■What is CID/BID Buntankin (or Levy) System

1. Services that are not covered by ordinary government services but that benefit the public are provided.

2. The funds necessary for such services/projects are collected from every property owner in a fair, transparent manner.

3. An organization to provide the services is established.

4. Ultimately, the CID/BID aims to make the area a pleasant place to live in and visit, and to increase the property values.

■CID/BID areas

BID area: The areas of Chonaikais #1, #2 and #3 are planned to be included. Regarding inclusion of businesses in Chonaikai #4 and Kabayama Chonaikai in the BID, discussions are under way with the chonaikais.

CID area: The areas of Chonaikais #1, #2 and #3 are planned to be included. Regarding inclusion of Chonaikai #4, discussions are under way with the chonaikai.

　　　　　　　　　　　

■Why is the Japanese name “buntankin”?

This is because “juekisha buntankin” system for allocating levies to beneficiaries set by Article 224 of The Local Autonomy Act (1947) will be adopted to establish the Niseko Hirafu CID/BID system. The important feature of the system is that “the beneficiaries are limited to the levy payers."  Therefore, community levies collected in Hirafu must be used only for Hirafu community matters. For example, the levy cannot be used for the cleaning of rubbish boxes at JR Kutchan Station. 

■BID projects

Aiming to increase revenue for local businesses, Hirafu-specific tourism destination improvement/ development and infrastructure maintenance will be conducted.

1. Developing a new rubbish collection system (1st year onward)

2. Street banner installation (1st to 3rd years)

3. Year-round guidebook, like Wine & Dine (1st year onward)

4. Dissemination of information on accommodations and activities via Web and Facebook (1st year onward)

5. Business promotion through local events (restaurant fair, Hirafu Festival, Hirafu Winter Festival, etc.)

6. A portion of the Hirafu-zaka St. sidewalk road-heating electricity cost*
(1st year onward)

*The local community, including the Town of Kutchan, is responsible for bearing the cost of road heating for 1.5 m of sidewalk width, a cost that is estimated at 6 mil. yen per year. The town will be requested to bear 40% of this, and the BID will bear the remaining 3.6 mil. yen per year.

■CID projects

1. Costs of streetlamp electricity, repair and new installation (short-term)

2. Community beautification (short-term)

3. Community networking (mid-/long-term)

4. Discussion on the new rubbish collection system. (mid-/long-term)

5. Lobbying to establish town laws that make property owners responsible for mowing and for removing snow from roofs, prohibiting fireworks, avoiding noise and properly disposing of cans/ bottles/ litter left on the street.

●Chonaikais are encouraged to continue their activities.

●CID levies will not be applied to the costs of Hirafu-zaka sidewalk road-heating.

●CID/BID operation

Because it has already become difficult for volunteers alone to take care of matters, some of the funds will be used to employ secretariat staff, and activity staff for patrolling, picking up litter and the like.

　　　　　　　　　　　　　　　　　　
　　　　　　　　　　　　　　　　　　　　　　　　　Street banners and illumination

■Advantages and disadvantages of the Niseko Hirafu Resort Buntankin (or Levy) System

●BID Business Levy

Advantages

Disadvantages

- Fair cost-bearing among all tourism and commercial businesses - Establishing an autonomy system where both Japanese and non-Japanese members discuss issues toward solving them - Lobbying body of local issues and infrastructure development/ maintenance - Raising interest in Hirafu among absent property owners - Securing a fund to be used for public matters in Hirafu (Due to the transformation of Hirafu Shibu into Hirafu Bukai of the Kutchan Tourism Association, the budget has drastically dropped.) - Establishing a system that secures and hands down Hirafu values, such as hospitality, the natural environment and culture) - Enhancing property values

- It takes time to obtain consensus for benefits and cost bearing. - There is no method where everyone feels fair. - It takes time and effort to obtain a consensus among property owners who have never borne expenses or joined in volunteer work in the community.

●CID Community Levy

Advantages	Disadvantages
- All building owners bear the cost (fair) - Lobbying body of local issues and infrastructure development/maintenance - Sharing full-time staff with BID - Establishing an autonomy system where both Japanese and non-Japanese members discuss issues toward solving them	- It takes time and effort to obtain a consensus among property owners who have never borne expenses or joined in volunteer work in the community.

【Residents/Non-residents】

	Advantages	Disadvantages
Residents	- Establishing an autonomy system where both Japanese and non-Japanese members discuss issues toward solving them. - Enhancing property values	- Increasing total payment of community expenses (except for the chonaikai members)
Non-residents		- Payment of community expenses (that they did not pay in the past)
Tenants	- Eliminating payment of chonaikai fees	- May be added to the rent

【Each chonaikai】

Chonaikai	Advantages	Disadvantages
#1	- No need to collect streetlamp electricity fee - The maintenance and management costs of community are borne by non-chonaikai members.
#2
#3
#4		- It takes time and effort to coordinate the roles of CID and the chonaikai. - The proposed CID levy is higher than the current chonaikai fee (Negotiations are needed to keep the fee at the current level.)

