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HomeMy WebLinkAbout2003-10-27 City Council (3)City of Palo Alto City Manager’s Report 13 TO:HONORABLE CITY COUNCIL FROM: DATE: CITY MANAGER October 27, 2003 DEPARTMENT: City Manager CMR:481:03 SUBJECT:RECOMMENDATION TO CITY COUNCIL TO ACCEPT THE REPORT AND RECOMMENDATIONS OF THE DOWNTOWN BUSINESS IMPROVEMENT DISTRICT (BID) ADVISORY BOARD, HOLD A PUBLIC MEETING ON THE PROPOSED BID AND ADOPT THE ATTACHED RESOLUTION OF INTENTION THAT APPROVES THE ADVISORY BOARD’S REPORT, DECLARES THE CITY COUNCIL’S INTENT TO FORM A DOWNTOWN BID AND LEVY THE ASSESSMENT ON BUSINESSES LOCATED IN THE BID AND SETS THE PUBLIC HEARING FOR NOVEMBER 24, 2003. RECOMMENDATION Staff recommends that the City Council adopt a resolution of the Council of the City of Palo Alto confirming the report of the Advisory Board in connection with the establishment of the proposed Downtown Palo Alto Business Improvement District (BID), declaring its intention to establish said district, declaring its intention to levy an assessment on businesses within said district for fiscal year 2003-04, and set a time and place for a public heating on the establishment of the district and the levy of the assessment. BACKGROUND Downtown merchants have been exploring the possibility of a BID for Downtown Palo Alto. The BID provides for the assessment of the businesses in the BID to offer a variety of services, activities and improvements to enhance the economic viability of Downtown Palo Alto. The formation of a BID and the levy of assessments against businesses in the BID to finance improvements and activities benefiting the businesses are authorized by state law (California Streets and Highway Code Section 36500 and following). The CMR:481:03 Page 1 of 6 purpose of a BID is to promote and improve a specific geographic area for the benefit of the businesses in the identified BID area. A BID Advisory Board makes recommendations to the City Council on the expenditure of revenues derived from the levy of assessments, on the classification of businesses and on the method and basis of levying the assessments; and prepares a report, including a budget, for each year that assessments will be levied. BIDs have been established in over 200 business areas in California including Mountain View, San Jose and Burlingame. Activities that can be funded with BID proceeds include: *Enhanced Downtown maintenance *Promotional events to draw customers to the Downtown *Provision of banners, directional markers, etc. *Paying for a staff person to coordinate Downtown activities *Coordination of business, City and community interests ¯Provision of business information, marketing materials and maps to highlight Downtown businesses On December 2, 2002, the representatives of the Downtown Marketing Committee formally presented a petition signed by over 50 downtown businesses during City Council oral communications. The petition requested that the City Council agendize the discussion of the Downtown BID and consider passing a Resolution of Intention to Establish a Downtown BID at a subsequent meeting. On March 17, 2003, City Council appointed an Ad Hoc Advisory Committee for the BID. At the time of the appointment, the group was identified as an ad hoc committee to explore the feasibility of creating a BID and to make recommendations to the City Council. The formal Advisory Board was appointed on September 22, 2003 (with three additional members from the professional business category added in subsequent action on October 7, 2003), and was directed to prepare a Report to City Council with recommendations for the establishment of a BID that would include: Recommended BID boundaries Recommended method and basis for levying the assessment (cost benefit analysis) Recommended improvement and activities that would be accomplished with BID revenues collected through the assessment CMR:481:03 Page 2 of 6 Recommended BID budget based on anticipated BID revenues for the first year of operation Recommended time frame for initiation of BID assessment and activities The Palo Alto Chamber of Commerce and the BID Advisory Board have been working together to refine their respective roles and relationship to ensure compatibility as the project moves forward. The Chamber of Commerce gave conceptual support for the BID in August 2002. Professional businesses in the proposed BID have voiced some concern regarding their inclusion in the district. The cost benefit analysis takes into consideration the reduced benefit that professional businesses in the BID will receive. For example, while retailers and restaurants will receive the greatest benefit, they will pay 100% of the base bid assessment. Service businesses that will receive less benefit than retailers and restaurants will pay 75% of the base assessment. Professional businesses that will receive the least benefit will pay 50% of the base assessment. Benefits that professionals will receive in the district include: a more viable downtown with services that draw their clients downtown and provide complementary goods and services; the provision of business attraction efforts