HomeMy WebLinkAboutStaff Report 207-06City of Palo Alto
City Manager’s Report
TO:
FROM:
HONORABLE CITY COUNCIL
CITY MANAGER
5
DEPARTMENT: CITY MANAGER
DATE:
SUBJECT:
MAY 15, 2006 CMR: 207:06
PUBLIC HEARING ON THE PALO ALTO DOWNTOWN BUSINESS
IMPROVEMENT DISTRICT AND ADOPTION OF A RESOLUTION OF
THE CITY COUNCIL CONFIRMING THE REPORT OF THE
ADVISORY BOARD ANq) LEVYING AN ASSESSMENT FOR FISCAL
YEAR 2006-07 IN CONNNECTION WITH THE DOWNTOWN PALO
ALTO BUSINESS IMPROVEMENT DISTRICT
RECOMMENDATION
Staff recommends that the City Council:
1.Hold a public hearing on the levy of proposed assessments in fiscal year 2006-2007 in
connection with the Downtown Palo Alto Business Improvement District and
2.Adopt a resolution Confirming the Report of the Advisory Board and Levy an
Assessment for Fiscal Year 2006-2007 in Connection with the Downtown Palo Alto
Business Improvement District
BACKGROUND
On May 1, 2006, the City Council
Adopted a resolution preliminarily approving the report filed by the Palo Alto Downtown
Business Improvement District Advisory Board for the 2006-07 fiscal year;
Adopted a resolution of intention to levy the annual assessment for 2006-07; and
Set May 15, 2006 at 7:00 p.m. as the date and time for the public hearing on the levy of
the proposed assessments
DISCUSSION
CMR 207:06 Page 1 of 3
The City Council is required to hold the public hearing, approve the 2006-07 Budget Report and
determine whether or not to levy the annual assessment for the Palo Alto Downtown Business
Improvement District (BID) for fiscal year 2006-07.
Absent a majority protest at the public hearing, at the conclusion of the public hearing the
Council may adopt a resolution approving the report for Fiscal Year 2006-07 as filed or as
modified by the Council. The adoption of the resolution constitutes the levying of the BID
assessments for fiscal year 2006-07.
The staff report describing the actions related to the BID, including the Report of the Palo Alto
Downtown Business and Professional Association (PADBPA) to the City Council is attached to
this memo.
RESOURCE IMPACTS
Adoption of the proposed BID budget does not directly impact City revenue. BID assessments
are restricted for use exclusively by the BID. It is anticipated that a healthy BID will encourage
growth of the retail community and consequently result in additional sales tax revenue for the
~ City. The Attorney’s Office will continue to provide legal oversight to the BID during the
annual reauthorization process. Administrative Services staff provides assistance to the City
Manager’s Office in the collection of BID assessments. City Manager staff will continue to
provide oversight to the BID and will prepare the annual reauthorization. Estimates indicate that
the cost of collection by the City will continue at the current level of $16,000. Any amount over
the $5,000 allocated in the BID budget will paid out of the City Manager’s contingency fund up
to that level.
ENVIRONMENTAL REVIEW
This action by the City Council is not considered a project under the California
Environmental Quality Act.
ATTACHMENTS
Attachment 1:
Attachment 2:
Resolution of the City Council of the City of Palo Alto Confirming the
Report of the Advisory Board and Levying an Assessment for Fiscal year
2006-07 in Connection with the Downtown Palo Alto Business
Improvement District
CMR: 206:06 Adoption of Resolution Preliminarily Approving BID
Advisory Board’s 2006-07 Budget Report and, Adoption of Resolution of
Intention to Levy 2006-07 Assessments in the Palo Alto Downtown
CMR 207:06 Page 2 of 3
Business Improvement District and Set a Public Hearing on the Levy of
Assessments
PREPARED BY:
CITY MANAGER APPROVAL:
!
SUSAN ARPAN, Economic Dd~elopment and
Redevelopment Manager
EMILY ~ISON, .Assistant Ci~ Manager
CMR 207:06 Page 3 of 3
Attachment 1
*** NOT YET APPROVED ***
RESOLUTION NO.
