SR 03-06-2018 3G
City Council
Report
City Council Meeting: March 6, 2018
Agenda Item: 3.G
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To: Mayor and City Council
From: Andy Agle, Director, Housing and Economic Development
Subject: Renewal of Downtown Property-Based Assessment District
Recommended Action
Staff recommends that the City Council:
1) Authorize the City Manager to cast its ballots on behalf of City-owned properties
in support of continuing the Downtown Property-Based Assessment District for
an additional 10-year term; and
2) Authorize the City Manager to negotiate and execute the renewal of the
Amended and Reinstated Services Agreement with Downtown Santa Monica Inc.
for an additional 10-year term.
Executive Summary
The establishment of the Downtown Property-Based Assessment District (PBAD) has
played a significant role in the success of Santa Monica’s Downtown. DTSM, which
derives part of its revenue from the PBAD, provides enhanced maintenance, security,
marketing and management that significantly improves the attractiveness of Santa
Monica’s historic Downtown as a place to live, work, shop, dine and visit. In 2008, a
majority vote by Downtown property owners favored the formation of a PBAD for a 20 -
year term, subject to the property owners reaffirming the value and utility of the district
with a 10-year affirmative vote. Council is asked to authorize the City Manager to vote
the City’s ballots for City-owned properties in favor of continuing the Downtown PBAD
for an additional 10-year period. Staff also recommends that Council authorize the City
Manager to negotiate and execute a Fourth Amendment to Amended and Restated
Services Agreement No. 9063 (CCS) with Downtown Santa Monica, Inc. (DTSM) to
renew the agreement for an additional 10-year term and modify any other related terms
and conditions. Total City assessments are budgeted to be approximately $406,070
annually with increases of up to five percent per year.
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Background
On March 25, 2008, Council approved a Downtown Management Plan (Management
Plan) which was the basis for an assessment engineer’s report (Engineer’s Report)
setting forth the mechanism for assessing property owners to raise funds
(Attachment A). On July 24, 2008, after a majority vote in favor of the proposed
assessment, Council adopted Resolution 10336 (CCS), which established the
Downtown Property-Based Assessment District (PBAD) and authorized the levy and
placement of assessments on property tax rolls for properties within the district
(Attachment B). Assessment funds are used to provide enhanced services and activities
within the PBAD, such as maintenance and ambassadors, which are in addition to the
baseline services provided by the City. The authorizing documents approved by Council
outline the district boundaries, services, budget, cost, formation, and duration. A 20 -year
district term was established subject to a 10-year majority vote by the property owners
affirming the continuation of existing services.
The City entered into a services agreement (Services Agreement) with Downtown Santa
Monica, Inc. (DTSM) to define roles and responsibilities between the City and DTSM,
and to delineate the collection and disbursement of assessment fees generated from
the Downtown PBAD. The Services Agreement provides that the 10-year initial term of
the agreement may be renewed for an additional 10-year period upon a majority vote in
favor of extending the Downtown PBAD and Council approval.
The Downtown PBAD generally encompasses the core of the downtown area bounded
roughly by Ocean Avenue to the west, 7th Street to the east, the Santa Monica Freeway
to the south, and Wilshire Boulevard to the north. Properties within the boundaries are
assessed based on the lot or building square footage (whichever is greater), the
property’s location within one of four benefit zones, and the type of use/ownership
(commercial, residential, governmental, and non-profit). The Downtown PBAD as
originally established in 2008 was comprised of three benefit zones. In 2015, a fourth
benefit zone was established through the Colorado Avenue Overlay Zone , which runs
until 2028, coinciding with the end of the Downtown PBAD term. The Downtown PBAD
is separate from the Lincoln Boulevard Property-Based Assessment District (Lincoln
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PBAD), which was also formed in 2015 and also runs until 2028.
DTSM, a 501(c) (3) non-profit organization, is under contract with the City to administer
the assessment funds and manage a variety of programs, services, and operations to
support economic stability and community life in Santa Monica’s Downtown. DTSM
provides hospitality and maintenance services, programs a year-round calendar of
community events including a popular seasonal ice rink, and promotes Downtown as a
vibrant shopping, dining, and entertainment destination. DTSM is governed by a 13 -
member Board of Directors with six members appointed by the City Council, six elected
by property owners, and one appointed by the City Manager.