that address vacancies in the BID area; a directory of businesses; and the opportunity to participate in a more unified business district with enhanced beautification, cleanliness, and business services. In addition, while the initial assessment structure was not tiered, the Advisory Board considered the input of professional businesses on the Board and others who have provided input, and decided to recommend tiering the assessment in the professional business category. Because data is only available in ranges of numbers of employees in this sector, invoices in the. first fiscal year (beginning January 1-June 30, 2004) will allow businesses to report the number of employees so that future decisions regarding a more tiered professional business category may be explored in subsequent years. DISCUSSION The public meeting for October 27, 2003 was noticed and set, as required by BID Law. Following the public meeting, City Council may adopt a resolution approving the report of the Advisory Board and declaring its intention to establish a business improvement district and levy an assessment on businesses in the district. The Resolution of Intention to Establish a Downtown BID includes the following: ¯Description of the boundaries of the area and identification of any separate benefit zones. ¯Name of the proposed area. CMR:481:03 Page 3 of 6 ¯Type or types of improvements and activities to be funded by the levy of assessments. ¯Statement that, except where funds are otherwise available, an assessment will be levied annually to pay for all improvements and activities in the area. ¯Identification of the proposed 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/her business. ¯Determination of whether new businesses will be exempt from the levy of the assessment for a period not to exceed one year from the date the business commenced operating, pursuant to Streets and Highways Code Section 36531. If the City Council chooses to adopt the Resolution of Intention, the following actions must be taken, according to BID law: ¯A public hearing (noticed according to BID law) must be held not less than 20 nor more than 30 days after the adoption of the resolution of intention. (The attached Resolution would set this heating for November 24, 2003. ¯At the hearing, the City Council must consider the testimony of all interested persons for or against the establishment of the BID, the extent of the area within the BID, and on the furnishing of specified types of improvements or activities by the BID. ¯Any interested person may make protests orally or in writing. Written protests must be filed with the City Clerk at or before the time fixed for the public heating. If written protests to the establishment of a BID are received from the owners of businesses in the proposed area, which will pay 50% or more of the total BID assessment, no further proceedings to create the business improvement area or to levy the proposed assessment shall be considered for at least a year. ¯At the conclusion of the public hearing to establish the BID, the City Council may adopt, revise, change, reduce or modify the proposed assessment or the improvements and activities proposed. If the assessment is increased, the proceedings would need to be started over. ¯If the City Council, following the public hearing, decides to establish the BID, it will adopt an ordinance to that effect. The ordinance will contain information required by BID law including the manner of collection and levy of assessments. ¯In subsequent years, the Advisory Board will file an annual report making recommendations on the following: Expenditure of revenues derived from the levy of assessments Classification of businesses Method and basis of levying assessments CMR:481:03 Page 4 of 6 The resolution sets the place and time for the public hearing (November 24, 2003) on the proposed BID to hear comments, protests and testimony on the establishment of the business improvement area and the levy of assessments in the BID. At that time, the effect of protests made by business owners against the establishment of a BID, and the extent of the area and activities proposed shall be described. RESOURCE IMPACT The Economic Development staff in the City Manager’s Office has provided support to the Ad Hoc Advisory Committee and the Downtown BID Advisory Board, including the creation of a business database; the preparation of the budget identifying proposed BID activities; preparation of a comprehensive reference booklet for distribution to businesses; and development of a cost benefit analysis and assessment formula for BID assessments contained in the Advisory Board’s Report to City Council.Staff also prepared and mailed individual notices to each business located in the BID. The City Attorney’s office has provided legal oversight and direction regarding the noticing and scheduling of required BID actions. There are still a number of issues to be resolved before a Downtown BID could become operational. These include collection issues, reimbursement of costs and other issues relevant to the establishment of the BID. These issues and revenue impacts will be