RESOLUTION OF THE COUNCIL OF THE CITY OF PALO
ALTO CONFIRMING THE REPORT OF THE ADVISORY BOARD
AND LEVYING AN ASSESSMENT FOR FISCAL YEAR 2006-
07 IN CONNECTION WITH THE DOWNTOWN PALO ALTO
BUSINESS IMPROVEMENT DISTRICT
THE CITY COUNCIL OF THE CITY OF PALO ALTO DOES HEREBY
FIND, DECLARE AND ORDER AS FOLLOWS:
SECTION i. The Parking and Business Improvement Area
Law of 1989, California Streets and Highways Code Sections 36500
et seq. (the "Law"), 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 ~District") in the City of
Palo Alto.
SECTION 3. The boundarles of the District are within
the City limits of the City of Palo Alto (the "City") and
encompass the greater downtown area of the City, generally
extending from E! Camino Real to the West, Webster Street to the
East, 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 ~A" and incorporated
herein by reference for a complete description of the boundaries
of the District.
SECTION 4. The City Council,by Resolution No. 8416,
appointed the Board of Directors of the Pa!o Alto Downtown
Business & Professional Association,a California nonprofit
mutual benefit corporation, to serve as the Advisory Board for
the District (the "Advisory Board").
SECTION 5. In accordance with Section 36533 of the Law,
the Advisory Board prepared and filed with the City Clerk a
report entitled "Downtown Palo Alto Business Improvement
District, 2006-07 Annual Report" (the "Report"), and, by
previous resolution,the City Council preliminarily approved
such report as filed.
SECTION 6. The City Council has adopted a Resolution of
Intention, Resolution No. 8600, declaring its intention to levy
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*** NOT YET APPROVED ***
and collect an assessment for fiscal year 2006-07
businesses in the District.
against
SECTION 7.Following notice duly given pursuant to law,
the City Council has held a full and fair public hearing
regarding the levy and collection of an assessment within the
District for fisca! year 2006-07.All interested persons were
afforded the opportunity to hear and to be heard regarding
protests and objections to the levy and collection of the
assessment for fiscal year 2006-07.The City Council finds that
there was no majority protest within the meaning of the Law.
All protests and objections to the levy and collection of the
assessment and any and all other protests and objections are
hereby overruled by the City Counci!.
SECTION 8. Based upon its review of the Report, a copy
of which has been presented to the City Counci! and which has
been filed with the City Clerk, and other reports and
information, the City Council hereby finds and determines that
(i) the businesses in the District will be benefited by the
expenditure of funds raised by the assessment, (ii) the District
includes all of the businesses so benefited; and (iii) the net
amount of the assessment levied within the District for the
2006-07 fiscal year in accordance with the Report is apportioned
by a formula and method which fairly distributes the net amount
in proportion to the estimated benefits to be received by each
such business.
SECTION 9. The City Council hereby confirms the Report
as originally filed by the Advisory Board.
SECTION i0. The adoption of this Resolution constitutes
the levy of an assessment for the fiscal year 2006-07
(commencing July I, 2006, and ending June 30, 2007). The
assessment formula, including the method and basis of levying
the assessment, is set forth in Exhibit "B" attached hereto and
incorporated herein by reference. 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, nonprofit organizations, newspapers, and professional
"single-person businesses", defined as those businesses which
have 25% of less full time equivalent employees, including the
business owner, shal! be exempt from the assessment.
SECTION ii. The City Council hereby declares that the
proposed uses of the revenues derived from the assessments
levied against businesses in the District are for the fol!owing
060510 sm 0100451 2
*** NOT YET APPROVED ***
facilities and activities: 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 !ocated and operating in the District.
