HomeMy WebLinkAboutStaff Report 2403-2822CITY OF PALO ALTO
CITY COUNCIL
Special Meeting
Monday, May 20, 2024
Council Chambers & Hybrid
5:30 PM
Agenda Item
8.Adoption of Resolution Suspending the Levy of Assessments on the Downtown Palo Alto
Business Improvement District (BID) Assessment for Fiscal Year 2025; CEQA status – not a
project.
City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Administrative Services
Meeting Date: May 20, 2024
Report #:2403-2822
TITLE
Adoption of Resolution Suspending the Levy of Assessments on the Downtown Palo Alto
Business Improvement District (BID) Assessment for Fiscal Year 2025; CEQA status – not a
project.
RECOMMENDATION
Staff recommends that Council adopt the attached resolution suspending the levy of the Palo
Alto Downtown Business Improvement District assessment for Fiscal Year (FY) 2025. (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.
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 FY 2023. The
Palo Alto City Council supported the Finance Committee recommendation and approved a
resolution to not levy an assessment for FY 2023. The BID was subsequently paused again in FY
20243. Staff continues this recommendation for FY 2025.
ANALYSIS
Staff recommends that the Council approve the recommendation for FY 2025 with the intention
to not collect BID assessments for an 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.
Based on Council direction in December 2023, in addition to the long-term streetscape plan,
options for near-term improvements in the downtown district are being reviewed. These may
include enhanced cleaning and maintenance as well as minor infrastructure improvements. Staff
anticipates finalizing the plan for these improvements in the first half of next fiscal year and
subsequently engaging the BID stakeholders to discuss re-initiating BID assessments in FY 2026
to fund these enhanced services. Thus, staff recommends suspending the BID assessments for
one additional year.
Additionally, after the plan for long-term streetscape improvements has been approved and a
funding plan for capital improvements has been finalized, staff will evaluate the appropriate
ongoing funding framework to support the long-term vision for downtown including, but not
limited to, enhanced cleaning and maintenance, landscaping, branding, and events. Staff
anticipates bringing forward any recommended changes to the BID for Council consideration in
2026. Finally, given the uncertainty surrounding PADBPA, a new advisory board for the BID may
be necessary. The decision to not levy assessments for in FY 2025 is consistent with Council’s
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 04/14/2023 City Council, PUBLIC HEARING: Adoption of a Resolution Providing that the City will Not Levy Assessments for the Downtown
Business Improvement District for FY 2024.
https://cityofpaloalto.primegov.com/meetings/ItemWithTemplateType?id=1974&meetingTemplateType=2
decisions4. In addition, based on further review of the Parking and Business Improvement Area
Law of 1989, staff has determined that no public hearing on the proposed resolution is required
if no assessment will be levied. If and when the Council determines to resume levy of the BID
assessment for future years, the Council will need to conduct a noticed public hearing prior to
doing so.
FISCAL/RESOURCE IMPACT
The BID is set up as a separate fund within the City’s budget. In prior years, when active, 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 being paused, 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.
In prior years, staffing resources have included staff time from the City Manager’s Office and
Administrative Services Department to provide oversight to the BID, administer the contract with
HdL (the third-party administrator for both BID and BRC), liaise with stakeholders, and preparing
the annual reauthorization.
STAKEHOLDER ENGAGEMENT
Staff continues to discuss the potential options for the future of the BID with downtown
business stakeholders, including former leaders of PADBPA and the Chamber of Commerce. In
FY 2025, staff anticipates working with stakeholders to explore options for new management
agreements for the BID.
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
APPROVED BY:
Lauren Lai, Administrative Services Director
4 Prior Council Decisions: FY 2021 (CMR 11219) and in FY 2022 (CMR 12255) in response to the pandemic, along with the
Finance Committee’s recommendation to not levy assessments for FY 2023 (CMR 13901) and FY 2024 (CMR 2303-1184).
1
267_20230411_ts24
Attachment A
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4
7
NOT YET ADOPTED
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 2025
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 been 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, 2023, and 2024.
E.The Advisory Board for the District is currently defunct, and therefore the Council has
not had the opportunity to review or approve the annual report on the District’s improvements
and activities, as well as the proposed assessments.
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 2025 (July 1, 2024 through June 30, 2025).
G. Because no assessment is proposed for fiscal year 2025, a public hearing on the
assessment is not required under the Parking and Business Improvement Area Law of 1989.
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, no assessments shall be levied for the
District for fiscal year 2025 (July 1, 2024 through June 30, 2025). The District
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267_20230411_ts24
Attachment A
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7
NOT YET ADOPTED
shall remain in effect and the Council will consider the levy of assessments for following fiscal
years.
SECTION 3. 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 review is required.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
City Clerk Mayor
APPROVED AS TO FORM:
Assistant City Attorney City Manager
Director of Administrative Services