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Downtown BID meeting gives backers a chance to pitch tax district -- and reveals at least some sources of opposition

Bull-bid Wednesday night's meeting at Rigsbee Hall downtown was a chance for Downtown Durham Inc. president Bill Kalkhof and some of those backing a special taxing district for augmented downtown services to make the case for why property owners in the central city should support the effort.

And over the course of an hour's presentation, Kalkhof, staff from DDI and would-be contractor SGI, and several prominent downtown property owners and residents made their best case for the plan.

They argued that it's the next step forward for downtown; that public monies are tight and demanded elsewhere; that the clean-green-safe services provided through a crew of on-the-street ambassadors would keep downtown more attractive and help orient the growing number of visitors.

Still, he question and answer session revealed that support for the idea isn't unanimous. Several downtown business and property owners -- notably a couple of them whose property investments aren't linked to the downtown renaissance on restaurant, bars and entertainment -- rebelled at the notion of a tax, and several wondered whether surcharges on downtown parking or theater tickets would be a more targeted funding source.

For downtown residents, the impact of the proposal is still in the air.

Some condo owners will now find themselves outside the BID's borders, which were recently redrawn to exclude three properties in the northeastern section of downtown -- just a week or so after DDI staff met with some affected condo owners.

Meanwhile, renters at West Village, American Tobacco and elsewhere may make rent payments each month, but will learn that any approved BID will apply the 7 cent tax surcharge to their registered, tax-eligible personal property, which for most will be their personal automobiles.

Kalkhof and his team kicked off the meeting by stressing some of the key facts behind the BID proposal:
  • 92% of cities as large or larger than Durham have a business improvement district;
  • 51 cities in North Carolina have BIDs, and the only three cities without them -- Durham, Winston-Salem and Wilmington -- are all in the process of creating them;
  • Satisfaction with BIDs nationally lies in their 95% average renewal rate when the sunset periods approach;
  • Downtown Durham's massive growth in residents, employees, retail businesses, and entertainment options is growing the demand for additional services.

Kalkhof noted that downtown's growth was bringing the urban core into competition for new residents and new businesses that were "more sophisticated" in seeking economic development opportunities and quality of life than was imaginable a few years ago, and that the level of services provided in downtown would have to adjust as a result.

But, he cautioned, those dollars aren't available from city and county taxpayers alone, particularly as interest in revitalization leaves the city core and moves to near-downtown neighborhoods and districts like Rolling Hills/Southside, North-East Central Durham and the West End.

"If you believe, like DDI does, that the current level of services is simply not good enough, then we're going to have to have a public-private option to raise up the level of services downtown, and to do so in a way that does not take away from other neighborhoods" near downtown and elsewhere in Durham, Kalkhof said.

"Diminishing resources are a reality for the foreseeable future," he added.

But the longtime DDI leader stressed that finding operational funds for maintaining downtown was the key to avoiding a penny-wise, pound-foolish outcome; after another presenter showed before-and-after photos of a Jacksonville, Fla. streetscape after power washing, Kalkhof morosely reminded the audience that Durham's downtown streetscape was almost four years old, and had yet to be similarly cleaned. "That's a small example of what we're trying to change here."

DDI's Matthew Coppedge said that the additional funds from the BID would be used to create more downtown events -- perhaps, he noted, even a foodie event modeled on the Taste of Durham food program -- as well as renewed tours of commercial and residential real estate agents and prospective businesses and residents.

"We're finding that we're becoming mentioned with the Boulder, Colorados, the Seattles," Coppedge said. "We really want to start marketing that around the country, to say that if you want to start a company, you should be in Durham."

Steve Hilliard from SGI, the company that would be contracted with using BID funds to provide augmented downtown cleaning services and ambassador positions with both visitor information and eyes-on-the-street functions, noted that his firm is the last privately-owned contractor of such services, in dozens of cities around the country.

He showed the kind of equipment that would be in use, from a Segway to an electric cart pulling power-wash equipment to portable vacuum sweepers -- something that even a BID skeptic would say he found appealing.

But Hilliard spent most of his time talking about staffing; he emphasized that all positions would earn at least the living wage recommended by City Council, and said that SGI put an emphasis on reaching out to downtown and near downtown residents.