SECTION 12. The Counci! finds that this is not a project
under the California Environmenta! Quality Act and, therefore,
no environmental impact assessment is necessary.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
City Clerk
APPROVED AS TO FORM:
Mayor
APPROVED:
St. Asst. City Attorney City Manager
Director of Administrative
Services
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ne A
~eB
The City of
Palo Alto
EXHIBIT "A"
Downtown Palo Alto Business Improvement District
Annual BID Assessments
Retailers and
Restaurants
ZONE A ZONE B
(75%)
$225.00 (Under 6 FTE employees) (50%)
$340:00 (6 to under 11 FTE employees) (75%)
$450.00 (11+ FTE employees) (lOO%)
$170.00
$260.00
$340.00
Service
Businesses $170.00 (Under 4 FTE employees) (50%)
$260.00 (4 to under 7 FTE employees) (75%)
$340.00 (7+ FTE employees) (lo0%)
$130.00
$20o.0o
$260.00
Professional
Businesses
(5o%)
EXEMPT (25% or fewer FTE employees, including the business owner)
$ 60.00 (26% FTE to 1 FTE employees) (25%)$ 50.00
$1,-10.00 (2 to 4 FTE employees) (50%)$ 90.00
$170.00 (5 to 9 FTE employees) (75%)$130.00
$225.00 (10+ FTE employees) (loo%)$170.00
Lodging
Businesses $225.00 (up to 20 rooms) (50%)$170.00
(lOO%)$340.00 (21 to 40 rooms) (75%)$260.00
$450.00 (41+ rooms) (lOO%)$340.00
Financial
Institutions $500.00 $500.00
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.
EXHIBIT "B"
Attachment 2
City of Palo Alto
City Manager’s Report
TO:
FROM:
HONORABLE CITY COUNCIL
CITY MANAGER DEPARTMENT: CITY MANAGER
DATE:
SUBJECT:
MAY 1, 2006 CMR: 206:06
APPROVAL OF THE REPORT OF THE ADVISORY BOARD FOR
FISCAL YEAR 2006-07 IN CONNECTION WITH THE PALO ALTO
DO\VNTOWN BUSINESS IMPROVEMENT DISTRICT; AND
RESOLUTION DECLARING INTENT TO LEVY AN ASSESSMENT
AGAINST BUSINESSES WITHIN THE DOWNTOVCN PALO ALTO
BUSINESS IMPROVEMENT DISTRICT FOR 2006-07 AND SETTING A
TIME AND PLACE FOR A PUBLIC HEARING FOR MAY 15, 2006 AT
7:00 PM
RECOMMENDATION
Staff recommends that the City Council:
(a) Adopt a resolution preliminarily approving the BID Advisory Board’s 2006-2007 Budget
Report for the Downtown Palo Alto Business Improvement District.
(b) Adopt a Resolution of Intention to Levy Assessments in the Palo Alto Downtown Business
Improvement district for fiscal year 2006-2007 and set a date and time for the public hearing on
the levy of the proposed assessments for May 15, 2006 at 7:00 p.m.
BACKGROUND
The Palo Alto Downtown Business Improvement District (BID) was established by the City
Counci! in 2004 pursuant to the California Parking and Business Improvement Area Law to
promote the economic revitalization and physical maintenance of the Palo Alto Downtown
business district. The Council appointed the Board of Directors of the Palo Alto Downtown
Business and Professional Association, a non-profit corporation, as the Advisory Board
(Advisory Board) for the BID, to advise the Council on the method and basis for levy of
assessments in the BID and the expenditure of revenues derived from the assessments.
CMR:206:06 Page 1 of 3
Pursuant to BID law, the Advisory Board must annually submit to the Council a report that
proposes a budget for the upcoming fiscal year for the BID. The report must: 1) propose any
boundary changes in the BID; 2) list the improvements and activities to be provided in the fiscal
year ;3) estimate the cost to provide the improvements and activities; 4) set forth the method and
basis for levy of assessments; 5) identify surplus or deficit revenues carried over from the prior
fiscal year; and 6) identify amounts of contributions from sources other than assessments.
