Numerous firms within the boundaries of San Diego's 18 business improvement districts have failed to register with the city to pay assessments that fund BID programs, according to a report released Wednesday by the City Auditor's Office.
BIDs — clusters of businesses in areas like La Jolla, El Cajon Boulevard and Little Italy — assess enterprises in their territories according to a city-approved formula and use the money to pay for group promotional efforts. The assessments are paid to the city treasurer as part of the business tax process.
When they compared a database of private businesses to a list of paid BID assessments, about 26 percent were noncompliant, the auditors said.
A separate comparison to data from the county Assessor's Office found the noncompliance rate ranged from 30 percent to 61 percent in 11 BIDS surveyed by the auditors.
In both cases, some of the businesses are likely to be exempt from paying the assessment, according to the report. The results did not specify a potential dollar loss.
The auditors recommended the city treasurer improve compliance rates by using additional data to find businesses that operate within BID boundaries. They also suggested that the Economic Development Department, in consultation with the treasurer and BID association management, establish and document a standardized process for BIDs to report businesses within districts that may not be paying their assessments.
The auditors also suggested that Economic Development create metrics to evaluate BID performance. In a memo issued last week, city Treasurer Gail Granewich and Economic Development Director Erik Caldwell said they agreed with the recommendations.
The first BID in California was established in downtown San Diego in 1970. The City Council formalized guidelines for the districts 16 years later.
Annual assessments generally range from $40 to $500 per business, depending on the district and other factors, according to the report. Some fees, however, range up to $1,200, and establishments defined as "anchor" businesses can pay as much as $5,000 a year.
