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H-S: Downtown BID special taxing district decision on hold until May 2

We've reported here before at some length on Downtown Durham Inc.'s proposal for a business improvement district (BID) downtown -- essentially, a special taxing district that, coupled with a reformulation of non-profit Downtown Durham Inc.'s governance structure, would allow DDI to receive additional funding on real and personal property in the downtown area. 

Those funds, if the BID is approved, would go to a "clean and green" program downtown, along with additional marketing for downtown events and additional economic development activities.

We've also noted that the public meetings called by DDI on the question saw some support, some questions, and some opposition -- particularly that led by Hank Scherich, CEO of Measurement Inc. and the second-largest downtown propertyholder. Unlike many of the other downtown investors, who can recoup (in theory at least) costs like taxes into rents or other pass-throughs, Scherich's educational testing firm occupies the buildings directly, making any offset difficult.

(As readers of the comments here know, there was also some significant opposition, it seemed, from condo sites like the Bullington on N. Duke St. and the Trinity Lofts complex at Trinity Ave. Both of those sites were excised from the BID district last month.)

Last night's City Council meeting was the chance for elected officials to vote on the matter. And as the H-S' Ray Gronberg notes in a well-reported story this morning, the answer is no answer -- for now.

The usual voices got up to speak their support or opposition, and based on the players active in earlier meetings, there weren't many surprises, it seems, in who's supporting and who's opposed to the district.

The most interesting datum in Gronberg's reporting: the assertion by DDI leaders that the district had the support of property owners representing more than a quarter of downtown's taxable base, with the remaining quarter in opposition.

But the Council has deferred a vote until May 2, with Gronberg noting that Mayor Bell himself is planning to bring some idea forward on how to proceed at that time.

It's never dull from a Council perspective when Bill Bell gets involved in brokering a decision; usually, it means that he sees political sensitivity on both sides of an item and wants to find some kind of slide-in compromise to at least assuage both sides.

In this case, it's hard to see what that middle road might be.

A number of opponents -- particularly those who own spaces at downtown's periphery, or who run service businesses to which "clean and green" sidewalks don't seem all that compelling -- called for funding a BID through some other means, like taxing DPAC or ballpark tickets or having a surcharge on parking. The idea being, of course, that those marketing and appearance services support visitor-oriented services.

On the other hand, DDI staff have demurred about the legal viability of such a proposal, whereas the BID structure has support in the NC General Statutes and is used in most major city downtowns in North Carolina, including Raleigh and soon in Chapel Hill.

So just what compromise does hizonner have in mind? We'll find out May 2, it seems.


Rob Gillespie

I'm a bit confused about what sort of compromise Mayor Bell may be trying to broker.

A reduction in the tax increase (which would address fears that the BID tax rate is too high) would leave DDI and their contractor SGI without sufficient funds to employ the crew size needed for downtown's size. This means that in two years, folks would simply argue that the BID doesn't do anything, and we'll see it dissolve.

On the other hand, a look at a tax or fee on DPAC or DBAP tickets would be on shaky legislative ground. Additionally, it would not raise the kind of money needed. We're talking about $400,000 a year. Do we really think that fans will tolerate a 10-14% tax added to bulls tickets?

Additionally, the argument that the BID only benefits visitor-oriented businesses is complete crap. If you want to attract employees, you need a nice location. AmBacco realizes this, and provides many of the services to their tenants that the BID will provide to downtown. The BID is going to benefit all downtown property owners-- residents, offices, warehouses, and retail.


Tenants and owners already pay egregious taxes. Did you hear the numbers being batted around last night? 50, 75, 100k a year in taxes already!!! Give 'em a break. Or come up with a better value proposition for business and property owners. Why not subsidize free parking? Why not have more bike cops downtown? I have to admit, I like the marketing aspects provided for in the proposal, but to have $7/hr 'ambassadors' and cleaning crews scampering about seems duplicative and a bit silly.

