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HomeMy WebLinkAboutRESO 9403Resolution No. 9403 Resolution of the Council of the City of Palo Alto Declaring Its Intention to Levy an Assessment Against Businesses Within the Downtown Palo Alto Business Improvement District for Fiscal Year 2015 and Setting a Time and Place for May 12, 2014 at 7:00PM or Thereafter, in the Council Chambers The City Council of the City of Palo Alto Does Hereby Find, Declare, and Order as Follows: SECTION 1. The Parking and Business Improvement Area Law of 1989 (the 11Law11 ), California Streets and Highways Code Sections 36500 et seq., authorizes the City Council to levy an assessment against businesses within a parking and business improvement area which is in addition to any assessments, fees, charges, or taxes imposed in the City. SECTION 2. Pursuant to the Law, the City Council adopted Ordinance No. 4819 establishing the Downtown Palo Alto Business Improvement District (the 11 District11 ) in the City of Palo Alto. SECTION 3. The City Council, by Resolution No. 8416, appointed the Board of Directors of the Palo Alto Downtown Business & Professional Association, a California nonprofit mutual benefit corporation, to serve as the Advisory Board for the District (the 11Advisory Board11 ). SECTION 4. In accordance with Section 36533 of the law, the Advisory Board prepared and filed with the City Clerk a report entitled 11 Downtown Palo Alto Business Improvement District, Annual Report 2014-201511 (the 11Report"). The City Council hereby preliminarily approves the report. SECTION 5. The boundaries of the District are within the City limits of the City of Palo Alto (the 11 City11 ) and encompass the greater downtown area of the City, generally extending from El Camino Real to the East, Webster Street to the West, Lytton Avenue to the North and Addison Avenue to the South (east of Emerson Street, the boundaries extend only to Forest Avenue to the South). Reference is hereby made to the map of the District attached hereto as Exhibit 11A11 and incorporated herein by reference for a complete description of the boundaries of the District. SECTION 6. The City Council hereby declares its intention, in addition to any assessments, fees, charges or taxes imposed by the City, to levy and collect an assessment against businesses within the District for fiscal year 2015 (July 1, 2014 to June 30, 2015). Such assessment is not proposed to increase from the assessment levied and collected for the prior fiscal year. The method and basis of levying the assessment is set forth in Exhibit 11 B11 attached hereto, and incorporated herein by reference. 140414 jb 0131195 1 SECTION 7. The types of improvements to be funded by the levy of an assessment against businesses within the District are the acquisition, construction, installation or maintenance of any tangible property with an estimated useful life of five years or more. The types of activities to be funded by the levy of an assessment against businesses within the District are the promotion of public events which benefit businesses in the area and which take place on or in public places within the District; the furnishing of music in any public place in the District; and activities which benefit businesses located and operating in the District. SECTION 8. New businesses established in the District after the beginning of any fiscal year shall be exempt from the levy of the assessment for that fiscal year. In addition, non-profit organizations, newspapers and professional "single-person businesses," defined as those businesses which have 25% or less full time equivalent employees, including the business owner, shall be exempt from the assessment. SECTION 9. The City Council hereby fixes the time and place for a public hearing on the proposed levy of an assessment against businesses within the District for fiscal year 2015 as follows: TIME: DATE: PLACE: 7:00p.m. or soon thereafter Monday, May 12, 2014 City Council Chambers 250 Hamilton Avenue Palo Alto, California 94301 At the public hearing, the testimony of all interested persons regarding the levy of an assessment against businesses within the District for fiscal year 2015 shall be heard. A protest may be made orally or in writing by any interested person. Any protest pertaining to the regularity or sufficiency of the proceedings must be in writing and shall clearly set forth the irregularity or defect to which the objection is made. Every written protest must be filed with the