BID dues, chargebacks dominate council finance committee discussion Tuesday

Members of the Edmonds City Council Finance Committee, city staff and the downtown Business Improvement District discuss the BID’s mission and finances during a remote meeting Tuesday night.

Whether the city should charge Edmonds’ downtown Business Improvement District (BID) a fee for processing the paperwork and providing other services became a point of contention during the Edmonds City Council Finance Committee’s Tuesday night meeting.

The topic was raised as part of an overarching discussion about the BID — also known as the Edmonds Downtown Alliance, or ED! — that included how to addresss the more than $38,000 in late dues owed by member businesses.

Noting the costs involved in monitoring and collecting those dues payments — along with other services the city provides  — City Administrative Services Director Dave Turley has suggested that the city charge the BID a fee — ranging from $6,000 to $8,000 annually.

The BID was formed with city council approval in early 2013, and includes an area in downtown Edmonds bounded on the north by Bell Street, on the east by Durbin Street, on the south by Homeland Drive and on the west by Sunset Avenue South and Railroad Street.

The BID operates with an annual budget of approximately $80,000, and all revenues come from dues assessed to the members — currently $30 to $90 per quarter. Through these assessments, the BID funds programs such as beautification, marketing and parking.

How to enforce payment of those dues has become an ongoing topic during recent council finance committee meetings. While a task force was formed in January to develop policy, Turley noted there are still outstanding questions. Among them: How to collect over $38,000 in late dues owed by businesses, whether the city should continue charging 12% interest on accounts that are in arrears and if it should continue sending businesses to collections when they get behind?

Councilmember Will Chen asked for background on why businesses are not paying their dues. Rogue Boutique owner Kimberly Koenig, who serves as president of the ED! board, replied that the reasons are twofold. “I think that some businesses have struggled through COVID and I think that some choose not to pay.”

As of Monday, 32 out of the BID’s 400 member businesses are in arrears.

Koenig added that the number of people choosing not to pay “isn’t growing,” but is the same business owners who have opposed the BID from the beginning.

Councilmember Diane Buckshnis noted that in 2019, the council decided not to approve a city proposal to suspend the business license of any downtown business delinquent in its payments to the BID. The council’s inaction just pushed the issue down the road and it’s time to address it, she said.

“There’s been this dichotomy that has gone on for all these years (regarding the BID),” Buckshnis said. “That’ll be one of the largest issues that we have — is determining that the establishment of the BID was all right and everything was OK.”

Historically, Turley said, the city has begun sending BID members to collections when they are six months behind in their dues, but hasn’t seen much return on that effort.

Addressing the question of what actions business improvement areas in other communities take to address dues nonpayment, Community Services and Economic Development Director Todd Tatum said that “some of them write them off, some of them accept there’s an amount that are not going to pay, some send them to collections like we do,” Tatum said. “It really is just a policy question about how much we accept in the system.”

Regarding the city’s proposal to charge ED! for administrative services, both Koenig and ED! administrator Carrie Hulbert said they were concerned that the proposed fee represents a large portion of the organization’s budget, and would force them to cut programming.

Tatum also shared an infographic that outlined what some other cities do in terms of chargebacks to their business improvement area. The City of Spokane, with a $1.2 million to $1.4 million budget, charges $8,000 annually but also is a member of the business improvement area and pays dues; Everett, with a $1 million budget, has no chargebacks; the City of Seattle doesn’t charge the University District and Pioneer Square business improvement areas.

The bottom line, Tatum said: “There are some chargebacks and…those chargebacks are generally low as a percentage of overall revenue.”

The City of Poulsbo, with a business improvement area budget of $80,000, charges $3,000. Koenig noted that “they (Poulsbo) really look at the increased revenue on sales tax and increased tourism and what we (businesses) bring to the city as a way to offset the staff time and expenses, basically saying that the value of the marketing that we’re doing for our downtown and the sales it is bringing sort of offset what the city in partnership is helping us.”

But Turley pushed back on those assertions, noting that the purpose of ED! “is to benefit the downtown. You’re absolutely using resources from city hall and we’re here to benefit the entire city,” Turley said. “And so you are bringing resources for a very small part of the city. It’s a little unfair to say you are helping the city out and so we should give you services for free.”

