Vigilante Neighborhoods Combat Crime: Business Improvement Districts and the Private Provision of Public Safety

Leah Brooks, University of California, Los Angeles

Many urban commercial areas suffer from crime, vandalism, and lack of maintenance, and property owners have turned to Business Improvement Districts (BIDs) to provide public goods to solve these problems. A BID is formed when a majority of property owners in a given neighborhood votes in favor of additional taxation; state law makes these contributions mandatory for all owners. Can these BIDs reduce crime? Across a variety of methods -- using fixed effects, comparing BIDs to neighborhoods that almost formed BIDs, using propensity score matching, comparing BIDs to their neighbors and near neighbors, and instrumenting for BID adoption with the era of neighborhood development – I find BIDs are associated with crime declines of 5 to 9 percent. More strikingly, these declines are purchased cheaply: BIDs spend $3,000 to avert one crime, compared to the $5,000 the LAPD spends per crime committed, or the $20,000 social cost of a violent crime.