City Clerk at or before the time fixed for the public hearing. The City Council may waive any irregularity in the form or content of any written protest and at the public hearing may correct minor defects in the proceedings. A written protest may be withdrawn in writing at any time before the conclusion of the public hearing. Each written protest must contain a description of the business in which the person subscribing the protest is interested sufficient to identify the business and, if a person subscribing is not shown on the official records of the City as the owner of the business, the protest shall contain or be accompanied by written evidence that the 140414 jb 0131195 2 person subscribing is the owner of the business. A written protest which does not comply with the requirements set forth in this paragraph will not be counted in determining a majority protest (as defined below). If, at the conclusion of the public hearing, written protests are received from the owners of businesses in the District which will pay 50 percent or more of the assessments proposed to be levied and protests are not withdrawn so as to reduce the protests to less than 50 percent (i.e., there is a majority protest), no further proceedings to levy the proposed assessment, as contained in this resolution of intention, shall be taken for a period of one year from the date of the finding of a majority protest by the City Council. If the majority protest is only against the furnishing of a specified type or types of improvement or activity within the District, those types of improvements or activities shall be eliminated. SECTION 10. For a full and detailed description of the improvements and activities to be provided for fiscal year 2015, the boundaries of the District and the proposed assessments to be levied against the businesses within the District for fiscal year 2015, reference is hereby made to the Report of the Advisory Board. The Report is on file with the City Clerk and open to public inspection. SECTION 11. The City Clerk is hereby authorized and directed to provide notice of the public hearing in accordance with law. II II II II II II II II II II 140414 jb 0131195 3 SECTION 12. The Council finds that the adoption of this resolution does not meet the definition of a project under Section 21065 of the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary. INTRODUCED AND PASSED: April 21, 2014 AVES: BERMAN, BURT, HOLMAN, KLEIN, KNISS, PRICE, SCHARFF, SCHMID NOES: ABSENT: ABSTENTIONS: SHEPHERD ATTEST: 140414 jb 0131195 4 El Camino Real Legend !abc,] Zone A {Ground Floor)-Zone B (Upper Floors) :: .\t~~· ~ Zone B The City of Palo Alto EXHIBIT A EICaminoR ea1 Downtown Palo Alto Business Improvement District Area Map This map is a product of the City of Palo Alto GIS --000' ........ TN C1tt ofP•IQ Mo 81411n'41 no "'fl'Onllbo.tyfot '"1•nO!to0190910 ~12 City or P110A!to Palo Alto Downtown Business Improvement District 2014-15 Annual Report Prepared for: Palo Alto City Council Prepared by: Russ Cohen, Executive Director, -~ »-~'" ,.~ ~ Palo Alto Downtown Business and Profession<~! Association There are dozens of great places to shop and eat and thousands of great ideas being generated every day. Only :n downtown Palo Alto. PALO ALTO DOWNTOWN n Introduction This report from the Advisory Board of the Palo Alto Downtown Business & Professional Association ("PAd,,) was prepared for City Council to review for the annual reauthorization of the Downtown Palo Alto Business Improvement District ("BID,,) pursuant to Section 36533 of the Parking and Business Improvement Law of 1989 (Section 36500 and following of the California Streets and Highways code) (the "Law,). This report is for the proposed fiscal year for the BID commencing July 1, 2014 and ending June 30,2015. ("Fiscal Year 2014-15,) .. As required by the Law, this report contains the following information: I. Any proposed changes in BID boundaries and benefit zones within the BID; II. The improvements and activities to be provided for Fiscal Year 2014-15; m. An estimate of the cost of providing the improvements and the activities for Fiscal Year 2014-15; IV. The method and basis of levying the assessment in sufficient detail to allow each business owner to estimate the amount of the assessment to be levied against his or her business for Fiscal Year 2014-15. V. The amount of any surplus or deficit revenues to be carried over from a previous fiscal year. VI. The amount of any contributions to be made from sources other than assessments levied pursuant to the Law. Submitted by Anne E. Senti-Willis, Chair, and RussellS. Cohen, Executive Director on behalf of the Advisory Board ("Advisory Board,) of the Palo Alto Downtown Business & Professional Association ("PAd,,), The Advisory Board approved this report on April9, 2014. Received on file in the Office of the City Clerk of the City of Palo Alto on April_, 2014. 