Myers Sugg

In the City of New Bern (from whence I come) a BID has been in place since the 1970's for the commercial district downtown. If anyone has been to downtown New Bern in the last 10-15 years you will see what benefits have been spread amongst that area because of the BID. Positive spillover has happened as well to the areas outside the BID. As I understand it, the BID in New Bern has been used to provide infrastructure support, including burial of utility lines, sidewalk and street improvements, tree installations, and heavy landscaping in the tourist common areas. In my opinion these improvements have contributed strongly towards the difficulty in finding parking spaces on weekends, and the next to no vacant store fronts there. A thriving downtown benefits many, even if you don't happen to live or own property there.

Will Elliott

I support the BID as-is. Our software company just made the decision to move downtown (more on that later) expecting to pay a bit more as a result of the new fee. Downtown is at a critical juncture with long-term success still a fragile ambition. The bottom line is that Durham's competitors have all implemented a BID and we'd be doing ourselves a huge disservice by not giving ourselves this advantage.

Rob Gillespie

When you own a property worth $70 million, you should expect to pay $100,000 a year in property taxes. That's how it works.

Property taxes generally account for 0.5 - 1.0% of a business's costs (with labor typically the largest cost, at around 50% of expenditures, but it really depends on the industry). We're talking about increasing this 0.5% by a total of 5%. This means that instead of taxes costing 0.5 to 1.0% of the cost of doing business, it will instead cost 0.525% to 1.05%. That's really not that big of an increase.


You've made great points Rob...

I think that some people are reducing the BID to normal city services. The services that I have read look to be above and beyond the normal service levels that the city provides.

A downtown that is seeing the most traffic (residents, employees, visitors, etc.) that I have seen during my lifetime needs a higher level of attention to ensure it is properly maintained. Private properties such as malls, suburban office parks and residential properties understand this.

The BID should give all of the property owners a solid return on investments (taxes/services).


Interesting to note that the leaders of the opponents' group own buildings that qualified for historic tax credits, so their property valuations were cut in half at the outset. So they're complaining about paying 7 cents more on HALF the rate of non-historic buildings? And they recruited owners of non-historic buildings to do their dirty work. Sounds like the Koch brothers to me!

The ambassadors will be paid living wage, which is about $11.50 per hour, not the $7 Beibar mentioned. (Beibar sounds suspiciously like one of the crazier opponents who spoke last night.)

Word on the street is that Bell's compromise is a smaller BID tax, say 4 cents, and the rest of the costs come from the general fund.


What Rob said to Beibar!

Much of the need for the BID is to have the contribution that DDI already makes to downtown, which is roundly viewed as positive even by BID non-supporters and which enures directly to the benefit of property owners, be paid for more evenly with fewer free riders. It will also allow DDI to spend more of their working on downtown's challenges and less time fund raising.

If you bought a building downtown 10 years ago for a quarter million and today it's tax value is $2 million largely because of work DDI has done to make it a viable place, $.07 per hundred of valuation is really insignificant. And adopting the bid is likely to help you see your value continue to rise.


I would not argue against citizens caring for their towns.

But picking up litter, planting trees and giving directions without special allowances all across Durham is more likely to succeed in creating an air of sophistication.


@Rob, et al, I am not a property owner Downtown, and I did not attend the meeting last night, but saw the proceedings on public access.

While the usual crazies made presentations (I personally enjoyed placing faces with names), a lot of respectable, hardworking, long standing contributors to Downtown's success dissented as well. My personal opinion is that 1.) overhead costs for small business are growing exponentially (health insurance, fuel costs), and 2.) the tax increase will flow directly to tenants (small business). Maybe we should pay attention to what small business owners have to say.

I appreciate the criticism, this is is a great forum and everyone is entitled to their own opinion.

Will Elliott

This is somewhat of a thread hijack but I couldn't think of a better place to share. I just read this article exploring if Austin could be the next Silicon Valley.

A couple of key points are made where Durham should both be proud and take heed.

- "...said that for Austin to become a leader in life sciences, "what we really need is a medical school." CHECK!

