Legal question muddies plan for downtown biz district

Legal question muddies plan for downtown biz district

NEW BEDFORD — Advocates and adversaries of a proposed downtown Business Improvement District are taking opposing views of whether the project has the required support from property owners within the roughly seven-square-block zone. 

The advocates’ interpretation of the state law governing BIDs says they have the petition signatures they need from at least 60% of property owners in the district. 

In arguing that they do not, opponents read the law differently. They also point to a count of owners that were omitted from the signed petitions proponents have presented, showing that the BID has about half the required support, at least for now. 

The question is in play as all City Council members prepare to meet as the Finance Committee on Monday night to continue a hearing on the plan. The assessment district is meant to improve the appearance of downtown, stage more events and boost marketing — all to draw more visitors. 

The committee hearing is being continued from April 10. As the committee comprises all 11 councilors, a vote to approve the project and move it to the full council would be tantamount to final approval.

The April session ran about three hours as proponents, opponents and public officials spoke and councilors asked questions. The legal question emerged then, and has been expanded upon since with research by a downtown property owner, who opposes the project. 

At-large councilor Linda Morad, who chairs the Finance Committee, included the question about which property owners are required to be included in the petitions in a list of councilors’ inquiries that she sent a few weeks ago to the council’s lawyer. Morad said this week that she’s received some responses from David Gerwatowski, and is waiting for others. She said she would not discuss the responses until the meeting. 

Related ⇢

“We have some concerns whether they’ve met the threshold,” Morad said. She questions whether the BID proponents have enough petition signatures to move forward, both because of which owners were included, and whether all of those who signed petitions were authorized to do so, Morad said. 

“If it does move forward, we’re not looking for a legal battle,” she said.

Marco LiMandri, a New Bedford property owner and volunteer consultant to the project, said in an email that the plan was “vetted by two city solicitors in New Bedford” and sent to the state for review. He said the plan and the petitions follow state law. 

LiMandri, who owns a home and a commercial property in New Bedford, has nearly 30 years of experience creating these districts around the country with his company, New City America, which is based in San Diego, where he lives. 

City spokesman Jonathan Darling confirmed that two assistant city solicitors, who have since left the department, did review the BID plan. While they raised no concerns, Darling said this should not be taken as a judgment on the specific question of whether the proponents have the required number of petitions.

Rose Miller, who with her husband Rick Miller owns 26 commercial properties in New Bedford, including several downtown, said they and other opponents are scouting lawyers and considering a legal challenge.

BID or no BID?

A lawsuit would escalate a dispute that has unfolded for months. Opponents have posted black-on-yellow “NO BID IN DNB” signs in store windows, distributed flyers, gathered petition signatures of their own, and filled councilors’ email inboxes with messages opposing the project. 

BID opponents have been posting signs downtown, including this one at the Calico boutique on Union Street. Credit: Arthur Hirsch / The New Bedford Light

The BID, which is supported by Mayor Jon Mitchell, would be a private enterprise. Still, it needs the council’s vote to establish a special assessment district to levy an annual fee based on property size. The fee would be collected by the city and handled like a tax lien if it were not paid. 

The district is planned to run from a portion of MacArthur Drive west to City Hall, from the SRTA bus terminal south to the Zeiterion Performing Arts Center. 

A BID plan has been discussed by business people for years, starting in 2014. That time, it did not get the petition signatures needed to put it before the council.

Advocates argue that since BIDs first appeared in the early 1970s, cities across the country have found these districts effective in cultivating commerce. They put more resources than the city may have into efforts to bolster certain neighborhoods, proponents say. They put in charge of the enterprise people who have a financial stake in the district’s success.  

Mitchell has cited a U.S. government report showing there are about 1,000 of these districts in the country. He has pledged a $45,000 annual city contribution. The BID plan calls for a yearly budget of $195,000 without the city allocation, about half of that for marketing.

BID supporters number among the city’s biggest property owners. Opponents are largely, but not entirely, people who own small businesses who lease their spaces. 

Opponents worry about the more affluent players taking over, dictating terms to the less affluent business owners. Opponents have raised concerns about an array of social harms they think the district could cause. 

They say these districts are meant to drive up property values, which would mean higher rents within the district, perhaps even spilling into surrounding lower-income residential neighborhoods.

Jenny Newman-Arruda, a tenant who owns TL6 The Gallery on William Street, has called it “extreme gentrification.” 