1 Section 1: BID boundaries and Benefit Zones There have been no changes in the BID boundaries or benefit zones within the BID and no changes are proposed. The current boundaries are depicted on the map below. The area of the BID is referred to as "Downtown." EJ Camlno Roal Legend r::i1i'2] Zone A (Ground Floor)· Zone B (Upper Floors) ~~~ )~1~: .~ Zone B r k" ru, or Palo Alto Downtown Palo Alto Business Improvement District Area Map ' This map Is o product ollho Cily of Polo Allo GIS ---. Who and what are downtown Palo Alto? The following charts illustrate the current makeup of Downtown Palo Alto by business category. Methodology: Ratio estimates based on one time data co/lectioi1 through quick probability samplings considered a "windshield survey. " Margin of error is estimated to be 10-15%. Businesses in downtown Palo Alto 2014 • Restaurants = 88 • Retail= 72 ""High tech= 109 • Real Estate = 30 1011 Finance = 84 ·~ Medical = 79 ···Other= 230 '--------------------------------··-··----' Restaurants Retail 4 •Independenty owned=75 • Chain or franchise=13 Total=BB •Independently owned=Sl • Chain or franchise=21 Total= 72 .--------------------------------- Restaurant vs. Retail • Retaurant = 88 :;,1 Retail = 72 ·-·-------·-------------------····-··-----·-·-·---·--- Total independent vs Chain (both rest. & retail combined ) u Independent= 126 uchain = 34 .--------------~-----------~--------------- New vs Closed Summary of findings _based on the above charts: rn New= 58 Closed= 13 These data illustrate reality rather than perception. Many perceive that there is a preponderance of restaurants vs. retail, but in reality the mix is quite balanced. That is also true for the number of chains vs. the number of independently owned businesses-it's clear that there is much more in the way of independently owned businesses than chain or franchised businesses-thus breaking the commonly held perception of downtown being dominated by chains and restaurants. Section II: 2013-14 Year in Review and Planned Activites for Fiscal Year 2014-2015 "Keeping Downtown Palo Alto Sqf'e, Spotless and Successful. " PROJECT STATUS EXPECTED COMPLETION Jleautitteation and sa'f6f.l: c, Cogswell Park wi-fi " Contributed funds to pilot free wi"fi hot spot program Complete March - hot spot at C9gswell Park; assisted TopComer.org with 2013 fundtaising. Oper#ition; Flagpole: Holes being installed as part of the University Ave Complete July- lll~!mtj•#b~, to , land,sc~ping improvements. Palo Alto Rotary and the 2013 and ongoing .:de~~tiit~rUniversity University Rotary Club funded and volunteered to .,2~~::: assetttble, install and remove flags each national "'hoUday, University A venue Worldng With the city of Palo Alto on outreach to Complete Apr-2013 landscape and business community to add awareness and address irrigation concerns on scheduled improvements. Began the fttst rehabiUtation of9 phases of 1-2 weeks each on Feb 7; Work conmlet~d. •piJ~U~>Art:Aut(1ra" PAd lias worked with the Pal Alto Arts Conunission Complete Nov - tns.taJiatlon atKbtg to move this installation to King Plaza. Fundraising, 2013 . website and print material distribution underway involving, among others, the Black Rock Art Foundation. Monthly sidewalk Wo.r'k:ed with the City to increase frequency and Ongoing hnptov.e equipment used for sidewalk cleaning. $j!'~~l)J.lal.JIIJllp: post In dev~lopment as a pilot program with the Complete Spring · 6anlte~· · expecfu.thm ofexpanding the program to include a 2013 and Summer greater variety ofhanners and more frequent 2013, Holiday 2013 replacement; Additional ful1ding will come from Spring 2014 in private p\llilic partnerships. progress Public Art: Program under development with Palo Alto Public Ongoing Downtown Mural Arts Commission and Downtown property owners to Project bring murals to Downtown buildings and other locations. RFP's have been issued. Exec. Dir. Will serve on review committee. 167902.001/56 £00., •• ., Downtown Ambassador .