Managing and operating a BIA
Managing and operating a BIA
The members of a traditional Business Improvement Area consist of both property owners in an improvement area, and their tenants.
Membership in a BIA generally includes attendance at BIA meetings, including the annual meeting of the BIA, and eligibility to vote on BIA-related issues such as the annual budget and selections to the board of management.
Some BIAs also have associates, who attend meetings. Associates are generally business people in the area surrounding but not included in existing BIA boundaries.
Board of management - Overview
Administration and strategic management of a Business Improvement Area is generally the responsibility of the board of management. In particular, the board of management is typically responsible for overseeing the planning, budgeting, implementing and evaluating of BIA projects.
Rules in the legislation (the Municipal Act, 2001 and City of Toronto Act, 2006) may apply to the term of directors of a BIA board of management. Traditionally:
- the term of the directors of a board of management is the same as the term of the council that appointed them, but continues until their successors are appointed
- directors are eligible for re-appointment
BIA board of management sizes vary considerably, depending on what the municipality decides. In Toronto, the practice is that boards of management include one or more members of City Council.
Chapter 19 of the Toronto Municipal Code (Business Improvement Areas) includes a listing of the total number of members of the named Business Improvement Areas, and of how many councillors are members of each.
Traditionally, the municipality appoints one or more directors directly and the remaining members are chosen by a vote of the membership (and later approved by municipal council). The board of management usually consists of between five and ten members.
In most cases, council designates a position on the board of management for the local councillor that represents the area within which the BIA is situated. Apart from the position on the board usually reserved for council appointees, the rest of the board is selected through a vote by the BIA membership subject to their approval by council.
Typical roles of the BIA board of management
Composition and activities of the board of management and its officers:
The BIA board of management typically establishes or makes recommendations to council about rules for the composition and activities of the board of management and its officers (e.g., chair, vice-chair, treasurer). Among the issues often considered are:
- the size of the board of management
- officer positions
- rules for quorum
- procedures for vacancies
- responsibilities of the board
- duties and responsibilities of board of management members and officers
BIA Boards of management also often form rules on:
- creation, functions and meetings of committees and sub-committees
- general meetings of BIA
- annual budget
- general expenditures
- rules of order
- voting/proxy voting
These practices are common. (Many details are not mentioned in the traditional BIA or other legislation.)
Budgets, funding and financial and annual reports
BIA boards of management traditionally submit their annual budget estimates for council approval. Traditionally, BIA boards could not spend money unless it was included in the estimates, or in a reserve fund. In addition, such boards could not borrow money, and could not incur debts extending beyond the current year without prior council approval. Finally, boards traditionally submit to council an annual report including audited financial statements for the preceding year, by the date and in the form set by council.
The BIA board of management generally exercises a number of informal responsibilities. These often include:
- selecting an executive
- establishing and reviewing committees
- hiring staff
- establishing BIA policies, constitution and operating bylaws
- reviewing and assessing BIA programs and projects
Selecting an executive
Boards of managements usually select an executive. The executive generally consists of at least four members, including:
- committee chair(s)
The executive is usually chosen by majority vote of the board. In some cases, choices for the executive are submitted to the BIA membership for approval.
Establishing and reviewing committees
Boards of managements often establish BIA committees. Many boards initially establish at least two committees, one for beautification and one for marketing and promotion. As the BIA matures, other committees are often introduced to provide for better planning with respect to parking, business development, tourism, revitalization projects and any number of other issues.
Committees generally range in size from three to eight persons. The chair of each committee is often a member of the board of management. Other committee members can include BIA members or local community leaders. Committee members may be appointed for any length of time during the tenure of the board, in practice.
Many BIA boards of managements establish guidelines that govern committee activities, including:
- board of management membership on the committee
- selection of a vice-chair for the committee
- the chair of the board is automatically a member of all committees (sometimes called an “ex-officio” position)
- that notices of meetings and agenda be mailed out to committee members in advance.
