Report Prepared by: Frank Quintero, Deputy City Manager and Director of Economic Development
Title
SUBJECT: Adoption of a Resolution Initiating the Formation Proceeding for the Property Based Improvement District for Downtown Merced
REPORT IN BRIEF
Developed by a coalition of property and business owners, the Downtown Merced Property Based Improvement District is a proposed benefit assessment district designed to enhance safety, maintenance, and beautification programs in Downtown Merced above and beyond those already provided by the City. Petitions signed by property owners representing greater than 50% of the district budget must be received by the City prior to initiating a ballot procedure to officially establish the Property and Business Improvement District for Downtown Merced. The Council is being asked to adopt a resolution of intent to establish the district.
RECOMMENDATION
City Council - Adopt a motion approving Resolution 2023-53, a Resolution of Intention of the City Council of the City of Merced, California, Initiating Formation Proceedings for the Business Improvements District for Downtown Merced.
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 Council Goals & Priorities FY 2023-2024, Downtown (a) (1) Continue with the - Property Based Improvement District (PBID) implementation
City of Merced 2022-2023 Adopted Budget, Section 10, Special Assessment Funds, Downtown Fund - Objective (1.) “Continue working towards the formation of a Property Based Improvement District.
DISCUSSION
The property and business owners with Downtown Merced (Central Business District) have proposed to establish the Downtown Property Based Improvement District (PBID) for a five-year term. The proposed PBID will serve the public interest by providing a level of safety, maintenance, and economic development services above and beyond what the City currently provides. The proposed services include safety and maintenance activities which include daily patrol of street ambassadors, street beautification projects, trash abatement, and graffiti removal. Also, place-making services will provide marketing, outreach and other activities to convey a positive image and attract new business to Downtown Merced. The proposed services and activities are intended to revitalize the Central Business District.
Approval of the Resolution of Intention to establish the PBID (Attachment 1) will set the time and place for the Public Hearing on the formation of the District and the proposed assessment and authorize staff to mail notices to all property owners within the District.
The proceedings under which the PBID is proposed to be established are set forth in Sections 36600 of the California Streets and Highways Code, entitled “Property and Business Improvement District Law of 1994.”
PBID Location: The PBID is approximately 25 square blocks of the downtown area. It is roughly bounded by 16th Street to the South, R Street to the west, 18th and 19th Streets to the north, and G Street to the east. The PBID is allocated into three benefit zones to reflect the level of service and special benefits each parcel will receive (Attachment 2.)
Background
Upon the recommendation of a prior City Council Downtown Subcommittee, the City Council identified forming a Property Based Improvement District (PBID) in Downtown Merced as part of their Fiscal Year 2020-2021 Goals and Priorities. Subsequently, a consultant was hired to assist staff and the PBID Steering Committee through the process.
The consultant with support from the PBID Steering Committee hosted a series of in- person workshops and information sessions with the property owners, business owners, and the public. It should be noted that the PBID Steering Committee was composed of volunteers who were property owners, business owners, or individual who had an interest in betterment of Downtown Merced.
PBID Considerations
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 1 - Exhibit A) has been prepared that includes the boundary map, a service plan, assessment methodology for three benefit zones, proposed means of governance, and an Engineer's statement.
Petitions signed by property owners representing greater than 50% of the district assessment budget must be received by the City prior to initiating a ballot procedure to officially establish the Property Based Improvement District for Downtown Merced. 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. Property owners delivered the signed petitions that had been executed to the consultant. Petitions in support of the district formation have been submitted by 65 property owners represent 50.21% of the total proposed assessment.
Annual assessments are based upon an allocation of program costs and a calculation of lot square footage, 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.
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 projected budget for the first year of operations for the PBID is $426,000, of which $417,480 will be funded by property assessments.
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 may initiate proceedings to establish a district by the adoption of a resolution expressing its intention to establish a district.
• Notice and Proposition 218 Ballot (By or before June 23, 2023)
The Property and Business Improvement District Law of 1994 and Article XIID of the California Constitution (Proposition 218) require 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 the resolution the City Council is directing the City Clerk to initiate the notice and assessment ballot process.
• Final Public Hearing (On August 7, 2023)
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 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 will be 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.
PBID Questions and Answers
The excerpt below is from a previous staff presentation to Council:
What is PBID?
The PBID or Property Based Improvement District is a special district where property is assessed to fund specific downtown improvements and services in addition to those provided by the City Merced. The PBID is self-imposed by a majority of property owners who must sign petitions and mark ballots to form the district. A governing board of property owners will oversee the budget and management plan.
What services will the PBID provide?
The PBID management plan may focus on cleaning services, public safety, promotional, event, community signs, and image enhancement programs above and beyond those already provided by the local community. PBIDs may also provide for clean teams to sweep and scrub sidewalks, remove litter and graffiti and increase frequency of trash removal. A common use of PBID is for information and safety ambassadors help to serve as information liaisons by welcoming and providing information to Downtown guests and provide information about downtown activities and establishments. Image enhancement programs are capital improvement/ maintenance projects such as flowerpots, improved lighting, directional way-finding signs and street furniture. All these enhancements are aimed at improving the quality of downtown experience, increasing civic and economic activity and driving business and property values.
I already pay taxes. Why support a PBID?
We often hear that downtown is not as clean as it should be, nor is it as safe as it used to be. Supporting a PBID will help make downtown sparkle and feel safer and friendlier. This will bring more people back to Downtown more often. This in turn will leverage existing and new investment in businesses, restaurants, stores, etc. In addition, PBID budget decisions are made by a board of property owners, which ensures private- sector control and accountability for these enhanced service.
Who will manage the PBID?
To keep administrative costs lower and leverage existing competencies, an independent community-based organization will be formed, or existing organization selected to be responsible for day-to-day operations. The managing organization will report to business and property owners.
Is this PBID unique to Merced?
No. More than 1,000 PBIDS exist throughout North America. In California, more than 100 PBIDs have been established since 1995. These are viewed as an effective tool in helping business districts compete and dramatically improving downtown environments.
Will the city reduce its existing services?
No. Should a PBID be formed, an agreement with the city and the management team will be executed ensuring baseline levels and frequencies of cleaning and maintenance services.
How much will it cost?
Assessments may be calculated based on the square footage of the lot, square footage of the building, and the number of linear street frontage within the three benefit zones. A consultant was hired to determine method of assessment and level of benefit.
What is the process for forming the PBID?
By state law, the PBID has a five-year life. Any subsequent renewal of the district would require a new management plan, petition, and mail-ballot process.
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.
ATTACHMENTS
1. Resolution 2023-53
2. PBID Location Map