· Q:Ciwntcnvn gateway ~'''"to'... . ~-re· Security camera installation in garages S~~.,pJJtgtn Vehicles sUbaomfulttee No smoking ordinance for Lytton Plaza and Cogswell Plaza kdtiliiilstration Yearly audit A:nliualdatabase tiJjCiate Annual invoices ations and1pl:oifamming Downtown Palo Alto walking maps To make Lytton Plaza more welcoming; umbrellas have been proposed to be added to outdoor seating .. Downtown Streets Team has agreed·to set up and dismantle umbre'nas on weekdays. Outreach is beginning for storage. Friends of LP will fund. Adding public art and foliage is also under development PAd continues to explore sponsorship of ''ambassadors'' with the Downtown Streets Team, with individuals who would be able to provide in.form~tion re~arding Downtown and direction to visitors, Fundfu bein sou bt. Development of feature to mark entrances to D t b' 'd d . ·own own, etng CORSI ere . Working withPA Chamber of Commerce BAPPF to supportprQgram to increase safety in parking garages through installation and monitoring of security cameras. Currently involved with sourcing vendors, obtainiqg_prices an&st.ute:esting placement locations. Served on the committee to develop a pHot prQgl'am wltb the .faith community to address this is!lue~Ordtnance now before council Suggested new ordinance to City staff as a result of :PA.dtriember complaints, PAd has drafted aletter in support of current Policy & Services Committee .· cort.Sideratiort and have encouraged further business con,mtunity support. Ordinance approved by city council. fu effect as of June 13 ·. .. Annual required financial sta~ement audit and tax retum corn leted b inde endent accountin finn.· Annual census of new and departed businesses within Downtown complete and provided to the City for annual BID assessment invoicin . Separate communications from PAd added to all City invoices, including separate welcome letter for new c businesses. In discussions with interactive developer to provide interactive and printed maps of downtown. R Umbrellas and stands installed. Foliage installed. Umbrellas and stands went missing. Umbrellas will be replaced in Spring 2014 Seeking funding Meetings have commence d Meetings have commenced Complete and then put op hold pending out of state Uti f lfla ton Complete June- 2013 Complete Feb-2013. In ro ress for 2014 Complete Feb.;.2014 Scheduled for July 1, 2014 Under development Website redesign Media Coverage F~t¢~book presence I Twitter ~ ' .., ' Holiday Tree Lighting/Shop Small Saturday "The Downtown Crown" Summer Concert Series Magazine devoted to Downtown businesses under development. Partial issue was released during the Pal() Alto.Institute Film Festival in October 2012. When complete, it will be available for free distributi<>n atDowntown businesses. BolU'd authorized ED to proceed with development. In conjl.inction with the City,.PAdhosted three meetings on·March 18 and in April with Downtown restaurant owners to provide information regarding encroachment permit requirements for outdoor dining. Efforts to facilitate compliance with City d' ·u b · · or mances w1 eongomg .. The past fiscal year has seen at least 15 ~rticles, citations, listings or other references in media outlets. Photos, posts and calendar items are all included m fac~book content. The facebook presence also provides "friends" with updates on new and departing businesses-as well as events and activities in downtown Palo Alto I Accouptlaunched Jan 2013 2012:tree'lighting occurred onNoveinber 30. The 2013li$hting is currently scheduled'for November 30 to ·coincide with Small Business Day Account launcbed]an 2013 . . : . • pAQ,tunvolved wtth thts annual Father's Day event through assistance with securing insurance for the event and providing outreach to the Downtown business community regarding street closures and . t . . t . h t wavs o DarttcJpa e 1Jl t · e even .. Atthe·grand opening of each new downtown qusiness, PAd welcomes the business to the district by presenting a crown . . Actively involved in ensuring the downtown parking assessment district is running effectively, It engaged in considerable outreach with downtown neighbors tegat"ding impacts including the development of a pHbt'R,.PP program. We continue to be involved with ongoing gowntown parking studies, working with city staff and working on outreach to downtown busines.s and ro e owners. An underwriter has been identified to.resume outdoor concerts downtown. PA~ provides continuous member outreach regarding street closures, special events, construction impacts, --------transportation studies, traffic disruptions and more. q Under development Complete