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HomeMy WebLinkAbout2003-12-15 City Council (4)City of Palo Alto City Manager’s Report TO: FROM: DATE: SUBJECT: HONORABLE CITY COUNCIL CITY MANAGER q13 DEPARTMENT: City Manager DECEMBER 15, 2003 CMR: 551:03 RECOMMENDATION TO CITY COUNCIL TO ACCEPT THE REVISED 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 REVISED REPORT, DECLARES THE CITY COUNCIL’S INTENT TO FORM A DOWNTOWN BID AND LEVIES THE ASSESSMENT ON BUSINESSES LOCATED IN THE BID AND SETS THE PUBLIC HEARING FOR JANUARY 12, 2004 AT WHICH INTERESTED PERSONS CAN TESTIFY RECOMMENDATION Staff recommends that the City Council: 1. Hold a public meeting on the proposed BID at which interested persons can testify. 2. Adopt a resolution that confirms the Revised Report of the Downtown Business Improvement District (BID) Advisory Board, declares the City Council’s intent to form a Downtown Business Improvement District (BID) and levies the assessment of businesses located in the BID, and sets a public hearing on January 12, 2004 at which interested persons can testify. BACKGROUND The Downtown BID Advisory Board (the Board), appointed on October 7, 2003, submitted its Report to City Council on October 27, 2003, which included recommendations on the BID boundaries; method and process of assessing businesses in the BID; description of BID activities; and the proposed BID budget. CMR:551:03 Page 1 of 5 After hearing the testimony of the Board members and businesses in the proposed BID district, and a discussion of the assessment methodology, City Council ~onceptually approved the BID and directed the Board to review the proposed assessments of businesses in the BID. Of particular interest was the creation of a category for "single person businesses" in the professional category operating in the district. Council also suggested that the Board consider a method of increasing the assessment for the largest businesses. DISCUSSION The Board took these recommendations into consideration and its recommended changes were provided to City Council on November 17, 2003 as part of the staff report setting the public meeting (December 15, 2003) and public hearing (January 12, 2004) for the BID. The revised Report and Recommendations to City Council was approved by the Board unanimously on December 3, 2003 and is attached to this staff report. The Report reflects the current recommendations of the Board. The substantive changes to the Report by the Board are as follows: ~ Revision of budget and activities based on changes to the annual BID assessments in the professional business category ~ Establishment of an exemption for "single person professional businesses" that have 25% or fewer full time equivalent persons (FTE), including the business owner. This covers employees or owners who work less than 10 hours a week (based on a 40 hour work week) ~ Establishment of an assessment specifically for "single person businesses" that have 26% FTE to 1 FTE persons in the professional business category of the BID (A full FTE equals, approximately 2000 hours annually) )~ Tiering of other professional businesses by size based (according to benefit) on the new "single person business" criteria ~ Rounding corrections to annual BID assessments for continuity The Board considered a similar breakdown for other business categories (such as retail, restaurants, banks, hotels and service businesses), but felt that it was justified only for the professional business classification because professional businesses will receive the smallest benefit from the BID. The Board also explored increasing the assessment for Downtown’s largest businesses. Its recommendation is that no changes be made because the assessment as presently tiered represents the nexus between the assessment and the benefit accruing to the CMR:551:03 Page 2 of 5 business from the proposed BID activities. Following the first six months of operation (January 1, 2004-June 30, 2004), the Advisory Board will review the database and assessments and will recommend any changes to City Council at the time of the annual reauthorization of the BID. Following the public meeting tonight, City Council will consider a resolution approving the Advisory Board and declaring its intention to establish a Business Improvement District and levy assessments on businesses in the District. Resolution of Intention The proposed Resolution of Intention to Establish a Downtown BID includes, as required by the BID law, a description of the boundaries of the area and identification of any separate benefit zones; name of the proposed area; 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; and the 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. If the City Council chooses to adopt the Resolution of Intention, a public hearing (noticed according to BID law) scheduled for January 12, 2004, will be held. At the this 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. At that time, 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 hearing. 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 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. CMR:551:03 Page 3 of 5 In subsequent years, an annual reauthorization of the BID and levy of assessments will be required for its ongoing operation. RESOURCE IMPACT The Economic Development Division in the City Manager’s Office has provided staff support to the Advisory Ad Hoc Committee and Advisory Board. Economic Development staff has overseen the creation of a business database and other activities associated with the formation of a Downtown BID. The City Attorney’s office has provided legal oversight and direction regarding the noticing and scheduling of required BID actions. In addition to internal legal oversight, outside legal services have been utilized. Estimates for this work are $10,000, with $5,000 being paid from the City Attorney’s budget for contractual services. The additional $5,000 will be paid from the City Manager’s contingency fund. Preliminary estimates of ongoing costs to the Administrative Services Department are estimated to be $16,000 for the payment processing of BID assessments. Of this cost, $5,000 will be paid from BID funds collected, and the balance of the funds ($11,000) will be paid from the City Manager’s contingency fund in this initial year of operation. An additional initial cost of $4,000 is estimated for data input and reporting. This amount will also be funded through the City Manager’s contingency fund. It is anticipated in future years that the payments will be sent out by the organization with which the City-contracts to provide BID activities administration and