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Home My WebLink AboutStaff Report 2303-1182CITY OF PALO ALTO CITY COUNCIL Special Meeting Monday, April 24, 2023 Council Chambers & Hybrid 5:00 PM Agenda Item 4.Adoption of a Resolution of Intent to Not Levy Assessments for the Palo Alto Downtown Business Improvement District (BID) in FY 2024 and Setting a Public Hearing for May 15, 2023; CEQA status – not a project. City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: Administrative Services Meeting Date: April 24, 2023 Report #:2303-1182 TITLE Adoption of a Resolution of Intent to Not Levy Assessments for the Palo Alto Downtown Business Improvement District (BID) in FY 2024 and Setting a Public Hearing for May 15, 2023; CEQA status – not a project. RECOMMENDATION Staff recommends that Council adopt the attached resolution of intention to decline to levy assessments in the Palo Alto Downtown Business Improvement District (BID) for Fiscal Year 2024 and setting a date and time for the public hearing on the proposal to decline to levy assessments for May 15, 2023, at 5:00 PM or thereafter (Attachment A). BACKGROUND The Palo Alto City Council established the Palo Alto Downtown Business Improvement District (BID) in 2004 pursuant to the California Parking and Business Improvement Area Law to maintain economic vitality and physical maintenance of the Palo Alto Downtown business district. The Council appointed the Palo Alto Downtown Business and Professional Association (PADBPA), a non-profit corporation, as the advisory board and administrator of the BID. PADBPA, acting through its independent Board of Directors, has historically advised the Council on the method and basis for levy of assessments in the BID and has managed the expenditure of revenues derived from the assessments. In light of organizational changes at PADBPA and changes resulting from the COVID-19 pandemic, and with the concurrence of the City Council, the City allowed the contract with PADBPA to expire on June 30, 2020. Council directed staff to work with the Palo Alto Chamber of Commerce and PADBPA to develop options for the transition of the management of the BID. The Chamber and PADBPA identified a need to build support for a resumption of the BID assessment within the business community before collecting a new assessment and establishing a new management agreement. Both entities supported placing the BID on pause for FY 2023. On March 1, 2022 the Finance Committee discussed options for the FY 2023 Business Registry Certificate (BRC) and BID processes (CMR 139021). The Committee reviewed three options for the BRC and BID and forwarded their recommendation to the City Council on April 4, 2022, CMR 139012, to restore the BRC in the 2022-2023 collection timeframe, using the established structure used in pre-pandemic years, while continuing the pause of BID assessments again in FY2023. The Palo Alto City Council directed Staff to proceed with this recommendation, and the City Council approved a resolution to not levy an assessment for FY 2023. ANALYSIS Due to ongoing discussions between PADBPA, the Chamber and the City, it is again requested that the BID assessment be paused in FY 2024. Staff recommends that the Council adopt the attached resolution for FY 2024 with the intention to not collect BID assessments for one additional year. In 2022 Council directed staff to work with the PADBPA and the Chamber to provide options on the future management of the BID. City staff are currently working on developing alternatives for a new streetscape design on University Avenue, in consultation with stakeholders and the community more broadly. This work is expected to generate a plan that will require businesses in the vicinity to invest in capital and potentially operating costs for implementation. Since it is not clear at this point what structure would be most appropriate for such investment, the BID is a valuable framework but not necessarily structured as will be needed. The entities therefore request another year to continue exploring options for the BID including input from organizations within the BID. If Council adopts the recommendation in this report, the Council must adopt the attached resolution of its intention to not levy a collection of the BID assessments for FY 2024, and set a public hearing for May 15, 2023. At the public hearing, Council will hear and consider any objections to non-collection of assessments due in 2023 and take final action. The decision to not levy assessments payable in FY 2024 is consistent with Council’s rescinding and waiving of assessments due in FY 2020 (CMR 112193) and in FY 2021 (CMR 122554) in response to the pandemic, along with the Finance Committee’s recommendation to not levy assessments for FY 1 03/02/2022 Finance Committee, Review the Business Registry Certificate and Business Improvement District FY 2023 Processes and recommendation to City Council on the Renewal Processes https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/agendas-minutes/finance- committee/2022/20220301/20220301pfcs-linked.pdf 2 04/04/2022 City Council, Approve Finance Committee Recommendation for FY 2023 to (a) Return to the Customary Pre-Pandemic Business Registry Certificate Requirement and Fee, and (b) Pause for One Year the Downtown Business Improvement District Assessment Program https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/agendas-minutes/city-council-agendas- minutes/2022/20220404/20220404pccsmamendedlinked1.pdf 3 05/04/2020 City Council, BRC Fee Waiver Resolution https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/reports/city-manager-reports-cmrs/year-archive/2020/id- 11219.pdf?t=68883.69 4 06/07/2021 City Council, Resolution to suspend assessments for FY22 (BID) https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/reports/city-manager-reports-cmrs/year-archive/2021/id- 12255.pdf 2023 (CMR 139015). At the public hearing, should Council decide to not levy an assessment for FY 2024, it will adopt another resolution confirming that decision. This two-step process is required under state law. During the FY 2024 period staff will work with representatives from PADBPA and the Chamber to do outreach to businesses to help identify priority projects that the BID assessment can go towards and look at different structures for management of the BID. Relevant to considering options for the BID is discussion of dissolving the BID should Council want to review that option in