Dec 2013 CompleteJune- 2013 Enforcement to begin at any time Ongoing Complete and Ongoing I Ongoing Scheduled for Nov 30,2014 Complete June 2013 Ongoing Ongoing Scheduled for Summer2014 Ongoing Section II Continued: Year in review and Planned Activites for Fiscal Year 2014-2015 Creating a spotless downtown. The sidewalks downtown are steam cleaned once per month with super powerful equipment that helps remove stubborn stains like chewing gum. (For the record, individual businesses can sweep but are prohibited from using water to "hose down" the sidewalks, as that debris will flow directly to the bay. Steam cleaning is the most effective and the most environmentally responsible method.) These methods are an improvement over years past. These increases in frequency along with better equipment and the help of the Downtown Streets Team, (founded by The Palo Alto Downtown Business and Professional Association in 2004) help to keep downtown Palo Alto "spotless." Creating a safe downtown. In addition to the association fees, many merchants in the downtown district also contribute fees to the downtown parking district which helped fund the building of the parking garages downtown (an ongoing cost) and fund the ongoing maintenance ofthe garages at an approximate cost of$1million each year. The garages are patrolled by the Palo Alto Police Department and outreach efforts by the Downtown Streets Team, both are funded by these fees. The return of dedicated patrols downtown with two officers assigned to the beat also ensure a presence downtown that helps deter crime and provides rapid response to downtown incidents. Creating a destination. Keeping downtown a great place to do business, whether you are a retailer, restaurant, start-up or a one- person office is our mission. There was a time before the existence of the business association that downtown was not a thriving, vibrant place to do business. Today, it is abuzz with activity due in large part to the efforts of the Palo Alto Downtown Business and Professional Association. Making certain that downtown is its own unique brand, one that differentiates itself from any other downtown, is an area of focus for The Association. Creating this brand comes from not only ensuring an attractive downtown, but one that doesn't mind tooting its own hom. Creating an environment that is business friendly. The Palo Alto Downtown Business and Professional Association provides a conduit to leaders and staff at city hall. We don't workjor the city of Palo Alto; we work with it on behalf of all the business located downtown. From helping to develop public policy regarding public parking to smoking in downtown parks to noise ordinances to issues surrounding outdoor dining, we are a stakeholder with a voice that can be heard amongst other stakeholders and Palo Alto's civic leaders. Section m. Budget for 2014-15 The total funds available for activities for this fiscal year are estimated to be $148,000. The budget for providing the ~ctivities is set forth as follows: BID 2013/14 Budstet Non-Assessment INCOME Total Sources Assessments $137.000 Allowance for Uncollectible Assessments ($34,000' Other Revenue $25,000 $25,000 12-13 S~lus Carrvover $20,000 ITOTAI INrnMW CUtiRM ~.,c nnn EXPENSES Operatinl! Expenses Staff Salaries Executive Director Salary & Benefits $67.980 Payroll taxes and expense $6.798 Office Supplies & Expenses $250 Intemet/W ebsite Maintenance $200 Telephone $600 Rent $3.120 Reauthorization Advertising $2,600 Audit-Tax Returns $5,700 Legal $1.000 $1000 Insurance -Liability $2.100 Workman's Comp $700 !Nominating $800 Contin_gencies $2000 Subtotal-Ooeratine Exoenses $93.848 $1,000 Prouams, Marketina and Events !Banners $14.000 $8000 Events $15 000 $15 000 Outreach & Communication $14,000 $1,000 Downtown Streets Team $5.000 District Improvement $61.052 Subtotal-Proerams, Marketinl! & Events $54.152 $24,000 ITOT AI Jt;x I"II;NNII;N CUt~-nnnf G.!.,c nnnl Section IV: Method and Basis of Levying the Assessment Cost Benefit Analysis I Bid Assessments The method and basis of levying the assessment is provided in sufficient detail to allow each business owner to estimate the amount of the assessment to be levied against his or her business for Fiscal Year 2014-15 and is not changed from the FY 2013-14 assessment. There have been no changes made to the Cost-Benefit Analysis or to the BID Assessments since they were approved by City Council on February 2, 2004. The method of calculation used to determine the cost and