"We try to look in about a ten mile radius; that's the furthest we go out" from downtown areas, Hilliard said. "It always works best when you have local residents that believe in downtown, understand the mission, and understand what their role and responsibilities will be for making downtown a more clean and safe environment for everyone."

Hilliard also compared Durham's proposed BID to two similarly-sized cities, Augusta, Ga. and Mobile, Ala. The proposed $363,000/year contract with SGI is in line with Augusta ($348k) and Mobile ($471k), with similar levels of employees in each of the districts.

The meeting also saw a chance for four downtown residents and business owners who support the BID -- including American Tobacco's Michael Goodmon, resident Alice Sharpe, developer and business owner Scott Harmon, and longtime retailer Richard Morgan -- share their reasons for supporting the site.

Goodmon noted that Capitol Broadcasting is the largest property owner downtown by tax base and would pay the most per year for the BID, but that he felt it was worthwhile. He noted that downtown had boomed, and was able to draw mobile phone manufacturer HTC's new North American R&D site competing against the likes of Charlotte, Atlanta and Austin.

"We competed for Red Hat's corporate headquarters, 3,000 jobs in downtown Durham. And if you asked me, if you asked a lot of people five years ago if we'd be competing for Red Hat's headquarters, I don't believe a lot of people would have believed that," Goodmon said. He called the BID idea "block and tackling" needed to grow that competitiveness.

~ ~ ~ ~ ~

As Kalkhof turned to the funding and dimensions of the district, though, it was clear that the plan has gone through some not-so-subtle evolution even in recent weeks.

Attractive brochures at the meeting's check-in table highlight the marketing campaign for the so-called "Bull BID," including key position points from proponents and a map of the proposed BID district. (A Bull BID web site is also live.)

Yet there was a noticeable and clear difference between the BID map on the brochures and an easel-mounted map at the meeting. Portions of the northeastern section of the BID have been removed and excised from the proposed district since the proposal was first announced, and since the brochures were printed.

The superblock containing Durham School of the Arts is gone, though that was always a tax-exempt property anyway. More intriguing: the Bullington Warehouse condos on Duke St., Trinity Lofts complex at Trinity and Washington, and Duke Tower hotel/condo sites have all been removed from the proposed BID.

Coppedge told BCR after the meeting that DDI officials had met with condo owners and residents last week to discuss the proposal, though he demurred on the follow-up question as to whether opposition there specifically led to their removal. Coppedge said that DDI's best advice on how to structure a BID was to target properties for inclusion that would receive benefits from the BID, and that the benefits for the excluded properties weren't clear.

For those residents who remain within the BID district -- notably including those living in apartment complexes like West Village, Golden Belt and American Tobacco, but also including properties on the Main St. corridor between -- the BID cost may get passed through in rent over time, but there's also a near term impact.

Kalkhof confirmed at the meeting that the tax applies to personal property bills, like those received by automobile owners from the county.

Residents weren't present in big numbers at Wednesday's meeting, though commercial property owners were. And while representatives of some large property owners like Goodmon and Golden Belt's Gary Kueber have come out in support of the BID, not everyone is on board.

Hank Scherich of Measurement, Inc. spoke near the end of the meeting and signaled his opposition to the idea, reminding those gathered that he was the second-largest landowner in downtown after Capitol's Goodmon, and the second-largest voluntary contributor to DDI.

While signaling his respect and support for Kalkhof, and stating he didn't want to delve into details, Scherich did want to go on record with his opposition to the BID idea.

"This tax increase of seven cents is small, sounds small. It's 12.68% on the City tax rate. It is 5.11% on your overall tax bill. Nobody has gotten a 5.11% salary increase in Durham in a long time. So I think it is a significant tax issue, and that's the reason that I'm one who ... who is opposed to it."

"This is simply one of those things where Hank and I have agreed to disagree," Kalkhof replied.

The DDI president also said that DDI had worked to bring the BID rate in below Raleigh (where it is 21% on top of the City tax) or Chapel Hill (12%). "We have tried very hard to find a number that is frankly lower than all our competitors, but gets the job done so those of you who are paying will see the difference."

Kalkhof added that Scherich is in the "unique position" as owning a large amount of property that his own company owner-occupies, unlike most downtown property owners who are renting out space to third party tenants who'll be able to presumably absorb the cost of the tax via pass-through or rent rates.