Since formation of the Downtown PBAD, DTSM has funded programs that have
improved the area and attracted residents, businesses, and visitors alike. Notable
services include a maintenance program, which provides staffing 24 hours per day,
7 days per week, a hospitality ambassador program, and enhanced marketing efforts
and special events that help to promote the district. Attachment C produced by DTSM
provides an overview of data demonstrating the measurable impacts of their oper ations,
which have benefited Downtown and Santa Monica generally.
Discussion
Downtown property owners are being asked to consider only the continuation of district
services under the existing Management Plan and Engineer’s Report. An assessment
ballot initiative managed by the City is not required since there are no modifications to
the district’s boundaries, assessment rate structure, governance, or other terms.
The purpose of the 10-year vote is for the district’s property owners to affirm the
services and assessments to be provided for the second 10 -year term.
DTSM is administratively conducting the affirmative vote and is responsible for
distributing and collecting the ballots, with the DTSM Board of Directors responsible for
certifying the results. DTSM has retained Kristen Lowell Inc. (KLI), who was the
consulting engineer on the Downtown PBAD’s formation, to advise on conducting the
vote and to provide independent verification in tabulating the ballots and presenting the
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official results. Under KLI’s guidance, DTSM will follow the same internal balloting
process used to elect property owner representatives to their board.
On February 15, 2018, DTSM mailed ballots and informational materials to property
owners within the Downtown PBAD boundaries. Ballots are due on March 20, 2018, and
the results will be tabulated by KLI and presented to DTSM’s Board of Directors at its
March 22, 2018 meeting. In conjunction with the vote, DTSM proactively outreached to
property owners and is holding office hours when ballots can be returned or concerns
can be addressed directly. Property owners receive one vote for each assessment
dollar paid, with ballots weighted in accordance with FY 2017-18 assessments. For the
district to continue, the majority of ballots returned, as weighted by assessments, must
be in favor of continuing the Downtown PBAD for another 10 years.
City’s Ballots
Council is asked to authorize the City Manager to cast ballots on behalf of several City-
owned properties located within the boundaries of the Downtown PBAD. There are 31
City-owned parcels within the district that represent approximately 9.35 percent of the
assessment vote. City properties mainly include the public parking structures and
surface lots, the 4th/5th Street and Arizona Avenue site, the Santa Monica Main Library,
and property adjacent to the Expo terminus station, as well as other properties listed on
Attachment D.
Next Steps
If the Downtown PBAD property owners affirm the district’s 10 -year extension, staff
recommends Council authorize the City Manager to negotiate and execute a Fourth
Modification to the Services Agreement with DTSM to renew the term for an additional
10 years and modify any other required terms and conditions. However, if the majority
of votes do not support the Downtown PBAD continuation, then programs such as
enhanced maintenance and ambassador services would not be able to continue after
May 2019 with the termination of the assessment funding and the end of the Services
Agreement term.
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Any subsequent renewal of the district would require a new management plan,
engineer’s report, and ballot process, as would any new or increased assessments that
are not consistent with the provisions of the adopted Management Plan. The duration of
the Downtown PBAD 20-year term limit coincides with the expiration of the Colorado
Overlay and the Lincoln PBAD in 2028. At that time, the City and DTSM could initiate
proceedings to form a new PBAD that combines the Downtown PBAD and the Lincoln
PBAD into a single assessment district that would serve Santa Monica’s Downtown.
Financial Impacts & Budget Actions
Should the Downtown property owners vote in favor of continuing the Downtown PBAD,
the City would continue to pay property assessments for City-owned properties for an
additional 10 years. In FY 2017-18, DTSM received $4,343,973 in property
assessments within the Downtown PBAD. Of that, assessments for City -owned
properties totaled approximately $406,070, which represents 9.35 percent of Downtown
PBAD assessment funds. City assessments are funded from Housing and Economic
Development Account 01274.577840 - Assessments for City-owned Property. To keep
pace with the consumer price index and program costs, annual assessments may be
increased up to five percent, subject to annual review and approval by DTSM’s Board of
Directors. Additionally, the City’s annual assessment expenditures may vary depending
on property acquisition and disposition over the next 10 years.
Prepared By: Kriss Casanova, Senior Development Analyst
Ap proved
Forwarded to Council
Attachments:
A. March 25, 2008 Council Report
B. July 24, 2008 Council Report
C. DTSM Marketing Pamphlet - PBAD 10-YR Vote
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D. List of City-Owned PBAD Properties
Downtown Santa Monica Property-Based Assessment District
10 Year Affirmative Vote
10 YEARS DOWN(TOWN)
It was roughly 10 years ago when property owners like yourself took a symbolic leap of faith by
approving the creation of the Downtown Santa Monica Property-Based Assessment District (PBAD).
