Fund Thyself

A month ago I drafted a memo that would expand the city’s ordinance to allow Community Benefit Improvement Districts (CBID). This is not an original idea, nor is it cutting edge. In fact it’s embarrassing that the City of San Jose didn’t jump on this opportunity sooner. Other major players who have implemented CBIDs successfully include, but are not limited to, San Francisco (Japantown), Oakland (Koreatown), Los Angeles (Chinatown) and San Diego (Little Italy). CBIDs are similar to a Property and Business Improvement District (PBID), where landowners vote to assess themselves to pay for services in a geographic area. Downtown San Jose just formed a PBID to provide cleaning services. Recently, the Mercury News published an article about the guys on machines cleaning the sidewalks in the downtown as a result of its newly implemented PBID.

CBIDs provide greater flexibility in the formation and operation of such predefined business and residential districts. They allow commercial and residential property owners to participate, and allow for longer initial terms for assessments so that CBIDs may borrow much like cities borrow on bonds.

In the paradigm of restricted resources, where municipalities (like San Jose) do not have budgets to take care of value added services to business districts, the least San Jose can do is provide options where property owners may organize and take care of their own needs. I am a firm believer that the city needs to provide options that allow property owners to assess themselves so that they can raise funds by “taxing” themselves appropriately in order to provide for themselves.

Many people may not realize this, but Lincoln Avenue, the “main drag” for pedestrians in Willow Glen and one of the city’s famous destination points, does not receive annual funding from the Redevelopment Agency (RDA).  Lincoln Avenue is currently home to the Business Improvement District (BID), where business owners pay a yearly fee to fund for Founders Day, Dancing on the Avenue and other expenses they pay on their own.  However, that may soon change.

Property owners on Lincoln Avenue have been waiting for over three years to implement a CBID, and they are moving forward with forming their CBID as I write this. A CBID can be formed anywhere in city of San Jose, now that the council has approved the new ordinance. With CBIDs, even residential areas may “tax” themselves for funding items like antique lights, landmarks, signage, and tree plantings among others things.

Adopting another option for our small business districts is a good thing and it does not cost the city money. In fact, CBIDs might just save the city money and generate tax revenue. With districts able to raise money to keep their streets clean, market regularly and provide other amenities to their area, more people will come and shop. With people spending money on items (physical objects), a portion of sales tax revenue will go directly to the city’s General Fund.

CBIDs will not fix the structural deficit, but providing property owners another option that has been successful in other major cities across the United States just might be a good thing for San Jose as well.


  1. #1

    Read the post again. This is not funded through sales tax. This funded by a voluntary assesment on the property owners themselves to be spent on things in their defined area.

  2. Speaking of funding issues, probably would be a good time for San Jose Inside to clarify for its readership the distribution model of the google adsense income, given that many of its writers have been involved in the so-called transparency movement at SJ City Hall, and some are politicians or lobbyists in that eco-system.

    Interesting that the first of this new group of ads to present itself to me was for a so-called “dating” site. If one of these ends up not being a “dating” site, but rather a site where the “date” shares income with the site provider, Tom McE’s “walking the streets” campaign in SOFA over two decades ago will have finally come full circle.

  3. #2 Kirkland

      Thank you, you are correct. But, my question for Pierluigi, unless you know, from where do they borrow the money??

      Pierluigi you say”…and allow for longer initial terms for assesments so that CBID`s may borrow much like cities borrow…”. From who or what do they borrow??
        How long has Downtown San Jose been using the CBID to pay for the project we read in the news? How long will it take Downtown Willow Glen to do the same and see results like San Jose`s?

  4. Great.  Let’s tax ourselves even more.  That’s not the answer…the answer is stop wasting public money on non-essentials. Stop overpaying for salaries and services, and start contracting out for some city services. (as the city already does).

    I mentioned in a previous post, the city (through its cultural affairs dept) sends a truck out to hang banners on Saratoga Ave promoting Cinnequest, rather than sending that truck.crew to patch the pothholes on Moorpark, or Mitty, or…

    pete campbell

    p.s.  Discovered that the SJ Library (west valley) was closed TWO days for Caesar Chavez Birthday…Santa Clara Library was open BOTH days!

  5. #6- the City doesn’t pay for banners that get hung; the event promoter -Cinequest, Sharks, etc- pays for both the banners and the labor to hang them.