Turley also challenged comparing Edmonds to associations located in Seattle, where the City of Seattle probably has “200 accountants and can absorb the time that it takes to manage something like this without even noticing it. I have about six (accountants). These are really unfair comparisons as far as I’m concerned.”

While stating that she valued Turley’s opinion, Koenig reiterated the large percentage of the Edmonds BID’s budget that would be impacted by the proposed Edmonds fee. She then asked “if there is a number that you could be more comfortable with that isn’t $8,000 that would be a reasonable ask?”

Buckshis then suggested that Turley and Tatum “could get together and determine a range” that would be acceptable to all.

As for the 12% charge on accounts that are in arrears, Council President Vivian Olson — who sat on the task force formed to discuss BID-related issues — explained that since the 12% isn’t compounded annually, “it ended up being a really small amount,” especially compared to late charges on other bills.

The BID-related issues will be discussed further when ED! presents its work plan to the city council Oct. 25.

During the Council Parks and Public Works Committee, councilmembers considered a range of issues. Among them:

— A discussion about options for providing sufficient electrical power for the Civic Center Playfield. Snohomish County PUD has requested an easement to replace an existing pole-mounted transformer with a new pad-mounted transformer, but the easement may impact an easement for the Edmonds Boys and Girls Club, which is planning to build a new facility on the property. Discussions will continue on solutions, Parks, Recreation and Human Services Director Angie Feser said.

– An update on professional services agreements for design/right-of-way phases for the next two stages of the Highway 99 Revitalization Project. Plans for Highway 99 renovations have been in the works since the Edmonds City Council approved a subarea plan for the highway and surrounding neighborhoods in 2017. The changes aim to address traffic and pedestrian safety and livability concerns for the portion of the highway that runs through Edmonds.

Transportation Engineer Bertrand Hauss — at right, second from bottom — discusses the before and after photos of the center median being installed during the stage 2 Highway 99 work.

The city is now working on stage 2, which includes construction of a landscaped center median and dedicated left-turn lanes from 244th to 210th Streets Southwest, with completion expected by early next year. Stage 3 will involve the segment from 244th to 238th Streets Southwest and stage 4 will focus on 224th to 220th Streets Southwest. Both stages will include capacity improvements, as well as the addition of planter strip on both sides of the street, new sidewalk, new street/pedestrian lighting, better stormwater management, targeted utility replacements (water/sewer), potential undergrounding of overhead utilities (could cost up to $11 million), and softscape treatments.

This graphic shows a cross section of Highway 99. improvements that would be added in stages 3 and 4 — including new sidewalks and a planter strip on both sides of the roadway.

The city issued a request for qualifications to select the design consultant for stages 3 and 4 and it received one response, from SCJ Alliance. SJC, which also worked on the design phase for stage 2 of the Highway 99 project, was selected for the work. The city is still working with SCJ on a cost estimate for the project, and will share that with the council when it is available.

– Consideration of a parking lot agreement between the Port of Edmonds and the City of Edmonds related to last year’s installation of the tsunami warning siren at Beach Place. The agreement — which will be placed on next week’s consent agenda — clarifies the city is responsible for providing power to the siren and replacing the batteries.

– A report from Jon Greninger, Snohomish County Solid Waste Superintendent, regarding the county’s Comprehensive Solid and Hazardous Waste Management Plan. Greninger noted that the plan still needs to be approved by the Snohomish County Council and also must be reviewed by the state Department of Ecology. It includes technical memorandums that cover, among other items, planning for climate change and sustainability, waste prevention, recycling and waste collection. The committee agreed to place a resolution to adopt the county’s plan on next week’s consent agenda. However, councilmembers agreed — in consultation with new Public Works Director Oscar Antillon — that it would be a good idea for Greninger in the future to provide an educational presentation to the public on the county’s solid waste management efforts.

– Review of a contract addendum for the Driftwood Players lease at the Wade James Theater. Antillon noted that the lease agreement — in place since 2017 — expires at the end of the month and the Driftwood Players wanted to renew for another five years. Although Edmonds doesn’t charge the nonprofit theater company rent to use the theater, the city is responsible for maintaining the building exterior, grounds and parking lot. After discussing what would happen if the Driftwood Players chose to sublease the facility to another tenant, committee members Neil Tibbott and Dave Teitzel requested that language be added stating that any profits resulting from such a sublease be split 50/50 with the city.

