Year of Publication

2008

College

Martin School of Public Policy and Administration

Degree Name

Master of Public Administration

Executive Summary

Downtown districts are falling victim to surges of new development increasingly taking place outside the city as people seek to escape fast‐paced city life for a more peaceful life in the suburbs. As people move to the suburbs, they either take the businesses with them or the businesses fail to maintain profitability in empty downtowns. Downtown Lexington has been no exception. The recent developments of Hamburg Place and, more recent the developments around Fayette Mall have attracted even more business owners away from downtown.

A new implementation approach for revitalization is gaining momentum, as downtowns are introducing policies that enable Business Improvement Districts (BID). In this approach to revitalization, property owners in a district file a petition to impose an additional assessment on themselves. This assessment is used to provide services supplemental to services being provided by the city government. Most BIDs seek to promote the economic development of downtowns, while providing services such as maintenance, street cleaning, security, marketing, and special events.

This report seeks to determine if the establishment of a BID has an effect on businesses in downtown districts, while also examining the issue of whether or not Lexington should establish a BID. To determine this, I have analyzed data from the Economic Census Zip Code Business Patterns. I conducted both a two‐sample t‐test with equal variances and a difference in difference regression to estimate if there was a statistically significant difference in the means of BID and Non‐BID cities pre and post‐ BID establishment for the average annual growth rates for number of establishments, number of employees, and average payroll.

The studies both failed to estimate that there is a statistically significant difference in the means of BID and Non‐BID cities pre and post‐BID establishment for the average annual growth rates of number of establishments, number of employees, and average payroll. However, there was a low variance in the difference of the BID cities and the Non‐BID comparison cities, meaning that the cities were well matched. Based on my analysis, I would recommend further study of BIDs before establishing a BID in Lexington, perhaps using these same cities, but examining the sales tax receipts or the type of business establishments might provide a better analysis of the impact that BIDs have on businesses.

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