Your considerable commitment provided the majority of the funding necessary to create award-
winning enhanced hospitality and maintenance services and a comprehensive marketing plan
ensuring that the Third Street Promenade remained one of the most celebrated public spaces in the
world and that Downtown Santa Monica continued to grow into a diverse, economically vibrant,
safe and clean community.
At the time, there was limited evidence supporting the creation of the PBAD, aside from case studies
in other downtowns, however, you were convinced of the need and committed to the vision outlined
in the defining principles and objectives contained in the district’s founding documents.
A decade later we can confidently say that your faith has been rewarded. Downtown is booming.
The number of residents living in downtown has nearly tripled. Property values are higher than
they have ever been. Exciting restaurants and innovative businesses are opening nearly every few
months. Downtown and the Third Street Promenade are still drawing millions of visitors each year,
helping to generate more than $1 billion in taxable sales for the City of Santa Monica.
But now is not the time to rest. In fact, it is time to push forward and tackle the challenges of today,
which is why we are asking for your support once again to reaffirm your belief in the PBAD and
Downtown Santa Monica, Inc., the nonprofit charged with safeguarding your investment. Under the
PBAD’s bylaws you must cast your vote for another 10 years of success. The assessment methodology
will not change, and we will continue to deliver the same robust level of service. Failing to vote yes
would eliminate the ambassador program in its entirety.
We urge you to once again join us in our effort to enhance Downtown Santa Monica. In this infor-
mation packet, you will find insightful stats demonstrating Downtown Santa Monica, Inc.’s progress.
Please take the time to review this valuable information. We are confident you will be pleased with
the results.
Then, please, grab your ballot and cast your vote in favor of continuing the progress we have made.
Now, more than ever, we need to focus our efforts on preserving the character of Downtown Santa
Monica as we work together to find solutions to the housing crisis, traffic congestion and the
changing face of retail. With your help and your support, we are confident that the next 10 years
will be as prosperous and rewarding as the last.
Please join the following PBAD supporters in creating a neighborhood we can all be proud of, one
we would all love to call home.
Adam Gottlieb Witkoff & 500 Broadway
Alan Mont Property Owner
Barbara Tenzer Tenzer Commercial Brokerage
Barry Snell Santa Monica College Trustee
Bill Tucker Tucker Investment Group
Behrouz Soroudi Promenade Gateway
Bruria Finkel Resident & Artist
Congregation of St. Augustine’s by the Sea
Corry Oakes OTO Development
David Khedr Khedr Management Company
Ellis O’Connor Fairmont Miramar Hotel
Dr. Glen & Mary Tistaert Tistaert Dental
Jan Sweetnam Federal Realty
Johannes Van Tilburg VTBS Architects
John Warfel Metropolitan Pacific
Joshua Gilman Walter Marks Realty
Juan Matute Associate Director, UCLA
Julia Ladd Santa Monica Place
Kacy Keys Seritage Growth Properties
Marvin Lotz American Commercial Equities, LLC
Noreen Husain Palisades
Patricia Hoffman Resident
Randy Starr Avision Young
Rob Rader Santa Monica College Trustee
Robert Coleman Property Owner
Santa Monica College
Scott Schonfeld LinWood Ventures/Lincoln Prop. Company
Steaven Jones Steaven Jones Dev. Corp
The Romano Family The Romano Enterprises
Tara Barauskas California Community Foundation
Dear Partner,
02
* 2017/2018 DOWNTOWN SANTA MONICA BOARD MEMBER
SUPPORTERS OF THE DOWNTOWN PBAD
Sincerely,
Downtown Santa Monica, Inc.
1 3 L
0
2
ZONE 1
$947,546
ZONE 2
$2,056,955
ZONE 3
$838,015
ZONE L
$410,984
ZONE O
$327,119
DOWNTOWN PROPERTY OWNERS
ARE ASSESSED ANNUALLY BASED
ON THE ZONE IN WHICH YOUR
PROPERTY IS LOCATED. THIS MAP
ILLUSTRATES THE FIVE BENEFIT
ZONES AND THEIR RESPECTIVE
TOTAL ASSESSMENTS.
