Business improvement districts (BIDs) are usually established by the legislature as an innovative approach to deliver public services, and funds to support their operations come from taxation on business premises or special property assessment fees levied on property owners for various improvement activities and services within the geographic area. The major goal of BIDs is to promote employment, commerce, economic development, and public welfare in certain neighborhoods. Generally, BIDs represent a unique form of public-private partnerships. Under these partnerships government can bring private sector businesses including community-based organizations into the management of projects, while safeguarding the accountability of funds and ensuring efficient service delivery. The analysis begins with a brief review of BIDs as an economic development tool. This is followed by a discussion of governing structures, intergovernmental relations, and effectiveness issues as these relate to urban governance. Furthermore, the paper concludes with recommendations on how to implement successful BIDs in the twenty-first century.