Scottish Government

BUSINESS IMPROVEMENT DISTRICTS WORKING GROUP:
MEETING: 6 DECEMBER 2004, SCOTTISH EXECUTIVE, CONFERENCE RM 8, VICTORIA QUAY, EDINBURGH

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1. Apologies

1.1 Apologies were received from Bill Anderson (Forum of Private Business in Scotland), Fiona Moriarty (Scottish Retail Consortium), Alf Strange (The British Property Federation), Jane Scott (The Boots Group), Gordon Edwards (Director of Finance, Aberdeen City Council) and Nikola Plunkett (Scottish Executive, Finance and Central Services Department).
1.2 Andrew Rushworth welcomed Jacquie Reilly and Donald Meldrum. He also welcomed Stephen Devine, who would attend future meetings in place of Jane Morgan, and Richard MacDonald from COSLA.

2. Minutes and matters arising: (Paper 04/12)

2.1 The previous minutes were agreed.
2.2 James Thomson informed the group that in addition to the further 2 COSLA representatives, Richard MacDonald of Stirling Council, and Gordon Edwards of Aberdeen City Council, he had contacted Scottish Local Authorities Economic Development Offices (SLADE) who informed him that they are not in a position to provide a representative, but that they will feed into the Group when necessary.
2.3 The briefing on the work of business support groups (para 4.3.1 of the previous meeting's minutes) is being taken forward by Jane Scott. Information would be provided for the next meeting.
2.4 The standard text for publicising the work of the Group was now available and that it would be distributed to the Group members via e-mail.
2.5 Andrew Rushworth referred to the pathfinder projects paper discussed at the previous meeting. There was an outstanding issue regarding the funding of the projects that required clarification. Euan Dobson explained that he had written this paper with central funding in mind, and stated his opinion that to ensure a successful model to promote BID projects significant central support would be desirable. This would help demonstrate the benefits obtainable from a BID. However other members of the Group felt there would be clear advantage in securing the funding from the businesses who would benefit, as this would test the level of support within the business community and be the only real test of the BID concept. It was agreed that Euan Dobson would redraft the paper to cover both approaches, government funding and business funding. This redrafted paper would be circulated in advance of the next meeting. It might be that the Group would recommend a combination of the two approaches perhaps on different timescales.