- that committees be responsible for their budgeted funds and seek board approval for any funds that exceed this budget.
In general practice, the chair of a committee is accountable to the board of management for all expenditures within the committee budget. In addition, the committee chair may have several other important responsibilities, including:
- choosing committee members
- organizing and planning programs and projects in the committee’s area of responsibility
- presenting progress reports to the board of management on all programs and projects undertaken by the committee
The committee may have practical responsibility for developing and implementing the budget, and for programs or projects required to carry out the mandate of the committee. Many committees with responsibility for a wide range of programs and projects establish sub-committees.
All BIAs require dedicated people to devote time and effort to help ensure the success of the programs and projects they establish. Some BIAs have paid, professional staff, but many operate with only volunteers.
Many BIAs that do employ professional staff hire a manager for the day-to-day management and
operation of the BIA and its programs and projects.
An assessment of staffing needs may require the BIA board of management to consider a number of issues, including:
- identifying tasks needed to implement BIA projects and programs
- identifying skills that staff require to complete these tasks
- determining resources and help that may be available from the municipality and from within the local business leadership and wider local community
- minimum requirements that the municipality may establish for staff of its local boards (compensation, benefits, etc.)
- deciding if resources are adequate to meet the staffing needs of the BIA
- determining the availability of funds to hire paid professional staff
Establishing BIA policies, bylaws and constitutions
Many BIAs establish policies and bylaws that govern their structure and operation. Some BIAs formalize these in the form of a constitution. This may help provide continuity and direction when there is a change in the composition of the board of management or committees. A constitution can also help provide legitimacy to the BIA and greater consistency and certainty in its operation.
In some cases, municipalities help BIAs by developing a model constitution that can be used by BIAs within the municipality to develop policies, bylaws and/or a constitution that meets their specific needs.
Whether establishing policies and bylaws or a constitution, all BIAs may need to consider a wide range of management and operations issues.
Among the issues that could be considered are rules and policies related to:
- composition and activities of the board of management, committees and subcommittees
- general membership meetings
- board, committee and subcommittee meetings
- annual budgets
- general expenditures
- rules of order
- conflict of interest guidelines
- voting and proxy voting
- adoption of policies, bylaws and constitution
Committees and sub-committees
BIA board of managements often establish rules with respect to the creation and functions of committees and subcommittees. Among the issues to consider here are:
- defining reporting requirements
- determining the composition and size of committees
- appointing committee chairs
BIA boards of management often establish rules concerning meetings of the general BIA membership. Among the possible issues to consider here are:
- a requirement for an annual meeting(s)
- notice requirements (rules related to local boards govern meetings notices, etc.)
- provision of relevant documents
- procedures for voting
- calling of meetings
Information about the general legislative requirements for meetings and procedures of local boards may be found in the “Understanding the Responsibilities of Local Boards” section of the Handbook.
Board of management and committee/sub-committee meetings
BIA boards of management generally establish rules concerning meetings of the board, committees and subcommittees. Among the possible issues to consider here are:
- requirements for holding regular meetings
- rules regarding member attendance
- rules regarding placing items on agenda
- requirements for notice of meetings
- rules for the provision of relevant documents
Information about the general legislative requirements for meetings and procedures of municipalities, local boards and committees may be found in the “Understanding the Responsibilities of Local Boards” section of the Handbook.
Rules of order
BIA boards of managements often establish rules concerning the rules of order for meetings of the board, committees and subcommittees. Often a BIA will refer to an established set of rules of order for conduct at meetings, such as Robert’s Rules of Order, which adapt historic Parliamentary Procedure to help everyone be heard and make decisions with minimal confusion.
Newer editions of Henry M. Robert’s manual on Parliamentary Law, first published in 1876, are often the basic handbooks of operation for clubs and organizations.
Customary order of business at meetings (summary)
This section summarizes some of the elements of customary meeting procedures, and related matters, used by some organizations.
