Since 1989, California businesses have been able to partner and create improvement districts using the Parking and Business Area Law of 1989. At the time, this law was quite the revolutionary concept – businesses paying an assessment that could only be used to help them –
oh my!
A few years later, a new law came around – the Property and Business Improvement District Law of 1994. Initially only available for use by landowners, eventually this law also became available to businesses. This law built on the 1989 Law’s foundation, requiring majority support from businesses to be formed, and allowing for a five or ten-year term and a designated nonprofit corporation. A host of new business improvement districts and tourism improvement districts sprung up under this law. Specialized districts, including tourism marketing districts, have flourished under the newer law.
Now, forming a new district under the 1989 Law is practically unheard of. The 1989 Law only allows a one-year term, doesn’t require a lot of input from the businesses, and doesn’t have a written Management Plan to guide its activities. Oftentimes, the administrative burden for a 1989 Act district falls to the City, rather than a designated nonprofit corporation.
Recognizing these limitations, many 1989 Law districts have been converted to the “new” law in recent years. The benefits of a modernization are vast. Who wouldn’t want a funding stream that’s guaranteed for five years instead of one? And isn’t it nice to have clear, written guidelines to work within – especially when those guidelines have been vetted by and received support from the businesses paying the assessment? Plus, lessening the administrative burden for city or county staff, putting the onus back on the businesses and managing nonprofit is a win-win for all parties (with oversight from the city or county and businesses paying the assessment, of course).