-"...closer collaboration between universities and business and among universities themselves, speeding up the licensing of university research, and fostering an environment that attracts entrepreneurs, and by turn, venture capital." Got Universities? Check! Got businesses? Check! Got collaboration? Needs Improvement.

-"We need hundreds of new companies every year, not tens," he said. "We need to tap universities and encourage them to commercialize their ideas, and reduce friction in tech transfer." Needs Improvement.

All in all, Durham has some strong advantages and is ahead of the curve on some key points. One thing Austin has over Durham though (and it's kind of a big deal) = SXSW Interactive. It's the trade show where meta-influentials go to talk tech and entrepreneurship and stroke each other's egos. In comparison, Raleigh has the East Coast Game Conference and the Internet Summit.

What could Durham do to draw a regional or national tech/entrepreneur crowd with our limited convention center? Will the new management help? Bay 7 stays busy with various "launch" events but we've got to think bigger.

I don't want Durham's next historic sign to read: "Durham. So close, yet so far."

Frank Hyman

From my point of view, I still haven't heard any persuasive arguments against the BID.

Downtown Durham and the city generally is a rising market. The Bull City has been ranked one of the top cities to ride out a recession and my conversations with other business owners bear this out.

Certainly no one wants to pay more than something is worth, but taxes are like dues we pay to belong to a club (that most of us chose to move to and join--meaning the city and county of Durham).

If you want to belong to a shitty little club that doesn't accomplish very much and looks like hell, then yes, you would get to pay some very small dues and live in a libertarian dystopia.

On the other hand, if you want to belong to a club that accomplishes great things, pays a living wage, looks good and plans for the future...then gosh, your dues might be a little higher.

And if Bell's compromise is to start the BID at a lower level of dues/taxes, that would be unfortunate, but acceptable, since really the important thing is to start.

Carl Strauss

Originally, I was skeptical of Durham’s proposed Business Improvement District plan (BID), especially since things are going along so smoothly in our city. However, upon further review, I realize the genius of the BID.

Establishing a new tax to fund a few people walking around picking up gum wrappers may sound wasteful and unnecessary, but the proponents of this new tax are way ahead of us. They’ve cleverly claimed the high ground by supporting the clean up of downtown, while they actually intend to “clean up” downtown (wink-wink).

Taxes are passed on to renters and customers as a cost of doing business. This means that doing just about anything downtown will cost more. These higher prices will serve to keep the less-fortunate away from the downtown area; keeping it sanitary and fragrant for the higher-salaried downtowners and affluent suburbanites. Surely, they don’t want to have to look at poor people while eating dinner (yuck).

It’s easier for large corporations, than it is for smaller store fronts, to absorb new taxes. Therefore, the BID will also help to push smaller, single-location businesses from downtown. Established, national companies, with recognizable trademarks, will have a chance to move in, thus eliminating unsightly local shops and service locations.

To the creators of this BID proposal, an “atta boy” is due. Understandably, you’re reluctant to reveal the BID’s true purpose, but now that I get it, I’ll take the arrows and do it for you. I’m sure this revelation will help to sell the BID to the skeptics.

Rob Gillespie

I think it is worthwhile to clarify the actual magnitude of the BID's increase to taxes.

We're looking at a 7 cents tax increase. Let's say you rent a restaurant or retail space that's worth $500,000 (that's 7,200 square feet of space in the Snow building, which is a lot of space). Your landlord is going to get taxed an extra $350 a year, or about $30 a month.

Is $30 a month really going to force a small business owner to shutter up their shop? If your small business is really that fragile, then I can predict about a dozen things that could shut you down in the next week.


@ Carl ... Rob makes great points but I'm not sure that the class argument makes any sense here. Durham's downtown will always be everyone's downtown and the BID will create new living wage jobs and attract more jobs as it continues to stimulate growth downtown. Low income folks certainly found no benefit in the dilapidated downtown of 15 years ago. The BID will help to improve Durham and that will benefit all who live here.