  6. Sounds good. How long has downtown San Jose been collecting sales tax revenue to fund their CBID ? How long will it take downtown Willow Glen to fund ?
        Downtown Willow Glen collected over $700,000. in sales tax in 2007.So would this be money collected seperatly by Willow Glen. Where or from whom does the CBID borrow the money? Are there more details?

  7. It’s too bad that folks in BIDs have to double-tax themselves so that they can get the services that taxes are supposed to cover. Pete Campbell #6 above is correct, the problem is government waste. it’s too bad that the SJ Library had to close for TWO days for chavez b’day, as well. The public be damned.

  8. What is fascinating to me is when ‘us’ becomes ‘them’ in participatory democracy.

    It appears to be a numbers thing. For a city the size of San Jose, ‘they’ tax ‘us’. When you get down to district level ‘we’ tax ‘ourselves’. And if you don’t like it, move!

  9. #7 My information is that these are city employees going out in the field to hang the banners.  Curious, that someone would post such a comment annonymously.

    Pete Campbell

  10. #11, pete, tried to answer you but post didn’t go through.

    Your information is wrong.

    The event producers pay a fee of $45 per banner.  City staff collects this fee and DOT staff hangs up the banners.  so, the city does not subsidize hanging banners, it likely makes a profit on hanging them.  the oca’s website gives more information.  I just wanted to correct the misinformation in your post – that when you see banners up, it somehow takes away from the general fund for important issues like pot holes, etc.  that’s not the case.

    by the way, I always post anonymously regardless of the subject…I don’t particularly care to post my name, hope you don’t mind.

  11. #12:

    If the city government is directing DOT personnel to go out and hang banners, and the salaries of these city employee’s are being paid from the General Fund…that is money going out of the General Fund.  The DOT should be committed to performing transportation related tasks, not hanging banners advertising public/private functions.  The fact that $45 per banner is being paid is irrelevant…Should we allow fire department personnel to go into the catering business if they can raise a few bucks?

    Pete campbell

  12. #12,
    You’re missing the point.  the $45 per banner is a payment made to the OCA for a service rendered by the city.  the OCA then pays the DOT to hang the banners.  that money does not come out of the general fund.  the DOT is contracted to do that work.  Since the DOT manages the streetpoles and lights (and hence the banner hardware on those streetpoles) then they are the appropriate department to hang the banners.  the DOT also oversees street trees.  this is in addition to the backbone of their work maintaining our roadways.

    again, the funds for banners on city streets does not come out of the fund to pay for street improvements such as pot holes, which I agree desperately need to be addressed.  Your analogy of the fire department as caterers is irrelevant.  Please educate yourself.

  13. Thanks for reading and posting
    CBID based on assessment of property not sales tax. The assessment district is ongoing for multiple years. (Guaranteed by Property)  Loans can be taken out based on future assessments coming into district. So annual budget for the CBID could have a loan payment budgeted. The CBID does not have to borrow however they may do so.  All privately funded by property owners.

    City still provides basic services. PBID or CBID provide services above and beyond.

    #6 and #9
    Agree however until that day comes I believe in allowing for options of self-funding vs waiting around for years and years with no results.

  14. #16 Pierluigi,

        Thank you, you`ve cleared things up for me. Now I have another question based on your reply. You say,” Guaranteed by Property”,who`s property,the City of San Jose`s property,homeowners property,Business property in Downtown Willow Glen or…would this be like a home loan,recorded with the County?
        District six is made up of mostly residential property (almost 100,000 residents)where Downtown San Jose is just the opposite,mostly “Corporate property”, including Corporate apartments which are empty half the time.
        Sounds like a good item for one of your town meetings. You explain things so well and answer most of our questions.
          Pierluigi,I agree we need to get city money into the neighborhoods, but another tax might be difficult to sell an assesment district that is made up with mostly home owners like Willow Glen.Consider a 41/2&#xin;crease in the cost of living, increasing fuel prices,the City of San Jose and the State of California talking about a sales tax increase. Consider that San Jose has lost 14,000 jobs since 01/08 and the fear of more layoffs.
      Your district produces a lot of Sales tax recenue for the City with Santana Row, Westfield Mall and downtown Willow Glen. Coming along the Alameda business district.
        I know your trying hard but the residents in the neighborhoods are very upset about the distribution of City funds. As you say, Willow glen is not in the RDA and that`s a big problem.When we hear RDA in the neighborhoods, we automatically believe the City means Downtown San Jose.

