Labor’s ‘Community Improvement Districts’ bill hands property owners special say over public space

June 22, 2024
The NSW government's draft bill does not mandate community consultation. Photo: Dietmar Rabich/Wikimedia Commons/CC BY-SA 4.0

The term “Community Improvement District” makes you think the community would be involved. But the draft NSW Community Improvement Districts’ Bill does not even provide for the community to be consulted.

The draft bill is a plan for a new form of urban governance, in operation overseas for some time.

It would empower a non-profit company of business property owners to impose a levy on all others within a precinct, whether or not they approve of their activities.

That company would make proposals on how to develop public-owned spaces in “their” precinct.

Projects could include hiring cleaning services or extra security to patrol an area, promoting special events, marketing businesses or sharing data analytics based on the credit card use of visitors.

These are the key principles in the draft bill, as a part of the Smart Places Policy and Engagement in the Cities and Active Transport Division of the Transport for NSW.

Feedback on the bill closed in March, and attracted only 25 submissions.

A final draft of the bill will not be made public until next year. However, as both the Coalition and Labor support laws to establish “improvement districts”, if a bill does reach parliament it is, it is sure to pass.

While the Coalition’s called their version “Business Improvement Districts”, Labor’s has opted for “Community Improvement Districts (CIDS)”.

BIDs first appeared in Britain, Canada and the United States about 20 years ago and today there are thousands around the world.

BIDS can lead to positive outcomes, but they can also divide communities.

Research shows it is more difficult for poor or homeless people to survive in BIDs, and they can drive up property values and rents.

Controversial in US, Britain

Kurt Iveson, Professor of Urban Geography at the University of Sydney, said such districts have been “very controversial” in the US and Britain.

“The interest of elite property owners in managing public space is to enhance the value of their adjacent private property.

“As a result, people or activities which they consider might impact on their property values become the target of regulations and private security. This is no way to govern public space, which is meant to be there for the public good, not for private profit.”

If passed, the draft bill would establish a new government agency, “Community Improvement District Regulatory Authority”, to approve proposals for CIDs.

The CIDs would consist of business property owners within a precinct. If a proposal received is approved, the authority would organise a ballot of all business property owners within the precinct.

Residential owners of land, small business tenants and community facilities, however, would not be given a vote.  

The CID could only proceed if approved by a majority of business property owners and a majority of the total value of business properties in a ballot.

Property owners with more than one property would have one vote for each property, while multiple owners of a single property would have one vote.

This system favours large commercial land owners.

Levies the big prize

Once a CID was approved, all business property owners in the precinct would be levied to cover the cost of its activities. The CID would be renewed, with a fresh ballot every five years.

Voting is not compulsory, which means that a minority of business property owners could win the right to levy all others. This has often happened in Britain.

The Regulatory Authority would collect the levies. Because the Authority would be cost neutral or “user-pays”, the levies would be set at a level that would cover the Authority’s costs.

Business property owners tend to cover rising costs by raising rents, which means the levies could lead to higher rents for small business renters, or even for residents in buildings occupied by businesses, despite the fact they would have no vote or were not consulted.

No obligation to consult community

While the community (residents and organisations) may be “engaged with”, there is no obligation to consult with them.

Before putting forward a proposal, a CID would need to consult with local councils, which would have an effective right of veto.

CID proposals would need to be supported by a resolution, passed by a majority of councillors in each council.

Given that council policy on BIDs would be determined whether they get a foothold in local government areas, it’s important the issue is debated in the local government elections to be held in September.

The regulatory authority would collect the levies. Business property owners who failed to pay the levy would pay interest on debts and could be taken to court and ordered to pay the costs of the authority.

This is happening now to hundreds of businesses in Britain.  

Public owners of business premises do have a vote in the British BIDs system. But the NSW draft bill excludes them.

However, federal, state or NSW governments could contribute to CID projects by paying into the regulatory authority.

“There’s a risk that we end up with a kind of archipelago of quasi-public spaces, each of which has different regulations and rules about what activities are prohibited,” Iveson said. 

“Public space should be public space — with the same rights and rules applying no matter who we are, and no matter where we are.”

City of Sydney opposes draft bill 

The City of Sydney is recommending Transport for NSW does not proceed with the draft bill.

Its submission included a number of criticisms including: opposing mandatory levies to fund CIDs and taxes on landowners to fund service delivery; an approval process mechanism which means smaller landowners can be being outvoted by one or two large landowners; the lack of provision for any consultation with residents or local businesses; the regulatory authority being self-funded and therefore less transparent; the possibility of CIDs not being aligned with council plans; the likelihood of CID levies being passed on to tenants; and the lack of mandatory consultation with residents and community groups.

Several trial BIDS have been set up without a levy.

One is the New Sydney Waterfront Company (NSWC), founded by some of the biggest commercial players in the Darling Harbour precinct, including Lendlease and Star and Crown casinos.

So far, it has been funded by substantial donations from these and other founding companies, supported by seeding grants from the NSW government and the City of Sydney.

A BID bill, based on property ownership, rather than business operations favours big companies.

The NSWC has never concealed it wants laws enabling BIDs to impose levies and become more self-sufficient. That’s why the grants were called “seed funding”.

It has worked closely with the NSW government for several years to push a BID law. Minister of state John Graham used his keynote speech at the NSWC annual summit last year to announce the draft bill.

Then CEO Jace Tyrrell wrote on the company website that he was optimistic that the NSWC BID would be the first formal BID established in NSW.

The draft bill allows for existing BIDS to be given quick approvals.

The City of Sydney opposes compulsory levies, which are part of the legislated BID model. Given that the City is part of the NSWC BID’s Government Liaison Group and funds the BID, it makes the City’s continued support for the BID all the more puzzling.

More debate needed

The NSW government needs to host a more transparent and inclusive debate about the benefits of a BID model or the problems, including the tendency to privatise public space.

Its current definition as a “place-based partnership between local government and the community, led by local businesses, to support and grow local economies, town centres and main streets,” smacks of spin.

It also needs to study the experience of countries where BIDs have become increasingly contested and controversial.

The London School of Ecomics has research which shows that while BIDs may play a role in reducing local crime, they lead to gentrification. 

Iverson said it suggests that the PID model “pushes us further down the path of spatial inequality.

“We already know in Sydney that wealthy local governments have more resources to design and care for their public spaces, and that the quality and quantity of public spaces across the city is uneven as a consequence.

“Imagine how much worse this will get if we head down a path where we start letting businesses maintain and police our public spaces — this will make that spatial inequality even worse.”

[Wendy Bacon is a retired professor of journalism. This article is abridged from City Hub and is reprinted with permission.]

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