News from Patrick Flynn

This week’s Assembly meeting was pretty tame and ended early, but don’t expect the next two to follow the same pattern.  Why?  Because we’ll have public hearings on whether to renew the Downtown Improvement District (DID) on both September 14 & 28, with deliberations on the 28th.  Readers will be forgiven for asking, “what’s the DID, and why is this a big deal?” so a little background might help.

Regular visitors to downtown Anchorage are familiar with the myriad of activities that take place throughout the year.  Music in the Park, the Holiday Tree lighting ceremony and New Year’s Eve celebrations, to name a few.  Those visitors likely note that something called the Anchorage Downtown Partnership seems to sponsor quite a few events, including those above, but may not know much else about the ADP.  It’s history stretches back to the mid-90’s, during the Mystrom administration.

Mayor Mystrom‘s advocacy for beautifying Anchorage (we still use his phrase, “City of Lights and Flowers”) manifested itself, in part, in establishment of Alaska’s first Business Improvement District.  That BID, established in 1996 as the DID (confused yet?  Don’t worry, it gets easier), provides for an incremental property assessment paid by businesses within the district’s boundaries, roughly from First to Ninth Avenues and I Street to Gambell Street.  (Owner-occupied residential properties don’t pay the assessment.)  Those funds, collected by the city, are then transferred to a non-profit entity – in this case ADP – which then provides services to augment those already provided by the city, though the events we see downtown are funded from different sources (we’ll get to that in a bit).

The ADP does quite a bit more than events (disclosure time: as the Assembly member for the downtown area I sit as a “guest” member of their board), most notably through their clean and safe programs where they clear snow from sidewalks in the winter, clean & sweep sidewalks in the summer, patrol the downtown area year-round to augment police services and work to generally improve the environment of the downtown area.  ADP also draws quite a bit of other revenue via memberships, sponsorships and payments-in-lieu-of-taxes (also known as PILOTs).  The former two sources – memberships and sponsorships – provide funding for the aforementioned events, thereby reserving assessment dollars for the value-added services above.  Regarding the latter, under General Services Administration (that’s the federal government’s landlord) policy, any GSA-owned property within a BID pays the assessment as if it were a private entity.  So, while the city cannot collect property taxes from federally-owned properties, ADP, via the DID, can and does.  The State of Alaska doesn’t follow the GSA’s policy, but that’s another story for another day.

As with any entity, however, ADP is not without its critics.  Each year when assessments are levied there are two major complaints the Assembly hears from some business owners:

1. We feel the services benefit other properties far more than they benefit ours and that inequity should somehow be remedied.
2. The western boundary of the district was politically gerrymandered thereby taxing us but not others who benefit from ADP’s work.

Regarding the former concern, it’s fundamentally a resource management issue.  The lion’s share of pedestrian and commercial activity occurs in a relatively compact area of the DID so those who are further away feel properties closer to the downtown core enjoy greater benefits from ADP’s efforts.  While that’s a reasonable assertion, I am keenly aware of ADP staff efforts to extend their services to every corner of the DID and, in fact, there are several ADP board members who first engaged ADP with similar questions and, upon learning more and getting more involved, are now amongst ADP’s strongest supporters.

That said, I consider the latter complaint valid, which requires a little more history about how the DID was formed and the rules applied thereto.  In order for any BID to be formed more than 50% of the property owners have to affirmatively vote in favor of the assessment, and it’s a weighted vote based on property values.  In other words, ConocoPhillips’ vote is worth quite a bit more than Skinny Raven‘s, the logic being that assessments on higher-value properties like ConocoPhillips’ will be higher.  And, since you may recall that owner-occupied residential properties don’t pay the assessment, said properties don’t get to vote at all.  (If this were the electoral college ConocoPhillips would be California, Skinny Raven might be Utah and someone’s house would be part of Canada.)  And remember, affirmative means affirmative; a property owner that doesn’t vote counts as a “no.”

Back in the mid-90’s when this new-to-Alaska concept of a BID was contemplated its backers feared that some tax-averse downtown businesses could prevent the formation of the DID, and they were likely right.  While the north, south and east boundaries of the DID are smooth lines, to overcome DID foes the western boundary zig-zagged through downtown, thereby excluding properties like the Carr-Gottstein building on Third & K, the Brady building on 4th & L and the Captain Cook hotel.  Because those properties were outside the boundaries they didn’t vote and, in the end, the vote was close but just made it past the 50% threshold.  A few years later a “confirmation” vote passed by a much higher margin as those within the DID observed the benefits from ADP’s new services, and the DID was extended for ten years.

About two years ago, as a “guest” member of ADP’s board, I suggested that when the DID conducted its renewal vote the western boundary should be smoothed and extended to L Street, which also happens to be the western boundary of the Downtown Community Council.  To their credit ADP did exactly that and several of the properties new to the BID, including the Captain Cook hotel, voted to extend the DID for ten more years.  Several others, however, did not.

So that’s why I’m expecting the September Assembly meetings, and September 28 in particular, to be a little more, shall we say, exciting.  While property owners in the DID voted about 62% in favor of continuing (with the new boundaries), 12% voted against and 26% did not respond (which, according to the previously mentioned affirmative rule, means this was a 62-38 vote) so we’re likely to hear from both camps.

Making this a little more awkward for me are a couple facts.  First, the representative of a company opposing the new western boundary is a long-time family friend.  (He also has a legal background, and may therefore offer opinions on whether the new DID is valid.)  Second, I’m a minority owner of a business that leases space in a building that happens to sit in the area slated for addition to the DID.  I disclosed this to both the Board of Ethics and my Assembly colleagues and was ordered to participate in deliberations.  In sum, September should be an interesting month…

Regards,

Patrick