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SR-410-001 (6) ... I tjtIJr {l(}/ 9-A JDl j 5 1985 'I; ~.,.... C/ED:EDD:ERF:mb Council Meeting: July 15, 1986 Santa Monica, California TO: Mayor and City Council FROM: City staff SUBJECT: Adoption of a Resolution by the City Council Declaring Its Intention to Establish an Assessment District to Provide for the Levy and Collection of Assessments to Finance Improvements to the Third Street Mall and to Establish a Fee to Cover the Costs of Operations and Maintenance Within the District INTRODUCTION This staff report transmits a resolution declaring the city IS intention to establish an assessment district for the Third Street Mall to finance circulation, parking and public space im- provements, and to establish a maintenance fee for the area in order to provide for the cost of operations and maintenance. The report also transmits a report prepared by Katz, Hollis, Coren & Associates specifying the boundaries of the proposed district, the proposed method of assessment, and the annual levy to be charged against each property. It is staff's recommendation that the Council adopt the attached resolution and report. BACKGROUND On July 8, 1986, the city Council adopted an ordinance specifying q-Il JUt J 5 IJ'6 - 1 - or ir" "-11 ..... I- the powers and procedures for the formation of assessment dis- tricts and the levying of assessments for the purpose of financ- ing improvements in the city of Santa Monica. The primary pur- pose of the ordinance was to initiate proceedings by which the City could implement the financing program contained in the pro- posed Mall Specific Plan and take full advantage of existing tax exempt financing options available to the city which may be threatened after september 1st when more limiting legislative changes are scheduled to take effect. The Plan recommends the establishment of an assessment district to finance the proposed public improvements program. It also provides that the City establish mechanisms by which to fund im- proved and ongoing operation and maintenance expenses. These recommendations are the outcome of staff and consultant consider- ation of alternative financing options, meetings with area prop- erty owners, merchants, Third street Development Corporation (TSDC) Board members and staff, and open forums sponsored by the TSDC and Chamber of Commerce for affected groups. DISCUSSION Pursuant to the city's adopted procedural ordinance regarding the formation of assessment districts, the attached resolution states the City's intention to determine that the public convenience and necessi ty require improvements to be made in the area of the Third Street Mall. The accompanying report provides: (1) a general description and specifications of the work to be undertaken and improvements to - 2 - )- - -. be madei (2) an estimate of the cost of the improvementsi (3) a map indicating the boundaries of the assessment district, sub- zones within the district and, by reference, each parcel within the districti and (4) the proposed assessment for the cost and expense of the proposed improvements. The report also specifies the method for the assignment of the levy and the method of collection. Establishment of New Assessment District since 1965 the Mall and surrounding area (geographically bordered by First Court to Fourth Court, Broadway to Wilshire) have had their parking needs serviced by the Downtown Parking and Business Improvement District (DPBID). The District's parking facilities were financed through the issuance of lease revenue bonds by the City which are scheduled to be fully retired in 1992. The exist- ing District receives revenues from two sources. Existing prop- erty owners currently pay $0.56 per each $100 of assessed valua- tion of land and improvements. Area businesses also contribute based on a factor equal to five (5) times the City's Business License Tax for the area. Under the proposed financing program, the existing DPBID would be eliminated and the City, through the use of previously reserved capital funds for the Mall, would defease the existing bonds. A new district would be created with geographic boundaries coter- minous with the previous DPBID. The public improvements recom- mended in the Mall Specific Plan would be financed through a new annual levy to be charged each parcel based on the gross floor - 3 - .... ~. area of existing improvements and the degree of benefit assigned to that parcel from the improvements to be made. The current method of assessment, based on assessed valuation of a property, results in very uneven level of assessments for similar parcels. Under