benefit to each business located in the BID is described below. The BID assessments are based on three criteria: the type of business, the location of the business and the size of the business. It has been consistently demonstrated that the typical BID program places a higher priority on activities such as commercial marketing. As a result, the retail and restaurant establishments in the BID are assessed more than service and professional businesses in the district. While service-oriented businesses benefit from a BID less than retailers and restaurateurs, they benefit more than professional businesses such as medical, dental, architectural, consultant and legal offices with their minimal advertising and promotion needs. For these reasons, various business types are assessed according to the benefit that they receive from the BID, as follows: > Retail and Restaurant > Service > Professional 100% of base amount 75% of base amount 50% ofbase amount Exceptions to this rule include financial institutions that are traditionally charged a flat rate regardless of location or size and lodging businesses that are typically charged by total rooms. The location of a business also determines the degree of benefit that accrues to that business. Centrally located businesses tend to benefit more, as do businesses located on the ground floor. For this reason, A and B benefit zones have been identified for the BID. In Palo Alto, Zone A benefit businesses are assessed 100% of the base benefit assessment while Zone B businesses are assessed 75%. A third criterion is used in the BID to determine benefit. This criterion, the size of the business, takes into consideration the number of full time employees employed by the business. Please refer to Attachment 1 for a more complete understanding of the application of these three variables to establish BID benefit. Attachment 2 is the BID assessment for each business located within the BID boundaries. Applying the criteria identified in Attachment 1, a summary of the assessment that applies to each business by size, type and location is outlined. In addition to the Cost-Benefit Analysis, the assessments include the following criteria: > An exemption for "single person professional businesses" that have 25% or fewer full time equivalent ("FTE"), including the business owner. This covers employees who work less than 10 hours a week (based on a 40 hour work week; an FTE equals approximately 2000 hours annually) > An assessment specifically for "single person businesses" that have 26% FTE to 1 FTE in the professional business category of the BID (An FTE equals approximately 2000 hours annually) > The tiering of other professional businesses by size based (according to benefit) on the "single person business" criteria This outline provides information by which a business can determine its annual assessment based on objective criteria. Except where otherwise defined, all terms shall have the meanings identified below: Definitions of Business Types in the Downtown Business Improvement District Retailers and Restaurants: Businesses that buy or resell goods such as clothing stores, shoe stores, office supplies as well as businesses that sell prepared food and drink. Service Businesses: Businesses that sell services such as beauty or barber shops, repair shops, most automotive businesses, dry cleaners, art and dance studios, printing firms, film processing companies, travel agencies, entertainment businesses such as theatres, etc. Hotel and Lodging: These include businesses that have as their main business the lodging of customers. This is restricted to residential businesses that provide lodging services to customers for less than 30 days. Professional Businesses: Businesses that require advanced and/or specialized licenses or academic degrees such as architects, engineers, attorneys, chiropractors, dentists, doctors, accountants, optometrists, realtors, insurance brokers, venture capital firms, consultants, advertising and marketing professionals and mortgage brokers and similar professions. Financial Institutions: Includes banking, savings and loan institutions and credit unions. Additional clarification on business definitions will be defmed according to Section 18.04.030 (Definitions) of the Palo Alto Municipal Code. The Advisory Board recommends that the following businesses be exempt from the BID assessment: > New businesses established in the BID area following the annual assessment for the year in which they locate