One other factoid about downtown taxes. The growth of downtown has meant that tax rates (taxes per hundred dollars of property valuation) over the last 20 years have actually gone down. So even adding this new tax on to downtown real property would still mean that tax rates are lower than they have been on average throughout that period.

My point is say you own a piece of property and have maintained it but not really put any money into it because you don't have the resources to "redevelop" it. Your value has increased significantly, not because of what you have done but because of what has happened positively in your neighborhood. As a result your tax bill has gone up, but not because of rate increases. Your property is more valuable today than it was 20 years ago. Even after the bid, the rate of tax on your property would be lower than it was when you bought the property.

So whats a property owner to do, a) stay in your property and with the aid of the BID continue to ride your value up, or b) sell your property take the capital gain that you have accumulated largely because of the good things that have happened in your neighborhood and redeploy that investment somewhere else. If you think the BID will continue to increase your value then you'd probably be inclined to go with option "a." If you have no confidence in DDI and expect things to level off or decline, then you'd probably go with "b". IF you're not sure, then maybe you hold on for 3 years and see if DDI does what they say they will do and then try to move the politics or go with option "a" or "b." It doesn't seem like a bad set of options to me.

Scott Harmon


I'm amused and offended, actually, by your post. The passive aggressive strategy in your argument is toxic and immature.

I'm a supporter of the BID, and I'd challenge you to find a more vocal and active supporter of independent, local businesses.

Your post is particularly ironic given your claim that large corporations can more easily absorb and benefit from the BID. Were you unaware that your employer, Measurement Inc., opposes the BID? They are a large corporation, at least by my standards.

Most of the opposition to the BID is understandable, and has been presented in a civil, respectful manner. Your employer, Hank Scherich, is a perfect example. I understand why he opposes the BID. He and I agree on the desired outcome for downtown Durham. We support many of the same causes, community issues, and goals for a healthy, inclusive community.

We just disagree on whether the BID is the right way to achieve those goals. But it's ok. Hank and I are adults and can have this conversation in an adult manner. I'm grateful for that.




Respectfully, please leave my employer out of this. I wouldn't presume to speak for them. I am speaking strictly for myself, since I live downtown, and I want to see our area stay vibrant and open to all. (Actually, I don't know how you know who I am, anyway---a little creepy. Perhaps we know each other).

I'm glad you were amused by my comments, as that was one of my goals with my ironic tone---to entertain as well as inform. If you didn't like my approach, that's certainly your privilige. However, I stand by the point I made. The BID will raise prices for everyone, including those teetering on the border of being able, or not able, to enjoy downtown activities. Nothing like this is ever miniscule in the end, and there are always unintended consequences.

I don't want to see downtown priced out of reach for more and more people. Now that my point has been made, I think we all know what we need to do to support ALL Durhamites.

Thank your for your response (and the others who responded above). Even if we disagree, it's at least nice to know someone read my comments. And now you know that I read yours. :-)

Ironics of the world, unite!

Will Wilson

Frank -- that was a wonderful way to phrase taxes.


When one joins a club, it is voluntary. No one has a gun to your head when you pay dues. Taxes are the opposite of this. You pay taxes by threat of jail. At some point, it becomes a legalized protection racquet. Clearly we have different opinions on where the line is drawn, and this is what we are debating.

And no, I'm not against all taxes. I understand the need for standard services. We do live in a civilized society after all. However, I don't think the 'club dues' = 'taxes' analogy is valid.

Will Wilson

Tea Party attitude towards taxes:
All for me, and me for me.


"From my point of view, I still haven't heard any persuasive arguments against the BID."

There's a difference between being deaf and thoughtful. Figure it out and get back to me.


Frank, have you considered this argument: if people want something, perhaps they should pay for it themselves. I would suggest that spending other's money is not selfless, but more "me-centric" than anything. Likely you will disagree, but clearly it's an awesome, outstanding, amazing, unbelievable, super, fantastic argument worth considering.

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