This is usually understood as the number of members that must be present for business to be conducted. The actual number is usually stated in bylaws.
Order of Business
Organizations using Parliamentary Procedure usually follow a fixed Order of Business. For example:
- call to order: The chair says, “The meeting will please come to order.”
- roll call: Members say “present” as their names are called
- minutes: secretary reads a record of the last minutes
- officers’ reports: Often limited to a report from the treasurer, but others may report at this time
- committee reports: First come reports from “standing” or permanent committees; then from “ad hoc” or special committees
- special orders: Important business previously designated for consideration at this meeting
- unfinished business: Business left over from previous meetings
- new business: Introduction of new topics
- announcements: Inform the assembly of other subjects and events
- adjournment: Meeting ends by a vote, or by general consent (or by chair’s decision if time of adjournment was pre-arranged by vote)
Reviewing and assessing bia programs and projects
Programs are often evaluated to determine if they are working, and if the BIAs economic situation is actually improving. Evaluation in this context implies the measuring of success and is usually undertaken once most of the longer term actions comprising a comprehensive approach are either complete or well underway.
The following questions may help in assessing the impact of any initiative:
- How many vacancies now exist in the BIA compared to when the program started?
- How quickly are vacancies filled?
- How many new businesses have located in the BIA since the program started?
- How many business failures have occurred since the program started compared to before?
- How many “facelift” projects have taken place since the program started?
- How many businesses have reported increased sales since the program started?
- Have there been reports of increases in property values since the program started? Are increased property values a result of improvements?
- How many new permanent jobs have been created in the BIA since the program started?
- How many successful events can you count on continuing?
- How has the competition fared since the program started?
- What are the media saying? Are they taking notice?
- Are media/resident/council reports positive or negative?
- Has the level of participation among BIA members increased?
Most of the information needed to answer these questions may be easily obtainable through: field surveys; discussions with BIA merchants; property owners and business groups; telephone calls to local realtors; discussions with key municipal staff; review of recent issues of the newspaper; and perusal of town assessment, building permit, and other files.
All of these elements may not be applicable in your particular situation. You may be able to identify more appropriate criteria that have not been included. These questions may provide a useful yardstick for measuring the success of your program. You may wish to consider your evaluation in the context of economic developments both in your region and the province.
BIA boards of managements generally establish rules concerning the annual budget. Among the possible issues to consider here are:
- Requirements for an annual budget
- Rules for membership approval of proposed budget
- Rules for provision of copy of proposed budget to members
- Rules for member access to approved budget documents
BIA boards of managements generally establish procedures concerning expenditures made by the board, such as procedures for the deposit and disbursement of funds.
BIA boards of managements often establish procedures and policies concerning negotiating and entering into contracts on behalf of the BIA. However, typically BIAs do not borrow money or incur debt beyond a year without the approval of the municipal council. Among the possible issues that can be considered are:
- the appropriate authority and responsibility of the board
- requirements for board resolution
- signing authority
Voting and proxy voting
BIA boards of management usually establish rules concerning voting procedures at general meetings and board meetings. Among the possible issues that can be considered are:
- voting by general membership
- voting by board members
- voting procedures
A number of BIAs have created rules about voting procedures that may help allow for well-executed general meetings. For example, some have a rule requiring corporate members to declare their nominees to the municipal clerk a week prior to a general meeting. As a reminder, the following traditional requirements (summarized from the legislation) may be among those that apply:
- a corporate member of a BIA may nominate in writing one individual to vote on behalf of the corporation.
- each member of a BIA has one vote regardless of the number of properties that the member may own or lease in the improvement area.
Note – The practice in Toronto is not to have voting by proxy at BIA meetings in the City.
BIA boards of management generally establish procedures concerning elections or selections to the board. Among the possible issues that can be considered is a process for nominating candidates for the board.
Consistency with legislation
It is important for all board of management members to remember that any and all policies, bylaws and other matters they act on must be consistent with law, including legislative and bylaw requirements.
