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HomeMy WebLinkAboutStaff Report 2603-6186CITY OF PALO ALTO CITY COUNCIL Special Meeting Monday, May 18, 2026 Council Chambers & Hybrid 5:30 PM     Agenda Item     6.Adoption of Resolution Suspending the Levy of Assessments on the Downtown Palo Alto Business Improvement District (BID) Assessment for Fiscal Year 2027; CEQA status – not a project. Consent Questions 9 7 0 9 City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: Administrative Services Meeting Date: May 18, 2026 Report #:2603-6186 TITLE Adoption of Resolution Suspending the Levy of Assessments on the Downtown Palo Alto Business Improvement District (BID) Assessment for Fiscal Year 2027; 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) 2027 (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 response to 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. 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 1390211). The Committee reviewed three options for 1 03/01/2022 Finance Committee, Review the Business Registry Certificate and Business Improvement District FY 2023 Processes and recommendation to City Council on the Renewal Processes 9 7 0 9 https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/agendas- minutes/financecommittee/2022/20220301/20220301pfcs-linked.pdf 9 7 0 9 the BRC and BID and forwarded their recommendation to the City Council on April 4, 2022, CMR 1390123, 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 20244, FY 20255, and FY 20266. Staff continues this recommendation for FY 2027. ANALYSIS 7 and reflects the City’s ongoing work to evaluate the future structure and funding framework for business district support. 8, continued work on the University Avenue Streetscape Project, and expanded economic development resources within the City Manager’s Office. These efforts include ongoing coordination with businesses, property owners, and community stakeholders and support broader City-led initiatives focused on activation of downtown and commercial areas, enhancing public spaces, and consideration of district management approaches. Continuing the waiver for FY 2027 allows this work to progress as the City further develops and evaluates a long-term approach to downtown 3 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 4 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 5 05/20/2024 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 6 05/27/2025 City Council, Adoption of Resolution Suspending the Levy of Assessments on the Downtown Palo Alto Business Improvement District (BID) Assessment for Fiscal Year 2026; CEQA status – not a 7 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) and Council in FY 2025 (CMR 2403-2822) and FY 2026 (CMR 2503-4251). 8 08/14/2023 Adoption of a Comprehensive Economic Development Strategy to Guide City Priorities, 9 7 0 9 economic development, including the future role of the Business Improvement District. Staff continue to hold regular meetings with downtown businesses to engage on business retention, concerns, and future investments. Some downtown businesses have recently expressed interest in enhanced services to address homelessness outreach and cleanliness, so staff anticipate engagement over the upcoming year to determine if the BID might have a role in addressing these issues. FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW 9 7 0 9 ATTACHMENTS APPROVED BY: Attachment A NOT YET ADOPTED 1 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 2027 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, 2024, and 2025. 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 2027 (July 1, 2026 through June 30, 2027). G. Because no assessment is proposed for fiscal year 2027, 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 2027 (July 1, 2026 through June 30, 2027). The District Attachment A NOT YET ADOPTED 2 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: APPROVED: Assistant City Attorney City Manager Director of Administrative Services On behalf of City Manager Ed Shikada, please find below the staff responses to questions from Councilmember Burt and Reckdahl regarding the Monday, May 18th Council Meeting consent agenda item where they discussed re-establishing assessments to support business district needs, as well as the following questions: Item #6: Adoption of Resolution Suspending the Levy of Assessments on the Downtown Palo Alto Business Improvement District (BID) Assessment for Fiscal Year 2027; CEQA status – not a project. 1. Request to refer the BID agenda item to the Economic Development Committee. Suspending the BID during COVID was appropriate, but the downtown needs reinvigoration and the BID was a tool to support those efforts, how does continued suspension support use of this tool? Staff response: The BID falls within the business retention, expansion, and attraction (BRE/A) strategy that is on the Economic Development Committee’s workplan as approved by the Council in their annual priority and objective setting (priority 3.1.1). Business engagement is vital to the success of a BID, to determine assessments and overall benefits to the downtown business community (explained further below). Monthly Downtown/University Ave Stakeholder meetings are underway, and the BID is scheduled for the May 27th meeting. In addition, work continues on the feasibility analysis of an Assessment District for University Avenue Streetscape. This project and reinvigorating the BID are closely aligned. 2. Must the City define the BID spending before we collect BID fees? Staff response: Yes. The Parking and Business Improvement Area Law of 1989 (Streets & Hwy. Code, § 36500 et seq.) requires that the City Council appoint an advisory board, and that the board make a recommendation 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. After receiving the report, the City Council must adopt a resolution imposing the assessment, which, among other things, must “[g]enerally describe the proposed improvements and activities . . . and any substantial changes proposed to be made to the improvements and activities.” (Id., § 36534(a)(3).) The previous advisory board dissolved, and the City Council would need to take action to appoint a new one as an initial step in this process. The Council is responsible for reviewing and approving that report prior to collecting BID assessments. 3. If so, can we initiate BID fees during a fiscal year? Or must the fees begin at beginning of the Fiscal Year? Staff response: The ordinance establishing the BID requires that the City provide business owners within the BID with a written invoice for the assessment by July 10 Collection for BID assessments coincide with renewal of the business registry certificate (BRC) program, which is due annually by March 31st. Given the outreach, consensus building, coordination with the City’s administrator of this fee, and ultimately notifications involved, staff anticipates that initiation of BID assessments during the year is unlikely.