in the BID area > Non-profit organizations > Newspapers > "Single person professional businesses" that have 25% or less FTE, including the business owner The Assessment calculated shall be paid to the City no later 30 days after receipt of the invoice with the ap10unt of the annual assessment sent by the City. A second notice will be mailed as a reminder to businesses that have not remitted payment by that date. Late payment will be subject to a 10% late fee. Section V: Revenue Surplus or Deficit Based on the revenue balance on 2/28114 of$58,631.42, the PAd expects a surplus carryover of $20,000. Expected expenses for the remainder of FY 13-14 are as follows: Current Revenue Balance $58,631.42 Expected expenses for remainine FYE6/30/20 14 Staff Salaries $20,000 Elections & Annual Reoort $3,500 Banners $8,000 Reauthorization Advertisine $2.500 Downtown Streets Team $2,500 Rent $1,040 Contineencv $1.091.42 Total E~ected Expense $38.631.42 Expected Carryover $20.000 Section VI: Non-assessment Income It is estimated that $24,000.00 will be raised in fundraising, and sponsor support. Additionally, we anticipate in kind contribution towards expenses for Fiscal Year 2014-15. Projected Income for Fiscal Year 2014-15 Legal (donation) $1,000 Banners $8,000 Events $15,000 Outreach & Communication $1,000 Total $25,000 Section VI: PAd Board of Directors by Business Type Retailers and Restaurants Alice Deuttscher, Shady Lane Gifts Georgie Gleim, Gleim the Jeweler Rita Comes Whitney, C isfor Craft Claudia Cornejo, Cafe Venetia Alex Giovanotto, Joya Service Businesses Robert Peterson, Peterson Architects Hospitality Barbara Gross, Garden Court Hotel Financial Institutions Gayle Almeida Hague, Boston Private Bank & Trust Company Professional Organizations Anne E. Senti-Willis, Tho its, Love, Hershberger & McLean Brad Ehikian, Premier Properties Patty McGuigan, Cornish & Carey Commercial Michael Lee 1, Palantir Non Profit Organizations Chris Richardson, Downtown Streets Team Phil Carter, Palo Alto Farmer's Market LIAISONS Palo Alto Chamber of Commerce David MacKenzie, President & CEO Downtown Streets Team Eileen Richardson, Executive Director City Of Palo Alto Greg Scharff, Palo Alto City Council Thomas Fehrenbach, Manager ofEconomic Development ATTACHMENT! A General Statement Regarding Cost~ Benefit Analysis For BID Businesses Using The Traditional Three Criteria Formula Criteria 1) Type of Business: Statement Concerning Cost~Beneftt Formula For BID Businesses Regarding Type Of Business: In a review of 200 California Business Improvement Districts, it is consistently demonstrated that the typical BID Program places a higher priority on Commercial Marketing Programs than on Civic Beautification and Commercial Recruitment Programs. With that trend in mind, retail and restaurant businesses, with their emphasis on, and need for, commercial marketing, are traditionally assessed more than less marketing-sensitive service-oriented or professional-oriented businesses. However, while service-oriented businesses benefit from a BID less than retailers and restaurateurs, they benefit more, (from commercial marketing programs), than professional businesses such as medical, dental and legal offices with their minimal advertising and promotion needs. Therefore, set forth below, is an example of how various business types might be considered regarding the computation of the annual benefit assessment. • Retail and Restaurant: • Service: • Professional: 100% ofbase amount 75% ofbase amount 50% of base amount Exceptions to this rule include financial institutions that are traditionally charged a flat rate regardless of location or size and lodging businesses that are typically charged by total rooms. Lodging businesses are assessed based on the total number of rooms because it is a more equitable manner of determining size. Many lodging businesses have many part time employees, but revenues· are based on the room occupancies of the hotel, not the goods sold or serviced provided by employees. Criteria 2) Location of Business: Statement Concerning Cost~ Benefit Formula For BID Businesses Regarding Location of Business: It has also been consistently demonstrated that the more centrally located businesses tend to benefit from BID activities and services to a greater degree than businesses located toward the periphery of the proposed BID boundaries. Events and activities tend to originate in the· central core of the Downtown area and spread benefit to the outer areas with diminishing