BID-ding for more

From the pages of In Business magazine.

Face it, Madison, we’re spoiled.

Thanks to the combined benefits of a world-class university and a state Capitol, among other attributes, Madison has been no stranger to accolades. So far in 2017 the city has been ranked in the top 10 of a variety of national surveys, from Best Small City in the U.S. (#10), to Super Cool U.S. Cities (#2), to Alternative Cities for Young Professionals to Live (#1).

There are dozens of others, and 2017 is no anomaly.

At the heart of the city, State Street connects the University of Wisconsin – Madison campus to the State Capitol on an isthmus that sits between Lakes Mendota and Monona. It’s hard to imagine a prettier setting, though some may argue about downtown’s best attributes: Is it the shopping, the restaurants and bars, the politics, the commerce, or the delightful quirkiness?

Indeed, it may be all of those, but beyond those characteristics there’s another force at work: Madison’s Central Business Improvement District, affectionately known as “the BID.”

A BID explained

Established by state statute, a BID allows the owners of two or more private and contiguous properties or businesses to cooperate and share costs to address problems or realize economic opportunities. BIDs can be any size and are governed by a board of directors. They have a budget and establish ongoing funding through special assessments to those within the BID. There are thousands of BIDS around the country, each tackling a variety of needs and issues.

Milwaukee, for example, has 32 business improvement districts, more than double the number of districts per capita as Minneapolis, according to a July story from Milwaukee Journal Sentinel writer Tom Daykin (“Milwaukee is No. 1 in improvement districts. But measuring their effectiveness is hard.”)

In Madison, there’s just one.

The past

It took several years, but Madison’s first and only Central BID was approved by the City Council in 1999 and formed by private-sector leadership with a mission to keep businesses within its boundaries healthy, vibrant, and worthy of all those aforementioned accolades.

Sue Springman, senior project manager at Mullins Group LLC, was instrumental in its creation. “I’ve been involved in Downtown Madison Inc. (DMI) for years. Back then, I was on a committee to find the next executive director when Susan Schmitz was hired,” Springman explains. “I told her we needed to include a BID because I knew it could benefit the city.”

Schmitz, DMI’s current president, remembers it well. “I was told that within a year I had to form a BID. I thought, ‘A what?’” But as a former retailer, she quickly grasped the BID’s potential, and as a new DMI staff member she also had the time and resources needed to do the required legwork.

As Schmitz describes, BIDs are assessment districts where property owners go to the city (or other taxing authority) and say, ‘We want you to tax us this way.’ The city adds the clearly marked assessment to the property owner’s tax bill. When the city receives the tax payment, it redirects the dollars back to the BID where a board of directors oversees spending. “BIDs are really very simple. That’s the beauty of them and the city has no control over a BID’s money,” Schmitz emphasizes.

Madison’s Central BID encompasses the greater State Street and Capitol Square area, including the 100 blocks off the Square. It covers about 200 property parcels and approximately 370 street-level, consumer-oriented businesses. Property owners within the BID are taxed accordingly, even through ownership changes, because the assessment follows the property, not the owner. Residential property and nonprofit businesses do not pay an assessment.

“For the city to approve a BID, the private sector had to initiate the idea and vote to approve it. That was the key thing,” Springman says. With State Street and the Capitol Square being the heart of the retail district, she firmly believed that a BID would pump energy into the area. The question was, could the big property owners be persuaded to assume an additional tax?

Their first assignment was to approach all the property owners within the designated BID boundaries and try to convince them to pay an additional tax every year, based on their linear footage and street frontage. “They were like, ‘What? You want to tax us again?’” Springman recalls.

Schmitz was undeterred. “Back then, nobody knew what BIDS were, so that was a real challenge.” Most of her time was spent educating and sharing examples from other BIDs around the country at a time when she says there was some local pushback.

Springman offers more of a historical view. Back in the late 1960s and early 1970s, there was some tension around putting a lot of focus on the downtown, she says. Many people didn’t think it was worth it. “I used to go around the city speaking to service clubs and would get booed! But that was also a time of student unrest, and Madisonians were angry. Thankfully we moved beyond that years ago!”

“Some thought a BID was a conspiracy to bring in chain stores,” Schmitz adds.

