HomeMy WebLinkAboutED BID Annual Levy Assessment 2014( Agenda Item No: 3. g
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Meeting Date: October 6, 2014
SAN RAFAEL CITY COUNCIL AGENDA REPORT
Department: Economic Development
Prepared by: Tom Adams, ED Specialist City Manager Approval;l ifwk6.
SUBJECT: Resolution of the San Rafael City Council Declaring Council's
Intention to Levy an Annual Assessment for the Downtown San Rafael Business
Improvement District and to Amend Municipal Code Chapter 10.09
RECOMMENDATION: Adopt Resolution.
BACKGROUND: Section 36500 of the California Streets and Highways Code allows for the
creation of a business improvement district within a municipality whereby businesses within the
district self -assess themselves an annual fee in order to pay for improvements and activities
which benefit the overall business district. The intent of the state law is to provide a funding
mechanism for business districts to promote economic vitality and provide additional services
beyond those offered by local government.
Businesses within the San Rafael downtown initially set up a business district in 1979 — this
original district included approximately 125 businesses along Fourth Street between Lincoln and
E Street. In 2013, the City Council voted to disband the original downtown district and replace it
with a larger district of approximately 700 businesses along Fourth Street — the expanded district
includes the West End and some side streets, as well as non -ground floor tenants, and other
tenants not included in in original BID (see Exhibit A for BID Map).
The assessments for the new BID were mailed in December 2013 and the new BID organization
began operations in 2014. The new BID has been very active in numerous programs to improve
the downtown business climate. In its first year, the BID has focused on the following areas:
building the BID organization and working with its membership, increasing the effectiveness of
marketing and events, promoting economic development, and working with the City to address
various issues related to parking, safety, cleanliness, and social issues (see Exhibit B for BID
Annual Report).
At the 2013 City Council meetings to establish the new assessment district, a wide variety of
comments were received from the public. In particular, several speakers questioned the fairness
of the assessment formula for the smaller businesses with the highest assessment fees. The
primary issue raised was whether these businesses have the financial capacity to absorb the
FOR CITY CLERK ONLY
File No.. .2.2
Council Meeting:
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SAN RAFAEL CITY COUNCIL AGENDA REPORT 1 Page: 2
assessment fees. As part of the creation of the new BID, City Council requested that the BID
review the overall fairness of the assessment fee structure and provide recommendations for the
2015 year assessments. In addition, over the past year, there have been some questions and
complaints from BID members about the clarity of the assessment classifications and the equity
of the assessment fee structure.
In response to City Council's request for a `fairness review', the BID set up an assessment
committee to review the current assessment fee structure and make recommendations to the BID
Board on ways to make the fees more equitable for all members. The assessment committee
reviewed a variety of ways to change the assessment formulas (it should also be noted that since
the BID assessment fee is collected with the business license fee there are administrative
constraints on how to structure the assessments based upon the information available to the
City's Finance department through the annual business license renewal program). There was not
consensus among the assessment committee for a preferred assessment formula. While several
members felt that an entirely new assessment fee structure was warranted, others felt that
instituting a completely new fee structure would require extensive outreach and consensus
building and that the fundamental structure of the current assessment structure is sound and
similar to many other business districts throughout the state. While there were some differences
of opinion on the overall fee structure, the committee members all agreed that the BID should
proceed with changes to the assessment formula to lessen the impact on some of the smallest
businesses.
At the September 5, 2014 monthly Board meeting, the BID Board reviewed and discussed the
recommendations of the assessment committee and potential changes to the assessment fees for
the upcoming 2015 calendar year. In general, the BID felt that changes were needed to respond
to concerns raised during the 2013 public hearings and to address some of the overall `fairness'
issues raised by the BID membership (see Exhibit C for current 2014 assessment formula and
proposed 2015 assessment formula). The BID Board unanimously approved the following
recommended changes:
Summary of the Recommended BID Assessment Fee Structure Changes:
Assessment Category
# Businesses
(a ox.)
