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HomeMy WebLinkAboutStaff Report 216-05The City Council is required to hold the public hearing, approve the 2005-2006 Budget Report and determine whether or not to levy the annual assessment for the Palo Alto Downtown Business Improvement District (BID) for fiscal year 2005-2006. 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 2005-06 as filed or as modified by the Council. The adoption of the resolution constitutes the levying of the BID assessments for fiscal year 2005-06. The staff report describing the actions related to the BID, including the Report of the Palo Alto Downtown Business and Professional Association (P ADBPA) 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: CMR:216:05 Resolution of the City Council of the City of Palo Alto Confi:rming the Report of the Advisory Board and Levying an Assessment for Fiscal year 2005-06 in Connection with the Downtown Palo Alto Business Improvement District CMR: 215:05 Adoption of Resolution Preliminarily Approving BID Advisory Board's 2005-2006 Budget Report and, Adoption of Resolution of Intention to Levy 2005-2006 Assessments in the Palo Alto Downtown Page 2 of3 NOT YET APPROVED and collect an assessment for fiscal year 2005-06 against businesses in the District. 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 fiscal year 2005~06. 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 2005~06. The City Council finds that there was no majority protest within the meaning of the Law. All protests· and obj ections to the levy and collection of the assessment and any and all other protests and obj ections are hereby overruled by the City Council. SECTION 8. Based upon its review of the Report, a copy of which has been presented to the City Council 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 2005-06 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 10. The adoption of this Resolution constitutes the levy of an assessment for the fiscal year 2005-06 (commencing July 1, 2005, and ending June 30, 2006). The assessment formula, including the method and basis of levying the assessment, is set forth in Exhibit "Bn 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, shall be exempt from the assessment. SECTION 11. 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 following 050505 sm 0100357 2 ATTACHMENT 2 3 TO: HONORABLE CITY COUNCIL FROM: CITY MANAGER DEPARTMENT: CITY MANAGER DATE: MAY 2, 2005 CMR: 215:05 SUBJECT: APPROVAL OF THE REPORT OF THE ADVISORY BOARD FOR FISCAL YEAR 2005-06 IN CONNECTION WITH THE PALO ALTO DOWNTOWN BUSINESS IMPROVEMENT DISTRICT; AND A . RESOLUTION DECLARING INTENT TO LEVY AN ASSESSMENT AGAINST BUSINESSES WITHIN THE DOWNTOWN PALO ALTO BUSINESS IMPROVEMENT DISTRICT FOR 2005-06 AND SETTING A TIME AND PLACE FOR A PUBLIC HEARING RECOMMENDATION Staff recommends that the City Council: • Adopt a resolution preliminarily approving the report filed by the Palo Alto Downtown Business Improvement District Advisory Board for the 2005-2006 fiscal year; • Adopt a resolution of intention to levy the annual assessment for2005-06; and • Set May 16, 2005 at 7 :00 p.m. as the date and time for the public hearing on the levy of the proposed assessments BACKGROUND The Palo Alto Downtown Business Improvement District (BID) was established by the City Council 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:215:05 Page 1 of3 DISCUSSION 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 2005-06 as filed or as modified by the Council. The adoption of the resolution constitutes the levying of the BID assessments for fiscal year 2005-06. The Advisory Board has prepared a report (Attachment 1), for the Council's consideration, which includes the budget for the Palo Alto Downtown BID for fiscal year 2005-06. 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 200S-06. 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 in the last year. The estimated amount of carryover funds to be used to carry out activities is $53,SOO. A map of the Palo Alto Downtown BID is attached as Attachment 2. The proposed assessments in the BID for fiscal year 2005-06 are the same as the assessments in fiscal year 2004-0S. The budget report for fiscal year 200S-2006was reviewed and approved by the Palo Alto Downtown Business and Professional Association at its board meeting on April 13, 200S. 