At Jacksons we have assisted a number of clients in successfully establishing BID companies in order to invest in specific projects and initiatives to help grow and promote the area in which they operate their business. This week’s blog will be considering the pros and cons of BID companies and the affect they can have on a business area.
It is well documented that times are tough on the high street; the rise of online sales, coupled with the large increase in business rates last year have added further woes to many micro and SME businesses trying to survive in a challenging economic climate.
However, during this turbulent period, many town centres and business districts have been experiencing a quiet and growing resurgence thanks in part to the introduction of BID companies. BID stands for Business Improvement District, or BID for short. The BID is a specific area where businesses work together to invest in services, special projects and events. There are now more than 280 across the UK.
There is no limit on what projects or services can be provided through a BID. The only requirement is that it should be something that is in addition to services provided by local authorities.
In order to fund the activities of the BID company, a levy is charged on all business rate payers in addition to the standard business rate bill.
BIDs are established by ballot; each BID must gain a majority of the votes cast, as well as a majority
of the Rateable Values (RV) of all those businesses on the non- domestic rates list for each BID area.
The relevant local authority, or its nominated agent, runs the ballot neutrally and each BID company lasts for a maximum period of five years. In order to continue beyond each term, a renewal ballot is also required.
The BID is managed by the BID company. This is often a private company and most bodies are not for profit companies.
THE BID company is responsible for developing and implementing the proposal which sets out how the BID will operate. They will provide the relevant local authority with this proposal along with the business plan (this must include the estimated cash flow, predicted revenue and financial management arrangements for the BID company.
In return, the local authority will manage the billing and collection of the levy and will hold the levy in a ring fenced account on behalf of the BID company.
The North East has already experienced several success stories from local BID companies, NE1 Ltd, the BID company for Newcastle City Centre, has been responsible for initiatives such as Alive after Five, the Quayside Seaside and Newcastle Restaurant Week. NE1 currently has 1400 business members and has just been re-elected for a third five year term.
In addition, during its first term Sunderland BID has successfully instigated initiatives such as Restaurant Week – held twice yearly – and introduced street rangers, who can rapidly respond to cleaning and maintenance issues. It is also hoping to be elected for another five year term in order to ring fencing an investment of around £3million.
Of course, some BID companies haven’t been so lucky and many have fallen by the wayside. Since 2012 a number of BID companies have already tried and failed to improve their local area. However, now a fascinating new trend seems to be emerging where new BID companies are being set up in tourism, food and drink, flood defences and industrial BIDs, which are now becoming players of importance and are allowing new options for businesses in areas which might not be able to support a traditional BID.
Here at Jacksons we have helped a number of local business areas set up their BID companies. From the insight we have gleaned one of the key elements to success appears to be the ‘buy in’ from the relevant local authority. Some of the most successful BID companies we have seen have resulted from a close link between the BID company and the local authority, with the two parties often sharing personnel or having a linked individual to help the businesses involved in the BID to produce the relevant proposal in addition to the services earmarked by the local authority.
If you would like to discuss establishing a BID company within your local area please get in touch. Contact Louise White at mailto:firstname.lastname@example.org or call Louise on 01642 356 500. We would be happy to help.