 2010. Public Safety Through Private Action: An Economic Assessment of BIDs, Locks, and Citizen Cooperation. Cambridge, Mass: NBER working paper 15877.

Holter, Darryl. 2002. “BIDS: A Quiet Revolution in Urban Management.” California Policy Options paper 943. Los Angeles, Calif.: UCLA School of Public Affairs. Accessed Feb. 23, 2011.

MacDonald, John, Ricky Bluthenthal, Daniela Golinelli, Aaron Kofner, Robert J. Stokes, Amber Sehgal, Terry Fain, and Leo Beletsky. 2009. Neighborhood Effects on Crime and Youth Violence: The Role of Business Improvement Districts in Los Angeles. Santa Monica, Calif.: RAND Corp. (This study was reviewed but did not meet CrimeSolutions criteria for inclusion in the overall program rating.)