— By Teresa Wippel

  1. The BID doesn’t work because it is separate from the annual business license. The city needs to cancel the program take the loss and build the downtown corridor bid revenue into the annual business license. If there is a legal issue with that then the city needs to cancel the whole program. This was nothing more than an annoying way to get money out of business owners to try and make downtown better for business. The business owners had no control over any of this process. I used to have my business downtown and the number one reason I didn’t want to pay for this is because my business did not benefit from any way (we have no walk in traffic).

  2. The BID was begun in 2010 as a self-imposed tax Edmonds businesses voted in to create a proactive mechanism to improve the downtown core. The city offered to administer the collection of taxes and to act as a partner to the BID. The BID is an example of the generosity downtown businesses offer to invest in our community. Check out the Ed! Website to see the programs we support, some of which the city would otherwise pay for. The majority of businesses continue to faithfully make their payments as we still fight to keep going through Covid and supply issues. We still believe we are better united and support each other and our town. Please note that many retail businesses and restaurants pay much more than than $90 per quarter. I urge the council to honor the original contract with the BID to administer the collection of fees. The $8,000 proposed charge to the BID is an insignificant amount to the city’s budget, but is a very significant amount to charge local store owners. I urge the council to reject this proposal. Send the BID a message of support and acknowledgement of the value we bring to Edmonds.

    1. Tracy,

      That’s a feel good story, but inaccurate. The BID wasn’t begun “as a self-imposed tax Edmonds businesses voted in.” A team of business owners approached other businesses to sign a petition to form the BID. This process took a couple years. When presented to Council at the end of 2012, two businesses who signed, Petosa’s and True Value, had since closed and the petition no longer met RCW requirements. Council voted, by resolution, to form the BID. I was a Councilmember and downtown business owner at the time. The city attorney allowed Strom Peterson (also a CM and BID business owner) and I to vote, despite what seemed conflicts of interest. Strom voted for the BID. I voted against.

      Businesses owners never voted to establish the BID. In fact, their only “voting” opportunity is election of board members. There have never been any meetings where a quorum of members have voted, even on yearly budgets.

      Ed! boards have been comprised of hard working and well meaning business owners. Controversy over Ed! is the responsibility of the City of Edmonds. I agree with James OBrien that “The city needs to cancel the program.”

      1. I agree with you Ms. Bloom. It does appear that voting on this may appear to be a possible conflict of interest. For this reason and possible other instances of voting, should local business owners serve as city council members? Nothing against local business I support many. Don’t really know just asking the question.

        1. Mike,

          That was the one instance in my term that I believed it a conflict of interest for me to vote because I was a downtown business owner. Disqualifying Edmonds business owners from running for office would not be an equitable solution to this rare situation. And there would be numerous candidates, including Will Chen, who would not have the opportunity to serve their city while offering the unique perspective of being a business owner.

          Having talked with many fellow business owners prior to Council deliberations, I was strongly opposed to the BID, and wanted to be able to ask questions of staff and be able to vote. I raised the conflict of interest because it was the right thing to do. Strom and my votes cancelled each other out. Without us, the vote would have been 3 to 2, rather than 4 to 3.

  3. Can someone tell me why this BID is somehow a good idea for being a city sponsored program? Since all these other cities seem to be doing it too, it must have been a very popular concept at some point in time. An everybody’s doing it fad, perhaps? Why aren’t these totally private organizations based on volunteer participation and funding? Could this function not be folded into the Chamber of Commerce purview? Obviously some of our business’s aren’t down with it being a “good thing.” Also, should Edmonds continue being in the nurturing and maintaining a Community Theater business? Seems to me like Edmonds City is involved in an awful lot of feel good type stuff and maybe should concentrate more on just maintaining the parks and streets and assuring the public safety.

    1. This sounds like its alittle like the mayors campaign of city resources being spent on the bowl. Business owners pay property taxes thru rent or owning the property and if retail collecting sales tax. How much is this actually costing the city.

