In Toronto, Business Improvement Areas (BIAs) are agencies of the city – that is to say their mandate comes from City Council; their Boards are approved by City Council and their main purpose is to serve the City’s priorities, while the priorities of their members (the business community they are purported to represent) are relegated to secondary importance.
This can be seen by the manner in which they are set up for operating. Toronto’s BIAs fall under Chapter 19, a municipal Act governed by the province. In doing so, they become subservient to the management of Toronto City Council.
This enables Toronto City Council to control and influence their operation. It also brings them under the city’s rules and regulations, such as codes of conduct and operational guidelines established by the city – not by regulations independently established by each respective BIA Board. It means that every Toronto BIA’s “constitution” is the same.
Every BIA is composed of two types of members; merchant retailers and commercial property owners. These BIAs are subject to an additional city tax levy which is surcharged to each commercial property owner (not the merchants) and included in the property tax collected by the city annually from the owner. This surcharge (the ‘Levy’) is determined by the Board of each BIA and collected by the city and then transferred to that BIA for use by its Board.
The Board is comprised of members of the BIA who volunteer to serve. These volunteers are nominated by the BIA members at an AGM and later appointed by City Council. The nominations can be made at any time during a Board’s term. However, Boards are initially established and appointed after every municipal election and serve for a 4 year term that runs concurrent with a newly-elected City Council.
These Boards are structured similar to a Board of Directors. They include a Chairman, a Vice Chair, a Secretary and a Treasurer (the Table Officers) with all other members serving as Directors. Each Table Officer has a role with duties that are set out as to what they must each perform. These duties are specified in the Rules and Regulations.* Once a Board is appointed, the members of the Board meet and choose from amongst themselves who will serve as Table Officers.
Each calendar year, that Board draws up a Budget. The taxes to be collected by the aforementioned Levy are submitted to City Council for approval and then are collected by the city for each respective Board. This Levy is what was previously mentioned as the tax surcharge being added to the commercial properties’ annual realty taxes.
The Boards then proceed to use these funds as they see fit, providing they comply with the restrictions set out by Chapter 19 legislation which is the governing authority under which all Toronto BIA Boards must operate. Any funds not used in that calendar year are carried over to the next year and used or banked, according to needs.
That is the template for BIA Boards. They are established, choose their officers, set their budgets and govern according to the rules of Procedure as set out by Chapter 19 of the Municipal Act.
Their raison d’etre, their existence, is to serve their members as defined in Chapter 19 under section 19.3 as follows;
“A. To oversee the improvement, beautification and maintenance of municipally-owned land, buildings and structures in the business improvement area beyond City standard levels provided at the expense of the municipality generally;
- To maintain business improvement area-initiated streetscaping capital assets within the business improvement area;
- To promote the business improvement area as a business, employment, tourist or shopping area;
- To offer graffiti and poster removal services respecting building façades visible from the street, to all business improvement area member property owners who provide written consent, upon approval of the program by the business improvement area members;
- To undertake safety and security initiatives within the business improvement area;
- To undertake strategic planning necessary to address business improvement area issues; and
- To advocate on behalf of the interests of the business improvement area subject to the limits set out in this chapter.
Sounds like a good thing, no?
There are many complications that flow from this concept. Some unintended; some due to poor planning and legislation and some because of difficulties created by the players involved.
“Conflicts in interests overcome the best of intentions.”
One of the main stumbling blocks is the interpretation of who the BIAs are intended to serve. One of the pylons in a democratic society is the understanding that those who are elected are elected to serve the people; their constituents. The corollary to that is that their constituents are the very same people from whom they collect taxes in order to serve the needs of the people. That’s the prime principle. You tax the people in order to provide management for the services which meet their needs. In theory.
In theory then, when the members of a BIA are charged a levy of extra taxes, those funds collected should be directed to serving the needs and interests of their respective membership. That’s the reason they are charged an extra tax – to have those funds serve their needs.
However, the problem arises when City Council decrees that BIAs are a ‘city agency’. That translates into City Council viewing the BIAs as serving the interests of the city (as a whole) and relegating the interests of those taxed (the BIA members) to a secondary state.
This point of view evolves into the BIAs becoming subject to City control. In other words, the city now expects and insists that the BIAs operate under the authority of the Office of Economic Development (responsible for city capital expenditures). This Office of Economic Development (OED) is staffed with civil servants. They all have various tasks, but those who deal with BIAs fall within two categories.