Proposed Action
Total Impact
Personal Service Sole Practitioners
50
Reduce fee b $25
$1,250
Financial Institutions /Banks
16
Increase fee b $200
$3,200
Retail, Restaurant, Personal Services - less
than $100000 gross receipts(Premium)
40
Reduce fee by $50
($2,000)
Retail, Restaurant, Personal Services - less
than $100,000 gross receipts Standard
40
Reduce fee by $25
($1,000)
Total BID Businesses with Fee Changes
146
Total Net Impact
($1,050)
As shown in the table above, a total of approximately 130 businesses will receive a reduction in
the assessment fee while 16 businesses (banks) will have their assessments increased. The
recommended changes to the BID assessment fee structure will result in an approximate
reduction in BID revenues of $1,050. Explanations for each of the proposed changes follow
along with some additional recommended changes to cleanup category definitions:
SAN RAFAEL CITY COUNCIL AGENDA REPORT 1 Page: 3
1. Reduce the assessment fee for `Personal Service Sole Practitioner' (mainly stylists in
salons) by $25. The assessment fee for these individuals would be reduced from $75 to
$50 for the premium area and $50 to $25 for the standard area.
Change #1 Rationale: The BID believes that since stylists typically rent their chair and may not
be onsite full time, they deserve a smaller fee. In addition, the salons pay their own annual
assessment fee in addition to those paid by the sole practitioners so there is an equity issue for
each salon location as well.
2. Reduce the assessment fee for those businesses in the `Retail, Restaurant, Personal
Services on the Ground Floor' category with gross receipts of less than $100,000
(currently paying $80 or less in business license fee) by $50 for businesses in the
premium area. The assessment fee for these businesses would be reduced from $225 to
$175.
Change #2 Rationale: The BID believes that those smallest businesses in the highest fee
categories deserve a reduction in their annual fee.
3. Reduce the assessment fee for those businesses in the `Retail, Restaurant, Personal
Services on the Ground Floor' category with gross receipts of less than $100,000
(currently paying $$0 or less in business license fee) by $25 for businesses in the
standard area. The assessment fee for these businesses would be reduced from $175 to
$150.
Change #3_ Rationale: The BID believes that those smallest businesses in the highest fee
categories deserve a reduction in their annual fee.
4. Increase the assessment fee for `Financial Institutions' (i.e. banks) by $200 for both the
standard and premium areas, such that the fee for the premium area will increase from
$225 to $425 and the fee for the standard area will increase from $175 to $375.
Change #4 Rationale: The BID believes that banks benefit the most from a stronger downtown
business district as stronger businesses within the district will translate to more revenues for the
banks. In addition, the higher fee for banks is consistent with the practices of other nearby BID's
such as Novato and Petaluma which both charge a $500 flat rate for banks.
5. Make some cleanup changes to various definitions and other language within the BID
ordinance to clarify the assessment fee classifications and make adjustments to better
reflect the intention of the assessment. The primary clean changes are: a single person
with multiple business licenses at the same address will be charged only one assessment
fee, retail business on the second floor (with primarily internet sales) will be treated as an
office tenant, and several of the definitions such as 'Financial Institutions' will be further
defined to more clearly indicate the businesses covered.
Change #5 Rationale: The BID believes that the assessment fee should reflect the approximate
value of the business district to business based primarily on the geographic location of the
business — those businesses located on the second floor or with multiple business licenses should
pay according to the classification of the business and the location of the business per the spirit
and intent of the assessment fee structure.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Pane: 4
6. At the request of the Finance Department, the BID will no longer charge pro rata fees for
new businesses or issue refunds for businesses that leave the BID before the end of the
year.
Change #6 Rationale: The Finance Department spends significant time and expense working
with businesses to help them understand and comply with the business license fee requirements,
as well as the BID assessment fee. Over the past year of the new BID, one particular area of
confusion among businesses, and Finance Department administrative difficulty, pertains to the
calculation and processing of BID pro -rata fees and refunds. Eliminating these elements from the
BID assessment fee structure will simplify the process for businesses as they join or leave the
BID and it will greatly reduce the administrative overhead associated with collecting the BID
assessments. These changes will not have a significant impact on the net revenues generated for
the BID organization.
