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Volunteering To Be Taxed: Business Improvement Districts and the Extra-Governmental Provision of Public Safety

NCJ Number
253575
Journal
Journal of Public Economics Volume: 92 Issue: 1-2 Dated: 2008 Pages: 388-406
Author(s)
Leah Brooks
Date Published
2008
Length
19 pages
Annotation

This article provides an overview of the purposes and support of Business Improvement Districts (BIDs) as a public safety benefit.

Abstract

In response to problems such as crime and vandalism, neighborhood property owners have established Business Improvement Districts (BIDs) to provide local public goods. When a BID is approved by a majority of property owners in a neighborhood, state law makes contributions to the BID budget mandatory. This resolution of the neighborhood's collective action problem reduces crime BIDs in the city of Los Angeles are robustly associated with crime declines of 6 to 10 percent. Indeed, crime falls regardless of estimation technique: fixed effects; comparing BIDs to neighborhoods that considered, but did not adopt, BIDs; using propensity score matching; and comparing BIDs to their neighbors. Strikingly, these declines are purchased cheaply. Attributing all BID expenditure to violent crime reduction, and thus ignoring the impact of BID expenditure on many quality-of-life crimes, BIDs spend $21,000 to avert one violent crime. This higher bound estimate is substantially lower than the $57,000 social cost of a violent crime. (publisher abstract modified)

Date Published: January 1, 2008