Of particular importance for BIAs may be sections 204-215 of the Municipal Act, 2001, BIA related provisions in the City of Toronto Act, 2006 and applicable local bylaws (such as the Toronto Municipal Code). Other legal requirements may also apply. BIAs and municipalities may wish to seek legal advice where interpretation or other legal issues arise.
Some actions of a BIA board of management (e.g., budget or certain expenditure approvals) may require council approval.
BIAs often hold special events to promote and showcase their businesses. Examples of the kinds of special events that BIAs have held include:
- holding a street dance, costume party, music festival, food fair, arts and crafts exhibition, fashion show, ethnic cultural exhibition, winter carnival.
- sponsoring an amateur theatrical production or seasonal activity like carolling or parades
- holding a BIA “let’s get acquainted” open house
- Holding contests, such as:
- amateur entertainment competition
- window display contest among BIA merchants
- poster painting, scavenger hunt, clean-up campaign
- Conducting promotions such as:
- sidewalk sale
- farmers’ market
- neighbourhood flea market
- giant garage sale
Volunteers can contribute to the success of a BIA in a wide variety of ways, utilizing many different skills. They can help organize and support events, booths, campaigns and programs, provide office support and computer, design, marketing and media skills, recruit other volunteers, and research new funding sources.
Most BIAs find that they have more success recruiting volunteers when they spell out exactly what needs to be done and how much time volunteers need to offer.
For a BIA to be successful, it may be essential for it to build and maintain a strong, positive relationship with the local community. After all, the primary customer base for BIA member businesses is in the surrounding neighbourhood. Towards this goal, a BIA can:
- demonstrate and ensure that neighbours recognize that the BIA and its members care about and are interested in the community
- respond in a positive way to community needs and concerns, get involved in community affairs, and work with residents’ groups and other local organizations (e.g., community centres, schools, churches, libraries, etc.) on common interests
- reach out to members of the community, participate in community activities and events as both a BIA and as individuals
- support the community as much as possible, encouraging members to hire locally and use local suppliers whenever reasonable
- keep the lines of communication open between the BIA and the community, be aware of what is going on in the neighbourhood, and make sure residents are kept informed of what the BIA is doing
- invite your community ratepayers’ association to some of your BIA board of management meetings to hear their comments and keep them informed of upcoming BIA activities
- get involved with the local community in charity or community fundraisers
One of the most important activities performed by any organization, including BIAs, is financial
management. Financial management begins with at least three key functions:
- Financial planning
- Financial monitoring
Good financial planning requires more than simply preparing an annual budget, although the budget is a mechanism through which it is implemented. Effective financial planning involves many activities, including:
- needs assessment
- needs prioritization
- policy/program development
The first step in developing a financial plan for your BIA can be to assess the needs of the local area. Needs assessment may be seen as an opportunity to develop a strategic financial plan for the BIA. Needs may range from improving the economic environment and changing public perception, to enhancing municipal policy in support of the BIA and infrastructure improvement, as well as enhancing parking, circulation and the physical environment. Appendix A provides a checklist of some of the needs of the business area that could be considered. (See Appendix A: A Sample Checklist to Identify BIA Needs.)
Once needs of the area have been identified, they can be prioritized. The most pressing needs are generally addressed first. It is the role of the board of management, with member input, to determine which are the most pressing.
Policy and program development
Once needs have been identified and prioritized, programs and projects that address these needs may be identified and developed into specific proposals. The next step is to prepare estimates of the costs associated with implementation.
At this stage, it may be important for the board of management and membership to consider that many proposals and projects may require several years to be fully implemented. Since the traditional BIA levy is assessed only for the current year and the ability of the BIA to borrow money and incur debts is limited, it may be important for the board of management and membership to consider that any projects requiring multi-year funding be provided for in upcoming budgets if they are to be completed. Financial planning may therefore go beyond current year requirements.