operations. The ongoing cost for processing of BID payments is estimated to be $5,000 annually. These costs will be paid with revenues generated from BID assessments. If additional expenses for payment processing occurs, these costs will be will be reviewed by the City Council at the time of the annual BID reauthorization and a determination will be made regarding the funding of any additional costs. POLICY IMPLICATIONS The establishment of a Downtown BID is consistent with Comprellensive 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: CMR:551:03 Page 4 of 5 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. ENVIRONMENTAL REVIEW This action by the City Council is not considered a project under the California Environment Quality Act. ATTACHMENTS Attach~nent 1 Report of the Advisory Board With Regard to the Business Improvement District for Fiscal Year 2003-04 Proposed Downtown Palo Alto Attachment 2 Resolution of Intention to Establish a Downtown Business Improvement District PREPARED BY: S~san J " " "Arpan, Econotmc Development Manager CITY MANAGER APPROVAL: Emily ~--rr~s~)n, Assistant City Manager CMR:551:03 Page 5 of 5 Attachment I 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 December 3, 2003 Board on December 10, 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: m BID boundaries and benefit zones within the BID; The improvements and activities to be provided for Fiscal Year 2003-04; An estimate of the cost of providing the improvements and the activities for that fiscal year; 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. 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 December 3, 2003. The Board approved this Report December 3, 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 December 10, 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 West, to Webster Street in the East 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 that is approximately the East side of El Camino Real on the West to the West side of Webster Street on the East. 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 I of this report. Section 2: The improvements and activities to be provided for Fiscal Year 2003-04. No capital 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. 2 The total funds available for activities for this fiscal year are estimated to be: $76,957. * 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. *Based on a calculation that assumes that 40% of businesses in the .26-4 categories for professional businesses will be single-person businesses (will be adjusted when actual numbers are available) 3 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. Following the October 27, 2003 City Council meeting, the Advisory Board recommended several changes to the assessments for "single person businesses" in the professional business category. These included the following revisions: Establish 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) 4 Establish 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) Tier other professional businesses by size based (according to benefit) on the new "single person business" criteria Advisory Board members with a unanimous vote affirmed that they favor this new breakdown. The Board considered a similar breakdown for other business categories (such as retail, restaurants, banks, hotels and service businesses), but felt that it was justified only for the professional business classification because professional businesses will receive the smallest benefit from the BID. The Board also explored increasing the assessment for Downtown’s largest businesses. Their recommendation is that the assessment as presently tiered represents the nexus between the assessment and the benefit accruing to the business. At this time, the recommendation is to leave the largest businesses’ assessment as originally proposed. Following the first six months of operation (January 1, 2004-June 30, 2004), the Advisory Board will review the database and assessments and will recommend any changes to City Council at the time of the annual reauthorization of the 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, 5 film processing companies, travel agencies, entertainment businesses such as theatres, etc. Hotel and Lodqinq: 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. The Advisory Board recommends that the following businesses be exempt from the BID assessment: New businesses established in the BID area following the annual assessment for the year in which they locate in the BID area Non-profit organizations Newspapers "Single person professional businesses" that have 25% or less 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. 6 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 $76,957* 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 assessments. In this first year of operations, there will not be any additional contributions from any source other than the BID assessments. Attach ments: Attachment 1 Attachment 2 : Recommended BID Boundaries :Budget of Recommended FY 2003-04 BID Activities Attachment 3: BID Cost Benefit Analysis Attachment 4: BID Assessment Schedule Attachment 5: BID Advisory Board Members by Business Type 7 *Based on a calculation that assumes that 40% of businesses in the .26-4 categories for professional businesses will be single-person businesses (will be adjusted when actual numbers are available) 8 The City of Palo Alto Proposed Downtown Palo Alto Business Improvement District This map is a product of the City of Palo Alto GIS II Attachment 2 Proposed BID Budget January i-June 30, 2004 Marketing and Promotions including Business Directory, development of directional signs, special events planning Graphic Design (logo design, banner design, branding, ad designs, website) Promotions including banners and hardware 18,000 Beautification (Planning for signage, enhanced tree lighting $13,000 $18,000 $5,857 Operations Staff (Salary for six months, incl. Benefits) 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) $23,000 $1,ooo $2,ooo $6oo $5oo $5,000 $3,000 $5,ooo $o 76, 957" * * *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 ***Calculated based on estimate that 40% of BID professional businesses currently classified as under 4 will fall into the "single person professional business" category 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. 