A BID is a nonprofit organization created by neighborhood property owners to provide local pubic goods and services, including public safety. The organization has the power to tax all the owners in the district, including those that did not sign the original petition. The data for examining the effects of BIDs on crime and arrests consisted of the annual counts of nine officially recorded felony crimes (homicide, rape, robbery, assault-aggravated, burglary, burglary-theft automobile, theft-personal, theft-other, and auto theft) and arrests by the Los Angeles Police Department for years 1994 to 2005, representing a time series of years before and after BIDs were adopted in Los Angeles. The study found that the average incidence of total reported crimes decreased more in BID areas than in non-B ID areas, reflecting a 44-percent greater relative reduction. Similarly, the average incidence of arrests declined more in BID areas than in non-BID areas, reflecting a 45-percent greater relative reduction. The introduction of BIDs was associated with approximately 28 fewer total serious crimes per neighborhood or an 11-percent relative decline in crime associated with BID implementation. For crimes motivated by environmental opportunities, the results appear to be particularly strong, as the largest marginal shift in crime occurred for robberies, followed by burglary and auto theft. In addition, the findings suggest that rather than displacing crime to neighboring areas, BIDs reduced crime in those areas by a modest amount. The BIDs in Los Angeles clearly pass a cost-benefit test. The social cost savings from BID security expenditures was greater than expenditures. The key is to provide the legal framework that facilitates the formation and funding of BIDs. 7 tables, 8 figures, and 47 references