With U.S. cities increasingly strapped for cash, it comes as no surprise that community benefit districts (CBDs) are gaining in popularity. But will CBDs redefine America’s cities of the future? A growing number of property owners think so.

On any given day in downtown Oakland, California, several people in bright-orange shirts and jackets are out on the streets covering up graffiti, steam-cleaning sidewalks, picking up trash, or simply helping people with directions. It is a scene that is playing out daily in more and more areas of cities across America. In Raleigh, North Carolina, for instance, they wear red uniforms; in Minneapolis, Minnesota, neon yellow. But regardless of location their roles are the same: they sweep, clean, and remove trash seven days a week and they coordinate with the city and police to help address safety issues, if they arise, in the district.

These workers are not contracted by the municipalities in which they operate, and they are not funded by local sales taxes or property taxes collected throughout the city. For the most part, they are paid for by private property owners or businesses that, by self-taxing through specific local enabling legislation, have created special districts around their buildings and businesses to supplement services provided by the city. These districts, sometimes referred to as business improvement districts (BIDs) or community benefit districts (CBDs), are popping up all over the United States, with these workers often serving as the most visible evidence of their existence. But BIDs or CBDs also provide a whole range of other services such as marketing and promotion of an area, public-space development and management, landscaping and maintenance, beautification projects, and enhanced security through installation of security cameras, special lighting, and the like.

“Benefit districts will increasingly take over more city services in the United States as parks, public spaces, and public right-of-way conditions deteriorate and deeper fiscal problems plague city governments,” maintains Marco Li Mandri, president of San Diego–based New City America and one of the major supporters of the CBD movement. Li Mandri, who worked with then San Francisco supervisor Aaron Peskin and others to adopt enabling legislation for CBDs in San Francisco in 2005, has helped form 54 business and community assessment districts since 2003 and is consulting with more than a dozen more, including the former steel town of Bethlehem, Pennsylvania.

A CBD is a public/private partnership formed under the same principles and legislation as a business improvement district. However, whereas a BID focuses mostly on business within a district, a CBD acknowledges that all land uses—not simply businesses— benefit from the revenue flow generated by the assessment district. This is an important distinction for property owners today because residential buildings are increasingly populating more downtown neighborhoods. For example, when property owners in downtown and the Lake Merritt/Uptown neighborhoods of Oakland decided to form special assessment districts, they realized that the districts themselves would represent many public and nonprofit businesses as well as for-profit entities, so the CBD concept was the best fit.

Li Mandri points out that special benefit services provided through community benefit district assessments are just that: special. “CBDs are not an excuse for a city to withdraw or cut back services that it would otherwise offer to other parts of the city which might lack a CBD,” he says. “The point of the CBD is really to complement existing general benefit services such as safety and garbage collection by providing special or enhanced services that cities may not be able to provide in harsh economic times.”

Yet, the fact is that in the current fiscal environment, most cities are forgoing special services altogether and have begun cutting into even general benefit services. “CBDs, because of the enhanced services they can provide and because the property owners who provide the resources to create those services are so close to controlling the dollars spent, are becoming indispensable in most cities,” Li Mandri observes.

Deborah Boyer, senior vice president with the Swig Company, a San Francisco–based private real estate investment firm that owns Oakland’s 1.1 million-square-foot (102,193-sqm) Kaiser Center office and retail complex, was new to the CBD concept but now is president of the board of the Lake Merritt/Uptown District Association, a $1.1 million annual budget CBD funded by assessments on properties in a 37-block area of the city. Boyer reports dramatic change already in the neighborhood since formation of the community benefit district last year.

“The CBD has really provided Lake Merritt and Uptown with a new lease on life and there’s a vibrancy today that I think most property owners and their tenants would admit was lacking just a year ago,” she says.

Boyer’s counterpart at the closely aligned Downtown Oakland District Association, J.C. Wallace, a vice president with San Francisco– based SKS Investments, agrees. “What’s important about our CBDs is that we’re moving ahead with the city’s support, but we’re not waiting for the city. This is about stakeholders in the district joining together, combining resources of money and time to create a better environment with more amenities for tenants, businesses, and visitors,” he says.

In less than a year since forming, the two Oakland districts have put a program in place, begun a joint marketing campaign including print and multimedia presentations (the latest project is a video blog incorporating short news-style reports on nightlife, events, and happenings in the districts), and linked with citywide initiatives such as the “Art Murmur” gallery walk/restaurant event held on the first Friday evening of each month. Future plans include renovations of a historic clock and horse trough to emphasize the districts’ historic past, a new signage program, and purchasing more trash cans to situate throughout the downtown and uptown areas.

CBDs can be transformational. For example, in San Francisco, the North of Market/ Tenderloin CBD, formed in 2004, has an annual budget of $1 million a year, most of which is invested back into the district in street cleaning, graffiti removal, and overall beautification. The block-by-block street-cleaning program and CBD events have done much to transform what was once a dense and unappealing area of the city, which now includes more than 90 restaurants.

In San Diego’s Little Italy neighborhood, property owners voted in 2004 to expand the special assessment used to form the district in 1996, resulting in a doubling of the district’s budget and expansion of the street-level programs and cultural events that have revived one of the oldest neighborhoods on the West Coast. The traditional Italian district was sliced into two by an interstate, sending many of the families who lived there into the suburbs. What followed was years of steady decline. But the decline ended when Li Mandri and local businesses formed the Little Italy Association, funded by a CBD now with an annual budget of over $1 million and which acts as a model for Italian-American communities all over the country.

“There are many things that go into creating a successful district and no two are ever the same,” says Li Mandri. “In Little Italy, one of the major issues for us was improving and, even more importantly, meticulously maintaining the public rights-of-way and spaces within the district to encourage residents to gather, much as they did in the days before the freeway interrupted life here in the 1970s,” he adds. Today, residents and visitors mingle, drink coffee, and sit and read their newspapers in the piazzas spread throughout the district in this little part of downtown San Diego.

“The sense of community is tangible,” says Li Mandri. “That’s all anyone here—residents, property owners, businesses, the city— really wants and that’s why people form improvement districts in the first place. Setting up a district is hard work and you have to do it right, but do it right and the benefits to the community go on forever because the positive vibe just takes over and feeds on itself.”