There are about nine (9) who liaise with the BIAs; each staffer being allocated a group of about ten (10) BIAs in their portfolio. Their OED title is ‘Economic Partnership Advisers’.
Then there are another three (3) staffers responsible for overseeing any capital projects that are contracted for the improvement (Capital Project) of a BIA. Their job is to manage each project by finding a contractor, signing a contract and monitoring its progress once the project gets underway. They act as ‘project managers’ and their OED title is ‘Streetscape Designers and Capital Project Coordinators’. Streetscape projects can be defined as,
“A. To oversee the improvement, beautification and maintenance of municipally-owned land, buildings and structures in the business improvement area beyond City standard levels provided at the expense of the municipality generally;”
And that’s when things turn into SHIT.
In theory, the staff at the OED is intended ‘to liaise, guide and advise’ the BIA Boards in their operations during everyday business, but especially when a capital project has been undertaken. These capital projects can run as high as one million dollars and are quite complicated. And once the BIA agrees to a capital project (95% of the time, it was directed and encouraged to undertake the project by their ‘Economic Partnership Advisors’), the project will be managed by the ‘Streetscape Designers and Capital Project Coordinators’.
Let’s return to the matter of a BIA project instigated and managed by OED staff later…
Remember the composition of the Board with Table Officers and Directors?
These individuals are all volunteers. They are not paid for their involvement. There are no skills or abilities required – only a willingness to serve. The only qualification is that they are members of a BIA and they pay into the BIA levy charged by the city. (Although retail merchants are not taxed directly, they are deemed to pay their share through the levy charged to their respective property owner/landlord)
Since there is no need for any skill, ability or special knowledge to serve, the Boards are a mixture of well-meaning volunteers wishing to help in the community. Since there is no remuneration, there is no monetary incentive to serve on a Board, which means; no competition. Accordingly, a very few inexpert, unqualified individuals are appointed and they run the show, making decisions that affect the whole BIA.
This can, and usually leads to, mediocre or poor governance. It can also lead to bad decisions and a serious waste of money – money collected from the members of a BIA which is then spent by a Board directors. In fact, almost 90% of the BIA Boards are governed by poor managers, with little knowledge of how to govern, no training and little previous experience.
Furthermore, this lack of skill requirements frequently contributes to mismanagement.
The lack of remuneration results in no competition for the job. No competition has two outcomes – no incentive to improve and acquire skills; no incentive to choose the most qualified. This fertilizes lack of direction, lack of governance and a colossal potential for mismanagement and waste. (These Boards often control funds exceeding $500,000).
Now, let’s return to the staff of the OED.
These staffers are not blind. They can see the BIA Boards are composed of individuals with little knowledge and skill. They form opinions. And their opinions invariably result in having little or no respect for most of those serving on BIA Boards.
This observation is accurate; but not politically-correct to make. And no staffer will ever advertise such an observation. To publicly declare they embrace such a view or opinion would get them fired.
Nonetheless, they do share this view because it’s human nature to treat mediocrity with little or no respect.
This now evolves into a situation where the OED feels it should ‘help’ a Board with advice or guidance. Such advice and guidance eventually morphs into influence, which eventually evolves into control.
And that is the natural evolution of how a Board becomes subservient to the City’s interests and comes under the control of civil servants.
Such control serves City priorities and not the BIA members who pay the BIA levy.
One possible method to avoid mediocrity or incompetence is to improve the quality and expertise of the members who serve on these BIA Boards. That would be the first step towards promoting BIA priorities and serving the needs and interests of its BIA members – instead of the City Council’s.
And one of the solutions towards acquiring better governance is to attract people who will serve and bring experience and dedication to the table. To do so, perhaps per diems should be considered for those who serve. And by “serve”, I mean actually serve – not just meet, talk and abrogate their duties to some staffer. These duties are defined under the BIA Rules and Regulations. Unfortunately, common practice of most BIA Boards is to dump the actual work of the Table Officers and the Directors by hiring staff, such as coordinators or managers. For instance, few if any, Board Secretaries actually record the Minutes. Most will wear the title while their hired staffer takes the Minutes. The same goes for Treasurers. They will sign the cheques, but the actual bookkeeping is done by staff.
This abrogation of duties (work) is encouraged since those who serve are not remunerated. BIA Board members need to address their own business priorities, such as making a profit. Accordingly, staff are hired to perform these duties. This is not intended as criticism; it is an observation of reality and natural evolution.
But if improvement of governance and performance is to be achieved, a better quality of participants is a must.
* Rules and Regulations can be found on this site under ‘Governance’.