3. Presentation from Jacquie Reilly on BID Pilot projects

3.1 Andrew Rushworth introduced Jacquie Reilly who was attending to provide the Working Group with a rundown of the experiences gained from the National Bid Pilot Project in England and Wales, including the potential pitfalls.
3.2 Jacquie informed the Group of the problems encountered with voting procedures and ballots. She advised the Group that thought should be given to using particular language for particular sectors, e.g. banking sector, as these had their own technical language which it is helpful to be aware of.
3.3 The pilot projects in England had been selected for their differences to see if BIDs is a tool that can be used in a variety of scenarios. The members of the steering group in England had contributed £600k to fund the projects over a 3 year period. The steering group met to give feedback, provide support, and bring together all relevant interests.
3.4 The steering group undertook a variety of promotional work in relation to BIDs. Workshops were run every month, and surveys conducted on a quarterly basis to check progress of the Pilots. In addition leaflets had been devised for specific sectors outlining the benefits to be gained from BID projects. A "hotline" had also been set up, though this had had a serious adverse impact on resources as staff were limited as a large number of calls were being received.
3.5 Out of the original 22 pilot schemes only 8 or 9 currently felt ready to go to full BID status. The remaining pilots were still building up support. There was an issue regarding awareness of the proposed BID projects amongst the full business community affected, and thought was required as to how to address this issue in order to reduce the risk of defaulters once the BID projects were initiated.
3.6 There had been a huge amount of interest in BIDs from the "Evening Economy", with innovations such as a car escort service to ensure people feel safe shopping in the area at night. These schemes needed to be particularly specific with what they have on offer and the business plan had to focus on this. This point should be made particularly clear in any guidance issued.
3.7 On lessons that had been learned, it was felt that the original 22 pilots had been too many as they were too big a group to coordinate efficiently. In addition it was recommended that, when selecting Pilot sites, priority should be given to those areas with Town Centre Management experience as this would ensure a better chance of success and engagement. There had also been a tendency for members of pilot schemes to depart from their brief despite being guided by the steering group: there should be tighter control of the pilot process than had been achieved in England, and participants should be more aware of what they were committing to. A feasible approach might be for a contract to be signed by a proposed Pilot BID that would commit the Pilot to passing regular updates to the centre: if at any point the contract details were broken then the Pilot BID could be discontinued. In addition it was beneficial to have senior staff from the organisations represented on the Pilot Bid Steering Group as this would carry more weight.
3.8 Very little funding had been made available to the BID pilots from the centre and businesses had therefore been asked to contribute the majority of the costs. This was done to ensure that the Pilots properly tested the BID idea regarding business interest and engagement.
3.9 Finally there were concerns in England that local government should be more involved in BID proposals, though it was stressed that BIDs had to be led by the private sector in order to ensure success. Involvement of the police was required when agreeing activity baselines. And if policing was to be cut back in the area concerned due to the work of the BID then consideration should be given to whether the police authority would be willing to contribute funding. Finally a central registration point for all BID projects would be very useful and would be a valuable source of reference for those considering whether to instigate a BID.
3.10 David Lonsdale asked if there was any minimum turnout required. There was no minimum, although the British Retail Consortium did request this. It was commented that there are no minimum turnouts required in local government elections. However it was pointed out that setting a minimum turnout figure would ensure there was a genuine effort made to fully consult with ratepayers in the area. Niall Stuart asked if there were any recommendations in getting the turnout up. Jacquie informed the Group that in America the vote was petition-based which required a door-to-door approach thus ensuring maximum coverage.
3.11 Donald Meldrum asked if the local authority veto on BIDs is a stumbling block. Jacquie explained that is could only be used if a BID would prove to be detrimental to current plans. It was stressed that this should not happen as ideally local authorities should be fully consulted about BID proposals at their initial inception stage. Billy McKenzie asked about the thinking behind the veto for residents. Jacquie explained that this was put in at the request of local authorities and that there was an argument against allowing this type of veto given the levy is paid for by businesses.
3.12 Andrew Rushworth asked if there was any evidence to show that tenants were holding back due to the non-involvement of property owners. Jacquie explained that it was too early to say. Property owners are more likely to consider long-term interests and will support long-term strategies, whereas tenants look at more short-term solutions to increase footfall so it is not always the case that a BID project will lead to benefits for owners. Jacquie pointed out that there were 352 Town Centre Management schemes operating around the country without the involvement of owners. She went on to say that it would be easier and more equitable to have property owners involved, however nothing has been formalised due to the difficulties in identifying property owners. Donald Meldrum pointed out that in Scotland Assessors complete an owner's declaration on an annual basis and that this could be used to identify ownership in Scotland.
3.13 Jacquie Reilly was thanked for attending the meeting and giving what was a thought provoking presentation. She then left the meeting.