  15. #14

    Are city employee salaries paid from the General Fund or not?  Also, the banner program is run by the Cultural Affairs Dept.  Finally, if we accept that city employee activities should be directed wherever private subsidies can be found, then flippantly suggesting that the fire dept should set up a catering business, is not too far a stretch.

    Pete Campbell

  16. Pierluigi,  Richard,

    Interesting discussion.  Not wanting to butt in with dumb questions, I went the City of San Jose home page and thought I would use it’s search engine to learn more about CBIDs, the City’s policy and process: how it works, what constitutes a District, how many within that District have to agree or vote to be taxed, who bonds or backs the loans (fronts or funds the improvement), where that money comes from before it’s paid back, what the guidelines are for funding special improvements, life of the payback, who has to approve the investment, if voters – what percent. . . .  you know…  all those good things that would help one understand how it works and what is being talked about.

    Well, it seems that searching in the City Clerk’s Office and San Jose do not recognize the following: CBID,  CBIDs,  Community Benefit Improvement Districts, Community Benefit Improvement District.

    Any suggestions?


  17. #13 Pete,
        You said it well.I wish more people could read your 2005 article in LaOferta.You were correct then and again now.
        I wish Jack would re-publish your article on San Jose Inside.

  18. Is this what happens after you ask for some traffic calming, a pothole to be fixed, or maybe little more community heads up on another 800 high rise homes in back yard?

    They tell you to “Go fund thyself”?

  19. #14 Anonymos,

      Question,does the money for not for profits come from the General Fund? Isn`t this program,“Cinequest” a downtown promotion that benefits downtown merchants? Isn`t this a project that should be paid for by one of the many downtown not for profit groups?

  20. Regarding comments on Item 20, I would assume that once the City Council has adopted the new ordinance, the Clerk’s office would incorporate this into their database.  The CBID should be an initiative that is available to all districts throughout San Jose.  A “kit” should be developed in which interested property owners can go to the City website and get a step by step outline on how to create these new, dynamic districts.

  21. I read with great interest Pierluigi’s comments on the new CBIDs.  It is about time.

    I for one would like to thank Pierluigi and the Mayor for their leadership on this.  As I have read in the SF Business Times and East Bay Business Times, these districts are catching on rapidly in Oakland and San Franciso.  San Francisco for one, has seen 7 of these districts formed, at the initiative of business and property owners, over the past 3 years.  Five more are in the stage of formation.
    When I look at areas such as South Park in Downtown Los Angeles, Little Italy in San Diego, Noe Vally in San Francisco, Rockridge in Oakland and soon Willow Glen, I realize that this is the wave of the future.  San Jose is taking a huge step forward in adopting this new local ordinance.

    Hopefully, Willow Glen will set the model for business district renewal with new mixed use developments, once their new CBID has been established.  West San Carlos should follow in Willow Glen’s footsteps, and then other areas with or without BIDs should look at how to create more dynamic, commercially vibrant, and attractive business districts using this new CBID tool.

    Thanks Pierluigi for your leadership on this issue.

    A typical business owner

  22. If you think that $45 a banner covers the cost of fuel, equipment, equipment maintenance, the 10 DOT people and their pensions, you are high. The facts are the $45 a banner fee probably isn’t even enough to cover the costs of that union coffee they are drinking.

  23. $45 per banner.
    With a truck, reasonable equipment, fixtures to place the banners and someone that has done this before, it’s not hard to imagine they can hang 5 or 10 per hour.  That’s $225 to $450 per hour complete with overhead, fringe benefits and some supervision.

    How much does your Lexas dealer charge per hour?

  24. Ok… moving right along.  Friday afternoon I was telling some riding buddies about CBIDs and my difficulties with finding information about CBIDs on the City web site. 

    My friend (now retired from the City) asked; “Did you call the City?”

    A bit embarrassed I said no.  Then I pulled out my cell phone and called the City Information Services line.  When I asked to speak to someone about Community Improvement Districts, he put me on hold to seek assistance.  When he returned he said that would be Code Enforcement, and then connected me. 

    When connected to a voice mail box and really thinking this was not correct, I hung up.  I know with time and enough connections I’m sure I could find someone who could help; but not wanting to hold up the group or waste City workers time, we got back on our bikes fort he ride home.

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