discussed in more detail at the time of the public hearing. POLICY IMPLICATIONS The establishment of a Downtown BID is consistent with Comprehensive Plan Policies and was a part of the recommendations for Downtown Palo Alto identified in the Retail Strategy for the City of Palo Alto prepared by Sedway and Associates in June 2000. The establishment of a BID supports the following Comprehensive Plan Policies: Policy B-4 - Nurture and support established businesses as well as new businesses. Program B-1 - Initiate assessment districts or other programs to facilitate neighborhood shopping center improvements such as landscaping, parking and access to public transportation. Policy B-11 - Encourage the use of public/private partnerships as a means of redeveloping and revitalizing selected areas. Policy B-20 - Support and enhance the University Avenue/Downtown area as a vital mixed use area containing retail, personal service, office, restaurant, and entertainment uses. Recognize the importance of an appropriate retail mix, including small local businesses, to the continued vitality of Downtown. CMR:481:03 Page 5 of 6 ENVIRONMENTAL REVIEW This action by the City Council is not considered a project under the California Environment Quality Act. ATTACHMENTS Attachment 1: Attachment 2: Downtown BID Advisory Board Report to City Council Resolution of Intention confirming the Report of the Advisory Board in connection with the establishment of the proposed Downtown Palo Alto Business Improvement District, declaring its intention to establish said district, declaring its intention to levy an assessment on businesses within said district for fiscal year 2003-04, and set a time and place for a public hearing on the establishment of the district and the levy of the assessment. PREPARED BY:s Economic Development Manager Assistant City Manager CMR:481:03 Page 6 of 6 ATTACHMENT 1 Report of the Advisory Board With Regard to the Proposed Downtown Palo Alto Business Improvement District For Fiscal Year 2003-2004 As approved by the Advisory Board on October 20, 2003 October 27, 2003 Introduction The Advisory Board for the Downtown Palo Alto Business Improvement District (BID) was directed by City Council on September 22, 2003 to prepare a report and recommendations 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 initial fiscal year for the BID commencing July 1, 2003 and ending June 30, 2004. ("Fiscal year 2003-04") However, because the activities will be provided and an assessment will be levied only during the period commencing January 1, 2004 and ending June 30, 2004, estimates in this report with regard to expenses and assessment proceeds relate only to that period. As required by the Law, this report contains the following information: 1.BID Boundaries and Benefit Zones withir~ the BID; 2.The improvements and activities to be provided for Fiscal Year 2003-04; 3.An estimate of the cost of providing the improvements and the activities for that fiscal year; 4. 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 2003-04. The amount of any surplus or deficit revenues to be carried over from a previous fiscal year. 6.The amount of any contributions to be made from sources other than assessments levied pursuant to the Law. Submitted by Stephanie Wansek, Chair, on behalf of the Advisory Board of the Downtown Palo Alto Business Improvement District on October 27, 2003. The Board approved this Report on October 20, 2003 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 October 23, 2003. Section 1: Identification of the boundaries of the BID or any benefit zones within the BID. The boundaries of the BID are within the City Limits of the City of Palo Alto. The approximate boundaries of the BID encompass the greater downtown area of Palo Alto and extend from El Camino Real in the East, to Webster Street in the West and from Lytton Avenue in the North to Addison Avenue in the South (East of Emerson Street, the boundaries extend only to Forest Avenue in the South). Two benefit zones have been identified based on several reviews by the Advisory Board on the BID and through discussions with the BID consultant who also walked the BID. These benefit Zones are A and B. Zone A encompasses the primary benefit zone, which is approximately the East side of El Camino Real on the East to the West side of Webster Street on the West. It extends from the South side of Lytton Avenue in the North to Forest Avenue in the South. Zone B encompasses the balance of businesses in the district, not in Zone A. First floor businesses in Zone A are in the area of primary benefit. Second floor businesses in Zone A as well as all businesses in Zone B receive a secondary benefit and are classified as Zone B businesses for the purposes of the BID. A map of the BID Boundaries and benefit zones is available in Attachment 1 of this report. Section 2: The improvements and activities to be provided for Fiscal Year 2003-04. No improvements are proposed to be provided for Fiscal Year 2003-04. The activities listed in Attachment 2 of this Report are proposed to be provided annually. Because the BID will exist only during a portion of Fiscal Year 2003-04, not all of these activities may be provided during that Fiscal Year though work may be done on any or all of the activities during the Fiscal Year. Section 3: An estimate of the cost of providing the improvements and activities for Fiscal Year 2003-04. The total funds available for activities for this fiscal year are estimated to be $101,000. The budget for providing the activities is set forth in Attachment 2 of this Report. Section 4: 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 2003-04. Attachment 3 describes the method of calculation used to determine the cost and benefit to each business located in the BID. 