The Council must then: 1) review the report and preliminarily approve it as proposed or as
changed by the Council; 2) adopt a resolution of intention to levy the assessments for the
upcoming fiscal year; and 3) set a date and time for the public hearing on the levy of assessments
in the BID. Absent a majority protest at the public hearing, at the conclusion of the public
hearing the Council may adopt a resolution confirming the report for Fiscal Year 2006-07 as
filed or as modified by the Council. The adoption of the resolution constitutes the levying of the
BID assessments for fiscal year 2006-07.
DISCUSSION
The Advisory Board has prepared a report (Attachment 1), for the Council’s consideration,
which includes the budget for the Palo Alto Do’~atown BID for fiscal year 2006-07. As required
by BID law, the report has been filed with the City Clerk and contains a list of the improvements,
activities, and associated costs proposed in the BID in fiscal year 2006-07. The Advisory Board
has recommended no change in the BID boundaries or the method and basis for levying
assessments. The activities and improvements are an extension of those initiated last year. The
estimated amount of carryover funds to be used to carry out activities is estimated to be $ 42,000.
A map of the Palo Alto Downtown BID is attached as Attachment 2. The proposed assessments
in the BID for fiscal year 2006-07 are the same as the assessments in fiscal year 2005-06.
The budget report for fiscal year 2006-07 was reviewed and approved by the Palo Alto
Downtown Business and Professional Association at its board meeting on March 22, 2006.
RESOURCE IMPACTS
Adoption of the proposed BID budget does not directly impact City revenue. BID assessments
are restricted for use exclusively by the BID. It is anticipated that a healthy BID will encourage
growth of the retail community and consequently result in additional sales tax revenue for the
City. The Attorney’s Office will continue to provide legal oversight to the BID during the
annual reauthorization process. Administrative Services staff provides assistance in the
collection of BID assessments. Estimates indicate that the cost of collection by the City will
continue at the current level of $16,000. Any amount over the $5,000 allocated in the BID
budget will paid out of the City Manager’s contingency fund up to that level. The Economic
Development Manager will continue to provide oversight to the BID and will prepare the annual
reauthorization.
CMR:206:06 Page 2 of 3
ENVIRONMENTAL REVIEW
This action by the City Council is not considered a project under the California
Environmental Quality Act.
ATTACHMENTS
Attachment 1"
Attachment 2:
Attachment 3:
Attachment 4:
Report of the Advisory Board with Regard to the Reauthorization of the
Downtown Palo Alto Business Improvement District for Fiscal Year
2006-07
Downtown Palo Alto Business Improvement District Map
Resolution of the City Council of the City of Palo Alto Approving
the Report of the Advisory Board for Fiscal Year 2006-07 in
connection with the Palo Alto Downtown Business Improvement
District
Resolution of the City 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
2006-07 and Set a Time and Place for hearing Objections
Thereto
PREPARED BY:SUSAN ARPAN, Economic D~ Manager
CITY MANAGER APPROVAL:
EMILY Assistant City Manager
CMR:206:06 Page 3 of 3
Attachment 1
PALO ALTO
DOWNTOWN
Annual Report
2006-2007
Business ImDrovement District
,As approved by the
PAD Advisory Board
on March ~, 2006
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, 2006 and ending June
30, 2007. ("Fiscal Year 2006-07").
As required by the Law, this report contains the following information"
III.
VI.
I.Any proposed changes in BID boundaries and benefit zones within
the BID;
II.The improvements and activities to be provided for Fiscal Year 2006-
O7;
An estimate of the cost of providing the improvements and the
activities for Fiscal Year 2006-07;
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 2006-07.
V.The amount of any surplus or deficit revenues to b_.e carried over from
a previous fiscal year.
The amount of any contributions to be made from sources other than
assessments levied pursuant to the Law.
Submitted by Barbara Gross, President, on behalf of the Advisory Board
("Advisory Board") of the Palo Alto Downtown Business & Professional
Association ("PAD").
The Board approved this Report March 22, 2006 at a publicly noticed
meeting of the Advisory Board.
Received on file in the Office of the City Clerk of the City of Palo Alto on
April 17, 2006.
2
Section I: 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.
