Having swallowed the rest of downtown whole, it now seems the new Downtown BIA won’t get the Denny Regrade for dessert.

Business Improvement Areas, or BIAs, are special taxing districts created by the city at the request of property owners to fund extra services—generally street sweeping and private security. Proponents of a plan to encompass all of downtown in a single Business Improvement Area have met their match in a determined group of Regrade property owners, who recently declined to join the happy family.

Supporters of the downtown super-BIA argued that including the entire downtown area from Denny Way to South King Street would eliminate the need for multiple governing bodies (for the separate Regrade, Retail Core, First and Second Avenue, Waterfront, and Pioneer Square BIAs) and save money when contracting for services.

But BIA critics argue that the costly districts are charging for services that should be provided by government (policing) or by individual property owners (street sweeping). “It’s a program that benefits only those people who don’t take care of their properties,” says Barbara Hartley of Regrade property management firm Allegra, Ltd.

Hartley and other Regrade interests created the No BIA! Coalition, a group that includes commercial landowners, property management firms, and condominium dwellers who feel the Regrade BIA has been a poor investment and should be disbanded, rather than elevated into a larger entity.

Another issue was the marketing programs proposed under the new downtown BIA, which Regrade critics contended would benefit shopper- and tourist-oriented downtown neighborhoods, not the residential/office mix prevalent in their area. “The Denny Regrade is an emerging neighborhood and it has great concerns over whether it would be able to keep its own identity within the Downtown BIA,” says Downtown Seattle Association president Kate Joncas.

BIA backers were unable to win the support they needed in time for a City Councilimposed April 30 deadline.

The Regrade’s rejection of the Downtown BIA will serve to further establish the area as a distinct, residential neighborhood in the heart of a commercial-oriented downtown. It also represents the first significant check to the spread of this immensely popular property tax mechanism. Although generally drawing some opposition, BIAs have been adopted in every neighborhood commercial area where they have been proposed, including the University District, Broadway, and the International District.

Stopping the BIA train proved a daunting task. The Regrade rebels were matched up against the Downtown Seattle Association, whose board of trustees includes most of downtown’s major property owners. (The DSA also plays the role of beneficiary—the organization will get the management contract for the new Downtown BIA.)

The process for setting up BIAs is fundamentally undemocratic and susceptible to manipulation. The City Council only forms BIAs by petition, which must show the support of 60 percent of area property owners. However, the 60 percent support is calculated by assessed value of property, not by individual votes. So BIA backers generally target owners of big-money buildings, allowing their less-well-heeled neighbors to be swept in without their consent.

“It’s like holding a public vote and saying, you’ve got a net worth of $1 million and the other guy is worth $100,000—so your vote counts 10 times what his does,” says Joan Algarin, a Regrade condominium owner and member of the No BIA! Coalition.

Fortunately for the rebels, they were joined by one important defector from the monied group. Developer Martin Selig, who has significant property holdings both in the Regrade and throughout downtown, has been that rarity among major downtown property owners: a skeptic toward the BIAs. “There is a lot of money going into a black hole here,” says Selig’s attorney Elizabeth Gallagher. “We are just not seeing the bang for the buck.”

Currently, the Denny Regrade BIA spends about $30,000 monthly, with $24,000 going to security firm Northwest Loss Prevention Inc., $4,000 to the Millionair Club (for street-sweeping crews), and $2,000 in salary to the BIA’s executive director. But critics of the system aren’t impressed with what they’re getting. For example, the bicycle-mounted security officers can’t make arrests. “They’re really perceived as just hassling people to the next block,” says attorney Gallagher.

Supporters of a broader BIA will now have to go on ahead without the missing piece of their puzzle. A public hearing on the formation of the downtown BIA is scheduled for mid-June, and a City Council vote, which is required for the formation of any BIA, will follow soon afterwards.