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% 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. 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 3 for a more complete understanding of the application of these three variables to establish BID benefit. Attachment 4 is the BID assessment for each business located within the BID boundaries. Applying the criteria identified in Attachment 3, a summary of the assessment that applies to each business by size, type and location is outlined. This outline provides information by which a business can determine its annual assessment based on objective criteria. In addition,. City staff mailed an estimated assessment to each business located in the Downtown Palo Alto BID. Except where otherwise defined, all terms shall have the meanings identified below: Definitions of Business Types in the Downtown Business Improvement District (BID) 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 Lodqinq: These include businesses that have as their main business Lhe lodging of cusLomers. This is resLricLed Lo 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. 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 Non-profit organizations Newspapers 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. Section 5: The amount of any surplus or deficit revenues to be carried over from a previous fiscal year. Because the BID is a newly proposed district, there is not surplus or deficit. Section 6: The amount of any contributions to be made from sources other than assessments levied pursuant to the Law. Assessment proceeds are estimated to be approximately $101,000 for Fiscal Year 2003-04. Assessment proceeds will be spent only on activities authorized in the resolutions of the City Council of the City of Palo Alto establishing the BID and/or levying the a sessments. In this first year of operations, there will not be any additional ¯ contributions from any source other than the BID assessments for the completion of BID activities. Attachments: Attachment 1: Recommended BID Boundaries Attachment 2: Budget of Recommended FY 2003-04 BID Activities Attachment 3: BID Cost Benefit Analysis Attachment 4: BID Assessments Attachment 1 Street CWaveriev S~reet Attachment 2 Proposed BID Budget January 1-June 30, 2004 Marketing and Promotions Business Directory, conceptual development of directional signs, special events planning Graphic Design (logo design, banner design, branding, ad designs, Website) Banners and hardware (1 time) Beautification (Planning for signage, enhanced tree lighting and seasonal planting) Operations $12,000 $ 8,000 $18,000 $12,000 Staff (Salary for six months, incl. Benefits)S27,500 Printing, supplies Mailing ($370 x 6) Phone Travel One time start-up costs (computer, printer, fax, copy machine, furniture, etc.) online access Audit Collection costs Contingencies Anticipated BID Budget (6 months) $ 2,000 $ 2,200 $ 1,200 $ 5oo $ 5,000 $ 3,000 $ 5,ooo $ 4,600 $101, 000 *Funds spent for activities will be reduced as needed to pay for overhead, administration and/or collection costs ** As much as possible, the intention of the BID is to spend BID dollars locally within the BID Attachment 3 A General Statement Regarding 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 after reviewing over 100 BIDs in California, 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 fiat rate regardless of location or size and lodging businesses that are typically charged by total rooms. Financial institutions are assessed at a higher level because of Community Reinvestment Law objectives that encourage investment in the local community. 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 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. 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: 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 whol 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 fee is as follows: ¯Small:50% of base assessment¯Medium: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 7 FTE * 7+ FTE* The above break down was arrived at based on the Advisory Committee’s review of anticipated benefits that would accrue to businesses based on size, type and location of the BID business. For example, since retail and restaurants are more labor intensive, the benefits accruing to these businesses are more a feature of type and location. Therefore, the employee (size) criterion is broader to focus on the other two factors in gauging business benefit. Attachment 4 Downtown Palo Alto Business Improvement District Suq_~ested Annual BID Assessment 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) (lOO%) $170.00 $250.00 $340.00 Service Businesses (75%) Professional Businesses (50%) Lodging Businesses (lOO%) $170.00 (Under 4 FTE employees) (5o%) $250.00 (4 to under 7 FTE employees) (75%) $340.00 (7+ FTE employees) (lOO%) $130.00 $190.00 $250.00 $170.00 (Under 5 FTE employees) (75~) ~ $225.00 (5+ FTE employees) (lOO%)l~.;~L~ $130.00 $170.00 $225.00 (up to 20 rooms) (5o%) $340.00 (21 to 40 rooms) (75%) $450.00 (41 + rooms) (1oo%) $170.00 $25O.OO $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. Lodging facilities will be charged by number of rooms available. 