Neighborhood crime has always been bad for business – scaring away customers, making it harder to recruit and keep employees, lowering property values, raising insurance rates, and causing losses directly due to crimes such as robberies and burglaries.
One of the most promising ways business owners can combat crime in their neighborhoods is to create business improvement districts. In such a district, merchants and other business owners in a geographically defined area work together and agree to raise money to pay for things such as private security guards, streetscape and graffiti cleanup, landscaping and marketing efforts.
By lowering crime and making a neighborhood more attractive, a business improvement district can help merchants attract more customers and thereby increase sales and profits – even after paying the for the costs of the improvements.
Some criticize the business improvement districts and suggest that they displace local merchants with national chains, promote the interests of business groups over the public and allow local governments to fail to carry out some of their responsibilities for providing basic services. While these problems may have arisen in some cities, business improvement districts can effectively fight crime, and this makes them an attractive option for many areas.
Business improvement districts are also advocates for improved city services that might include sanitation, public works and policing. An added bonus is that the districts are funded directly by the business owners who benefit, rather than through taxes collected from a community.
Until now, the business community in general has been largely absent from the discussion of crime prevention issues. Yet when business owners do get involved in fighting crime, the results can be dramatic.
Take, for example, the Hollywood Entertainment District, which is one of the oldest established business improvement districts in Los Angeles. Actively involved in improving the social and physical conditions of the Hollywood area, this district spends approximately $1 million a year on private security efforts to combat crime and disorder along Hollywood Boulevard and adjacent streets. Since the formation of this district in mid-1990s, there have been sharp reductions in disorder and crime.
Initial studies published in the last few years of the citywide effect of established business improvement districts in such cities as Los Angeles and Philadelphia suggest they help reduce crime by restoring order in communities. Estimates from one study in Los Angeles, for example, found that these districts led to a 5 to 9 percent decline in serious crimes.
In an effort to better understand how these districts work, we and other researchers at the Rand Corp. and the Center for Disease Control and Prevention currently are studying the broader impacts of business improvement districts in Los Angeles.
As part of the study, researchers will interview households in and around business improvement districts about their perceptions of crime and disorder. The study will also assess the social and physical decay in business improvement district areas and examine reported crime patterns in and around the districts.
The point of the study is to examine the efforts of business improvement districts as managers of their own commercial space. We also want to know what the role of the districts is in promoting social change through fostering improved collaboration with the police and other city agencies. We also plan on examining how the relationship between private and public accountability is negotiated when business districts are involved in the management of public spaces.
The study will also assess how these districts might be used as an organizing agent toward solving larger scale problems – such as homelessness, vagrancy and sanitation. We believe this study will help us understand not just the impact of these districts within their own geographic area, but also what influence they may have on adjacent communities.
Even based on what we now know, it is obvious that it makes sense for cities to help business improvement districts organize and function. One way to do that would be to leverage public resources through a city agency – such as the city planning office or the city clerk's office – to facilitate technical assistance from experienced business improvement districts for the planning and formation of new areas.
The now famous broken-windows theory advanced in 1982 by criminal justice scholars James Q. Wilson and George Kelling suggests that, when left unattended, even small problems and incivilities like graffiti, loitering, public drinking or panhandling can foster an atmosphere conducive to more serious crime.
It was this theory that in the mid-1990s motivated William Bratton – who then was New York City police commissioner and is now chief of the Los Angeles Police Department – to increase enforcement against minor offenses and was associated with reductions in crime in that city.
Effective business improvement districts operate under this same philosophy and focus on improving the perceptions of their local areas through improved physical aesthetics and managing incivilities in public commercial spaces.
In an age with eroding public resources to pay for community-based programs, business improvement districts provide a model for reducing crime that is both effective and cost friendly. Such districts can play an important role in restoring the vibrancy of urban communities.
John MacDonald is a behavioral scientist at the Rand Corp., a non-profit research organization based in Santa Monica. Robert J. Stokes is an assistant professor at the School of Government and Public Affairs at Virginia Commonwealth University.
This commentary originally appeared in Los Angeles Business Journal on July 3, 2006. Commentary gives RAND researchers a platform to convey insights based on their professional expertise and often on their peer-reviewed research and analysis.