■Processes toward establishing the Niseko Hirafu CID/BID

Upon the consensus made among local residents/ businesses, the committee will propose that the Town of Kutchan establish the CID/BID laws. After the laws are enacted, the locals will establish a legal person to operate the CID/BID. The CID/BID operating body will apply to the Town of Kutchan to establish the Niseko Hirafu CID/BID. Upon the approval of the Town of Kutchan, the Niseko Hirafu BID/CID will be established.

■Collecting CID/BID levies

The CID/BID will be established by the consensus of building and relevant land owners. All of them, regardless of whether they are residents or non-residents, are obliged to pay the levies. The Town of Kutchan will collect the levies in accordance with the “juekisha buntankin” system that allocates levies to the beneficiaries.

　

The levies collected under the system are the same as “taxes." If you fail to pay the levies...

1. The same procedure as for unpaid tax will be applied (e.g., lien), and

2. The owner will lose the right to vote on CID/BID matters, the right to be on the board of directors, and the right to receive CID/BID services.

■Amounts of BID levies

All commercial buildings used for tourism or other commercial purposes will pay the following levies. Vacant lots may be subject to a levy.

1. Accommodations: “number of rooms used for guest stay” X “accommodation room unit rate” (accommodation room unit rates: 3,500 - 7,000 yen/room)

The unit rate may be determined by the location (distance from Hirafu-zaka St.) and types of accommodations (hotel, pension/lodge, condo, chalet, backpacker hostel).

2. Restaurants/shops: Floor area (excl. kitchen, toilets, etc.) X 100 yen/m²/year + 35,000 to 40,000 yen (This includes introduction in maps and a half-page ad in a Wine & Dine-like ad directory)

3. Share of road heating electricity cost by length of land adjoining Hirafu-zaka St.

4. Vehicle food vendors

　　　- Required to register with the BID and pay a fee
　　　- Businesses in good standing will be listed in the BID web directory.
　　　- The fee will be roughly 35,000 yen/vehicle/year

■Examples of properties subjects to/not subject to the BID levy

Type	Note	BID levy
Accommo- dations	Licenced by the public health centre to operate as such	Subject to BID levy
	Not licences to operate as such	Subject to BID levy (Guidance will be provided to obtain a proper licence.)
Chalets (vacation houses)	Rented to tourists	Subject to BID levy
	Chalets, or vacation house not rented out	Not subject to BID levy
Rented houses and apartments	Having a 3-month or longer contract with a tenant who is registered as a resident	Not subject to BID levy
	Having a less than 3-month contract with a tenant who is is not registered as a resident	Subject to BID levy
	Having a 3-month or longer contract with a tenant who is is not registered as a resident	Subject to BID levy
Warehouses garages attached buildings	Businesses other than in tourism/commerce (e.g., agriculture)	Not subject to BID levy

■ Amounts of CID levies

●CID levy: 8,400 yen/unit/year (the same amount as the Chonaikai #3 membership fee)

1. All buildings are subject to the levy, except as in #2 below.

2. Warehouses and garages of farmers and of “pure” residents who do not conduct any businesses are exempted.

3. A group of accommodation buildings on the same premises and approved to operate as one entity of accommodation business by the hokensho (public health centre) is counted as one unit.

4. The owner’s housing unit within accommodations, restaurants or the like is not counted, provided that the owner owns both the housing unit and the business units.

●The community buntankin of Chonaikai #4 may be less than those for other chonaikais, provided that Chonaikai #4 bears some roles of the CID.

■Is a vacant lot subject to levy?

○BID

The land adjoining Hirafu-zaka St. will be charged for “Hirafu-zaka St. sidewalk road-heating electricity share” according to the length of land along Hirafu-zaka St. Other than that, a BID levy for vacant lots is not planned thus far.

○CID

There are discussions of charging a levy for a vacant lot where there used to be a building. Details have not been discussed.

Land that is properly managed/ maintained by local residents or that offers to be a snow dumping site may be exempted from the levy.

■CID/BID operation organization

Type of legal person: General incorporated association

○Reasons for this choice

1. All property owners need to be CID/BID members; therefore, the organization does not allow a member to leave freely, as they could do if an NPO or a joint-stock company were chosen as the type of legal person.

2. The objective of a joint-stock company is economic gain, which is not the objective of the CID/BID organization, whose objective is the provision of public services.

　　　　　　　　

○Annual Membership Meeting

The annual, mid-term (3-year) and long-term (5-year) business plans will be put up for approval at the Annual Membership Meeting.