Palo Alto Downtown
Business Improvement
District
Section II
Improvements and Activities Completed in 2005-06
Marketing and Events
Programs
Completely redesigned the web site aimed for consumer and member use. It
includes current activities, a comprehensive business directory, maps for parking
and directions, and other links. (www.paloaltodowntown.com)
Updated database of all downtown businesses for display and use via the
website.
Events
The Dine Downtown program was produced in August ’05 and was considered a
great success by the restaurants and diners.
PAD produced the well-attended Holiday Stroll in early December ’05.
PAD provided music, food and entertainment to the Artwalks in summer ’05.
Downtown Streets
This highly successful program started in 3anuary 2005. Though PAD still supports the
program, it has been spun off into its own non-profit corporation. The Downtown
Streets Team was created to address two problems identified by PAD members:
con,terns regarding the unhoused and dirty streets and sidewalks.
Downtown Streets Team
The program now has !0 participants who clean the streets for food and shelter
vouchers.
The program has built successful working relationships with Innvision, Catholic
Charities, Alliance for Community Care, City Council, PAPD, City Management.
The program has received funding and is expecting continued funding fr.om the
City of Palo Alto, local businesses and local landlords.
A team was formed consisting of PAD members, representatives from local social
services, representatives from the unhoused community, and Palo Alto City
officials.
PAD organized the highly successful Street Row fundraising event, contributing
$10,000 to the program.
The program had eight members find jobs and three find permanent housing.
Environmental
This working group was formed in March ’05
Key areas were identified and plans are underway to address upgrading the
alleyways, increase plantings, and install directories of PAD businesses.
Parking
Representatives from PAD attend the Palo Alto Chamber of Commerce’s parking
committee to learn of programs underway and contribute the downtown
business perspective.
4
Executive Committee
Created a budget for 2005-06 and Fiscal Year 2006-07
Created a E~oard Development team to collect information for Advisory Board
members.
-Worked creatively with the City of Palo Alto on a solut.ion to the municipal code
as it pertains to false alarms and the City’s response.
-Outreach to the PA Police Department to improve communications and build a
strong working relationship.
Nominatin~J
Recruited new members to the Advisory E~oard to ensure all business sectors are
represented.
Coordinated first annual member meetings and election of directors of PAD.
Finance
Set up accounting systems for PAD bookkeeping.
Oversaw year-end tax filing.
Audit in process currently and will be completed by May 31, 2006.
5
Section II
Expected Z.mprovements and Activities for 2006-07
Marketing and Events
Programs
Maintain and grow website aimed for consumer and member use and for cross
promotion for downtown businesses. :It will include current activities, a
comprehensive business directory, maps for parking and directions, and other
links.
Newsletter will be prepared and distributed two times per year.
Events
-Dine Downtown will produce its 4th & 5th programs in August ’06 & Winter ’07.
-PAD will continue to provide music, performers, and artists to liven up the
ArtWalks during the summer.
-PAD will produce the Holiday Stroll, similar to last year’s event.
-PAD will produce and co-market events to accommodate the influx of visitors for
these Stanford events: Graduation in June, Back to School in Sept. and Parents
Weekend in Feb.
Downtown Streets
Downtown Streets Team
-The program continues to raise money and flourish.
-Team will begin pressure washing and window washing business.
Environmental
-Downtown walking maps will be enlarged and displayed as a directory for visitors.
-Planters will be installed on the side streets and maintained by the Downtown
Streets Team.
Decorative enhancements will be used during various holidays.
Parking
Education and outreach programs will be put in place to inform business owners
and managers of the parking options for staff.
Advertisements and other outreach programs will be used to educate public of the
ample free parking.
Executive Committee
-Continue to refine PAD structure and organizational development.
-Continue to update and refine information provided to Advisory Board Members.
-Begin Urban Planning initiative for the downtown area.
-Work closely with Destination Palo Alto to increase tourisim.
Nominating
Continue to recruit effective, active members to the Advisory Board.
Manage the annual election notification and voting process.
Finance
Plan and implement delinquent member collections.
Review and advise on annual budget and explore income opportunities.
