In the Business Improvement Zone

Taxing district aims to boost Main Street business
Ideas generated from a recent meeting of businesses in the Main Street area

A sampling of the questions and ideas generated from a recent meeting of Main Street businesses, who gathered to discuss the concept of a Business Improvement Zone for that area. (Photo by the writer.)

About a dozen business owners, managers and others from the Main Street area gathered last Thursday morning at Conor O’Neill’s to talk about an idea being floated for that district – a self-taxing entity called a business improvement zone, or BIZ. It’s a way to pay for services – things like snow or litter removal, or flowerbeds – to make the district more attractive and bring more shoppers downtown.

This isn’t the first time we’ve encountered the Main Street BIZ. In April, the Downtown Development Authority awarded $83,270 to the group – spearheaded by Ellie Serras and Ed Shaffran – to help get it going. Since then, Main Street BIZ has hired a consultant – Betsy Jackson of The Urban Agenda – and is holding meetings with stakeholders to pitch the idea and get feedback.

That’s what was happening on Thursday. The meeting was one of three planned so far: Earlier in the week, organizers met with property owners of buildings along a three-block stretch of Main Street, where the district is proposed. And on Tuesday, June 30, they’ve scheduled a similar presentation for residents and others who patronize Main Street area businesses. That meeting starts at 6 p.m., also at Conor O’Neill’s.

What’s a BIZ?

Michigan law allows property owners within a specified district to tax themselves, with the funds designated for economic development purposes within that district. The proposed Main Street BIZ would stretch from the south side of Huron to the north side of William, and would include a “wrap” down Washington and Liberty on both sides of Main, running to (but not including) the alleys.

Betsy Jackson, the consultant hired for this project, walked The Chronicle through the process required to set up a BIZ – organizers have already taken initial steps, including setting up a nonprofit and forming a transitional board. Next, they’ll need to get 30% of property owners to sign a petition stating their intent to form a BIZ. (That 30% is based on a formula which gives weight to a vote based on the value of an owner’s property. That is, they could reach the 30% mark without getting 30% of the individual property owners. Additionally, there’s a maximum weight of 25% for any one individual.)

After the petition is filed, the city schedules a public meeting of property owners, who will vote on a detailed business plan for the BIZ. The business plan specifies exactly what the collected funds can be used for. (After the BIZ is approved, it would require another vote to spend the money on services not covered by those categories. For example, if snow removal isn’t initially designated as a category for the BIZ funds, then the district can’t spend the money on snow removal.) The business plan would also give details about a budget, frequency of services, a formula for assessment, governance structure and other information.

At the public meeting, if a majority of property owners approve the business plan, then the city schedules a public hearing within 45 days, and the city council votes on the plan. If council approves it, an election is set. The election is administered by the city via mailed ballots. This time, 60% approval is needed – and again, the votes are weighted based on the value of the property. If 60% or more votes approve the BIZ, then all property owners within the district will be assessed, with the exceptions of  nonprofit property owners (like religious organizations or the university), government properties and owner-occupied housing units. The BIZ requires renewal every seven years.

Why Form a BIZ?

At Thursday’s meeting, Ellie Serras said some of the Main Street property owners decided they needed more control over the district’s future. “We want to make this good thing even better,” said Serras, the long-time executive director of the Main Street Area Association who stepped down from the post last year. Her husband, Dennis Serras, is a partner with Mainstreet Ventures, which owns several restaurants in Ann Arbor, including Palio, Gratzi, Real Seafood Co., The Chop House and La Dolce Vita – all operating on Main Street.

Five property owners got this project off the ground: Ed Shaffran of Shaffran Companies, Rob Spears of Cabrio Properties Amvest Properties, Mike Martin of First Martin Corp., Jeffrey Harshe of MAV Development and Jim Curtis of Curtis Commercial. Each of them contributed $5,000 to the effort, which will be repaid from BIZ funds if the entity is formed. They are also part of a transitional board – other board members are Alan Freedman of Four Directions, and Ron Dankert of Swisher Commercial. Keith Orr of the Downtown Development Authority board (and co-owner of the \aut\BAR and Common Language Bookstore in Kerrytown) is a tentative board member. If the BIZ is formed, property owners in the district would elect a new board at their first annual meeting. The city’s mayor would also be entitled to appoint one board member.

In addition to forming a board, organizers plan to use the DDA grant to set up office space, do website design and cover administrative costs, Serras said.

Jackson said that BIZ districts are typically set up in response to dwindling public sector resources. Business districts have special needs that aren’t necessarily covered by the city’s general fund – standard “common denominator” services aren’t sufficient, she said. Downtown shops and restaurants can’t compete on price with big box stores and malls, Jackson added, but what they can offer is a distinctive, positive experience and ambiance – that’s their competitive edge.