the proposed new assessment, calculated on gross floor area, the costs will be spread more equitably throughout the district. The attached report establishes three (3) sub-zones for the Dis- trict. The assigned levy is based on the annual cost associated with the financing of the improvements benefiting that sub-zone. As is the case in the existing DPBID, all parking improvements are assumed to benefit all parcels in the District equally I therefore their cost has been equally assigned to all zones in the new district. The same has been assumed for all traffic and circulation improvements to be constructed in the district. Mall and alley common area and associated public improvements costs have been been assigned only to those sub-zones that will direct- ly benefit from these improvements. The cost of the new assess- ments for each zone is as follows: Zone 1 (properties between the Mall and the alleys on either side): Zone 2 (East side of 2nd street and West side of 4th Street properties) : Zone 3 (West side of 2nd street and East side of 4th Street properties): $1. 0754 $.4077 $.3343 - 4 - ~ ' rs-r In most cases, these new assessments will be a reduction for properties located in Zones 2 and 3. Properties in Zone 1 (the Mall) will be realizing a substantial increase in their assess- ment rate commensurate with the far greater benefit they will receive through the improvements. The proposed assessment district provides a credit for those par- cels which provide parking for use by the public and for non- profit religious and educational institutions that do not use their facilities on a full-time or peak period basis. Any new development that provides for a net increase in square footage and parking demand will be required to pay an additional annual assessment equal $1. 50 per net increase in gross square footage. This amount will be used to finance additional parking and related improvements with the goal of maintaining adequate parking facilities to accommodate future growth in the area. The attached resolution also makes provisions for declaring the City's intention to adopt an ordinance to levy a fee for the op- eration and maintenance of the improvements. The fee would be levied against businesses in the District (rather than property owners who will be responsible for paying the assessment) and would be equal to five (5) times the City's Business License Tax. The City Council by resolution will be able to periodically ad- just the amount of the fee, not to exceed five (5) times the Business License Tax, to ensure that revenues from the fee do not exceed the cost of the operation and maintenance of the improvements. - 5 - '\ ~I Next steps The adoption of the Resolution of Intention by the Council will set in motion the procedure for pUblic noticing of the assessment district. On August 19, 1986, 30 days after the adoption of the resolution, the City Council will conduct a public hearing to hear from the affected property owners, businesses and the public regarding both the assessment district and the maintenance fee. Staff will also present to the Council on August 19 the necessary documents to permit the issuance of certificates of Participation to finance the public improvements prior to Septem- ber 1, 1986. FISCAL IMPACT The fiscal impact of the establishment of the assessment dis- trict, the maintenance and operations fee and the issuance of securities to finance improvements will be presented in the staff report presented to Council for the August 19, 1986 public hearing. RECOMMENDATION It is staff's recommendation that the City Council: 1. Adopt the attached Resolution of Intention; 2. Confirm and ratify the attached Third street Mall Assess- ment District Report; 3. File the Report with the city Clerk; and 4. Direct the City Clerk to cause notice of the passage of this resolution to be posted and mailed pursuant to the - 6 - "l . city I S adopted procedural ordinance for assessment districts. Prepared by: Peggy curran, Director Community & Economic Development Department Ernesto R. Flores, Manager Economic Development Division Attachments: 1. Resolution 2. Consultant's Report (Katz, Hollis, Coren & As- sociates, Ine.) resinmal - 7 - ". . . RESOLUTION NO. 7255(CCS) .... (Clty Councll Serles) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA, DECLARING ITS INTENTION TO ESTABLISH AN ASSESSMENT DISTRICT TO PROVIDE FOR THE LEVY AND COLLECTION OF ASSESSMENTS TO FINANCE IMPROVEMENTS TO THE THIRD STREET MALL AREA, AND DECLARING ITS INTENTION TO ADOPT AN ORDINANCE TO ESTABLISH A FEE FOR THE OPERATION, ~,INTENANCE AND REPAIR OF SUCH IMPROVEMENTS. WHEREAS, the Clty