Report Prepared by: Frank Quintero, Deputy City Manager and Director of Economic Development
Title
SUBJECT: Public Hearing, Ballot Count, and Adoption of a Resolution Establishing the Formation for the Property Based Improvement District for Downtown Merced
REPORT IN BRIEF
A coalition of property and business owners proposed the creation of the Downtown Merced Property and Business Improvement District (PBID) as a benefit assessment district designed to enhance safety, maintenance, and beautification programs in Downtown Merced above and beyond those already provided by the City. On June 20, 2023, the City Council adopted a Resolution of Intent to form the PBID (Resolution 2023-53) after receiving a successful petition in support of forming a PBID.
The Council is being asked to conduct a public hearing to receive public input related to the PBID formation. Sealed ballots of property owners will be accepted by the City Clerk up until the close of the public hearing. At the close of the public hearing, the City Clerk's Office will open and count the ballots to determine if there is a majority protest.
RECOMMENDATION
Upon the conclusion of the public hearing, if the vote is successful to support 50% or more of the property owner assessments towards establishing a PBID,
City Council - Adopt a Motion:
A. Adopting Resolution 2023-65, a Resolution of the City Council of the City of Merced Forming the Downtown Merced Property Based Improvement District and Levying Assessments Starting with Fiscal Year 2023-2024 Pursuant to the Property and Business Improvement District Law of 1994; and,
B. Upon approval of Resolution 2023-65, Direct staff to return to Council with the dissolution of the Downtown Merced Business Improvement Area completed before December 31, 2023; and,
C. Upon approval of Resolution 2023-65, Direct staff to return to Council with the dissolution, modification, or re-configuration of the Downtown Maintenance District completed before December 31, 2023; and,
D. Upon approval of Resolution 2023-65, Direct staff to return to Council with the necessary Budget Adjustments for the City’s Contribution towards the PBID assessment completed before December 31, 2023; and,
E. Upon approval of Resolution 2023-65, Direct staff to return to Council to establish the Advisory Board of the PBID to facilitate the nomination and selection of the PBID Board of Directors.
Body
ALTERNATIVES
1. Approve as recommended by Staff; or,
2. Approve, subject to conditions as specified by the City Council; or,
3. Refer to staff for reconsideration of specific items as requested by the City Council; or,
4. Defer action until a specific date; or,
5. Deny the request.
AUTHORITY
Charter of the City of Merced, Section 200;
CITY COUNCIL PRIORITIES
City Goals & Priorities FY 22-23, Downtown a.1. - Continue with Property Based Improvement District (PBID) implementation; FY 2023-2024 Budget, Chapter 13, Special Districts, Downtown Fund, Objectives, (1.) Continue working towards the formation of a Property Based Improvement District and Tourism Business Improvement District.
BACKGROUND
State of California Property and Business Improvement District Law of 1994 and Article XlID of the California Constitution govern the creation of property-based business improvement districts. A coalition of Downtown Merced property and business owners acting as a steering committee led the effort to petition the City Council to initiate the ballot procedure necessary by law to officially establish a Property and Business
Improvement District for Downtown Merced. City staff are facilitating the implementation of this process on the steering committee's behalf and with information provided directly by the committee and the City’s consultant.
DISCUSSION
To initiate the process, the steering committee has complied with the required provisions of the Property and Business Improvement District Law of 1994. A Management District Plan (Attachment 2) has been prepared that includes the boundary map, a service plan, assessment methodology for benefit Zones, proposed
means of governance, and an Engineer's statement (Attachment 2 - Exhibit A.) The PBID encompasses approximately 28 blocks in the downtown central core (Attachment 3). Written petitions were distributed to property owners of record, along with a Management District Plan summary describing the district boundary, assessment, and services of the PBID.
The PBID consultant, Kristin Lowell & Associates, delivered the signed petitions to the City Clerk indicating support from more than 50% of the property owners, which is the threshold required by law to initiate a PBID assessment ballot process. On May 15, 2023, the City Council also authorized the City Manager to sign a petition in support of establishing the district and, upon receipt of the assessment ballot, to complete and sign the assessment ballot in favor of the Downtown Merced Property and Business Improvement District and the annual assessment against the parcel(s) as identified on the assessment ballot. In total, petitions in support of the district formation were submitted by 65 property owners, which represented over 50% of the total proposed assessment.
As determined by area property and business owners, the top priority for services and activities within the PBID will include:
• Public safety - safety patrols and stewardship ambassadors to serve as resource guides;
• Maintenance and Beautification - cleaning team and image enhancements;
• Economic Services - advocate on downtown policy issues, address the interests of property owners, and provide information and services to assist in recruitment and retention of tenants/businesses; and
• Administration - provide daily management to carry out PBID operations.
The goals of the PBID are to:
• Provide a welcoming and clean environment within the PBID that will attract private investment and more business and residential activity and to improve the assessed parcels.
• Improve commerce within the PBID by filling vacancies and to encourage reinvestment within the district.
Annual assessments are based upon an allocation of program costs and a calculation of lot square footage, first floor building square footage plus upper floor building square footage and linear footage for each of the respective three benefit zones. Benefit zone adjustments are made to reflect the anticipated service frequencies within each of the benefit zones. Single family owner-occupied residential property assessment rates are adjusted in accordance with their share of benefits received.