  4. Again, I ask, “why should the city be involved in this at all?” Shouldn’t this just be a private club type thing, comprised of the businesses that actually want to be a part of it and think it’s a good thing? Organizations for the community good, like ACE, ECR, and Lions invite people of like minds to join and they elect a Treasurer who collects the dues and pays the bills. Pretty simple stuff. Our Mayor and City Council can’t even begin to do their required and necessary city duties in a timely and efficient manner and they let themselves get bogged down in this kind of trivia. “Never mind patching the pot holes today, it’s opening night at our playhouse and the roof is leaking.” Think about it.

  5. I’m quite surprised to read the negative comments about Ed and the BID. As a business owner and board member, I strongly support all that Ed does for the downtown business core. It provides ample opportunities for each business to participate in marketing programs, promotes walking traffic through the downtown businesses, has added after hours parking. The branding is sharp. And it’s constantly evolving. Not only do I gladly pay the small marketing tax, I add a lot of my own time to make it possible.

    1. Then you also support, the approximately 58% of revenue collected by the city, being spent on employees of Ed.
      I am quite sure business owners would fare just as well without wasting money on Ed.

      It the BID Board thinks Ed! Is so Loved by business owners, then hold an impartial vote to see the truth.

  6. Now that the BID has been in going for 10 years, this council should take some actions designed to see if the current business DT business community want to continue that work. Sounds like we can hit the “reset” button to see if it now makes sense to continue and if so what will the DT business community want a “rebooted” ED to do.

    The city already supports DT business owners with an Employee Parking Permit Program. The program allows business owners to buy permits that allow DT parking for about 25 cents a day without being ticketed.

    Council should take a more complete look at the BID, and not just take a “wack a mole” action.

  7. Beth, I have no problem with a group of well meaning business owners banning together in an independent association to promote their respective business’s as a whole. Collect their voluntary dues and use them as they wish to promote downtown business. No problem with that whatsoever from me as a private citizen.

    My comments aren’t meant to be negative toward any individual business owner. My question about our BID set up is it’s quasi city government status and forcing people to participate, who don’t want to participate or can’t afford to participate. There are legitimate questions that need to be asked and answered about how our city Council and City Attorney got involved in this from the beginning and why non-business owning citizens have to see valuable city time and resources spent on what should be a total function of private enterprise. In my view our mayors (mostly beginning in the cure Deadmonds era) and some council people are just too wrapped up in promoting and selling Edmonds to outsiders and not keeping their eyes on the ball of what really needs to get done for all Edmonds constituents, not just some.

  8. If I started a citizens association to promote the elimination of single family zoning throughout the city – an HID (Housing Improvement District) so to speak, then got on the council and talked three other council persons into making it a city sanctioned plan where the city collects the dues and hires the legal team to support it, I’d be the laughing stock of the community and run out of town for my efforts. And, I’d deserve it.

  9. I’m curious, if the BID is such a worthwhile effort that deserves city resource allocation, then why not do so for the Hwy 99 business corridor? There would seem to be more upside along this business district of the city than downtown. I’m not advocating for either, but just want to point out what should be obvious.

  10. Business Improvement Districts (BID) have been around for over 40 years in the US. As a business owner in downtown I happily pay my fees because of the quality of work that the board (all volunteers) and the Program Manager produce is stellar. Committed, creative, passionate and thoughtful. As our residents and visitors stroll around, Ed’s! impact is everywhere. The green umbrellas, the street signs, the bike racks, the after hours parking, multiple seasonal promotions (look in merchant windows for the seasonal decals), the trolly and Emily the Elf…there are too many to list here. Our BID provides incredible marketing services with social media promotions for downtown but also individual businesses as well as Ad campaigns to draw visitors. They are a big reason I chose DT Edmonds to open our business. Having a BID gives us the flexibility we need pick up where the city leaves off with promotional and beautification projects. The city has a much needed focus in other districts of our amazing town and the Ed! BID keeps the DT at the forefront, and benefits all DT businesses and residents (I live DT as well).

    1. Liz, nobody is telling you not to have a volunteer downtown business improvement group or that it’s a bad thing. It is a big conflict of interest to have City Council people, who own downtown business’s, making decisions about having the city be a partner in your association and providing you legal advice on the public dime; so your “volunteer” organization can force people who don’t want to be in it, or pay into it, do so.