Accent Hardwood Flooring owner Genia Smith described a similarly unique position relative to some other downtown property owners in explaining her opposition to the tax. Unlike those who own buildings ramping up to become residential units or restaurants and bars, for whom clean-and-green is key, Smith's operation is relatively commercial in basis.

"If it's truly the restaurants, bars and special events that'll be benefitting from this tax, why can't we put a special tax on the DPAC, on the baseball tickets, on the restaurants and are bars that are really going to be the ones benefitting from this?" Smith said.

She added that the tax is coming during a downtown in her business and housing in general, and that her workforce is down in size one-quarter from where it was almost three years ago; she described her frustration at paying a tax that supports good benefits for SGI ambassador staff, including health insurance, while she's in a position of looking at cutting benefits for her own employees.

"I love Durham. Downtown Durham has really grown and it's become a great place, all without the BID tax. I don't see us sliding downhill because we don't have a BID tax," Smith said.

Kalkhof responded by noting that economic development downtown drives new business for everyone, even new hardwood flooring business for Smith. 

King's Sandwich Shop's T.J. McDermott and Durham County Clerk of Superior Court Archie Smith III also voiced their concern over the proposal, with Archie Smith seconding Genia Smith's suggestion of a surcharge on ballgame and DPAC tickets as an alternative source of fundraising for the dollars that would come from the BID.

Downtown architect John Warasila expressed his bemusement at the idea that BIDs had become an acceptable idea nationally for funding downtown zones instead of seeing municipal funding as a source. "How, as a country, did we get to the point that we had to have BIDs to take care of our downtown?"

"Philosophically, I could not agree more with that," Kalkhof said. "I always them come back to the practical."

"In this case, unfortunately, practically [the status quo] is not working."

Warasila's comments reflected a point Scott Harmon made earlier in the discussion.

"Cities long ago forgot how to manage downtowns. You folks who have been here for many years understand that," Harmon said. "This center city became a wasteland over the years... Cities are trying to catch up, figure out how we take care of" public spaces that are so much different from suburban areas where designated developers at the Southpoints of the world pay for the equivalent of BID services.

The DDI leader thanked the group for what he called a "respectful discussion," adding that he knew there'd be significant additional discussion ahead of a tentative April 18 public hearing by the City Council on the matter.

"We are sensitive to your issues," Kalkhof said. "I'm sure I don't have to tell you all how to contact your members of City Council, and rest assure we will be too," he added, to chuckles from the audience.

A second presentation on the BID is scheduled for Wednesday, March 16 at 6pm at Rigsbee Hall on Rigsbee Ave. behind Rue Cler.

Comments

Reyn Bowman

Comments about "being mentioned" so we need marketing fail to grasp that the reason we're being mentioned is in no small part to the publicity-driven marketing DCVB is doing as Durham's marketing agency.

It would have been better stated that DDI needs a means to harvest more of that interest.

I thought the event was very useful and answered a few questions.

The GronBear

How will oversight be handled exactly? This is a great deal of money that will be directed to what looks like a self appointed board. As residents of downtown, if we aren't happy with the services do we really have any power or option to remedy it? It looks ripe for cronyism. Right now, if you don't like what DDI is doing you don't have to give money. If you don't like how the city is delivering services you can complain to your council member. As I understand it the board overseeing the BID and its monies will be self appointed. I'd like to see City Council appointment authority so at least we have a chain of command should we need to see changes down the road.

Dudek

@The GronBear The BID can be dissolved at anytime by the city council.

UNC's School of Government has a great little FAQ about BIDs listed here. http://sogweb.sog.unc.edu/blogs/localgovt/?p=2146

That said, DDI has done a fantastic job since 1990 of bringing businesses to downtown, and working with the city's office of economic development to get deals done to get West Village, American Tobacco, and many other developments done.

If I had to make a bet, I'd say you never would have moved downtown if it wasn't for the work of DDI. I know I wouldn't have moved to just outside of downtown if it wasn't for the work DDI has done.

Walter Smith

The funny thing is people forget the hood is just around the corner. Downtown is a joke.

Chuck

Walter,

Maybe you haven't been watching the obvious progress that our downtown has made over the past couple of decades by any measure. The proximity of the "hood" has not been the sort of impediment to that growth and development that you seem to anticipate. In fact, one would imagine that the continued growth and development of our downtown could provide stimulus to the close in neighborhoods.

