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SR-213-008 (4) F:\RESOURCE\SHARE\GWENSH\STAFREPT\PicoBID1StRd3.WPD Council Meeting: March 28, 2000 Santa Monica, California TO: Mayor and City Council FROM: City Staff SUBJECT: Recommendation: 1) That the City Council Hold a Public Hearing and Introduce for First Reading an Ordinance to Establish the Pico Boulevard Business Improvement District and to Provide for the Levy of an Assessment Therein; and 2) That the City Manager be Authorized to Negotiate and Execute a Contract with the Santa Monica Chamber of Commerce to Administer the Funds Collected Through This Assessment. Introduction This report recommends that the City Council hold a public hearing and introduce for first reading the attached ordinance to establish the Pico Boulevard Business Improvement District and to provide for the levy of an assessment therein. It also recommends that the City Manager be authorized to negotiate and execute a contract with the Santa Monica Chamber of Commerce to administer the funds collected through this assessment. Background and Discussion According to a survey taken in 1999 during the Pico Streetscape Improvement Project, the Pico merchants and businesspeople have been struggling in recent years with stagnant growth and rising costs of doing business. Parking, one of the problems cited in the survey, became a critical issue during late 1999 with the pending formation of preferential parking zones proposed for neighborhoods immediately adjacent to the commercial area on the east end of Pico Boulevard. Similar situations already exist in other places along Pico Boulevard. Hence, after several months of discussion and organizing efforts among 1 the merchants and businesses of Pico Boulevard, on January 12, 2000, businesses of the newly-formed Pico Improvement Association voted to request that the City proceed with the establishment of a Pico Business Improvement District to allow Pico businesses to raise revenues for improving parking, other business related issues and the general promotion of business on Pico Boulevard. The proposed a formula for the annual assessment was as follows: For retail, hotels and motels, a sliding scale equivalent to the business license fee up to an annual maximum of $1,000; and for non-retail, a fixed fee of $100 per year. For auto-related retail, service stations, and repair shops, the annual fee would be the equivalent of the business license fee, but with a maximum of $500 per year. The minimum for all business license holders would be $100 per year. On February 22, 2000, the City Council approved Resolution No. 9488, which declared its intention to establish the Pico Boulevard Business Improvement District (BID), and set a public hearing for first reading of the proposed ordinance on March 28, 2000. Similar parking and business improvement areas have been operating for a number of years on Main Street, Montana Avenue, and in the Bayside District. The Santa Monica Chamber of Commerce administers the funds received for the Main Street and Montana business improvement areas, and provides administrative support, bookkeeping, liability insurance, payroll reporting service, and other functions necessary to administer these districts, and has assisted in the formation of the Pico BID. 2 Ordinance 1606 (CCS), which authorizes the City to impose assessments on businesses within a parking and business improvement area and establishes the requirements and procedures for establishing or amending such BIDs, requires that notices be mailed and published regarding the resolution of intent and a public hearing be held. Staff has prepared and mailed notices regarding this public hearing to affected Business License Holders within the area of the proposed Pico Boulevard BID and published the Resolution of Intent No. 9488 (CCS) more than ten days in advance as required by Ordinance No. 1606 (CCS). No formal protests to the proposed BID have been received by the City Clerk as of March 17, 2000, and only one has been received by the Santa Monica Chamber of Commerce. Questions have been raised regarding how to best assist those businesses which are new or grossing less than $20,000 income. Staff has considered this issue and researched the impact of changing the fees for these small and low revenue-producing business license holders, and recommends the following: that business license holders pay half the proposed minimum, or $50.00 per year if they are new or grossed less than $20,000 during the year for which their business license renewal fee is calculated. This is a reduction in fee from that published in the Public Notice and Resolution No. 9488 (CCS). This change from the fees published in the Resolution of Intent would reduce the funds collected from approximately $80,000 per year to approximately $74,500 per year. The City would retain 5% to cover the costs of administration, before forwarding to the 3 administering organization. The Santa Monica Chamber of Commerce, which administers similar districts on Montana Avenue and Main Street, customarily retains an additional 10% to cover the costs of administration, support, and liability insurance, etc. The proposed change in formula would reduce the net funds available for the Pico BID from approximately $68,400 to approximately $63,700 after deductions by the City and the Chamber of Commerce. This amount will increase as the Pico area becomes more profitable. BUDGET/FINANCIAL IMPACT The revised business improvement district fees from Pico Boulevard merchants and property owners are projected to be approximately $74,500 per year under this recommendation. This figure will be included in the FY 2000/01 budget. The 5% retention by the City would be approximately $3,725. Staff calculates this amount would be sufficient to cover administrative costs associated with printing, postage, and billing. There would be no other financial/budgetary impacts. RECOMMENDATION City staff recommends that the City Council introduce for first reading the attached ordinance to establish the Pico Boulevard Business Improvement District Assessment and to provide for the levy of an assessment therein. City staff also recommends that the City Manager be authorized to negotiate and execute a contract with the Santa Monica Chamber of Commerce to administer the funds collected through this assessment. 4 Prepared by: Jeff Mathieu, Director, Resource Management Department Mark Richter, Economic Development Division Manager Gwen Pentecost, Sr. Admin. Analyst, Economic Development Div. Attachment: Ordinance 5