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. ATTACHMENT RESOLUTION NO. RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO CONFIRMING THE REPORT OF THE ADVISORY BOARD IN CONNECTION WITH THE ESTABLISHMENT OF THE PROPOSED DOWNTOWN PALO ALTO BUSINESS IMPROVEMENT DISTRICT, DECLARING ITS INTENTION TO ESTABLISH SAID DISTRICT, DECLARING ITS INTENTION TO LEVY AN ASSESSMENT ON BUSINESSES WITHIN SAID DISTRICT FOR FISCAL YEAR 2003-2004, AND SETTING A TIME AND PLACE FOR A PUBLIC HEARING ON THE ESTABLISHMENT OF THE DISTRICT AND THE LEVY OF THE ASSESSMENT WHEREAS, the City of Palo Alto (the "City") is a charter city organized and existing under the laws of the State of California; and WHEREAS, it is in the public interest to promote the economic vitality and physical maintenance of business districts within the City in order to prevent erosion of the business districts and to attract and retain businesses; and WHEREAS, the Parking and Business Improvement Area Law of 1989 (California Streets and Highways Code Sections 36500 et seq.) (the "Law") provides that the City may establish a parking and business improvement area (a "PBIA") for the purpose of providing improvements and promoting activities within a PBIA and may levy an assessment against businesses within a PBIA to fund improvements and ~’ ’~’ -ac~!vl~les, and WHEREAS, downtown businesses have been exploring the possibility of a PBIA for downtown Pa!o Alto; and WHEREAS, the City has received a petition signed by the owners or authorized representatives of over fifty downtown businesses requesting that the City initiate proceedings for the formation of a PBIA for the downtown area; and WHEREAS, pursuant to its Resolution No. 8339 adopted on September 22, 2003, as amended by its Resolution No. 8341, adopted on October 7, 2003, the City Counci! (i) appointed an Advisory Board (the "Advisory Board") for the proposed Downtown Pa!o Alto Business Improvement District, a proposed PBIA, (ii) directed the preparation of a report by the Advisory Board pursuant to Section 36533(b) of the Law; and, (iii) set the time and place for a public meeting and public hearing to receive testimony on the proposed establishment of the Downtown Business Improvement District and the proposed assessment_; and 031020 sm 0100142 1 WHEREAS, in accordance with Section 36533 of the Law, the Advisory Board prepared and filed with the City Clerk a report entitled "Report of the Advisory Board with Regard to the Proposed Downtown Palo Alto Business Improvement District for Fisca! Year 2003-2004" (the "Report"). The Report is on file in the office of the City Clerk and open to public inspection. NOW, THEREFORE, the Council of the City of Palo Alto does RESOLVE as follows: SECTION I. The City Council hereby approves the Report as filed by the Advisory Board and, pursuant to the Law, the City Counci! declares its intention to establish the Downtown Palo Alto Business Improvement District (the "District") and to levy and collect an assessment against businesses within the District for Fisca! Year 2003-2004 (July i, 2003 through June 30, 2004). Such assessment shal! be in addition to any other assessments, fees, charges or taxes imposed by the City. SECTION 2. The boundaries of the District are within the City limits of the City of Pa!o Alto (the "City") and encompass the greater downtown area of the City, generally extending from E1 Camino Rea! 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. SECTION 3. 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 usefu! 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. No improvements are proposed to be funded in Fiscal Year 2003-04. Reference is made to the Report for a description of the activities to be funded by the District in Fiscal Year 2003-04. // 031020 sm 0100142 2 SECTION 4. Except where funds are otherwise available, an assessment will be levied annually to pay for all improvements and activities within the District, commencing with Fiscal Year 2003-04. SECTION 5. The proposed method and basis of levying the assessment is set forth in Exhibit "B" attached hereto and incorporated herein by reference. Assessments for Fiscal Year 2003-04 are proposed to be prorated, with businesses within the District assessed one-half of the proposed amount of the annua! assessment. As set forth in Exhibit "B", the assessment is based on the type of business, the location of the business and the size of the