6
Section III: Budget for 2005-06
The total funds available for activities for this fiscal year are estimated to be $164,000.
The budget for providing the activities is set forth as follows:
BID 2005/06 Budget
INCOME
Assessments
Bad Debt
Total Assessments
Income/Fundraising
Carry over FY 2005/06
TOTAL INCOME
$135,300
$(12,300)
$123,000
$ 20,250
.$ 42,000
$185,250
EXPENSES
OPerating Expenses
Staff Salaries
Executive Director Salary $52,000
Support Staff Salary $18,000
Payroll taxes $10,000
$8o,ooo
Expenses Income
Office Supplies & Expenses $
Bookkeeping $
Internet/Website Maintenance $
Telephone $
Rent $
Audit $
Legal $
Insurance - Liability $
-Workman’s Comp $
Contingencies $
Total Operating Expenses $
3,500
2,500
3,5OO
1,000
3,000
3,000
2,000
2,500
1,000
1,000
103,000
Marketing and Events
Programs
PAD Newsletter
PAD Outreach
Events
Dine Downtown
$
$
3,000
2,500
8,500
7
10,000
ArtWalk $3,500
Event Permit Fees $1,750
Holiday Stroll $4,500
Stanford Events $8,000
$31,750
$
$
$
3,500
1,750
5,000
Downtown Streets
DST $20,000
Environmental $10,000
Nominating $2,000
$ 32,000
Total Expenses/Income $166,750 $20,250
Section IV: Method and Basis of Levying the Assessment
Cost Benefit Analysis l Bid Assessments
The method and basis of levying the assessment is provided 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 2006-07 and is not changed from the FY 2005-06 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 100% of base amount
>Service 75% of base amount
>Professional 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.
8
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 than10 hours a week (based on a 40 hour work week (A full 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 (A full 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.
9
Financial Znstitudons: :Includes banking, savings and loan institutions and credit unions.
Additional clarification on business definitions will be defined 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 B:[D
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 full time
equivalent (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 amount 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
It is estimated that approximately $ 42,000 will be carried over from the FY 05-06 budget.
This is based on the revenue balance on 3/22/06 as $77,000. Expected expenses for the
rest of FY 05-06 are as follows:
Current revenue balance
Expected expenses for remaining FY
Staff Salaries
Elections and Annual Report
Office + operating expenses
Outside Audit
Website redesign
Total expected expenses
$21,000
$2,5o0
$2,000
$3,500
$6,000
$77,000
$35,000
Expected carry-over $42,000
Section VI: Non-assessment Income
It is estimated that $20,250 will be raised in fundraising and sponsor support for Fiscal
Year 2006-07.
Projected Income for Fiscal Year
06-07
Marketing and Events
Events
-Dine Downtown $10,000
- Summer Programs $3,500
-Holiday Stroll $5,000
- Permit Fees $1,750
Total $ 20,250
10
Section VII: PAD Board of Directors by Business Type
Retailers and Restaurants
Alex Resnik, Spago Palo Alto
Cornelia Pendleton, University Art Center
Israel Zehavi, Diamonds of Palo Alto
Georgie Gleim, Gleim Jewelers
Hotel and Lodging
Barbara Gross, Garden Court Hotel
Stephanie Wansek, Cardinal Hotel
Professional Businesses
.Sunny Dykwel, Alain Pinel
Jim Maliksi, J. Maliksi + Associates
Hedy McAdams, i.D., Mediator
Victoria Lukanovich, F1 IT Consulting
_]erry Moorman, C.P.A., Moorman and Company
Beth Rosenthal, Ph.D., Psychologist
Service Businesses
Marc Dickow, Jungle Digital Imaging
Stacey Yates, SkinSpirit
Financial Institutions
Deborah Pappas, Borel Bank
ATTACHMENT 1
A General Statement Reqardinq Cost-Benefit Analysis For
BID Businesses Using The Traditional Three Criteria Formula
Criteria 1) Type of Business:
Statement Concerning Cost-Benefit 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% of base amount
75% of base 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.