energy and impact, much like the ripple effect of a stone tossed into a body of calm water. Furthermore, ground floor businesses tend to benefit to a greater degree than businesses located in upper floors. Therefore, in some cases, a new BID's annual benefit assessment formula also takes these street level criteria into account. As mentioned above, special events, fairs, festivals and other activities tend to take place within, or along, the Main Street core rather than in the areas at the periphery of the Downtown core. Additionally, BID-sponsored seasonal decorations, public art projects, street banners and street furniture tend to be located within the immediate core area. A ttS~r.hmP.nt 1 Therefore, businesses located within the most central area of the proposed BID are considered to be within "Zone A" which should be considered the primary benefit zone. There is typically a "secondary zone" or "Zone B" within most proposed BID areas. This area receives less benefit than Zone A and should be assessed accordingly. An example of how different zones might be treated regarding the computation of the annual benefit assessment is as follows. • Zone A: 100% of base benefit assessment • Zone B: 7S% of base benefit assessment In the case ofDowntown Palo Alto, it is recommended that all Zone A upper floor businesses, as well as any other businesses located at the periphery of the proposed BID, be considered as Zone B businesses. Please refer to the map in Attachment I. Criteria 3) Size of Business: Statement Concerning Cost-Benefit Formula For BID Businesses Regarding Size of Business: In approximately SO% of newly established BIDs, a third assessment criterion is used. This criterion involves the size of each individual business that is based upon the businesses' total number of full-time employees. Full-time employees are those working a total of2,000 hours per year. Part-time employees are grouped into full-time job positions, i.e., two half-time employees total one full-time. Fractions are rounded down to the nearest whole number with no less than one person as a minimum for business. An example of how various business sizes might be treated regarding the computation of the annual benefit assessment is as follows: Retail/Restaurants Service Businesses Small SO% ofbase amount Under6FTE* Under4FTE Medium '7S% ofbase amount 6 to under 11 FTE 4 to under 7 FTE Large 100% of base amount 11 or more FTE 7 ormoreFTE * FTE = full time employees Additionally, an exemption was established for "single person professional businessesu that have 2S% or less FTE, including the business owner. This covers employees who work less 10 hours a week (based on a 40 hour work week) Since "single person businesses" that have 26% FTE to 1 FTE in the professional business category of the BID benefit the very least from the assessment, their assessments have been tiered by size based (according to benefit) on the new "single person business" criteria. A ttA~hmP.nt 1 ATTACHMENT2 Downtown Palo Alto Business Improvement District Annual BID Assessments · ZONE A ZONED (75% of Zone A amount) Restaurants & Retailers Under 6 FTE (50% of base amount) $225 $170 6 to under 11 FTE (75% of base amount) $340 $260 11 or more FTE (1 00% of base amount) $450 $340 Service Businesses Under 4 FTE (50% of base amount) $170 $130 4 to under 7 FTE (75% of base amount) $260 $200 Over 7 FTE (100% of base amount) $340 $260 Professional Businesses 25% or fewer FTE, including owner (0% of base Exempt Exempt amount) 26% FTE to tinder 1 FTEj_25% of base amount) $60 $50 2 to 4 FTE (50% of base amount) $110 $90 5 to 9 FTEi75% ofbase amount) $170 $130 10+ FTE (100% of base amount) $225 $170 Lodfdn2 Businesses Up to 20 rooms (50% of base amount) $2258 $170 21 to 40 rooms (75% of base amount) $340 $260 41+ rooms (100% ofbase amount) $450 $340 Financial Institutions $500 $500 Note 1: For retail, restaurant, service, and professional businesses, size will be determined by number of employees either full-time or equivalent (FTE) made up of multiples of part-time employees. A full FTE equals approximately 2000 hours annually. Lodging facilities will be charged by number of rooms available and financial institutions will be charged a flat fee. Note 2: Second floor (and higher) businesses located within Zone A will be assessed the same as similar street-level businesses located within Zone B. Note 3: Assessment amounts are rounded to the nearest ten dollars. The minimum assessment will be $50.00. Error! Unknown