Organizers have identified three potential categories for which BIZ funds could be earmarked, Jackson said, though these could change based on feedback. All of them are aimed at improving people’s perception of the Main Street business district – they are the first things people encounter, she said. The potential categories are 1) snow removal from sidewalks and curb cuts, 2) sidewalk cleaning and litter removal, and 3) landscaping/maintenance.

Questions and Concerns

After a presentation by Serras and Jackson, they opened the floor for questions – and there were many. Several people expressed concern that Ann Arbor city council would not provide basic services if they knew that Main Street BIZ had the money to pay for them instead. Jim Beuche, an attorney with Hooper Hathaway who’s doing work for the BIZ, said that while city council is hard to predict, they “can’t foist off more on us than they will on everyone else.” That said, the reality is that the council defines what services are provided in the city, Beuche said, and those can change at any time.

This prompted Newcombe Clark, president of the Main Street Area Association board, to say: “If you pay more for a cabin on the Titanic, you’ll still sink like everyone else.”

Serras responded by saying that the city can – and has – been pulling back services for the past decade. When the city decided to stop taking care of flowerbeds downtown, the Main Street Area Association stepped in to pay for that, she said. A few years ago, the South State Street merchants paid for security because the city removed its beat cops, she said – a scenario that’s playing out again. Having the BIZ in place would make it possible to respond when the city changes its service levels. (Clark later reminded the group that Ann Arbor’s beat cops would no longer be patrolling, as of this week.)

Derek Davis, marketing manager for The Melting Pot restaurant on South Main, wondered how expensive this would be for his business. The Melting Pot pays rent, he said – would the BIZ mean that their rent will be raised?

At this point it’s unclear how much the property owners will be assessed, Jackson said. The business plan would have to specify the formula used to calculate an assessment, likely based on a property’s value and perhaps its streetfront footage. But the BIZ has no authority to prevent landlords from passing along the costs to their tenants, she added.

Davis noted that some landlords do take care of services like sidewalk snow-shoveling and flowerbeds. But for the building his restaurant rents, he said they have to pay for that kind of thing themselves. It sounded to him like within the organization of the BIZ, tenants had little power.

The issue of tenant power came up again in a discussion of the BIZ board, which would be elected by property owners and include one mayoral appointee. Several people suggested that the board include at least one business owner/tenant, to give that group a voice.

Parking was another issue raised during the discussion. Caroline Kaganov, general manager of Conor O’Neill’s and a Main Street Area Association board member, joked that she feels she’s been working for the city – she’d spent the past four days helping people figure out how to use the new parking meters installed downtown. She said the perception is that parking is scarce. Davis said there was plenty of parking, but there needed to be ways to lower the price. Perhaps the BIZ could subsidize customer parking for businesses that can’t afford to comp it on their own, he suggested.

Some people were concerned because alleys aren’t going to be included within the BIZ district – that’s where a lot of the problems are, they said, citing litter and snow removal.

Angela Pierro of Zero Gravity Designs said aesthetics were important, like putting in flowerbeds and cleaning up cigarette butts. She also said sidewalks need to be in better shape – uneven sidewalks, which cause little kids to trip or which make it difficult to push strollers – deter families from wanting to come downtown.

Davis said that in general he felt the city was very safe, but the biggest security complaint he heard from customers related to panhandling. Being approached by panhandlers affects the perception of whether Ann Arbor is a family friendly place, he said.

Next Steps

The goal would be to have a BIZ assessment on the July 2010 tax bills, Jackson said. That means they’d need to have a draft of the BIZ plan adopted by the board and start circulating petitions in September, she said. They hoped to have enough signed petitions to submit to the city clerk in October.

Meanwhile, they’ll be gathering information about similar zones in other cities. More outreach efforts are planned, too, including a website (to be designed by Angela Pierro of Zero Gravity Designs) and online survey to get more feedback about what services the district needs. They’re also working with the city attorney’s office and city clerk to ensure that all the proper steps are taken, since the city hasn’t done anything like this before. “We want to make sure there are no hold-ups related to process,” Jackson said.


  1. June 29, 2009 at 10:46 pm | permalink

    I cannot imagine a scenario where Downtown would be made better by more taxes. I find this to be the ultimate mistake someone could make and more anti-business than I could imagine. Taxes would be the most inefficient way to get this done. For cleaning up cigarette butts, I highly recommend… a broom and 10 minutes of hard labor. If you want, clean your area and the area around you… or just yours. If you feel you will get more business from a clean area, then clean. After all, it’s your mess most likely… unless we are to believe that for some reason people just like to put trash in front of your business, and it’s not the customers loitering (or eating) outside.

