Business Improvement Districts (BID) were introduced in the in the 1990s and arrived here 10 years later courtesy of the Local Government Act 2003 and the BID Regulations 2004. Loosely speaking, BIDs are concerned with improving the physical environment for businesses in their area.
Depending on the strategy of the particular BID project, the implications of a BID are important for the owners of small to medium size businesses, particularly retail. A BID Company is a company limited by guarantee, which is funded by a levy on businesses, payable to the BID company and collected by the Council. The levy is typically £500 - £1000 payable in addition to business rates. The money raised is then spent on projects identified to improve the conditions of operation, and by implication the profitability, of businesses within the District.
Typical projects include enhanced website facilities for businesses; improved CCTV facilities; the introduction of local “champions” to act as coordinators between areas within the district; paying for, or sponsoring, events that attract potential customers to a district; or decorations/cleaning schemes to make shopping areas more attractive. It will also contribute to the salaries of BID company staff.
However these arrangements can only come into force via a ballot of the levy payers. Two conditions must be satisfied: first, a majority must vote in favour of the BID proposals; second, the aggregate of the rateable values of each business premises of those voting in favour of the proposals exceeds the aggregate rateable value of those voting against the proposals.
The key phrase here is that it is those who vote who count. The concept of the BID Company can be a good one and there several examples nationally where the BID Company, the Council and, most importantly, the levy payers have been happy with the benefits of the scheme.
By the same token, we are aware of schemes where there has been a low turn out of local businesses voting for the BID with the net result that many are surprised by the levy demands which are regarded as an unwanted and unexpected tax. This in turn has led them to scrutinize the benefits being delivered in return for the levy and question the level and frequency of services being provided.
In a situation like this there is no defence to a demand to pay the levy in the Magistrates Court or the Small Claims Court on the basis services are not being delivered. If the BID Company can prove the ballot has been validly conducted the levy is generally payable.
The simplest remedy is for disgruntled levy payers to get on the Board of the BID Company (all BID members entitled to a vote and to put themselves forward for election to the board) and seek to influence the delivery of services. Alternatively they can seek to wind up the BID Company, or read the consultation literature when the BID is renewed (no BID can last longer than 5 years) and vote against the renewal of the BID.
We have recently provided advice to an association representing businesses on the issue of BID dissatisfaction. If you would like any further information or advice on BIDs, please contact Pritpal Singh–Swarn.
This article was first published in NewsBrief, Autumn 2009.
