Scottish Government

The Potential for Rural Business Improvement Districts (BIDs)

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Purpose

2. This report seeks to inform the Business Improvement Districts (BIDs) Working Group on the option of applying the BIDs concept and methodology within rural areas.

3. Potential for Rural BIDs

4. COSLA noted in our response to the consultation that, for some areas, BIDs may be a useful tool but it was vital to ensure that it is the most practical and cost effective tool it can be. This is important for general BID issues such as gaining landlord involvement, where the owner of a property in a BID area also contributes as they share in the benefits, and obtaining cornseed funding. However, the principle of ensuring the tool is as effective as it can be must also be considered when looking at rural areas to ensure that the BID tool can be adapted to meet the needs of the area it is being applied to. There have been notable successes within smaller communities and suburbs as well as schemes such as the Times Square BID referred to by the Executive in its consultation paper. However, all the BIDs examples used by the Executive within their consultation were of inner city projects. This focus led a number of rural authorities believing that BIDs were not applicable to their authority and this paper seeks to address this misconception.
6. This report recognises that it is not the definitive paper on rural BIDs but it intended to open up the debate with the Scottish Executive's BIDs working group. If the working group addresses the issues and concerns raised in the report COSLA recommends that a rural BID is one of the pilot BID sites to ensure that the previous misconceptions of an urban only initiative are removed.

7. Potential for Rural BIDs

8. Specific Rural Projects; BIDs are able to target specific business areas to deliver a service over and above an agreed level of Local Government service provision. Local rural communities have a number of potential areas and projects that they have sought to introduce but for which an appropriate tool is not available.
10. Generic Rural Themes; The Scottish Executive working group are also seeking our opinion on the potential for using BIDs to promote a wider theme and to be across a larger geographic area. This work would require the modification of the BIDs model as found in North America and English pilot schemes which target specific smaller business districts. A more general BID could for instance be used by an authority to address the issue of tourism. This would then see an additional commitment to the service area chosen and also generate private sector levy funding to achieve what may already be a joint local authority and area's aim or objective.
12. Industry Specific; A rural BID could also be used to target specific industries and therefore be across more than one authority. Therefore a BID could be undertaken to address specific issues within the fishing industry or by expanding broadband access to rural businesses. Again as with generic rural BIDs discussed above rural Local Authorities can use the opportunity of this paper to mould the BID tool to meet the needs of rural authorities and rural issues.

13. Specific Issues for Rural BIDs

14. BIDs Levy; Rural businesses have very tight revenue margins. In a small community a number of businesses will receive rate relief and to expect the majority of businesses to vote for an additional self-tax appears to be a naïve stance. Rural businesses will not vote for a specific rural BID project unless the proposed improvements lead to increased trade. Even if the proposed improvements would do so it must be recognised that short term increases must be experienced or the additional BID levy may result in businesses relocating, going under or empty properties within the BID area not being filled. Pilot BIDs in England received the BID levy equivalent from central government. If this initiative was repeated in a Scottish rural BID pilot a successful rural BID would let rural businesses see the effectiveness of the scheme and therefore may encourage them to pay the required BID levy.
16. Local Authority Lead; The BIDs concept put forward within the Scottish Executive's BIDs consultation indicated that BIDs should be private sector led, however, Andy Kerr MSP in his former capacity as Minister for Finance and Public Services stated that BIDs could be both private and public sector led. For BIDs to work within rural areas and specifically for generic rural theme BIDs or industry specific BIDs it would be important that the local authority is the lead body. The scale and size of such potential BIDs would benefit from having an organisation leading it that has experience of joined up working and large-scale projects.
18. BID Flexibility; To enable the BID concept to work within a rural authority and to be of use to rural businesses it is important that the BID guidance enables rural authorities and rural businesses to mould the BID concept to meet the requirements and pressures of their proposed BID project. For example, if an authority were to undertake a tourism BID this would result in a wide BID area but an authority may wish to charge different levels of BID levy to different businesses in line with perceived levels of benefits to be gained. This is currently allowed under the draft BIDs guidance but further scope must be given to encourage innovative thinking and approaches to the uniqueness of each rural BID.
20. Cornseed Funding; The cost of merely setting up a BID as a legal entity in English pilot BIDs was 0.25m. Given the tight revenue margins of rural businesses and the financial pressures a BID would place on rural authorities it is vitally important that the Scottish Executive provide cornseed funding for any BID. The set up costs of a BID are a sizeable investment for any Local Authority but for rural authorities or for BIDs with small business centres it is a highly significant sum. If it is proposed that businesses should raise this money it may be a large enough sum to potentially deter them from a BIDs proposal. Given the need for best value a Local Authority may be unlikely to fund these initial costs unless they can be sure of a successful BID.
22. Demonstrable Services and Success; Any BID whether rural or urban must give measurable additional services and measurable success. Given the real concern of small rural authorities to be able to meet the BID levy it is vitally important that a rural BID can demonstrate additional services which are not currently provided and that the improvements gained through the BID can be demonstrate during the life of the BID and clearly demonstrated after the BID. Any rural BID should also be able to clearly demonstrate the real engagement with the business community and the successful joint working. This demonstration would encourage and enable further joint ventures and is crucial to the success of future BIDs. Where rural businesses and local authorities often conflict on the issue of non-domestic rate levels demonstrable examples of the successes of joint working would be to the benefit of all stakeholders.

23. Conclusion

24. There are a number of issues raised in this paper which are of significant concern to rural local authorities. The working group must seek to ensure that the BIDs tool and BIDs guidance address these concerns and that the focus of BIDs is on the tool and how it can be applied rather than following the examples of North American BIDs or the English pilots.
26. The BIDs concept has already received media coverage at the time of the consultation but as with the consultation document itself this focussed on the use of BIDs within urban areas or urban authorities. The working group must be aware that ensuring that the guidance enables the use of BIDs within rural areas will in itself not encourage the take up of BIDs at a rural level. If the working group are serious about ensuring the BIDs tool can be used by all businesses then it should seek to have a rural pilot BID. This would ensure the focus is not on urban projects alone and would clearly demonstrate to rural businesses and rural authorities the real gains that can be achieved by a BID.
28. BIDs can work within rural areas, for rural business and for rural issues. The working group needs to have the same innovative and broad view on rural BIDs that we are seeking from rural businesses, rural authorities and other rural stakeholders. By being dynamic and applying BIDs to rural areas we are clearly demonstrating the work of this group, namely to apply the BIDs concept to Scotland rather than to find Scottish examples that can be applied to the North America or English models.