BID fees taking bite out of partnerships.

Business Improvement District officials are shocked and angered by a city proposal to charge the groups a fee, saying it puts pressure on budgets that are already stretched thin.

"It seems to undermine the whole spirit of the public-private partnership," said Barbara Randall, executive director of the Fashion Center Business Improvement District.

The proposal -- which was included in Mayor Rudolph Giuliani's Jan. 25 budget -- would impose an administrative fee amounting to two percent of each BIDs budget, or $1.1 million total for the city's 41 BIDs.

The city passed legislation in 1982 allowing for the creation of BIDs, which provide services aimed at supplementing those provided by the city in areas such as sanitation and marketing. For instance, BIDs often provide extra security in an area, as well as street cleaning, and public toilets, During the holiday season, many BIDs decorate the streets with colorful banners and other decor. By improving its appearance and quality of life, a neighborhood becomes more conducive to economic development with new businesses or office buildings attracted to the revitalized area.

Businesses and property owners within a particular district - which reap the benefits of services - pay taxes to the BID, which are collected by the city through city tax bills. The City Council and the mayor must approve any in creases in taxes paid to a BID.

BIDs have received attention in recent years because of the role they have played in the revitalization of New York City. The groups are often credited with improving the quality of life in a particular area, which makes it more attractive to business and development.

"They have to be given enormous credit for rehabilitating parts of town that others had written off," said Warren Wechsler, senior vice president of the Real Estate Board of New York. "By making those suffering areas more attractive it tilled the soil for development throughout the city."

Taking small steps to improve the quality-of-life in an area in the hope that the measures will have snowball effect resulting in the revitalization of neighborhoods is an approach that Giuliani has hailed throughout his administration. It is for this reason that some BID executives were stunned by the mayor's proposal.

It is unclear, however, how strongly Giuliani plans to pursue the proposed fee. The city budget is in the early stages of formation and will be the subject of numerous discussions before it is adopted. Some BID executives are hoping there will be opportunity to voice their opposition to the measure.

Several calls to Giuliani's press office were not returned.

"I sense that it's not a firm budget item," Randall said. "It's not a large amount but we hope that it will get reconsidered."

This is not the first time, however, that there has been friction between the city and BIDs. In 1998, Daniel Biederman resigned as president of the Grand Central Partnership after Giuliani accused him of amassing too much power. Giuliani replaced him with Alfred C. Cerullo III, his former commissioner of finance.