the future. Dissolving the BID would require separate Council action. Staff will include this alternative as background in the upcoming discussions with the business community on the path forward for the BID. In spring 2023 businesses will be asked to register for the business registry certificate (BRC) program as usual and not the BID should Council approve the resolution. In addition to the BRC program, businesses will be engaged in the new business tax program with the first payment due in January 2024. Updates on the implementation of the business tax can be found here6. FISCAL/RESOURCE IMPACT The BID is set up as a separate fund within the City’s accounting system. In recent years, the BID has required a General Fund subsidy as collected assessments fell short of the costs of operating the BID. The subsidy amounted to $70,000 in FY 2020. Historically, the City acts as the collection agent for BID revenues and reimburses PADBPA’s expenses after receipt and verification of invoices. With the BID on pause, an estimated $80,000 will not be collected and no BID business activities will be provided. In the past business activities have included the streetlight banner program, Lytton Plaza enhancements, and summer concerts among others. Additional staff resources include time from the City Manager’s Office and Administrative Services Department to provide oversight to the BID, administer the contract with Avenu Insights (the third-party administrator for both BID and BRC) liaise with stakeholders, and prepare the annual reauthorization. STAKEHOLDER ENGAGEMENT Staff has met and coordinated with members of PADBA and the Chamber of Commerce in preparation of these recommendations. In FY 2024 staff will work with these entities to develop options for a new management agreement for the BID. 5 04/04/2022 City Council, Approve Finance Committee Recommendation for FY 2023 to (a) Return to the Customary Pre-Pandemic Business Registry Certificate Requirement and Fee, and (b) Pause for One Year the Downtown Business Improvement District Assessment Program https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/agendas-minutes/city-council-agendas- minutes/2022/20220404/20220404pccsmamendedlinked1.pdf 6 https://www.cityofpaloalto.org/Business/Business-Tax-Implementation-Details ENVIRONMENTAL REVIEW The proposed action is not a project for the purposes of the California Environmental Quality Act. ATTACHMENTS Attachment A: Resolution Declaring Intention to Not Levy Assessments Within the Downtown Palo Alto Business Improvement District for Fiscal Year 2024; and Setting a Time and Place for a Public Hearing on the Proposed Decision Not to Levy Assessments on May 15, 2023 at 5:00 PM or Thereafter, in the Council Chambers APPROVED BY: Kiely Nose, Assistant City Manager NOT YET ADOPTED 1 267_20230411_ts24 Resolution No. _____ Resolution of the Council of the City of Palo Alto Declaring Its Intention to Not Levy Assessments Against Businesses Within the Downtown Palo Alto Business Improvement District for Fiscal Year 2024; and Setting a Time and Place for a Public Hearing on the Proposed Decision Not to Levy Assessments on May 15, 2023 at 5:00 PM or Thereafter, in the Council Chambers R E C I T A L S A. The Parking and Business Improvement Area Law of 1989 (the "Law"), California Streets and Highways Code Sections 36500 et seq., authorizes the City Council to levy an assessment against businesses within a parking and business improvement area which is in addition to any assessments, fees, charges, or taxes imposed in the City. B. Pursuant to the Law, in 2004 the City Council adopted Ordinance No. 4819 establishing the Downtown Palo Alto Business Improvement District (the "District") in the City of Palo Alto. C. The City Council, by Resolution No. 8416, appointed the Board of Directors of the Palo Alto Downtown Business & Professional Association (“PADBPA”), a California nonprofit mutual benefit corporation, to serve as the Advisory Board for the District (the "Advisory Board"). D. Beginning in March of 2020 and continuing through the present, Downtown businesses have substantially impacted by the COVID‐19 pandemic, the public health measures taken to reduce the spread of the virus, and the resulting statewide economic contraction. In recognition of these impacts, the City Council refunded fiscal year 2020 BID assessments and declined to levy assessments in fiscal years 2021, 2022, and 2023. E. As California emerges from the pandemic, local businesses are experiencing additional impacts from changes in on‐site and remote work patterns and other developments in the local economy. In addition, PADBPA is experiencing organizational changes. F. In recognition of the challenges continuing to effect downtown businesses and understanding the need for a new direction on BID management, the City Council has determined not to levy BID assessments for fiscal year 2024 (July 1, 2023 through June 30, 2024). NOW THEREFORE THE CITY COUNCIL OF THE CITY OF PALO ALTO RESOLVES AS FOLLOWS: SECTION 1. The Council hereby adopts the above Recitals as findings of the Council. SECTION 2. Based on the findings herein, the Council intends not to levy or collect assessments for the District for fiscal year 2024 (July 1, 2023 through June 30, 2024). The District NOT YET ADOPTED 2 267_20230411_ts24 shall remain in effect and the Council will consider the levy of assessments for following fiscal years. SECTION 3. The City Council hereby fixes the time and place for a public hearing on the proposed determination not to levy assessments against any businesses within the District for fiscal year 2024 as follows: DATE: May 15, 2023 PLACE: Conducted simultaneously in person at Palo Alto City Hall (250 Hamilton Avenue, Palo Alto, CA) and via Zoom TIME: 5:00 p.m. or soon thereafter At the public hearing, the testimony of all interested persons regarding the determination not to levy assessments against any businesses within the District for fiscal year 2024 shall be heard. SECTION 4. The City Clerk is hereby authorized and directed to provide notice of the public hearing in accordance with the law. SECTION 5. The Council finds that the adoption of this Resolution does not meet the definition of a project under Section 21065 of the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: City Clerk Mayor APPROVED AS TO FORM: _________________________ Assistant City Attorney City Manager _________________________ Director of Administrative Services