      To my thinking DTBID works very well as a private business association, but is highly questionable as a quasi government agency that requires all merchants to participate. The bottom line to me is our part-time, low paid, at large elected city legislative branch just doesn’t work as an agent representing all the town’s citizens. That combined with the often dysfunctional Strong Mayor set up, makes all of the citizens being at the top of the organization chart nothing but a myth and joke. We should have a district elected, full time city council that always meets at district level before city wide meetings. They should have hiring and firing power over an appointed city manager.

      1. There’s been a recent uptick of negativity from some people about our BID and it’s important that those of us who are impacted from a business and/or personal level, speak to their experiences of this group. Ed! should NOT be disbanded as suggested above and in fact the 99 corridor could and should consider a BID. They would need to get together as the merchants did in DT and petition for this. The city benefits financially from well managed BIDs, so why wouldn’t they be involved? From my research, it’s quite common to have cities involved in collecting the dues/taxes. This gives them visibility and additional transparency into the BIDs planning, forecast, and programs. They can better work in concert with the city to ensure there is less overlap of efforts and that the BID can enhance and support any city work. Many have opinions on the matter and that’s fine but it’s important to listen to those that are actually involved. I see that both Don and Beth have shared as well and appreciate that they have commented even though our experiences are not all the same.

        1. Who’s suggesting that ED be disbanded? I’m suggesting that ED should be privatized which I’d think you would be all for if you truly believe in capitalism and free enterprise being a good thing for the town. If ED is such a great thing for everyone in town, why do you need the city to be your crutch for keeping it going? Please explain to me exactly why any portion of my city taxes should be spent on your association getting it’s dues paid and being represented by the city attorney. Just because everyone else is doing it, doesn’t make it right. Lots of people flocking to town to buy stuff from you is great, but I don’t get much value from it, nor do hundreds of other Edmonds citizens. Using the city government establishment to go after other business people for bad debt doesn’t say much positive about your organization in my view.

  11. The February 17, 2015 City Council Minutes document that the BID was supposed to have been brought forward by 60% of the business owners in the district but ended up being formed in a different way.

    The November 10, 2014 City Council Minutes include: “City Attorney Jeff Taraday explained the BID process can start either with a petition or a resolution. While there was a substantial effort put into collecting signatures for a petition, it was realized in course of the review of those signatures that it would not meet the legal standard for a petition and it was recommended the process be initiated by resolution which the Council did with Resolution 1284.”

    Somehow this ability to initiate the BID process morphed into a belief that the City Council could also ESTABLISH the BID.

    City Council did so via Ordinance 3909. The vote was 4-3.

    A collection Letter written by Lighthouse Law Group claims the State Statute allows cities to establish a BID either by petition from business owners within the BID boundaries or by resolution from the legislative authority of the City.

    Hence, the City has acted like a petition is not needed to establish a BID.

  12. BIDs are a taxing district. They are not “dues” being collected it is a tax. How a tax gets imposed is pretty basic. It requires a majority (sometimes super majority) of those being taxed to agree. Tax payment is not not optional. The questions swirling around the formation of the BID are critical, because without the proper adherence to those laws of formation of a BID ( a supermajority to form one) a tax is being levied improperly City governments cannot impose taxes without a majority vote of those being taxed. This BID is now wanting all Edmonds tax payers to foot the bill for accounting and collection services. See Mr. Turley’s concerns above. Using resources meant for all of Edmonds to support a hyper local taxing district which could vote to raise their own taxes but wants instead to have Edmonds tax payers to contribute to the BID enhancing the BIDs bottom line. The purpose of formation of a BID is to benefit only a hyper local group. This BID wants to use its funding for projects but not for its own liabilities such as accounting and collections. That appears to me to be the issue here.

  13. Mike,

    This won’t answer your question, but will give ballpark figures. Funds were allocated for the trolley in the 2020 budget:

    “The council also agreed to fund — for $55,000 — the purchase and operation of a downtown trolley.”

    From an earlier article,

    “The $75,000 request includes $50,000 to purchase a vehicle and $25,000 to operate it for a year including fuel, maintenance and a driver.”

    1. Thank you. I haven’t heard much about the trolley since those articles and was curious about the current funding allocation from the City and the BID. I agree with Clinton Wright and don’t think Edmonds citizens should be subsidizing a BID.

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