Establishing a Community Benefit District is a complicated multi-year effort
that requires community planning, engaging local stakeholders and accessing
technical resources from the City and County of San Francisco. The process
follows several key step organized in two phases:

Phase 1:
• Development of a steering committee
• Community outreach to assess support amongst property owners
• Garnering support from District Supervisor
• Hiring a consultant team for outreach and preparation of reports
• Application to OEWD for grant funds
• Development of a services plan and budget
• Development of a boundary map
• Development of an assessment methodology and assessment rates

Phase 2:
• Creation of a management plan and an engineer’s report
• Petition and ballot voting process
• Legislative approval process

In Phase 1, interested stakeholders are organized into a steering committee
that oversees formation. Campaign steering committee members include
district property owners, merchants and residents, who educate fellow
property owners, merchants, residents and neighborhood organizations on the
benefits of a CBD/BID and survey those who will be assessed to ascertain if
formation is feasible

A preliminary delineation of the district boundaries is created, taking care to
include properties that would generate significant revenue, while also making
sure that the mix of properties in the district makes sense and constitutes a
unified area. An initial database of property owners is developed including
contact information and building data. Property information gathered by
the Assessor’s Office can be requested from the Office of Economic and
Workforce Development.

Surveys are sent out to determine the level of support for a CBD/BID
and to understand the types of services that are most desired. Surveys are
accompanied by an initial round of outreach to key property owners and or
businesses to ensure their support for further study of CBD/BID feasibility.
In Phase 1 it is important to create a preliminary service plan and budget for
spending the revenue acquired through the CBD/BID. The types of services
paid for by the CBD/BID should be arrived at through a process of surveying
to discover the service priorities of the stakeholders within the district and
by reviewing the existing City service levels. In addition, the amount of
total revenue to be raised by the CBD/BID should be determined through
discussions with property and business owners who would become district
participants.

At the end of Phase 1, preliminary research and outreach yield a decision to
press forward with the district formation process, or to table a new CBD/BID
for future consideration. In Phase 2, the steering committee drafts a proposed
management plan that includes the following:
• A final delineation of the boundaries of the district, taking care to
include properties and or businesses that would generate revenues to
support the supplemental services, while also making sure that the mix
of property owners and businesses included in the CBD/BID is such
that building support remains feasible.
• A finalized service plan and budget.
• A methodology for assessing the properties and or businesses.
Assessments on properties or businesses are regularly based on a
combination of square footage, lot size, linear frontage, building use
or other factors. The guiding principle, however, must be based upon
the fact that assessment will confer a special benefit to every parcel or
business directly assessed.
• District duration or term.
• Identification of the existing or yet-to-be-formed management
corporation and its leadership board composition. In San Francisco,
Article 15 of the Business and Tax Regulations Code requires that the
Board of Directors of the CBD/BID management corporation must
include at least 20% merchants from the proposed district who do not
own property in the district.

Petition Phase: Once the proposed management plan has been written, the
steering committee must then obtain sufficient signatures from property
owners and businesses being assessed in order to trigger the initial legislative
authorization from the Board of Supervisors required to authorize a special
election ballot on whether or not the CBD/BID should be established. Per
Article 15 of the SF Business and Tax Regulations Code, there must be
petition support from assessed businesses and property representing 30% of
the weighted vote in the district. Votes are weighted based on the amount of
the assessment to be levied on each parcel or business.

Ballot Phase: Petitions are submitted to the Board of Supervisors. Following
approval of the proposed management plan and engineer’s report by the
Board of Supervisors, via approval of a resolution of intent to establish a new
CBD/BID, ballots are mailed out with the management plan and assessment
engineer’s report to all property owners and businesses being assessed in the
proposed CBD/BID by the Department of Elections. A public hearing is
held at the culmination of the 45-day ballot period. For a CBD/BID to pass,
it must receive at least 50% plus 1 of the mail ballots returned, again, the votes
are weighted. Finally, once a CBD/BID is approved by a weighted majority
of returned ballots, the Board of Supervisors must officially approve its
formation during a public hearing.

Assessment Methodology

During Phase 1 of the CBD/BID formation process, community outreach
is important to first assess the willingness of property owners to agree to
district formation, and second, to understand the amount of the annual
financial commitment they are willing to make. Determining an assessment
methodology requires a careful balance between raising adequate revenues to
provide supplemental services, while also being affordable and reasonable to
affected property owners.

In San Francisco, assessment methodologies vary in complexity by district.
The simplest district assessment methodology relies on a single zone where
services are uniformly administered and a straightforward calculation of a
parcel’s annual assessment by three or four property variables, such as linear
frontage (sidewalk frontage), land area, building square feet, and building use.
Larger districts often rely on much more complex assessment methodologies
that delineate low and high service zones that maintain different rates for
the aforementioned property variables. The process is further confounded
by special exemptions, rules, and mandates described in each district’s
management plan.

Once the district is formed, the assessment methodology cannot be changed
to increase assessment income or to reduce the burden on district property
owners. The district can only raise annual assessments by exercising a
discretionary annual increase to adjust for inflation as outlined in the ratified
management plan.

Property owners that were excluded from the original district boundaries
cannot join the district between the point of formation and expiration. Some
districts provide their services for a fee in these instances. For example, the
Union Square BID provided its Clean & Safe program services for a fee to
property owners who were not included in the district boundaries, but who
desired additional cleaning and safety services. Other property owners who
are located on non-contiguous blocks outside of the district’s boundaries,
for whom this option is not available, must wait until the district begins the
reauthorization process, when it can press for inclusion in expanded district
boundaries.

Property based special assessments take the form of a line item levy on semiannual
property tax bills. Businesses and parcels not subject to property
tax, but are subject to CBD/BID assessments, are billed by the City. These
funds are then transferred to the nonprofit management corporation that
administers the district services and budget. Non-payment of assessments can
result in a secured or unsecured property lien

Next Topic

The information above was taken directly from

Impact Analysis of San Francisco’s
Property & Business Improvement
Districts (CBDs/BIDs)
Fall 2012  by Stanley Ellicott and Lisa Pagan
Pages (14-17)
http://www.oewd.org/media/docs/CBD%20docs/CBD%20BID%20Eval%20Report%20FY%2012-13.pdf