○Board of Directors

The board drafts policies, business plans, etc. for submission to the Annual Membership Meeting and for operating CID/BID projects and activities.  Other than the representatives of the ski lift operator, the directors will be elected by voting.

○Secretariat

One or two full-time secretariat staff will be supplemented by part-time project/activity staff or by contracting out for staff.

○Accounting

1. The levy is a tax-like fund. Therefore, a professional accounting office will be assigned to guide accounting work and to make audits. 

2. Activity-based-accounting (ABC) will be used to clarify the cost of each activity/project.

■Member categories

BID members: All commercial property owners and some land owners and their tenants

CID members: All residential/commercial property owners

Affiliate members: Businesses whose addresses are outside the BID but who wish to participate in BID activities. Affiliate membership requires approval of the board of directors and payment of a fee.

■Voting

●CID/BID establishment

The committee is proposing to conduct a vote among property owners who would be subject to a CID/BID levy on establishment of CID/BID. The voting rights for CID establishment will be given to the owner of CID units* according to the number of units subject to the CID levy; the voting rights for BID establishment will be given to the owner of BID units* according to his/her ownership of BID units. Voting will be by so-called “negative vote” for CID/BID establishment and continuation. Only eligible voters who oppose the creation of the BID/CID will vote. Unless the opposing vote exceeds 40% of the total BID/CID units owned by property owners, the Hirafu CID/BID will be approved and established. The continuation of CID/BID will be put to a vote every five years.

* In principal, one unit of housing (house, condominium, chalet, etc.) is regarded as one CID unit.

** The BID unit is determined by dividing the total BID levies of the BID member by the average accommodation room unit rate.

●Why a “negative vote”?

Hirafu residents and local businesses account for only 20% of all property owners in Hirafu. Because local residents/businesses account for too small a share to take care of overall community matters, the new CID/BID system, in which all building unit owners share the responsibility for bearing the community costs, has become necessary.

When we adopt a “positive vote” for CID/BID establishment, a CID/BID could be established if and only if a majority of absent property owners were willing to pay for Hirafu community expenses and were paying enough attention to Niseko Hirafu so that they did not forget to cast their positive vote. That is a very difficult challenge for Hirafu community residents and businesses.

When it becomes impossible for local residents and businesses to bear the costs and labour of maintaining the community, the local environment is increasingly degraded. That will result in falling property values. This will, in turn, cause great damage to absent property owners.

Let's introduce some overseas examples. In Vancouver, Canada, the vote to establish a BID was originally by “positive vote." Then, the economic development of the city caused rapid increases in real estate values and a high share of absent property owners who resided around the world. (Nearly 60% of property owners in the city live overseas.) This interfered with the establishment of a BID for several years. In addition, the BID continuation vote, which is held every five years, became increasingly burdensome for BID projects, because the secretariat had to spend most of their effort in the fourth and fifth years obtaining positive votes from absent property owners who were uninterested in BID activities.

Consequently, the city changed the voting system from “positive vote” to “negative vote."  This change lead to the establishment of many new BIDs that revived local commercial centres. In England and in other cities in Canada, a “positive vote” is used for the establishment of BIDs.

There are examples of CIDs and BIDs that introduced a “positive vote” system and failed to continue. That was because both had absent (overseas) owners of large-scale properties who once supported the CID/BID but did not support continuation.

Learning from these proceeding examples, we are proposing to introduce the “negative vote” system for the Niseko Hirafu CID/BID. The “negative vote” will help the local community to establish/continue the CID/BID even if a large-scale, absent property owner does not want to.

Again, 80% of property (building unit) owners in Hirafu are absent owners. And 75% of property owners in the Chonaikai #1, #2 and #3 areas live overseas. The share is 61% for Chonaikais #1 - #4. To obtain a majority by positive vote, we must obtain 50% of such absent owners' support. If we introduce a positive vote system for CID/BID establishment or continuation in near future, we would not be able to decide to introduce what we need in the near future. This means our objective of CID/BID, which is sharing of the responsibility and benefits of local management with absent owners, would be easily rejected.

Hirafu is an international resort. It needs a system befitting international standards.

●Election of BID Board of Directors

1. Only Hirafu residents are eligible for directorships.

2. The voting rights for BID Board of Directors will be given to a property owner in accordance with the number of “BID units” held by the property owner.

3. Tenants will be eligible for directorship and will have voting rights to elect directors who are responsible, as chairs, for relevant commercial committees.

4. BID members who fail to pay the CID/BID levy or taxes by the deadline will lose their CID/BID voting rights and eligibility for directorship.

●Appointment of CID Directors

1. Chonaikai chairs will be appointed to some of the CID directorship positions. However, because some chonaikais are no longer functioning, and they have no chair, a method for electing or appointing CID directors is a pending issue.