In fact, a BID did the exact opposite because it encouraged business and property owners to be more locally involved.

“When we wanted to start an ambassador program, there was a voice out there that believed it was a conspiracy to have narcs on the street! I had to dispel that,” Schmitz laughs. “It was kind of funny.”

Springman and Schmitz argued their case all around town. “We went to all the property owners,” Springman said, “to make sure everyone was involved, from Urban Land Interests, to Hovde, Mullins, Fiore, Ripken and ma and pa shops. It was very important that the larger property owners be on board because they represented over 50% of the total ownership downtown and they would be paying the bulk.”

In the end, Schmitz said the businesses finally realized the benefits a collective voice would bring. “Frankly, I think they were tired of being approached every year by various organizations to support holiday events or other causes.” As is usually the case, 20% of the businesses would regularly participate, she explained, yet everyone would benefit. The BID ensured that every business would contribute a fair share and that all would benefit.

To sweeten the pot, Madison’s Central BID was designed with a five-year sunset clause. “We promised the property owners that we wouldn’t be around forever if they didn’t like what we were doing,” Springman says.

It has never been voted down.

(Continued)

The present

Although the Central Madison BID shares office space with DMI, the operations are entirely separate. Tiffany Kenney is the BID’s current executive director. “We are not part of DMI,” Kenney clarifies. “We share office space, rent, and a receptionist. They administer our HR benefits, but we could just as easily have gone elsewhere.”

It’s a unique organization, she admits, and not officially a 501(c)4 because the money is collected through the city’s tax rolls. The BID board approves all expenditures, and every bill it pays is administered through the city.

The BID’s executive committee, comprised of property and business owners, provides additional direction and oversight. Presently, the Madison’s Central BID encompasses two full-time staff, two part-time programming coordinators, one part-time administrative assistant, six hourly ambassadors, and about 20 volunteers.

Kenney took the reins as BID executive director in 2016 and is quickly making an impact. The focus has changed somewhat, she explains. “We want the BID to be a communications hub or promotional engine so our people understand that downtown is theirs.” The organization directs information to businesses relating to everything from events, to street closures, safety issues, and parking.

Property owners are assessed $15.60 per linear foot to support the BID, and residential properties or nonprofits located within the BID are not assessed.

How or whether the assessment gets passed along to building tenants is up to the property owners. “We don’t want to regulate business,” Kenney states. “We trust that property owners are looking out for what they believe will be the best use of their space. We want to work with the mayor to incentivize and encourage retail, but we don’t want to regulate it.”

Kenney is locked in on four initiatives: first, to market and promote downtown; second, to create a welcoming environment downtown; third, to add special events that attract people to the downtown area; and finally, she says, “to keep the good things we’ve always had!”

The BID puts on holiday festivities, such as the Holiday Open House and Downtown Madison Family Halloween every year, and supports other goings-on like Cars on State and Maxwell Street Days. Its ambassador program helps people navigate the area, and Kenney has championed new events like the Night Market, which drew more than 5,000 people to each of its three dates in 2017, and “Summer in YOUR City Café” at the top of State Street on weekdays. A new holiday lighting ceremony, “Shine On Madison,” is planned for Saturday, Nov. 18 at 6:08 p.m.

The BID also prints and distributes 150,000 copies of the annual Downtown Map & Guide which lists 370 businesses, organizations, and destinations, and it maintains and hosts the visitdowntownmadison.com website.

Springman, the BID’s vice chair, lauds its success. “Now, everyone has equal access to participate. We have co-op advertising programs, a Facebook page, and we’re active on social media.”

Kenney is also encouraging more retail along State Street at a time when retail is struggling in general. “The property owners I work with want a diverse mix downtown. They want cool retailers,” she says, reminding that at one point, Madison had 40 record stores.

“We won’t ever have that again,” she admits, “but perhaps we can find a middle ground. Each year we do a summary of the chain-versus-local situation, and 80% of retail downtown is still local.”

As a collective voice, Madison’s Central BID recently urged the city to enact a sandwich board ordinance allowing signs on sidewalks outside of businesses. “I’d like to think that our letters to alders and our voice had some influence on the city’s decision,” Kenney says. “We agreed there should be rules, and we’ll work with business owners to make sure they know when the new rules go into affect.”

