Chinatown Property Owners Say City Illegally Charged Them BID Fees Before BID Even Existed
Some Chinatown property owners didn't really want to be part of a Business Improvement District in the first place. Now a group of them are claiming that the city illegally charged them fees corresponding to months before the BID even officially existed.
The city told the Voice yesterday that it is correcting that error, but that's doing little to appease some frustrated business owners.
These BIDs, which are public-private partnerships, are intended to revitalize neighborhoods and support economic development through a partnership of local property owners and commercial tenants. Businesses pay annual fees that BIDs charge for cleaning sidewalks, picking up trash, and other local efforts.
To those who didn't want to be a part of a Chinatown BID in the first place, the alleged financial mishap is an extra slap in the face, especially as businesses are struggling to stay afloat during a tough economy.
A group of property owners, with the support of the Asian American Legal Defense and Education Fund, argued that the city's Department of Finance held property owners responsible for thousands of dollars in BID fees for four months before it was officially established. They asked the city to rescind these charges last month and said they finally heard back at the end of the month when the Department of Small Business Services acknowledged to them that there had been an error.
"Even just a small amount is a huge burden for these businesses and small property owners," said Bethany Li, a staff attorney at AALDEF, who joined disgruntled BID members yesterday to announce that they would be getting their money back. "It really makes a difference between a bustling store and an empty storefront."
Apparently, members of the BID were charged fees from October through January, even though the BID did not get final approvals until January. The fees vary depending on factors such as the size of the property, but Jan Lee, who owns two neighborhood properties, said that at just one of his sites, the incorrect fees added up to $1,730.
"This misappropriation of our funds lived up to every suspicion that we had going into this," said Lee, 46, whose family has owned property in the neighborhood for 80 years. Lee, who has been a loud opponent of the formation of the BID, said that the incorrect fees add up to hundreds of thousands of illegal charges across different owners.
A spokesperson for the city's Department of Small Business Services, which administers the BID program, told the Voice yesterday that "the BID billing has been adjusted and began as of February, 2012."
In September, the City Council passed the Chinatown BID law and the mayor also signed off of it, but it did not get final approvals from the State Comptroller until January, 2012, spokesperson Merideth Weber said. The amount to be charged for the fiscal year will be around $500,000 instead of $900,000 and property owners will be notified of the assessment being charged and how credit will be applied for those that did pay the fees, she said.
She also added in an email, "After several years of planning, the Chinatown BID is now operating and will help improve the business environment for the nearly 800 retail stores in Chinatown, bring new visitors to the community, and enhance the overall quality of life for residents by ensuring clean and safe streets in the neighborhood."
Lee said he's still very frustrated and that struggling businesses can't afford any of these fees. "In speaking with literally dozens of Chinatown [property owners]...it's very rare for our tenants to pay on time. That is an indication to us that they don't have the cash flow. We've been managing property for generations. When people aren't paying rent on time...what are we supposed to do?" BID fees, he said, sometimes force businesses to raise rent, though others don't want to do that to their tenants and know that in some cases it just won't work if they're already behind on payments.
Plus, they don't need the services of the BID, Lee said. "Tenants usually sweep the sidewalks themselves."
Li, from AALDEF, said it's a troubling sign that the city -- which now oversees 67 BIDs -- made this kind of error. "My understanding is [the city] just misunderstood the law, which is problematic given that this is their 67th BID."
Ultimately, she added, the fees of the BID can be burdensome to longtime businesses who have to participate. "Once the city approves it, there's nothing you can do."
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