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. City Manager staff will continue to provide oversight to the BID and will prepare the annual reauthorization. CMR:215:05 Page 2 of3 Section II Expected Improvements and Activities for 2005-06 Marketing and Events Programs -Completely redesign the web site aimed for consumer use. It will include current activities, a comprehensive business directory, maps for parking arid directions, and other links. -The newsletter for all PAD members will be sent out quarterly - A cross-marketing program will be set up among downtown businesses. Programs include gift Events baskets to new residents, weekend getaway packages, and "A Day Downtown" package Produce a coupon book for all the downtown businesses, with a wide distribution throughout all businesses a"nd residents. This will become an income-generating program In August, Dine Downtown will produce its third program PAD will provide music, performers, and artists to liven up the ArtWalks PAD will produce a Fashion Show I Makeover event that will involve many downtown merchants, restaurants, and services. The proceeds will go to the Downtown Streets Team 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 will' be fully operational and will expand this year Environmental Downtown Walking Maps will be bloWn up 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 -Ads 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 for Board Information binders Nominating -Continue to recruit effective, active members to the Board Manage the Annual Election notification and voting process Finance Plan and implement delinquent member collections Review and advise on annual budget -Will explore ways to bring in more income for PAD 5 Section III: Budget for 2005-06 The total funds available for activities for this fiscal year are estimated to be $349,307. The budget for providing the activities is set forth as follows: BID 2005/06 Budget INCOME Assessments $ 122,307 Non-Assessments $ 173,500 Carryover FY 2004/05 $ 53,500 TOTAL INCOME $ 349,307 EXPENSES Operating Expenses Expenses Income Staff Salaries Executive Director Salary $ 50,000 Support Staff Salary $ 18,000 Payroll taxes $ 10,000 Office Supplies & Expenses $ 2,000 Bookkeeping $ 800 InterneUWebsite Maintenance $ 1,500 Travel & Auto $ 500 Telephone $ 1,000 Rent $ * Audit $ 2,500 Legal $ 1,500 Collections 1 City BID management $ 5,000' Expense of Peliquent Collections $ 1,500 Utilities $ * Insurance -Liability $ 2,000 -Workman's Comp $ 1,000 Contingencies $ 1,000 Total Operating Expenses $ 98,300 $ Marketing and Events Programs $ 19,000 $ 12,500 Events $ 73,000 $ 103,500 Downtown Streets Downtown Streets Team $ 94,000 $ 47,500** Environmental $ 35,000 $ 10,000** Parking (for marketing) 2,500 Nominating (elections expenses) $ 2,000 Executive Committee (Board materials expenses) $ 2,500 Total Expenses/lncome $ 326,300 $ 173,500 *in-kind donation . ** grant and fund raising revue 6 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. Financial Institutions: 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. Th,e 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 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. 8 Section VII: PAD Board of Directors by Business Type Retailers and Restaurants Faith Bell, Bell's Books 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 Sunny Dykwel, Alain Pinel Jim Maliksi, J. Maliksi + Associates Hedy McAdams, J.D., Mediator Victoria Lukanovich, F11T Consulting Jerry Moorman, C.P.A., Moorman and Company Beth Rosenthal, Ph.D., Psychologist Service Marc Dickow, Jungle Digital Imaging Stacey Yates, SkinSpirit 10 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 I. Criteria 3) Size of Business: Statement Concerning Cost-Benefit Formula For BID Businesses Regarding Size of Business: In approximately 50% 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 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: • Medium: 50% of base assessment 75% of base assessment • Large: 100% of base assessment * Full-time employees (FTE) Retail/Restaurants under 6 FTE* 6-under 11 FTE* 11+ FTE* Service Businesses under 4 FTE* 4 to under? 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 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. . ATTACHMENT 1, page ~ 12 " NOT YET APPROVED SECTION 11. 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: Sr. Assistant City Attorney 050426 sm 0100356 4 Mayor APPROVED: City Manager Director of Administrative Services Retailers and Restaurants (100%) Service Businesses (75%) Professional Businesses (50%) Lodging Businesses (100%) Financial Institutions Downtown Palo Alto Business Improvement District Annual BID Assessments ZONE A ZONE B- (75%) $225.00 (Under 6 FTE employees) (50%) $170.00 $340.00 (6 to under 11 FTE employees) (75%) $260.00 $450.00 (11 + FTE employees) (100%) $340.00 $170.00 (Under 4 FTE employees) (50%) $130.00 $260.00 (4 to under 7 FTE employees) (75%) $200.00 $340.00 (7+ FTE employees) (100%) $260.00 EXEMPT (25% or fewer FTE employees, including the business owner) $ 60.00 (26% FTE to 1 FTE employees) (25%) $ 50.00 $110.00 (2 to 4 FTE employees) (50%) $ 90.00 $170.00 (5 to 9 FTE employees) (75%) $130.00 $225.00 (10+ FTE employees) (100%) $170.00 $225.00 (up to 20 rooms) (50%) $340.00 (21 to 40 rooms) (75%) $450.00 (41+ rooms) (100%) $500.00 $170.00 $260.00 $340.00 $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 liB"