Matt Mikolajewski, director of the city’s economic development division, has been involved with the BID for years, including as a board member. “It has brought great benefits to the city,” he acknowledges.

Every BID is different, he says. “Our BID is focused on helping retailers and restaurants on the ground level, and as a result the focus has been on marketing and creating events to draw people downtown.” In contrast, Milwaukee’s Third Ward has a BID that owns and operates two downtown parking garages. It’s all about the need.

Mikolajewski says a BID works best when it partners with a city. “The BID is better at marketing, while there are some things a city does better. In the case of the holiday snowflake lights, for example, the BID purchases them and the city installs them, so it’s a true joint effort.”

Because Madison’s Central BID is funded through a special assessment that the property owners agree upon, Mikolajewski says the city takes only a fiduciary role. “But we can also compel people to pay because we could take action if they didn’t.” Fortunately, he adds, “a lot of our downtown properties are owned by good commercial real estate firms.”

(Continued)

The future

State Street and the Capitol Square’s uniqueness ensure the district will forever evolve, Springman agrees, but retail must follow suit. She hints at pop-up businesses or wayfinding as examples.

“State Street is a mile long! People need to know where the stores are since they can’t drive cars down the street.” She’d like to see a parking app, for example, that displays all the available private and public parking in real-time, and with more and more people choosing to live downtown, she wonders how downtown retail can meet their basic needs for things like socks or laundry detergent.

“Everything has changed and we need to stay current,” Springman insists.

In 2018, she will become board chair of the Madison Central BID.

Kenney has her own list of wants. “A big challenge is letting people know about the work we’re doing,” she says. “I don’t think they understand that these property owners willingly pay this money. They don’t have to. They could say no, but they don’t want to say no.”

She half-jokes that she’d love to change the organization’s name, as Madison’s Central Business Improvement District, aka “District No. 1,” doesn’t exactly roll off the tongue.

“It’s really hard to market downtown Madison and not get confused with DMI,” Kenney admits.

She’s also encouraging more retail, particularly to coincide with the results of a retail marketing study the city recently conducted that suggested that people visiting downtown need but a slight nudge to spend money downtown. Perhaps that means offering more game-day specials, Kenney suggests. “People would also like to see three stores in a row, rather than two,” she adds, “and they’d like to see stores for kids and a pet store.”

Room for BID No. 2?

With all the success of Madison’s Central BID, why aren’t there more BIDS in the city? After all, Greater Madison includes plenty of thriving business districts — Regent Street, Monroe Street, Park Street, and Williamson Street to name just a few.

“Nothing prohibits communities from launching BIDs,” notes Kenney. “It just takes properties that are contiguous and property owners who want to pool their resources to get some type of work done.” It also takes a lot of setup time and an ability to support a staff.

“BIDs need to be organically created by the property owners who pay the assessments voluntarily to fund them,” Springman reminds. “It’s their decision, but we’d be happy to offer advice.”

Admittedly, Madison’s BID came at the right time, Springman says. Susan Schmitz came at the right time, too. “As you know, timing is everything,” she smiles.

Mikolajewski sees no obvious barriers to more BIDs. “It just becomes a question of if and when a group of business owners believe they need to flip from a membership association to more of a formal business improvement district,” he explains. “You need buy-in from the property owners and the business owners together because most of the commercial leases are structured in the triple net format, so most expenses get passed on to tenants.”

Schmitz has her own take. “I think people think all BIDs need to look like State Street and the Square. No! Willy Street or Monroe Street could do whatever they wanted, and I hope it happens in the future. There are so many advantages to it, and they can be designed however they want. I don’t think people really understand the beauty of a BID and how entrepreneurial they can be. But it has to be their idea.”

In her opinion, the Regent Street area, between Park Street and Camp Randall Stadium, could be ripe for such an arrangement. “I think it’s ready to go to another level.”

Schmitz will retire from DMI at the end of the year, more than confident that the BID that she helped launch nearly 20 years ago will continue on in excellent hands. “I really believe in BIDs because they are so good for communities, and it’s been fun to watch this one grow. In a strange way, I feel like I gave birth to it because I care about it so much.”

In fact, she admits, it’s her favorite subject.

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