By Doug Generoli

The release of Mayor Bob Filner’s initial 2014 budget proposal caused quite a storm in the past several weeks with politicians and the media finding much to criticize. In large part their attention was focused on big ticket issues – use of one-time funds, cuts to the City Attorney’s office, and delays in infrastructure repair – but there was one item that went largely unnoticed … except by the small business community.

Small business in San Diego is thriving. Vacant storefronts are being filled. Businesses are expanding and relocating into larger venues. New construction is occurring.

San Diego small business is even receiving national attention. In late 2012 North Park was rated by Forbes magazine as one of the top 20 hipster neighborhoods in the nation. Just last month Adams Avenue made it into the travel section of the New York Times, which named it as a worthy stop on a short San Diego visit, with specific mention of Lestat’s and Mariposa Ice Cream and Viva Pops.

According to Employment Development Department data, small business, defined as businesses having fewer than 50 employees, accounts for over 90% of San Diego businesses with payroll and provides 38% of payroll jobs in the city.

So it came as a surprise when Mayor Filner’s budget proposal eliminated a large amount of funding for the Business Improvement District (BID) Council. That is, if you didn’t know what was happening behind the scenes.

The Business Improvement District Council is a steering committee for small business in San Diego. At the time it was established in 1989 it was hailed as a model of collaboration between city government and private business, the proverbial public-private partnership.

The BID Council was funded by City tax dollars and tasked to bring the business community of San Diego together. Accordingly, the various business improvement districts in town – City Heights, El Cajon Boulevard, Little Italy, 18 in all – each send a representative to sit on the council and collectively they address the concerns of and advocate for San Diego small business.

To that end the BID Council has two employees, an Executive Director and an assistant. The Executive Director of the BID Council now is Tiffany Sherer, a fixture in the San Diego small business committee for the past ten years. She became the BID Council’s Executive Council in May 2009 after serving as the Executive Director of the La Jolla Business Improvement District for six years. Most of Sherer’s duties are dry and somewhat esoteric – City reimbursement for maintenance assessment district expenditures or business district reimbursement for a portion of city fees and services – and in general Sherer’s tenure with the BID Council has been uneventful, that is, until Sherer recently got caught up in the dispute between the San Diego hotel industry and Mayor Bob Filner.

The Filner-hoteliers dispute centered on the Tourism Marketing District (TMD), an entity that was established to promote San Diego as a tourism destination. It is funded through a citywide assessment district which collects a 2% room charge from San Diego hotel guests. In the recent brouhaha the hoteliers wanted tourism district funds released as soon as possible while Mayor Filner, citing pending litigation, wanted to hold money in reserve in case the TMD was found to be illegal.

Negotiations over the operating agreement between the City and the TMD were lengthy and often rancorous. An agreement was eventually signed in late April, but, unfortunately, when the rancor was at its highest, Sherer entered the fray by circulating an e-mail to the board members of the BID Council which detailed talking points in favor of the hotel industry’s position and suggested that the various business districts attend an upcoming City Council hearing on the TMD issue to testify on the hotel industry’s behalf.

From a small business perspective choosing sides in the mayor-hoteliers conflict didn’t make much sense. The TMD issue wasn’t really a business improvement district issue and in a strong mayor system of government it’s not wise to do battle with the mayor over something that’s not critical. It seemed that there was little to be gained and a lot to be lost.

And losing is exactly what happened. Mayor Filner’s budget proposal, which goes into effect on July 1st, eliminates funding for the staff and overhead of the BID Council. At the same time it creates a new position, called Small Business Advocate, inside the City’s Economic Development Department. In essence, the mayor’s new budget doesn’t eliminate small business advocacy in San Diego, but it does bring it in-house and directly under the control of the mayor’s office.

Small business leaders are reluctant to comment on this shifting of positions, fearing that the bad politics might get even worse. Several voiced concern that the BID Council might want to fight over the matter and create another no-win and rancorous dispute with the Mayor’s office. Business leaders envisioned being asked again to testify at a City Council hearing, being forced to weigh whether loyalty to the BID Council or making nice with the Mayor’s office was in their best interests.

Luckily, it appears that a conflict with the mayor will not happen. Recently, the current BID Council President, Pat Edwards, a long-time North Park businessman, announced that the BID Council would “do everything in its power to ensure that the transition will be smooth and uneventful.” And in a surprise twist to the story Edwards also announced that the City had already hired someone to fill the Small Business Advocate position, a woman who is known to San Diego small business, Liz Studebaker.

Liz Studebaker is a well-respected San Diego small business name. She was Executive Director of the North Park Main Street Business Improvement District for nearly five years and laid some of the groundwork for North Park’s subsequent emergence as one of the best hipster neighborhoods in the nation. She left San Diego in January 2012 to run the Midtown Business Association in Sacramento and has received similar accolades for her work there, including setting up Midtown’s first farmer’s market, enhancing the neighborhood’s Clean & Safe program, fine-tuning special events, and creating a more bike friendly business district. She is due to begin working here in San Diego in the coming weeks.

For now the future of the BID Council is uncertain. President Edwards said that the BID Council will continue to meet and conduct business, but under a severely restricted budget. To cut expenses the BID Council will move its offices from their present location in the Chamber building on West C Street to somewhere more affordable. Executive Director Sherer will still serve as Executive Director and be paid with BID Council reserves until other sources of revenue can be found. A recent e-mail was sent to each of the business improvement districts in town inquiring if they could each make an annual contribution of $5000 to fund the BID Council. As yet, it is unknown whether the various business improvement districts in town will support that measure.

 Doug Generoli is a freelance writer and Treasurer of the Adams Avenue Business Improvement District