The board of management is generally responsible for the BIA budget. Budgeting involves both developing a budgetary plan and preparing the proposed annual budget. The budget can be regarded as the vehicle by which the strategic financial plan, developed from the initial needs assessment, is implemented.
A board of management of a traditional BIA prepares a proposed budget for each fiscal year by the date and in the form required by the municipality. The board also discusses the budget with its membership in one or more meetings.
Generally, a traditional BIA board of management would not spend any money in any particular item unless it is either included in the budget approved by the municipality, or in an established reserve fund. In addition, the board would not incur any debt extending beyond the current year without the prior approval of the municipality.
Developing a budget plan
Budgeting is an important consideration in successfully managing a BIA. The board of management is responsible for preparing the annual budget. The purpose of the budget is to provide the funds required to finance the projects and programs identified by the board as meeting the needs of the local business area. Thus, the budget reflects the priorities and needs of the local business area.
A first step to preparing a budget is for the board of management to determine which of the projects and programs identified in the strategic financial plan should be funded in the current budget. Projects or programs may be ranked according to their urgency and importance. It may be important that the board of management does not under-budget for projects. This can result in projects not being completed. It is also important not to over-budget for projects.
Members may be included in planning and preparing the budget. This will help to ensure that the budget has the support of a majority of members. Discussions can be held among the board of management, key staff and members to reach a consensus on the types of projects that should be pursued by the BIA over the coming year. Consideration is usually given to ensuring that the activities of the BIA generally provide benefit to all types of members (retail, professional, industrial).
Many BIAs seek well-defined, clear and concise budgetary objectives and goals. This generally will make it easier for board of management members to explain what they propose to do, the purpose of these proposals and the cost of implementing these proposals. Different BIAs adopt different approaches to setting budgetary priorities. Some newly established BIAs feel that it is desirable to undertake “quick hit” high impact projects, (e.g. banners), during the first year of operation to ensure that the BIA has an immediate impact on the area.
Other BIAs use their first year as a period to develop a long-term strategic plan for revitalization of the area. Boards of management will often develop three or five-year plans that are updated annually.
Another approach adopted by some boards of management is to give priority to beautification and streetscape improvements during the first few years of a BIA. Promotional activities are then emphasized in subsequent years. The most successful BIAs often combine both beautification and promotional strategies from the outset.
The board of management may need help in projecting costs. This may require the board to approach contractors, consultants or advertising agencies. The board may wish to first contact the municipality for estimates. Municipal staff may be able to provide valuable assistance free of charge. For example, a municipal engineer may be able to provide reliable estimates of the expected costs of beautification projects.
Approving the budget and determining the levy
The board of management prepares annual budget estimates that are submitted to municipal council for approval. Generally, the board presents the budget to members at the annual general membership meeting for approval. Traditional boards of management are required to hold meetings to discuss the proposed budget with their membership and generally solicit input from the membership. To facilitate a thorough discussion, the board may wish to provide a copy of the proposal budget to the membership along with the notice of the budget meeting. Once the budget has been discussed by the membership, it is then submitted to municipal council.
Once the budget is approved by municipal council, the council traditionally adds a special levy to the property tax paid by every owner of a business property (classes of property designated as industrial or commercial) within the boundaries of the BIA. For each property, the amount of the levy will be related to its realty assessment. Ordinarily, if the assessment of a property represents one per cent of the total business realty assessment within the BIA boundaries, the owner of the property might pay one per cent of the total BIA levy.
The usual amount of the traditional BIA levy for a property is determined by dividing the property’s realty assessment by the total business realty assessment in the BIA and multiplying by the total BIA annual budget.