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. Further.more, 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 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:50% of base assessment ¯Medium:75% of base assessment ¯ Large: 100% of base assessment * Full-time employees (FTE) Retail/Resta u ra nts under 6 FTE* 6-under 11 FTE* 11+ FTE* Service Businesses under 4 FTE* 4 to under 7 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. A_TTACHM NT 4 Downtown Palo Alto Business Improvement District Suqqested Annual BID Assessment Retailers and Restaurants (100%) 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) (100%) $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 $2OO.OO $260.00 Pro~ssional Businesses ~o%) EXEMPT (25% or fewer FTE employees, including the business owner) $ 60.00 (26% FTE to 1 FTE employees) (25%)$ 50.00 $110.00 (2 to 4 FTE employees) (5o%)$ 90.00 $170.00 (5 to 9 FTE employees) (75%)$130.00 $225.00 (10+ FTE employees) (lO0%)$170.00 Lodging Businesses (100%) $225.00 (up to 20 rooms) (50%) $340.00 (21 to 40 rooms) (75%) $450.00 (41+ rooms) (lOO%) $170o00 $260.00 $340.00 Financ~l ~s#tu6ons $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. Attachment 5 Downtown BID Advisory Board Members by Type of Business Retailers and Restaurants Georgie Gleim, Gleim the Jeweler Cornelia Pendleton, University Art Faith Bell, Bell’s Books Israel Zehavi, Diamonds of Palo Alto John Aylward, Caf~ Niebaum Coppola Alex Resnik, Spago Hotel and Lodqinq Stephanie Wansek, Cardinal Hotel Barbara Gross, Garden Court Hotel Professional Sunny Dykwel, Alain Pinel Realtors Warren Thoits, Thoits Brothers Insurance Jim Maliksi, Jim Maliksi Architects Beth Rosenthal, Psychologist Victoria Lukanovich, F1 IT Consulting Financial Institutions Steve Warden, Union Bank Chamber of Commerce Sandra Lonnquist, PA Chamber of Commerce NOT YET APPROVED RESOLUTION NO. RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO CONFIRMING THE REVISED 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 activities; and WHEREAS, downtown businesses have been exploring the possibility of a PBIA for downtown Palo 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 Council (i) appointed an Advisory Board (the "Advisory Board") for the proposed Downtown Palo Alto Business Improvement District, a proposed PBIA, (ii) directed the preparation of a report by the Advisory Board pursuant to Section 36533(b) 0f the Law; and, (iii) set October 27, 2003 as the date for a public meeting and November 24, 2003 as the date for a public hearing to receive testimony on the 031209 sm 0100172 1 NOT YET APPROVED proposed establishment of the Downtown Business Improvement District and the proposed assessment; and WHEREAS, on October 27, 2003, in accordance with Section 36533 of the Law, the Advisory Board prepared and filed with the City Clerk a report and the City Council held a public meeting on the establishment of the District and the levy of assessments; and WHEREAS, following the public meeting on October 27, 2003, the City Council by its Resolution No. 8360 directed the Advisory Board to review the proposed assessments on businesses in the District and submit a revised report and set December 15, 2003 as the date for a rescheduled public meeting on the establishment of the District and the levy of assessments and January 12, 2004 as the date for a rescheduled public hearing on the establishment of the District and the levy of assessments; and WHEREAS, in accordance with Section 36533 of the Law, the Advisory Board prepared and filed with the City Clerk a revised report entitled, ~Report of the Advisory Board with Regard to the Proposed Downtown Business District for Fiscal Year 2003-04" (the "Revised Report"). The Revised 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 Revised Report as filed by the Advisory Board and, pursuant to the Law, the City Council 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 Fiscal Year 2003-2004 (July i, 2003 through June 30, 2004). Such assessment shall be in addition to any 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 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 031209 sm 0100172 2 NOT YET APPROVED 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 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. No improvements are proposed to be funded in Fiscal Year 2003-04. Reference is made to the Revised Report for a description of the activities to be funded by the District in Fiscal Year 2003-04. 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 annual 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 E1 Camino Real to the West, the west side of Webster Street to the East, 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 located in Zone A. In addition, all 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 fiscal year shal! be exempt from the levy of the assessment for that fiscal year. In addition, non- 031209 sm 0100172 3 NOT YET APPROVED profit organizations, newspapers and professional "single-person businesses," defined as those businesses which 25% or fewer ful! time equivalent employees, including the business owner, shall be exempt from the assessment. SECTION 7. On December 15, 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 to 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 January 12, 2004 at 7:00 p.m. or as soon thereafter as practicable, in the City Council 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 types of improvements and activities by the District or 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 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 Section will not be counted in determining a majority protest (as defined be!ow). 031209 sm 0100172 4 NOT YET APPROVED 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 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 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 must be eliminated. SECTION 9. The City Clerk is directed to give such notice of the Public Hearing as is required by law. SECTION i0. 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: City Attorney City Manager Director of Administrative Services 031209 sm 0100172 5 The City of Palo Alto Proposed Downtown Palo Alto Business Improvement District EXHIBIT "A" This map is a product of the City of Palo Alto GIS Downtown Palo Alto Business Improvement District Suggested Annual BID Assessment Retailers and Restaurants (100%) 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 (75%) $170.00 (Under 4 FTE employees) (5o%) $260.00 (4 to under 7 FTE employees) (75%) $340.00 (7+ FTE employees) (100%) $130.00 $200.00 $260.00 Professional Businesses ~o%) 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) (1oo%)$170.00 Lodging Businesses (100%) $225.00 (up to 20 rooms) (5o%) $340.00 (21 to 40 rooms) (75%) $450.00 (41+ rooms) (100%) $170.00 $260.O0 $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 FTEequals 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"