Proposed 2014 Annual Renewal Process
Per state law, in order to renew the annual assessment, the City Council must first adopt a
`Resolution of Intention to Levy an Annual Assessment' and set a public hearing for a future
date. Since the BID proposes to increase the assessment for some of its members, state law
requires an additional third public meeting to receive public testimony on the proposed changes
to the assessment formula. Thus, the annual renewal process for the BID assessment will take
place at three city council meeting as follows:
Meeting #1- October 6.2014: Resolution of Intention to Levy an Annual Assessment.
This meeting is mainly intended to notify the public of the process. The only action
required is to accept the BID annual report and adopt the resolution of intention to levy an annual
assessment. These actions do not commit the City Council to any ultimate decision other than
initiating the annual renewal process.
Meeting #2 - November 3.2014: Public Meeting on Annual Assessment
This meeting is intended to receive input from the public on the proposed annual
assessment. No action required.
Meeting #3 - December 1.2014: Public Hearing on Annual Assessment
This meeting is intended to receive additional input from the public on the annual
assessment for the BID and to confirm the levy of an assessment for the upcoming year.
Public Notification Process
The BID will take the initiative to notify its members of the annual renewal through its member
communications such as the BID e -newsletter, notifications on the BID website, and through
agenda items at the monthly BID Board meeting. In addition, state law requires a certain level of
public notification of the annual assessment. Per state law, the City will publish the Resolution of
Intention to Levy an Annual Assessment in the newspaper prior to the public meeting and public
hearing. Lastly, per state law, notice of the public hearing and a complete copy of the resolution
of intention will be mailed to each business which will have an increased fee (`Financial
Institution'/banks).
SAN RAFAEL CITY COUNCIL AGENDA REPORT 1 Page: 5
FISCAL IMPACT: Adoption of the resolution does not have a direct impact on the City other
than some ongoing staff time related to assessment billing and processing and administration of
the annual renewal. To the extent that the BID activities enhance the business climate within the
district, this will generate increased sales tax revenue for the City.
OPTIONS:
1) Adopt the Resolution.
2) Direct Staff to Modify the Resolution
3) Refuse to Adopt the Resolution.
ACTION REQUIRED: Adopt Resolution.
ATTACHMENTS:
Exhibit A: BID Map
Exhibit B: 2014 BID Annual Report and Cover Letter, 2014 Board of Directors, and Proposed
2015 BID Budget
Exhibit C: BID Assessment Formula (Current and Proposed)
RESOLUTION NO. 13816
RESOLUTION OF THE SAN RAFAEL CITY COUNCIL DECLARING COUNCIL'S
INTENTION TO LEVY AN ANNUAL ASSESSMENT FOR THE DOWNTOWN SAN
RAFAEL BUSINESS IIVVIPROVEMENT DISTRICT AND AMEND SAN RAFAEL
MUNICIPAL CODE CHAPTER 10.09
WHEREAS, the California Streets and Highways Code Section 36500 et seq. authorizes
cities to establish parking and business improvement areas for the purpose of promoting
economic revitalization and physical maintenance of business districts in order to create jobs,
attract new businesses and prevent erosion of business districts; and
WHEREAS, the Downtown San Rafael Business Improvement District was established
in 2013 to amend the existing Parking and Business Improvements Area instituted in 1979 in the
commercial area on and around the Fourth Street corridor in San Rafael.
WHEREAS, pursuant to San Rafael Municipal Code Chapter 10.09 and the California
Streets and Highways Code Section 36533, the Board of Directors of the Business Improvement
District shall prepare an annual report for each calendar year in which assessments are to be
levied which the City Council shall review.
NOW THEREFORE BE IT RESOLVED by the City Council of the City of San Rafael as
follows:
Section 1. The City Council intends to levy an annual benefit assessment on businesses
in the BID, except where funds are otherwise available, to pay for selected improvements and
activities of the BID.