    Flowers can be bought privately and planted in front of your business much cheaper than via taxes. And, guess what… the business that don’t look as pretty will either fail or strive… but it’s their choice. If you are the only one who cares for flowers, you’ll stand out. If not, not having flowers doesn’t seem to be the reason people wouldn’t come downtown to Ann Arbor.

    If you want more people to come, how about keeping the roads smooth? And snow removal is a great job too… and if you feel that the city isn’t doing a good enough job, then either complain, vote in those that represent your thoughts, or do it yourself. Taxes is not the answer and if you keep raising taxes, rents will go up, businesses will close, and no one will come to a downtown with lots of closed businesses… no matter how many flowers you plant.

  2. June 30, 2009 at 12:52 am | permalink

    “it’s your mess most likely”

    Is that true? My experience is that people from everywhere litter everywhere.

    That said, I think you provide food for thought, Fred, on the simplicity and potential effectiveness of personal responsibility and the model that can present. I initially thought the BIZ concept was worthwhile, but it may be overkill, as you suggest.

    I wonder if an obstacle that might have led to the choice of that path is an unresolved mistrust between property owners and tenant business owners. Expectations (unspoken ones in particular) can lead to resentment that undermines otherwise cooperative efforts. Maybe it would help for everyone concerned to step back and examine that before proceeding.

  3. By Kris
    June 30, 2009 at 8:15 am | permalink

    I say avoid the taxes but establish standards and commonization. The common theme of plantings and maintenance will bring up the whole area and purchasing of a block of plantings will be much more economical than just one flower bed.

  4. By Heidi Kaplan
    June 30, 2009 at 8:17 am | permalink

    This arrangement would appear proper after a round of volunteerism has failed. A little elbow grease can get things done… the question is, how neighborly can our downtown businesses be with one another and how sustainably?

    Perhaps if teams of two, three, or four businesses could split the labor of pickup/sweeping/watering on their stretch of Mainstreet and it was a gratifying experience for all involved, this kind of method could be counted on. When the first scuffles arise and MSAA can’t get the problem solved as mediator, then at least we’ve ruled out the free, ‘I believe in a better world’ option. Then, tax away!

  5. By Tom Brandt
    June 30, 2009 at 12:26 pm | permalink

    Fred, normally I would agree with you that raising taxes is counter-productive, but in this case it is the property owners themselves proposing to raise their own taxes. This indicates that they see problems that need fixing and that taxing themselves is an efficient means to fix them.

  6. By Val
    July 1, 2009 at 7:40 am | permalink

    What is the purpose of the Main Street Association then? Everything that a BIZ plans to do, is seemingly what the MSA does. Are there some sort of tax implications or funding options that a BIZ can obtain that the MSA can’t? (Is a BIZ about city services, or about economic development?)

    Fred’s right, but I would add that if this is about economic development, a pooling of resources would be better spent on marketing for the region and consumer education about spending local in your downtown. (Sorry CVB or DDA, those downtown maps are lame!)

    *Maybe* if more people lived downtown, (ahem, more dense housing downtown), downtown businesses wouldn’t scrape by. Also, if more people lived downtown, it would be a lot harder for the city to ignore certain services (like snow removal). (Although in a lot of cities, like Royal Oak, snow removal downtown is not a free city service. In this budget year, I can see why it isn’t here either.)

  7. By Ed Shaffran
    July 1, 2009 at 8:19 pm | permalink

    The BIZ in not a tax. All of us property owners/tenants pay for the current services, e.g. snow removal and sidewalk cleaning. The City DOES NOT clean/clear our sidewalks nor do they pay for the flowers or pay for the Holiday lights you see during the winter months. The BIZ is about continuity when it comes to keeping the sidewalks free of snow and debris. It about a better experience for you the residents and visitors of our wonderful downtown. Attempts have been made in the past to do this on a volunteer bases, which would be best, however those efforts have failed. The BIZ will be set up pursuant to Michigan Law. As the driving force behind the BIZ the last thing I want is an increase in taxes. The BIZ in NOT about duplicating City services, its about preserving and enhancing OUR downtown.

    PS: The MSAA is an all volunteer organization that promotes the Main Street Area.

  8. By Heidi Kaplan
    July 2, 2009 at 10:24 am | permalink

    It would be great if we could be more specific in terms of how volunteerism has failed Mainstreet in the past- is it freeriders or the lack of a formalized system?

    To clarify; deep snow in alleys when trash collection is contingent on clearing it and continuously cracking concrete aren’t tasks I would entrust to a group of volunteers. That makes perfect sense.

    I’m just a bit baffled that in this economic climate a tax is being proposed with mention of easy jobs like sweeping and litter collection. Speak to it in terms of substantial tasks and projects beyond cigarette and candy wrapper collecting…