As provided by state law, the PBID assessment will appear as a separate line item on the annual Merced County property tax bill and be collected by the County on an annual basis from each assessed property owner and then forwarded to the City. The City shall forward the assessments to the PBID Owners' Association Board of Directors who will have the responsibility of managing PBID programs as provided in the Management District Plan. The City shall be paid a fee to cover its costs of collection and administration. The projected budget for the first year of operations for the PBID is $426,000, of which $417,480 will be funded by property assessments.
The PBID would be established for a five-year (5) term beginning January 1, 2024, through December 31, 2028. State law provides for the disestablishment of a PBID pursuant to an annual process. If the owners of real property who pay more than 50% of the assessments levied submit a written petition for disestablishment within 30-days of the anniversary date that the PBID was first established, the PBID may be dissolved by vote of the City Council after a public hearing on the proposed disestablishment is held.
PROCESS TO ESTABLISH THE DISTRICT
Resolution of Intention
Upon the submission of written petitions signed by the property owners in the proposed district who will pay more than 50% of the assessments to be levied, the City Council, on June 20, 2023, initiated proceedings to establish a district by the adoption of a resolution expressing its intention to establish a district.
Notice and Proposition 218 Ballot
The Property and Business Improvement District Law of 1994 and Article XIID of the California Constitution (Proposition 218) required the City mail written notice and assessment ballots to the owners of all property proposed to be assessed within the district. Mailing the notice and assessment ballot begins a mandatory forty- five (45) day period in which owners may cast ballots. By adoption of Resolution 2023-53, the City Council directed the City Clerk to initiate the notice and assessment ballot process.
Final Public Hearing (August 7, 2023)
The City Council shall hold a public hearing and receive public testimony. At the end of testimony, Council will close the public hearing and direct tabulation of assessment ballots submitted and not withdrawn to determine whether there is a majority protest against the assessment. A majority protest exists if the ballots in opposition to the proposed assessment exceed the ballots in support of the proposed assessment, weighted by the amount each property owner will pay. If there is no majority protest, Council may adopt a resolution declaring the results of the majority protest proceedings and establishing the PBID.
A notice was published in a newspaper of general circulation in the City of Merced announcing the Public Hearing set for August 7, 2023, not later than 10 days nor more than 25 days prior to the public hearing.
NOTICE AND PROPOSITION 218 BALLOT:
The PBID consultant, Kristin Lowell & Associates, provided the City Clerk's Office with copies of the ballots, assessment information, addresses and other information to facilitate the notice and balloting process. On June 23, 2023, the City Clerk mailed the ballots to the property owners of record listed in the information provided by the steering committee.
As the City was facilitating the ballot process on behalf of the steering committee, the City worked with the steering committee representatives and consultant Ms. Kristin Lowell, to address questions raised about the ballots, management plan, engineer’s report, assessment, and so on.
Ms. Lowell can speak to any questions regarding the process or concerns related to their efforts to establish the PBID as well as to questions related to the PBID Board of Directors makeup, development of the assessment calculations, and the documents submitted as part of the PBID process.
BALLOT COUNT
At the conclusion of the Public Hearing, the City Clerk's Office will lead a count of all ballots to determine whether a majority protest exists. Up until the closing of the hearing, the City Clerk will accept sealed ballots from property owners. Ballots which were delivered unsealed, were not provided on the official ballot, are inconsistent with the assessment rolls, or in any other way appear defective will be disqualified from the ballot count.
OTHER ACTIONS TO FOLLOW
Should the ballot count be in favor of establishing the Downtown Merced PBID and Council adopt the respective Resolution, the following subsequent actions will follow:
• Establish an advisory committee to oversee the election of the first governing committee.
• Dissolve the current Business Improvement Area (double business license tax.
• Modify, reconfigure, or dissolve the existing Downtown Maintenance District.
• Consider a budget adjustment to pay for the respective assessment for City of Merced owned properties within the PBID and adopt a level of Baseline Services to be provided by the City to the PBID.
IMPACT ON CITY RESOUCES
Financing is provided by the levy of assessments upon properties that benefit from improvements and services and has limited impact on the General Fund. There are 292 assessed parcels in the PBID service area. The total PBID assessment budget for the first year will be approximately $417,480.00. If the proposed PBID is established, the City will participate as property owners. City owned property will have a total first year annual assessment of approximately $63,082.74. Funding for the respective City-owned parcels will be supported by the City’s General Fund or appropriate account.
The City of Merced will be allocated an estimated $62,000 in assessments in the first full year. The removal of the Downtown Fund double business license will also remove the need for personnel to administer the fund. The General Fund will lose approximately $23,500 in cost recovery for personnel in the Economic Development Division and other administration. The elimination of the Downtown Maintenance District will reduce revenue which funds one full-time Park Worker. The position will need to be absorbed by the General Fund and/or the CFD. If it is determined no funding is available, the position will need to be eliminated.
COUNCIL DOWNTOWN SUBCOMMITTEE
The original Council Downtown Subcommittee consisted of Council Member Jill McCleod, Council Member Kevin Blake, and Council Member Matthew Serratto. The Subcommittee visited three downtowns located in the Cities of Modesto, Turlock, and Visalia. Each downtown was anchored by a PBID. Representatives from each City noted how the downtowns were thriving and revitalized through the PBID.
The Subcommittee recommended the formation of a PBID to the City Council which was passed.
ATTACHMENTS
1. Resolution 2023-65 to Establish the Downtown Merced PBID
2. Downtown Merced District Management Plan & Engineer’s Report
3. PBID Boundaries