Councl1 of the Clty of Santa Monica proposes to partlclpate ln the acqulsltlon, construc- tlon and flnanclng of certaln Improvements relatlng to the Santa Monlca Thlrd Street Mall and perlpheral areai and WHEREAS, lt has been determlned by the Clty CouncIl that proceedlngs be commenced and conducted for the prellml- nary steps for the formatIon of an assessment dIstrIct and the leVYIng of assessments to flnance such lmprovements; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES RESOLVE AS FOLLOWS: SECTION 1. That thlS CIty CounCIl hereby declares Its lntentlon to establlsh an assessment dlstrlct. SECTION 2. That the "Thlrd Street Mall and Down- town Assessment DIstrIct Report" (the "Report") prepared by ... - ---- --'-- ~ Katz, Holl~s, Coren & Assoc~ates, Inc. ~n accordance w~th Procedural Ord~nance No 1377 of the C~ty adopted on July 8, 1986, ~s hereby conf~rmed and rat~fled and shall be f~led w~th the C~ty Clerk. ~ SECTION 3. That ~t ~s the ~ntent~on of the C~ty Counc~l to determ~ne that the pub1~c conven~ence and necess~- ty requ~re lmprovements to be made ln the area of the Th~rd Street Mall and per~pheral area. The proposed ~mprovement5 (the "Improvements") shall ~nclude, but not be 11m1ted to the ~tems set forth In Exhlblt A to the Report attached hereto. SECTION 4. That the boundar1es of the proposed assessment dlstrlct are descrlbed In Exh~blt B to the Report attached hereto. SECTION 5. That the dlstrlct to be beneflted by the 1mprovements be assessed to pay costs and expenses there- of and to be known as an assessment d~strlct, shall be all that part of the Clty of Santa Monlca, wlthln the proJect area havlng exterlor boundarles as shown on the assessment dlstrlct d1agram set forth ln Exhlblt B to the Report at- tached hereto. Reference 1S hereby made to the dlagram for a full and complete descr~ptlon of the assessment dlstrlct and the d~agram shall govern for all deta~ls as to the extent of the assessment dlstrlct. 2 ~ J .. " -II ~.., ... SECTION 6. That It is the intention of the City Council to adopt an ordinance (the "Ordinance") to levy an annual fee (the "Fee") for the operation, maintenance and repair of the Improvements. The Ordinance will provide: A. The Fee shall be equal to five times the annual Business License Tax established pursuant to Article VI of the Santa Honica Municipal Code on businesses within the district; B. The Fee shall be collected in the same manner, at the same time, and subject to the same penalties as the Business License Tax establIshed pursuant to Article VI of the Santa Monica Municipal Code; C. The City Council by Resolution may adjust the amount of the Fee on all or classes of businesses within the district to the extent necessary to assure that revenues from the Fee do not exceed the cost of operation, maintenance and repair of the Improveme~ts and to assure that the Fee reasonably relates to the benefits of the Improvements. D. In no event shall the amount of the Fee exceed the lesser of five times the annual Business License Tax or $15,000.00 adjusted annually by increases in the Consumer Price Index. SECTION 7. The City Council proposes to find and determlne that the public convenience and necessity require the Improvements. A public hearing for hearing protests and objections to the proposed Improvements and the Ordinance will be 3 .. / . . . ... held on Tuesday, August 19, 1986, in the City Council Chambers, 1685 Main St~eet, Santa Honica, California, at 7:30 p.m. The City Clerk shall cause all notices of the hearing to be posted and mailed as required by applicable law. When notice by publication is required) the City Clerk shall publish such notice in the Eveninq Outlook, a newspaper of general circulation published in the City of Santa Honica. After such hearing, if the City Council finds and determines that the public convenience and necessity require the Improvements, it may order the Improvements and adopt the Ordinance. SECTION 8. The City Clerk shall certify to the adoption of this Resolution, and thenceforth and thereafter the same shall be in full force and effect. APPROVED AS TO FORM: ~ ~. ~_. ROBERT H. HYERS 0 City Attorney .. 4 / . ' . ~ Adopted and approved this 15th day of July, 1986. rzLLk r ~ / ---.... May 0 r .----- I hereby certIfy that the foregoIng Resolution No. 7255(CCS) was duly adopted by the City Council of the City of Santa Monica at a meeting thereof held on July 15, 1986 by the followIng Council vote: Ayes: Councilmembers: Conn, EpsteIn, Jennings, A. Katz, Zane and Mayor Reed Noes: Councilmembers: None AbstaIn: Councilmembers: None Absent: Councilmembers: H. Katz ATTEST: ~1h.~ Clty Clerk ...