## Facts

- New York law authorizes municipalities to create business improvement districts (BIDs) funded primarily by mandatory assessments on non-exempt real property owners within the district to provide supplemental services.
- New York City created the Grand Central Business Improvement District (GCBID) in midtown Manhattan and designated Grand Central District Management Association, Inc. (GCDMA), a nonprofit, to manage the BID under statute and a contract with the City.
- GCDMA recommended and implemented supplemental services and improvements (e.g., sanitation, security, and business promotion) within limits imposed by state and city law; the City retained core governmental authority and ownership of public property.
- The BID’s primary funding came from assessments levied by the City exclusively on property owners in the district.
- GCDMA’s board was elected by three membership classes: property owners, commercial tenants, and residential tenants; state and city requirements ensured a property-owner majority on the board.
- Residential tenants (including plaintiffs Robert Kessler and Vicki Cheikes) were entitled to elect only one board member.
- Plaintiffs sued under 42 U.S.C. § 1983, claiming the board election scheme violated Equal Protection by diluting their voting power under the one-person, one-vote rule.
- The district court granted summary judgment for GCDMA, the City, and the New York Attorney General, concluding the BID was a special, limited-purpose entity disproportionately affecting property owners, so one-person, one-vote did not apply.

## Issues

1. Whether GCDMA and the GCBID are special, limited-purpose entities that disproportionately affect property owners, placing board elections outside strict one-person, one-vote requirements.
2. Whether GCDMA exercises general governmental powers sufficient to trigger one-person, one-vote scrutiny under the Equal Protection Clause.

## Decision

- The Second Circuit affirmed summary judgment for defendants.
- The court held the GCBID/GCDMA arrangement constituted a special, limited-purpose governmental unit whose activities disproportionately affect property owners because property owners bear the mandatory assessments.
- The court concluded GCDMA did not exercise general governmental powers comparable to a municipality; the City levied assessments and retained traditional governmental authority.
- Applying a reasonableness standard, the court upheld the property-owner-majority board structure as reasonably related to the BID’s limited purposes and funding structure.
- The court determined the case was not moot despite contract timing issues because the controversy was capable of repetition yet evading review.

## Legal Principles

- The one-person, one-vote requirement applies strictly to general-purpose governmental bodies but may not apply to special-purpose entities performing narrow functions.
- When an entity is special-purpose and its actions disproportionately affect a definable group (including through concentrated financial burdens), election schemes may be evaluated under a reasonableness standard rather than strict population-based equality.
- A voting structure favoring the group that bears the primary financial burden of a special-purpose district can satisfy Equal Protection if reasonably related to the district’s limited functions.
- Provision of supplemental services (rather than assuming primary municipal responsibilities) and lack of independent taxing or law-enforcement power support classification as special-purpose rather than general-purpose government.

## Conclusion

The Second Circuit upheld a BID governance scheme granting property owners majority control because the district served limited, supplemental functions and imposed its primary financial burden on assessed property owners, making one-person, one-vote inapplicable and the voting structure permissible under a reasonableness review.


Kessler v. Grand Cent. Dist. Mgmt. Ass’n, Inc., 158 F.3d 92 (2d Cir. 1998)