The Truth will piss you off.

The original concept of establishing Business Improvement Areas (BIAs) was appealing. The intent was to form an association of entrepreneurs which would represent, promote and support the various business members in a city or community.

In Toronto however, the ideal was hijacked by municipal politicians who are always seeking more revenue. Instead of representing the business class, BIAs’ priorities were sculptured by Toronto’s City Council to become an extra tax base – in other words, these creations served the interests of the municipality instead of the business community. Specifically, they became a new revenue source which provides additional monies for the use of City Council. The original concept was prostituted for the indulgence of additional political spending at the expense of the business class.

(Note: these comments DO NOT apply to Ontario’s BIAs which exist outside Toronto. The municipal environment for non-Toronto BIAs is far more cooperative and symbiotic. Those BIAs actually operate under benign and brotherly conditions with their respective councils. This point is important.)

Now, let’s return to the Toronto situation…

Toronto BIAs are used by the city to extra-tax the business class and to use that revenue to repair or create improvements to city infrastructure (roads, lighting, sidewalks, etc.) which otherwise would have been funded from the city’s general revenues (a broader tax base). Another way to describe this is to point out the Public Realm (which belongs to all city residents) is being improved by revenues raised by a select few taxpayers; the business class of commercial property owners and merchants which pay a BIA levy.

The necessary legislation was introduced and passed at the provincial level (Queen’s Park) and it gave authority to municipalities to create BIAs and incorporate them into the city structure by making them agencies. All BIAs are agencies of their respective city. In Toronto, the governing legislation for BIAs is founded in the Toronto Municipal Act, Chapter 19. For the rest of Ontario, the governing legislation is found in the Municipal Act 2001, Chapter 25, section 204.

As city agencies, BIAs are given the ability to raise funds commonly known as the BIA levy, by adding their members to an extra tax base. This levy is set annually by BIAs through their respective Boards. Members of these Boards serve as Directors on the BIA Board of Management and are selected by the membership (the business members who pay the levy).

These Boards, once elected by the members at an Annual General Meeting (AGM), are ratified (appointed) by city council. As ratified appointees, all the Board members become subject to the city’s rules and codes, such as the Conflict of Interest Act, Code of Conduct and other rules and regulations of governance.

In summary then, what was created was an extension of municipal governance to a new, additional tax base. The concept of businesses uniting to promote their interests went out the window and the agenda for their existence came under City Council’s priorities; meaning they were now cash cows to be milked by the city for the city’s needs instead of the members’ interests. Under this political umbrella, the basic elements for success are designed to serve the city; not BIA members; the business class.

This structuring, however, embedded a great number of deficiencies. These deficiencies create weak or even disastrous BIA governance – resulting in many conflicts, complications and waste.

Since these BIAs are encouraged by the city to spend funds for city improvements, weak governance can be a preferred attribute… they can be easily swayed to act as they are told.

Continued, Part II.

 

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