BID Renewal Challenged by New Group

by Jason Mandell

In the past five years the Fashion District Business Improvement District (BID) has been, by most accounts, a success. The area has enjoyed an upswing thanks to the BID's cleanliness, safety and marketing efforts, and a rush of building propelled by the Downtown loft boom and the Staples Center development. But at a time when many might expect the BID's property owners to vote overwhelmingly to renew the district for another five years, the group is fighting for its survival. The culprit is a competing BID that threatens to dismantle the existing group.

Len Fisch, who owns several large retail and wholesale properties in and around Santee Alley, a major Fashion District thoroughfare, is leading an effort to launch a new BID whose territory would comprise the central section of the Fashion District. The proposed boundaries for the Apparel District BID are Ninth, 15th, San Pedro and Main streets.

"They want our belly," said Kent Smith, executive director of the Fashion District BID, which, founded in 1996, was the first property owners' BID in Los Angeles. It now has a $3.1 million annual budget.

With the renewal process underway, the BIDs are battling for property owners' support. City law dictates that the two cannot coexist.

"You cannot have two Business Improvement Districts that overlap," said Karen Kalfayan, chief management analyst at the City Clerk's office, which oversees the BIDs.

Battle of the Consultants

Fisch charges that the Fashion District BID is governed by a "good old boy" system that does not give all property owners equal rights. He said that the BID's voting process allows board members to retain their seats without a proper reelection process, and makes it difficult for newcomers to win seats on the 15-member board. Fisch also complains that he and other property owners have no say on how the BID spent its funds, and that their requests that more money be spent on promotion have been ignored.

"Some of us owners are paying over $100,000 a year in assessments and we have had no voice," said Fisch.

Smith acknowledged that the BID's election process was flawed, but said that amendments made earlier this year to the group's bylaws mean that elections are now accessible to all property owners. He hired consultant Brad Segal to mediate with Fisch's group.

Fisch has hired his own heavyweight consultant, Steve Afriat, a campaign veteran whose website lists nine past and present Los Angeles City Councilmembers and two County Supervisors as clients. Afriat is pulling no punches, claiming that the Fashion District BID "is still a country club Business Improvement District."

Segal, whose Denver-based company Progressive Urban Management Associates has worked with BIDs throughout the country, said Fisch and his group's complaints are based on personal divisions within the district that go back generations.

"It's almost like a family feud," said Segal.

Indeed, some of the Apparel District BID's biggest supporters are former Fashion District BID board members. Fisch's wife Selma, who is also working to launch the Apparel District BID, served on the Fashion District BID's board for its first three years.

Peter Fleming, who owns a large produce market at Ninth and San Julian, said he recently stepped down from the Fashion District BID board after five years because he did not support the new bylaws.

"(The new bylaws) do not provide for an open nomination and election process and I think that's vital," said Fleming.

Still, many property owners say the Fashion District BID is a success. Steve Needleman, whose Anjac Properties owns 14 buildings in the Fashion District, said the BID has had a positive impact on the area and that he will vote to renew the organization. "If it's not broke, you don't fix it," said Needleman.

The Fashion District BID has had success in a number of crucial areas. It has helped reduce property-based crime by 16% since 2001, according to Smith. After launching a heavy marketing campaign and a website that receives over 600,000 hits a month, the district is regularly teeming with shoppers. Retailers over the holiday season reported strong sales, even as business at malls and other mainstream outlets slumped.

Finding Common Ground

Business Improvement Districts are a voluntary self-taxing program for property owners who want to supplement city maintenance, security and other services. The funds are also used to promote the districts. Most Downtown BIDs charge property owners a set annual fee, or assessment, based on their square footage. Every five years, in most cases, the BIDs must be renewed.

The Fashion District BID is in the process of seeking renewal for its third term. The first step is to gather signatures from property owners whose individual assessments add up to more than 50% of the overall assessment for the area. Smith said the BID has received the minimum amount of signatures.

However, Fisch, who has spent over $20,000 campaigning for the Apparel District BID, said he too has acquired the minimum number of signatures.

The Apparel District BID needed signatures from property owners comprising only 30% of its proposed assessment, since the area is in an economic empowerment zone, Kalfayan said.

Now, with signatures secure, each group must go through a few more steps before heading to City Council for approval. City officials are still unsure how they'll resolve the situation. Kalfayan admitted that the issue is particularly tricky, since this type of conflict has never occurred.

Councilwoman Jan Perry, whose Ninth District includes the Fashion District, said she will likely intervene.

"I am considering asking both sides to sit down together with a mediator and try to resolve their issues," said Perry. "I am waiting for a response from the City Attorney to determine whether this is a viable option."

Kalfayan said she expects the groups will be forced to come to an understanding within the next few weeks.

(page 1, 04/14/03)

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