We in Durham try to embrace the diversity presented by communities you may choose to denigrate. Someday, as we make continued progress thru efforts like the BID, like the multiple efforts that has been done over the last decade or so to improve North East Central Durhsm, and like current efforts to redeveloped Rolling Hills, even folks like you will know that comments like yours are not made in good faith.

Dudek

@Walter I'm sorry you feel that way. I hope you come downtown real soon and grab dinner at anyone of the terrific new restaurants that have opened the past couple of years.

And if you'd like a tour of the 'hood, Cleveland-Holloway will be having our Fourth Annual Home Tour in June. You'll be able to see all the homes that have either been rehabbed, are being rehabbed, or are available for rehab. Afterwards we have a big ol' Block Party open to everyone. We hope you can make it walter. Email me if you'd like more details. matt.dudek(at)gmail.com

bb

wow, that logo is rather phallic, but then again, so is the bull downtown.

The GronBear

I understand it can be dissolved by Council, but if there is an issue that doesn't rise to the level of dissolution the mechanics to remedy it seem weak. If we agree it is needed, but isn't serving the population in ways that the populations wants, think evolving standards, how do we get a response if the oversight is tone deaf? I'm not in any way suggesting DDI hasn't done great things for downtown. This BID will likely outlive the current staff and board at DDI, we should work to have a system that will be accountable no matter who is running it day to day or on its board.

Dudek

@The Gron Bear I think this issue of oversight isn't much different from issues of oversight at all levels of government. I'm frustrated with NCDOT and the City Council for not calling to stop the Alston Ave. widening, and my only power is in the voting booth in November, and I'll have to decide if their decision to widen Alston Ave. outweighs the things I like about the current city council.

We never have direct control, and knowing DDI's reputation for the past 21 years, I believe the organization will listen to complaints. I also think the structure sets it up so that if the public puts pressure on the city council, the city council will put pressure on DDI and the Bull City BID to make the necessary changes. Especially if many people are in opposition.

I am a planning student at UNC (but I live in Cleveland-Holloway) and am doing my Master's Project on Business Improvement Districts in small towns (5,000-10,000 people) and after 30 interviews even the most ardent critics in these towns don't want to see BID dissolved, they recognize how important the BID is for downtown.

JRH

I like the idea of a BID for downtown Durham but I'm not that sold on the work of DDI and am not certain why they (a non-governmental entity) should be handling a tax that is mandatory if you happen to own property in the area defined by their organization. Also, a comparison to Mobile Alabama's BID was made at the meeting. Here are some numbers for comparison:

Downtown Mobile has three non-profit entities that work in conjunction; The Downtown Mobile Alliance, Downtown Mobile District Management, and Main Street Mobile, Inc. According to their 2009 990 tax documents their total combined revenue for the year was $1,269,440 if which $240,673 went to salaries. Which is only 11% of the total revenue for the year.

Compare that to DDI whose revenue for the same year was $408,122 of which $327,001 went to salaries, or just over 80% of the revenue! Bill's compensation (salary+benefits) alone was 29.5% of their overall budget. That doesn't leave much for promotion, marketing, and putting on events. Perhaps this is why they need a mandatory tax?

Dudek

DDI right now isn't a BID, and therefore can't be compared to what the BID budget will be. Right now DDI primarily works on economic development, and not providing services. If the BID passes DDI's budget will be about $910 million, and salaries will remain the same but now DDI will be comparable to Alabama and will be comparable in budgets.

Additionally, housing the BID outside of government is beneficial because DDI, as a nonprofit, is not bound by the red tape that government is, which can make projects time consuming and more expensive. Specifically, they are not bound by civil service requirements, and uniform procurement laws.

And finally, DDI is the best organization to head the BID because they have been working in downtown for 21 years and they have more connections and respect in the field than anyone else. They have the relationships and the proven ability to do this job that no one else has. DDI and Bill Kalkhof believed in downtown, way before anyone else.

Dudek

More information.

DDI has this pdf posted on their site with more details about budgets and funding.
http://www.downtowndurham.com/bid/BIDInformationWeb.pdf

and "Funding the Bull BID" tab has more info on how the budget will be split here: http://www.bullbid.com/

Natalie

@ Dudek
Wow. I bet DDI would love if your typo was their actual projected yearly budget.

Dudek

heh, $910K. Excuse me...

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