For example, if:
A property’s realty assessment is $100,000, and the total relevant assessment in the BIA boundaries is $10,000,000 and the annual BIA budget is $40,000, then the property’s BIA levy is equal to:
($100,000 / $10,000,000) X $40,000 = $400
The municipal council could consider, for a traditional BIA, setting minimum and maximum charges for one or more separately assessed properties or categories of properties in a prescribed class, as:
- Percentages of the assessed value of rateable property in the BIA that is in a prescribed business property class
- Dollar amounts
- Percentages of a BIA’s annual budget
Special other rules may also apply to the minimum and maximum charges. In addition, the council could consider setting a special charge for properties that derive greater benefits from the traditional BIA.
Municipalities seldom use such special benefit provisions. However, a maximum levy can be a useful tool in situations where one property in the BIA represents a significant proportion of the total applicable realty assessment in the BIA. In such situations, in the absence of maximum levies, the BIA levy may be seen as a heavy burden on the large property in relation to others in the BIA.
Alternative sources of funding
The board of management and membership of the BIA may also investigate alternative funding sources. In recent years, many boards, with the support of members, have also taken on a fundraising role. Some boards have obtained corporate sponsorship, or have charged fees for BIA-related events. Others have been successful in seeking corporate sponsorship to support both physical improvements and local marketing and promotional events.
Some BIAs have also accepted the participation of associates, generally business and property owners in the surrounding area. Associates may provide voluntary financial support to the BIA because they believe the benefits of the activities of the BIA extend beyond its boundaries and that they therefore reap similar benefits.
Some municipalities have cost-sharing programs to help BIAs with the costs of capital improvements. Check with your municipality to determine whether such programs are available. An example of a BIA capital cost-sharing program can be found on the City of Toronto website.
Responsibility for financial monitoring of the board of management lies with municipal council, as well as with the board itself. Traditional BIA boards submit annual reports to the council that include audited financial statements.
The municipally appointed auditor acts as the auditor of the board of management. The board would make all of its records (such as books, documents, transactions, minutes and accounts) available to the auditor.
The board of management may wish to consider an open-book policy with respect to their membership. For example, they may present their financial statement and proposed budget at the annual meeting of the BIA so that members have an opportunity to scrutinize the board’s financial management and provide constructive suggestions.
BIAs can consider implementing fees for property owners and tenants in the BIA for some of the BIA’s services or activities.
Practical considerations may include, among others:
- consulting the municipality (a municipal approval of fees may be needed)
- the basis for the fees
- membership, business activity, recent changes, and degree of support for any approach
- general workability
- workability in comparison with other funding (e.g., from the BIA levy)
- other funding (e.g., from the BIA levy)
For more information concerning the above topic, Part XII of the Municipal Act, 2001, Part IX of the City of Toronto Act, 2006 and any regulations concerning fees and charges may be among the provisions of interest.
Charities occupying property within the boundaries of a BIA may be eligible for a rebate of part of the BIA levy. In addition, owners of vacant property within the boundaries of a BIA may be eligible for a rebate of part of the BIA levy.
For more information concerning the above topics, sections 361 and 364 of the Municipal Act 2001,, and sections 329 and 331 of the City of Toronto Act, 2006 may be among those of interest.
Area rate levies
Municipal property taxes are generally spread across all property owners in accordance with their assigned property class and the relative value of their property within the taxing jurisdiction. While property tax rates vary from property class to property class, all properties within a class generally pay the same rate.
However, in some circumstances municipalities may impose special area rates. These rates apply only to properties within an area receiving special services and may cover some or all of the cost of those services.
The special services levy has similarities to a traditional BIA levy. However, there are differences. One is that a special services levy, generally, may apply to all rateable property (including residential), whereas the traditional BIA levy applies only to the prescribed business property classes (i.e., the commercial and industrial classes).
Decisions on whether or not to area rate special services are made at the local level. Should a municipality choose to area rate a special service, the proposal would have to meet the general requirements in the legislation. These include, among others, designating the benefiting area, and levying the special rate on property within the defined area.
For more information concerning the above topic, section 326 of the Municipal Act, 2001, section 287 of the City of Toronto Act, 2006 and any regulations concerning special services may be among the provisions of interest.