The opponents fear that public spaces, such as Wing’s Court, will be taken over by private interests, restricting public access. They also worry about private security using heavy-handed tactics against homeless people and minorities. 

Proponents say these arguments are rooted more in fear than in their plans or the real experience of BIDs around the country. The proposed budget, for instance, includes no private security crew. Proponents say downtown New Bedford needs help beyond what the city can provide, especially now. 

Jay Lanagan, who has co-owned or helped create many restaurants that have been part of downtown New Bedford’s resurgence, noted that downtown is still recovering from the pandemic. Last summer, he said, the area suffered two blows: the Zeiterion closed for extensive renovations until next year, and the UMass Dartmouth College of Visual and Performing Arts left the Star Store. 

Who counts as an owner?

Rose Miller posted a “NO BID” sign in the window of the old bank building she and her husband own on Union and Pleasant Street, and then went a step further. She wondered about the color-coded BID map the proponents presented, showing a number of properties in black, marked as “unassessed.” 

That meant they were too small to reach the annual assessment threshold for owners who are required to pay in. These owners could pay if they wish, but are not required to do so. 

Using the BID map, and the more detailed city assessor’s database, Miller counted every property shown in black, printing out an information sheet for each property.

Including the federal government — omitted from the BID petitions because the government’s three properties would be exempt from fees — the count comes to 56 owners. That’s counting two particular owning entities as one, as they’re listed with the same names, one shown as a trust and one not. 

The plan presented by the proponents lists 53 owners. According to information presented with the plan, of the 53 owners included, 35 signed petitions supporting the bid. That includes the City of New Bedford and a number of nonprofit operations, which are not required to pay the assessment. Some have volunteered to pay the fees.

That’s 66% of the 53 owners, topping the threshold spelled out in the law. Adding the 56 owners that Miller counted, however, brings the total number to 109. By that count, the 35 owners who signed would be 32% of all owners, or 30 assenting owners short of 60%.

It’s possible the proponents could get those signatures, but they don’t have them yet. They don’t believe they need them.

LiMandri does not dispute Miller’s numbers, but her understanding of the law. 

He noted that the law in several of its 10 sections distinguishes between “participating” owners and others. While “participating” is not defined in the law, LiMandri said the term refers to those who are required to pay the fee. 

The law allows BID proponents to decide how the operation will run, including the fees and who pays them. In this case, proponents have decided that those owners whose properties are not large enough to make the $1,000 minimum annual fee do not have to pay. 

“The legislation refers to acknowledging financial hardship,” LiMandri said in an email. “That was our way of ensuring that small property owners were not assessed, but they could enjoy the benefits of the revenue generated by the BID.”

The question is whether that distinction applies to the number of owners who are required by law to sign petitions in the first place.

It appears there’s been no legal case on this issue in Massachusetts, where there are 10 BIDs in eight cities and towns, including three in Boston. One suit against a BID in Northampton was decided for the opponents in 2014, but involved different questions.

The state Attorney General’s office declined to offer an interpretation of this aspect of the law, and said it has never been asked to do so.

Miller acknowledges that her academic background is in accounting, not law. Still, she points out that the law does not refer to “participating” members in the section on petition requirements. 

That section, the third of 10, says that organizers launch a BID by filing a petition with the city or town clerk. The petition, the law says, “shall contain: (1) the signatures of the owners of at least fifty-one percent of the assessed valuation of all real property within the proposed BID and sixty percent of the real property owners within the proposed BID.”

At-large Councilor Shane Burgo, one sure vote against the BID, has wondered about this as well.

“We don’t think the numbers are accurate,” Burgo said. He also questions why nonprofit organizations such as the New Bedford Whaling Museum and the Buzzards Bay Coalition are included in the owners counted in the supporting petitions, as they have the option of paying or not paying the assessment. 

In other words, they could be “participating,” but not necessarily. Their choice. 

In drawing their map, Burgo said proponents engaged in a kind of “gerrymandering.” They’re picking which owners are in, and which are out, to get the support they need, he said.

LiMandri said the plan is consistent with the law.

“Boundaries are set within a downtown district and not everyone is mandated to be included,” he said. “The commonwealth sets a high standard for creating the district but also clearly discusses financial hardship for smaller property owners. We accommodated that.”

Email reporter Arthur Hirsch at [email protected].

The post Legal question muddies plan for downtown biz district appeared first on The New Bedford Light.