business. For purposes of apportioning the assessment, businesses are included in Zone A or Zone B. The boundaries of Zone A extend from the east side of E! Camino Real to the East, the west side of Webster Street to the West, the south side of Lytton Avenue to the North and Forest Avenue to the South. Zone B encompasses the balance of businesses in the District, and includes all businesses not !ocated in Zone A. In addition, al! upper floor businesses in Zone A are considered to be Zone B businesses. Reference is hereby made to the map of the District attached hereto as Exhibit "A" for a description of the zones. SECTION 6. New businesses established in the District after the beginning of any fisca! year shal! be exempt from the levy of the assessment for that fisca! year. In addition, non- profit organizations and newspapers in the District shall be exempt from the assessment. SECTION 7. On October 27, 2003, the City Council held a noticed Public Meeting regarding the establishment of the District and the levy of the assessment against businesses located in the District. At the Public Meeting, all persons had an opportunity give public testimony regarding the establishment of the District and the Zones therein, and the levy of the assessment. SECTION 8. The City Council will hold a Public Hearing on November 24, 2003 at 7:00 p.m. or as soon thereafter as practicable, in the City Counci! Chambers at 250 Hamilton Avenue, Palo Alto, California, 94301. At the Public Hearing, the testimony of all interested persons regarding the establishment of the District, the extent of the District, the Assessment, the furnishing of specific 031020 sm 0100142 3 types of improvements and activities by the District for the Fiscal Year 2003-2004 levy of the assessment 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 shal! 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 shal! 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 Section 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 wil! pay 50 percent or more of the Assessment 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 create the District, or to levy the assessment, as described in this Resolution, shall be taken for a period of one year from the date of the finding of a majority protest by the City Counci!. 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 must be eliminated. SECTION 9. The City Clerk is ~irec:ed to give such notice of the Public Hearing as is required by law. 031020 sm 0100142 4 SECTION i0. The Council finds that this is not a project under the California Environmental Quality Act and, therefore, no environmenta! impact assessment is necessary. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: City Clerk APPROVED AS TO FORM: Mayor APPROVED: City Attorney City Manager Director of Administrative Services 03 ! 020 sm 01 O0142 ~ EXHIBIT "A" @ The City of Palo Alto Proposed Downtown Palo Alto Business Improvement District This map is a product of the City of Palo Alto GIS EXHIBIT "B" Downtown Palo Alto Business ~mprovement District Annual Assessment Retailers and Restaurants (lOO%) ZONE A ZONE B (75%) $225.00 (Under 6 FTE employees) (50%)$170.00 $340.00 (6 to under ii FTE employees)(75%)$250.00 $450.00 (Ii+ FTE emp!oyees) (100%)$340.00 Service Businesses (75%) $170.00 (Under 4 FTE employees) (50%) $130.00 $250.00 (4 to under 7 FTE employees) (75%) $190.00 $340.00 (7+ FTE employees) (100%) $250.00 Professional B~sinesses (5O%) $170.00 (Under 5 FTE employees) (75%) $225.00 (5+ FTE employees) (100%) $130.00 $170.00 Lo~ing Businesses (lOO%) $225.00 (up to 20 rooms) (50%) $340.00 (21 to 40 rooms) (75%) $450.00 (41+ rooms) (100%) $170.00 $250.00 $340.00 Financial Institutions $500.00 $500.00 Note I: For retail, restaurant, service, and professional businesses size wil! be determined by number of emp!oyees either full-time or equivalent (FTE) made up of multiples of part-time employees. Lodging businesses will be charged by number of rooms available. Ful!-time employees are those working a tota! of 2,000 hours per year. Part-time emp!oyees are grouped into full-time job positions, i.e., two half-time emp!oyees total one fu!l-time. Note 2: Second floor (and higher) businesses located within Zone A will be assessed the same as similar street-leve! businesses !ocated within Zone B. 031020 sm 0100142 Note 3: Assessment amounts are rounded to the nearest ten dollars. Note 4: Retailers and Restaurants include: Businesses that buy or resell goods such as clothing stores, shoe stores, office supplies as wel! as businesses that sel! prepared food and drink. Service Businesses include: 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, trave! agencies, entertainment businesses such as theatres, etc. Lodging Businesses include: Businesses that have as their main business the lodging of customers. This is restricted to residentia! businesses that provide !odging services to customers for less than 30 days. Professional Businesses include: Businesses that require advance 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 include: institutions and credit unions. Banking,savings and loan 031020 sm 0100142