A lawsuit against the city of San Diego alleges business improvement districts are not run properly and are not being transparent about where taxpayer money is going. NBC7’s Megan Tevrizian reports.
A new lawsuit against the city of San Diego alleges its business improvement districts are not run properly and the city is not being transparent about where taxpayer money is going.
Cory Briggs, an attorney for San Diegans for Open Government, is behind the lawsuit.
There are 18 business improvement districts (BIDs) in San Diego. A BID is a geographically defined area in which businesses are required to pay an additional tax to fund projects, events or improvements within the defined district.
According to Briggs, BIDs started off as a good way for businesses to fund things that go above and beyond what the City would normally provide for the community. “Small businesses coming together and saying, ‘Hey look, we want to charge ourselves a little bit of money and have that money as a pool to promote things that are unique to us,'" he said.
But Briggs said many of the BIDs in San Diego now have morphed into slush funds.
“You have these nonprofits that are run by just a few businesses in the community who control the budgets every year,” Briggs said.
Diane Faulds, a small business owner in Pacific Beach, agrees with Briggs. She said BIDs are unregulated and a way for the city to shift responsibility away from itself and onto the backs of small business owners.
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“It’s another way of kicking the can down the road, or the responsibility down the road, to someone so that they can’t be liable for the problems that the businesses are clamoring for,” Faulds said.
The city of San Diego would not comment specifically about these allegations because of pending litigation. Calls and emails to the City Attorney’s Office were not returned. However, in a statement the city explained BID assessments, which total about $1.52 million a year from 15,000 businesses, are collected by the city treasurer at the same time and manner as the city business tax.
Without the city of San Diego paying for some of these services, Briggs said it frees up money in the city’s general fund. That is potentially a good thing, he said, if the city is transparent on how that excess taxpayer money is being spent.
“The city has simply taken these new taxes and used them to pay for the minimum that the public would normally pay. When you ask yourself, 'What happened to the money that would normally help us make those minimums, where did it go?’" Briggs said he doesn’t get a straight answer.
Briggs told NBC 7 he’s asked the city of San Diego where the excess money was spent, and the city hasn’t shown him any documentation on how they spent the money.
Sara Berns, the executive director of Pacific Beach’s BID, Discover PB, told NBC 7 in a statement that “BID assessment dollars make up only about 1/3 of our budget which we use to leverage more dollars to put back into the community.” See the City’s and Bern’s full statements below:
Read Berns’ full statement here:
"BID’s are managed by non-profits who’s missions varies from neighborhood to neighborhood. Speaking on behalf of Discover Pacific Beach we have a variety of programs that help to promote and improve our business community including, beautification, special events and promotions, and advocacy. BID assessment dollars make up only about 1/3 of our overall budget which we use to leverage more dollars to put back into the community. We support small businesses through newsletters, marketing, neighborhood brand identity and special events. We provide some beautification services above and beyond basic City services and consistent around community identity. Staff time is used to administer programs such as the PROW (public right of way) program and assist businesses in navigating permitting, financing and logistical resources. According to the attached report most BID members receive greater than a 5:1 return on investment to their annual assessments. Business Improvement Districts do not replace basic City services but provide special benefits to the members within the district that are above and beyond what the City provides."
Read the city of San Diego’s explanation of BIDs:
"The City of San Diego's BID program, the largest tenant-based program in the state of California. The program dates back to 1970 with the creation of the Downtown Improvement Area, California's first metropolitan downtown district. Since that time, the small business community and the City have created 18 active districts.
Please note that state law allows for BIDs to be formed and the City to levy and collect assessments on behalf of the BIDs that are formed for improvements and activities that benefit the assessed businesses. They provide business area merchants with the resources to develop marketing campaigns; increase awareness; and enhance public improvement projects in partnership with the City, facilitating business attraction and retention and commercial neighborhood revitalization. BID assessments are collected by the City Treasurer at the same time and in the same manner as the City's business tax; approximately $1.52 million annually from 15,000 businesses."