2. When an election will be held for CID directors, the election may be similar to that for the BID board of directors: Only residents of Hirafu in good standing will be eligible for directorship.

●Annual Membership Meeting

Each member (per person or business) will have one vote. A quorum will be set under the CID/BID bylaws.

●Board of Directors Meeting

Each Director will have one vote. A quorum will be set under the CID/BID bylaws.

■Let's share responsibilities and benefits!

Although absent property owners will be responsible for paying the levy under the CID/BID system, they will also benefit from the improved community environment. Under the Niseko Hirafu CID/BID, all property owners, regardless of whether they are residents or non-residents, will collaborate to foster the community as a world-class mountain resort.

Note: The assessment below is based on the assumption that the shops and restaurants have been placing a half-page ad in Wine & Dine. The Kutchan Toursim Assocation fee is expected to reduce by the end of 2013. 

● A restaurant (operated by a natural person) on Sasayaki-zaka St. in Chonaikai #1.

The owners owns the building. The floor area excluding the kitchen and wash rooms is 10 m²

■CID levy	8,400 yen
BID levy	10×100 yen＋35,000～40,000 yen = 36,000～41,000 Yen
Total	44,400 yen～49,400 yen

○Current payments to community organizations

Centre village streetlamp electricity costs	5,000 yen
Wine & Dine ad and NPB annual fee	31,000 yen
Kutchan Tourism Assoc. fee	17,000 yen
Total	53,000 yen

●A pension in Chonaikai #3 (operated by a natural person) The owner owns the building. Accommodation rooms total 8.

■CID levy	8,400 yen
BID levy	8 (rooms) X 5,000 yen (anticipated max. room rate for a pension in Chonaikai　#3) = 40,000 yen
Total	48,400 yen

○Current payments to community organizations

Chonaikai fees	8,400 yen
Kutchan Tourism Assoc. fee	27,000 yen
NPB annual fee	10,000 yen
Total	45,400 yen

● A 30-room hotel on Hirafu-zaka St. in Chonaikai #1 (operated by a legal person)

The owner owns the property, which includes a café (20 m²).

The property adjoin Hirafu-zaka St. for 20 m.

■CID levy	8,400 yen
BID levy (Café)	20×100 yen＋35,000～40,000 yen = 37,000～42,000 Yen
(Accommodations)	30 (rooms) X 7,000 yen (anticipated max. room rate for a hotel in Chonaikai #1) = 210,000 yen
Share of road heating electricity cost by length of land adjoining Hirafu-zaka St.	20 m X 2,130 yen = 42,600 yen
Total	289,600 yen ～294,000 yen

○Current payments to community organizations

Centre village streetlamp electricity costs	10,000 yen
Wine & Dine ad	21,000 yen
Kutchan Tourism Assoc. fee	27,000 yen
NPB annual fee	100,000 yen
Total	168,000 yen

●A condominium in Chonaikai #2 (2LDK) (owned by a natural person; rented out to tourists by a property management company)

■CID levy	8,400 yen
BID levy (Accommodations)	2 (rooms) X 7,000 yen (anticipated max. room rate for a pension in Chonaikai　#2) = 14,000 yen
Total	22,400 yen

●A chalet in Chonaikai #4 (3 LDK) (owned by a natural person; rented out to tourists by a property management company)

■CID Community levy	(Not discussed yet)
BID levy (Accommodations)	3 (rooms) X 6,000 yen  (anticipated max. room rate for a chalet in Chonaikai # 4)
Total	18,000 yen

○Current payments to community organizations

Chonaikai fees	6,000 yen
Total	6,000 yen

●A pension in Kabayama Chonaikai (operated by a legal person)

The owners owns the building. Accommodation rooms total 15.

■CID levy	None (Kabayama Chonaikai fee: 4,000 yen)
BID levy (Accommodations)	15 (rooms) X 4,500 yen (anticipated max. room rate for a pension in Kabayama Chonaikai) = 67,500 yen
Total	67,500 yen

○ Current payments to community organizations

(Chonaikai fee)	(4,000 yen)
Kutchan Tourism Assoc. fee	27,000 yen
NPB annual fee	30,000 yen
Total	57,000 yen

○After CID/BID introduction, the total could increase by 9,500 yen.

●A tenant restaurant in Chonaikai #1 (operated by a legal person)

Floor area: 50 m²

■CID levy	None
BID levy	None
Total	0 yen

○Current payments to community organizations

Centre village streetlamp electricity costs	5,000 yen
Wine & Dine ad	21,000 yen
NPB annual fee	30,000 yen
Kutchan Tourism Assoc. fee	27,000 yen
Total	83,000 yen

○After CID/BID introduction, the landlord could increase the rent by the CID/BID levy amounts.