12
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, B:[D-sponsored seasonal decorations, public art projects,
street banners and street furniture tend to be located within the immediate core area.
Therefore, businesses located within the most central area of the proposed B:[D 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 B:[D 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: 75% of base benefit assessment
:In the case of Downtown 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
Criteria 3) Size of Business:
Statement Concerning Cost-Benefit Formula For B~[D Businesses Regarding Size
of Business:
In approximately 50% of newly established B:[Ds, 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 of 2,000 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:
¯Small:
FTE*
¯Medium:
Retail/Restaurants
50% of base assessment under 6 FTE*
75% of base assessment
¯Large: :[00% of base assessment
* Full-time employees (FTE)
Service Businesses
under 4
6-under 11 FTE*4 to under 7
FTE *
11+ FTE*7+ FTE*
Additionally, an exemption was established for "single person professional businesses"
that have 25% or less full time equivalent (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 B:[D 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 CHIVlENT 1~ page 2
13
ATTACHMENT
Downtown Palo Alto Business Improvement District
Annual BID Assessments
Restaurants
(.~ o O O/o )
ZONE A ZONE B
(7s%)
Retailers and
$225.00 (Under 6 FTE employees) (50%)
$340.00 (6 to under 11 FTE employees) (75%)
$450.00 (11+ FTE employees) (lOO%)
$170.00
$260.00
$340.00
Service
Businesses
(75%)
$260.00
$170.00 (Under 4 FTE employees) (5o%)
$260.00 (4 to under 7 FTE employees) (75%)
$340.00 (7+ FTE employees) (loo%)
$130.00
$200.00
Professional
owner)
Businesses
(50%)
EXEMPT (25% or fewer FTE employees, including the business
$ 60.00 (26% FTE to 1 FTE employees) (25%)
$110.00 (2 to 4 FTE employees) (50%)
$170.00 (5 to 9 FTE employees) (75%)
$225.00 (10+ FTE employees) (loo%)
$ 50.00
$ 9o.oo
$13o,oo
$17o.oo
Lodging
Businesses
(lOO%)
$225.00 (up to 20 rooms) (50°,’0)
$340.00 (21 to 40 rooms) (75%)
$450.00 (41+ rooms) (100%)
$170.00
$260.00
$340.00
Financial
Institutions $500.00 $500.00
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.
14
Attachment 2
neA
P alo Alto
Palo Alto Downtown
Business Improvement
District
Thi~ map g a productof~e
Ciy ofPab AIo G IS
500"
Attachment 3
**NOT YET APPROVED**
RESOLUTION NO.
RESOLUTION OF THE COUNCIL OF THE CITY OF PALO
ALTO APPROVING THE REPORT OF THE ADVISORY BOARD
FOR FISCAL YEAR 2006-07 IN CONNECTION WITH THE
PALO ALTO DOWNTOWN BUSINESS IMPROVEMENT DISTRICT
THE CITY COUNCIL OF THE CITY OF PALO ALTO DOES HEREBY
FIND, DECLARE, AND ORDER AS FOLLOWS:
SECTION i. The Parking and Business Improvement Area
Law of 1989, California Streets and Highways Code Sections 36500
et seq., (the "Law"), 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 "District") in the City of
Palo Alto.
SECTION 3. The Law requires the City Council to appoint
an advisory board which shall make recommendations to the City
Council on the expenditure of revenues derived from the levy of
assessments, on the classification of businesses, as applicable,
and on the method and basis of levying the assessments.
SECTION 4. In accordance with Section 36530 of the Law,
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 ~Advisory
Board").
SECTION 5. In accordance with Section 36533 of the Law,
the Advisory Board has prepared and filed with the City Clerk,
and the City Clerk has presented to the City Council, a report
entitled "Downtown Palo Alto Business Improvement District,
2006-07 Annual Report" (the ~Report").
SECTION 6. The City Council has examined and reviewed
the Report, and hereby preliminarily approves the Report as
filed by the Advisory Board.
