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A BID is a business-led and business funded body formed to improve a defined commercial area. The benefits of BIDs, cited by the businesses they represent, are wide-ranging:
- Businesses decide and direct what they want for the area
- Businesses are represented and have a voice in issues effecting the area
- BID levy money is ring-fenced for use only in the BID area – unlike business rates which are paid in to, and redistributed, by government
- Increased footfall
- Improved staff retention
- Business cost reduction
- Area promotion
- Facilitated networking opportunities with neighbouring businesses
- Assistance in dealing with the Council, Police and other public bodies
Key BID Facts
- In the UK, the majority of BIDs exist in town centres, however they are also in industrial, commercial and mixed-use locations.
- The BID mechanism allows for a large degree of flexibility and as a result BIDs vary greatly in ‘shape’ and size.
- The average size of a BID is 300-400 hereditaments, with some of the smallest having fewer than 50 hereditaments and the largest at over 1,000.
- Annual income is typically £200,000-£600,000 but can be as little as £50,000 per annum and as much as £2 million+.
- Legislation enabling the formation of BIDs was passed in 2003 in England and Wales (with subsequent regulations published in 2004 and 2005 respectively) and in 2006 in Scotland.
- The first BID in England started in January 2005.
- The first Scottish BID started in April 2008 as did the first Welsh BID.
- BIDs were first established in Canada and the US in the 1960s and now exist across the globe, including in South Africa, Germany, Japan, New Zealand and Australia.
Developing a BID
- A BID can only be formed following consultation and a ballot in which businesses vote on a BID Proposal or Business Plan for the area.
- The ballot is run by the local authority or outsourced by the local authority to a third party.
- All businesses eligible to pay the levy are balloted for a minimum of 28 days.
- In the UK, for a BID to go ahead the ballot must be won on two counts: straight majority and majority of rateable value. This ensures that the interests of large and small businesses are protected.
- There is no minimum turnout threshold.
- Industry Criteria and Guidance Notes are published to support locations during the development phase
Renewing a BID
- BIDs operate for a maximum of five years within the legislative framework. If they wish to continue they must go through a renewal ballot process to secure another BID term of up to five years.
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- The BID Proposal or Business Plan sets out businesses’ priorities for improvements for the area and area services, as well as how the BID will be managed and operated.
- This document becomes legally binding once a ballot has been won and becomes the framework within which the BID will operate.
- An Operating Agreement is entered into between a BID and their local authority governing how the BID levy monies are collected and administered and passed over to the BID.
- BIDs enter into Baseline Agreement with their local authority and other service providers, which specify the level of service provision in the area. These ensure that any services the BID provides are additional.
Operating a BID
BID Levy and Funding
- A BID is funded through the BID levy, which is a small percentage of a businesses’ rateable value. The majority of BIDs charge 1% of rateable value, however there are some that have opted for higher levies, particularly in smaller locations with lower rateable values and industrial areas.
- Once a ballot is successful the BID levy is mandatory for all eligible businesses. BIDs can choose to exempt certain businesses from paying the levy (and therefore from voting in the BID ballot). Many BIDs exempt the smallest businesses; and some exempt certain business sectors.
- BIDs are often successful at attracting funding in addition to the BID levy. They are particularly attractive to public sector grant making bodies due to the private sector match-funding available through the BID levy. Local authorities, property owners, and businesses outside the BID area can all provide additional income for BIDs through voluntary agreements.
Governance and Management
- The vast majority of BIDs are not-for-profit companies limited by guarantee.
- BIDs set out how they will be governed in their BID Proposal or Business Plan and Company Articles of Association.
- Most BIDs are governed by a board made up of BID levy payers representing the BID area.
- BID management teams vary with the size, focus and budget of each BID but will generally encompass management, administration, business engagement, marketing and communications and project management
- It is important for BIDs to measure performance to demonstrate the return on investment to levy payers through activities in the area.
- Industry Accreditation is focused on ensuring quality management systems exist within BIDs
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