4. Involvement of Property Owners: Paper 04/13

4.1 Andrew Rushworth then turned to the involvement of property owners and noted that the Working Group had received 3 models via the Circle Initiative in England for consideration. No other proposals had been submitted by members.
4.2 Donald Meldrum stressed that it should be property owners that are referred to rather than landlords, removing the need to consider the many layers of tenancy that can occur.
4.3 Donald Meldrum said that the opinion of Scottish Executive Estates Department was that property owners should be involved as they will benefit from the increased property values/rentals which may result from a BID. Stephen Devine expressed concern that the extra financial burden a compulsory levy would entail might inhibit property investment by owners in Scotland.
4.4 Gordon Reid suggested that BID proposers should have the discretion to include owners or not as certain BID projects may not have any direct impact on property rental values. Having this flexibility would allow businesses to proceed with projects without the consent of property owners.
4.5 The issue of changes in rateable values was raised and how to address this given the potential adverse effect this could have on funding levels. It was agreed by the Group that rateable values should be frozen at the start of the BID project's life, although exceptions might be needed for significant changes.
4.6 Gordon Reid asked whether the Scottish Executive had powers to introduce BIDs if the levy was a new tax. Billy McKenzie suggested that a BID levy is not a tax as it is to pay for extra services required by the business community and is imposed on business themselves not the state. However he would seek a legal opinion on this issue.
4.7 Donald Meldrum suggested that both RICS and the Scottish Assessors Association are contacted for advice on the involvement of owners given they are the experts in this area. It was agreed to approach both organisations for advice on any models for the involvement of owners which are favoured by the Group.
4.8 Niall Stuart asked if there was any way to stop the owner passing their levy on to the tenant. Billy McKenzie suggested that this be addressed via owners and tenants coming to a contractual agreement at the beginning of the BID projects life which would commit owners to not raising rents by more than inflation. It was agreed that this issue could be addressed in the guidance and views would be welcomed from the Group on this.
4.9 Andrew Rushworth referred to the 3 models contained in the paper and it was agreed that model 1 of the 3 was the most acceptable. It was agreed that Billy McKenzie and Donald Meldrum, in conjunction with RICS and the Scottish Assessors Association, would produce a further paper on the involvement of property owners for the next meeting.

5. COSLA Paper on Rural BIDs: (Paper 04/15)

5.1 Richard MacDonald explained that the main barrier to a successful rural BID was the critical mass of businesses in rural areas. Another difficulty was in specifying adequately the outputs from 'softer' initiatives appropriate to rural business. One theme a rural BID could address however was marketing of the area to increase tourism. As this could be done over a large area that would help to increase the potential revenue from a levy.
5.2 Niall Stuart suggested that rural BIDs should have the same objectives as urban BIDs, and that the concept should not be altered simply to make it fit real circumstances. If there are clear objectives for a BID in a rural area and this has business support then it will happen; if there are no objectives and no support then it won't and shouldn't. Even in rural areas, the BID should be business-led.
5.3 Stephen Devine expressed his reservations that there is a risk of trying to shoehorn an urban BID concept to fit a rural town a population of 3,000 or less. Euan Dobson agreed with this and pointed out that a BID is a unique tool which should not be stretched too far as the focus could be lost.

5.4 It was agreed that it would be useful to have some examples of the level of rateable value in small towns to give an indication of the amount of revenue that could be gained from a levy. Donald Meldrum agreed to provide information on this for the next meeting.

5.5 Euan also asked about the US Conservancy Projects. Billy McKenzie confirmed that details of this were still being sought.
5.6 Andrew Rushworth noted that the origin of the Group's remit to examine the application of the BIDs concept to rural areas had been suggestions made to the Parliament's Local Government Committee that the concept be adapted to meet the needs of community groups other than business interests. The COSLA paper had not explored this idea. The Group did not feel they had the expertise to advise on this extension of the BID concept.

6. Draft BIDs guidance document 04/14

6.1 Billy McKenzie said that views on the document would be welcomed via email. A second draft would be produced for the meeting in January. Amendments and additions were requested by Friday 17 December.

7. AOB

7.1 The next meeting will take place on 17 January 2005 in Victoria Quay.

Summary of action points:

Secretariat to issue standard text on BIDs to group members via e-mail

Secretariat to seek legal advice on the BID levy

Billy McKenzie and Donald Meldrum, in conjunction with RICS and Assessors, to produce a paper on the practicalities of the Model favoured by the Group regarding involvement of owners

Donald Meldrum to seek information on rateable value levels in small towns in advance of the next meeting

Jane Scott to provide information on Business Support Groups

Euan Dobson to revise his paper in light of comments made and pass to Secretariat in advance of the next meeting

Members to feed comments on the draft guidance document to Billy McKenzie no later than Friday 17 December

Scottish Executive
December 2004