**NOT YET APPROVED**
SECTION 7. The Council finds that this is not a project
under the California Environmental Quality Act and, therefore,
no environmental impact assessment is necessary.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
City Clerk
APPROVED AS TO FORM:
Mayor
APPROVED:
Sr. Assistant City Attorney City Manager
Director of Administrative
Services
Attachment 4
*** NOT YET APPROVED ***
RESOLUTION NO.
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 2006-2007 AND SETTING A TIME AND
PLACE FOR HEARING OBJECTIONS THERETO
THE CITY COUNCIL OF THE CITY OF PAL0 ALTO DOES HEREBY
FIND, DECLARE, AND ORDER AS FOLLOWS:
SECTION I. The Parking and Business Improvement Area
Law of 1989 (the "Law"), 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 "District") 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 ~Advisory Board").
SECTION 4. In accordance with Section 36533 of the law,
the Advisory Board prepared and filed with the City Clerk a
report entitled "Downtown Palo Alto Business Improvement
District, Annual Report 2006-2007" (the "Report"), and, by
previous resolution, the City Council preliminarily approved
such report as filed by the Advisory Board.
SECTION 5. The boundaries of the District are within
the City limits of the City of Palo Alto (the ~City") and
encompass the greater downtown area of the City, generally
extending from E1 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 ~A" and incorporated
herein by reference for a complete description of the boundaries
of the District.
*** NOT YET APPROVED ***
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 2006-2007
(July i, 2006 to June 30, 2007). Such assessment is not
proposed to increase from the assessment levied and Collected
for fiscal year 2005-2006. The method and basis of levying the
assessment is set forth in Exhibit "B" attached hereto, and
incorporated herein by reference.
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 fisca! year 2006-2007
as follows:
TIME:
DATE:
PLACE:
7:00 p.m.
Monday, May 15, 2006
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 2006-2007 shall be heard. A
protest may be made orally or in writing by any interested
person.
060420 sm 0100446 2
*** NOT YET APPROVED ***
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 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 that 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 I0. For a full and detailed description of the
improvements and activities to be provided for fiscal year 2005-
2007, the boundaries of the District and the proposed
assessments to be levied against the businesses within the
District for fiscal year 2006-2007, 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.
*** NOT YET APPROVED ***
SECTION ii. The City Clerk is hereby authorized and
directed to provide notice of the public hearing in accordance
with law.
SECTION 12. The Council finds that this is not a project
under the California Environmental Quality Act and, therefore,
no environmental impact assessment is necessary.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
City Clerk
APPROVED AS TO FORM:
Mayor
APPROVED:
Sr. Assistant City Attorney City Manager
Director of Administrative
Services
060420 sm 0100446 4
The Cily of
Palo Alto
neA
Palo Alto Downtown
Business Improvement
District
Thi~ map i~ a pBductofl~e
Cry of Pab AID G IS
Downtown Palo Alto Business Improvement District
Annual BID Assessments
Retailers and
Restaurants
(loo%)
ZONE A ZONE B
(75%)
$225.00 (Under 6 FTE employees) (50%)
$340~00 (6 to under 11 FTE employees) (75%)
$450.00(11+ FTE employees)
$170.00
$260.00
$340.00
Service
Businesses
(75%)
$170.00 (Under 4 FTE employees) (50%)
$260.00 (4 to under 7 FTE employees) (75%)
$340.00 (7+ FTE employees) (loo%)
$130.00
$200.00
$260.00
Professional
B~4sinesses
(50%)
EXEMPT (25% or fewer FTE employees, including the business owner)
$ 60.00 (26% FTE to 1 FTE employees) (25%)$ 50.00
$1,-10.00 (2 to 4 FTE employees) (50%)$ 90.00
$170.00 (5 to 9 FTE employees) (75%)$130.00
$225.00 (10+ FTE employees) (loo%)$170.00
Lodging
Businesses $225.00 (up to 20 rooms) (50%)$170.00
(loo%)$340.00 (21 to 40 rooms) (75%)$260.00
$450.00 (41 + rooms) (loo%)$340.00
Financial
Institutions .$500.00 $500.00
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.
EXHIBIT