Section 2. The City Council does, at the request of the existing San Rafael Business
Improvement District, and pursuant to the California Streets and Highways Code Section 36500
et. seq., declare its intention to amend San Rafael Municipal Code Chapter 10.09 "Downtown
San Rafael Business Improvement District" (the "BID"); revising the `Definitions' section
(10.09.020) and revising the `Calculation of Assessment' section (10.09.050); including all
businesses except residential uses and home occupations in the District.
Section 3. The boundaries of the entire area to be included in the BID, and the
boundaries of each separate benefit zone within the BID, are set forth in the map and boundary
description, Exhibit A, attached hereto and incorporated herein by reference. A map of the BID
is on file with the City Clerk.
Section 4. The types of improvements and activities proposed to be funded by the levy of
assessments on businesses in the BID are in Exhibit B attached hereto and incorporated herein by
reference.
Section 5. The method and the basis for levying the benefit assessment on businesses
within the BID are set forth in Exhibit C attached hereto and incorporated herein by reference.
Section 6. All funds of the BID shall be expended on improvements and activities within
the BID.
Section 7. New businesses shall not be exempt from payment of the fee.
Section 8. A public meeting for the purpose of allowing public testimony on the proposal
to amend the BID shall be held before the City Council on November 3, 2014, at 7 p.m. in the
Council Chambers, 1400 Fifth Avenue, San Rafael, California. At the public meeting the
testimony of all interested persons, for or against the amendment of the BID or of any of the
matters included in the amendment, will be heard.
Section 9. A public hearing to amend the BID shall be held before the City Council on
the December 1, 2014, at 7 p.m. in the Council Chambers, 1400 Fifth Avenue, San Rafael,
California. At the public hearing the testimony of all interested persons, for or against the
amendment of the BID or of any of the matters included in the amendment, will be heard and all
protest collected.
Section 10. A protest against the assessment of the BID, or any aspect of the assessment
may be made orally or in writing. To be counted as a part of a majority protest against the
assessment of the BID, a protest must be in writing and from a business in the BID. A written
protest may be withdrawn from record at any time before the conclusion of the public hearing.
Each written protest shall contain a written description of the business in which the person
signing the protest is interested, sufficient to identify the business, and its address. If the person
signing the protest is not shown on the official records of the City of San Rafael as the owner of
the business, then the protest shall contain or be accompanied by written evidence that the person
is the owner of the business. Any written protest as to the regularity or sufficiency of the
proceedings shall be in writing and clearly state the irregularity or defect to which objection is
made.
Section 11. If at the conclusion of the public hearing there are of record written protests
by business owners within the BID that will pay fifty percent (50%) or more of the total
assessments of the entire BID, no further proceedings to amend the BID shall occur. New
proceedings to amend the BID shall not be undertaken again for a period of at least one year
from the date of the finding of the majority written protest by the City Council. If the majority
written protest is against a specific activity, inclusion of a specific area or type of business, or a
specific assessment amount, adjustments may be made to the amendment proposal.
Section 12. Further information regarding the Downtown San Rafael Business
Improvement District may be obtained from the Office of Economic Development at 1313 Fifth
Avenue, San Rafael, CA 94901.
Section 13. The City Clerk is directed to give notice of said public hearing by publishing
the notice once a week for three weeks in a newspaper of general circulation in the City of San
Rafael, at least seven days before the hearing; and by mailing a complete copy of this Resolution
of Intention to those interested parties who have filed a written request with the local agency for
mailed notice of public meetings or hearings on new or increased general taxes.
I, ESTHER C. BEMNE, Clerk of the City of San Rafael, hereby certify that the
foregoing Resolution was duly and regularly introduced and adopted at a regular meeting of the
City Council of the City of San Rafael, held on Monday, the 6th day of October, 2014, by the
following vote, to wit:
AYES: Councilmembers:
NOES: Councilmembers:
ABSENT: Councilmembers:
Bushey, Colin, Connolly, McCullough & Mayor Phillips
None
None
. �tzm-e
ESTHER C. BEIRNE, City Clerk