FY 2016/2017 Downtown Benefit Zones
STATEMENT OF ACTIVITIES FY16/17
Assessment Revenues
Parks
ICE at Santa Monica
Other Revenues
TOTAL REVENUES
Economic/Business Development
Marketing/Promotional Branding
ICE at Santa Monica
Operations
Ambassadors
Maintenance
Parks
Management/General
Special Projects
Homeless Support/Programs
Dolphin Change Program
TOTAL EXPENSES
6.30.2016 (FY15/16)
$6,222,469
$0
$1,116,544
$293,731
$7,632,744
$416,037
$1,031,860
$1,030,256
$220,516
$1,647,063
$1,638,263
$0
$558,984
$343,232
$104,327
$17,275
$7,007,813
STATEMENT OF FINANCIAL POSITION FY16/17
Cash/Cash Equivalents
Certificates of Deposit
Property/Equipment
TOTAL ASSETS
Liabilities
Total Net Assets
TOTAL LIABILITIES
& NET ASSETS
6.30.2017 (FY16/17)
$4,015,331
$0
$76,606
$4,091,937
$523,974
$3,567,963
$4,091,937
6.30.2016 (FY15/16)
$3,587,634
$ 0
$81,563
$3,669,197
$282,320
$3,386,877
$3,669,197
A summary of DTSM, Inc.’s FY16/17 financial statements for all programs and operations.
FY 2016/2017 Financial Statements
6.30.2017 (FY16/17)
$6,235,739
$249,959
$989,168
$811,689
$8,286,555
$432,311
$1,470,469
$931,489
$216,513
$1,825,068
$1,958,451
$233,955
$679,612
$173,449
$120,081
$22,413
$8,063,811
03
The Downtown Santa Monica Maintenance Program provides round-
the-clock cleaning of district streets, sidewalks, parking structures and
alleyways. The custodial and power washing services made possible
by the PBAD have had an immensely positive impact on the public
perception of Downtown Santa Monica. The maintenance team records
every task as a “maintenance interaction.” Below is data collected since
the program’s inception in June 2009.
Maintenance
PBAD OBJECTIVES
TOTAL HOSPITALITY
INTERACTIONS
1,105,293
BEFORE PBAD
AFTER PBAD
Fondly referred to as “the blue shirts,” hospitality ambassadors have
made an indelible impression on residents and visitors as the depend-
able, friendly, familiar faces of Downtown Santa Monica. Since 2009
the hospitality team has greeted patrons, provided business referrals
or directions, assisted in finding lost children or vehicles and more.
As the acting eyes and ears of the district, ambassadors will kindly
notify patrons of quality of life violations such as no smoking, skate-
boarding or biking on the Promenade, no sleeping in doorways and no
filming without a permit. All interactions are recorded and reviewed
regularly to maintain the quality of service this essential program provides.
Hospitality
BUSINESS
REFERRALS
QUALITY OF LIFE
INTERACTIONS
449,914 250,052
Hospitality ambassadors have been monitoring
the public restroom in Parking Structure 4 since its
remodel in 2009. Since then 3,462,739 people have
visited the restroom.
TOTAL MAINTENANCE
INTERACTIONS
859,271
04
TOTAL PIECES OF
DEBRIS COLLECTED
668,097
SQ. FT. OF PUBLIC
SPACE POWER WASHED
17,653,768
What’s in a name? In our case, it’s the difference
between a sunny, thriving central business district
and an action-packed authentic, beachside, urban
destination that is home to residents of all ages, the
top culinary minds in the world, sought after retail
brands and cutting-edge technology. After an extensive
branding project made possible by the PBAD, Bayside
District transformed into Downtown Santa Monica
Enhanced Marketing
The dream to redevelop and revitalize the Third Street Promenade in
the late 1980s was shared between public officials and private property
and business owners. Public and private investment and joint policy
making paved the road to success. In 2008, you voted to reinvest in
Downtown Santa Monica again, this time in programs that would make
the user experience safer, cleaner and more inviting. To ensure decisions
impacting downtown represent the interests of both residents and
property owners, the Downtown Santa Monica, Inc. Board of Directors
follows a balanced nomination structure in which property owners
directly elect six members who are invested in the district’s success.
Governance Structure
PROPERTY
OWNER ELECTED
BOARD
MEMBERS
CITY COUNCIL
APPOINTED
CITY MANAGER
DESIGNEE
MEMBERS
6
13
with the brand philosophy to embrace our true
downtown roots. Enhanced marketing programs like
branding, public relations, social media and events
have elevated the visitor experience and the global
conversation about Downtown Santa Monica, Los
Angeles Business Journal’s Industry Leader and top
Business Improvement District.
05
267 TOTAL EVENTS HOSTED ON THE THIRD
STREET PROMENADE
1,733,819,575 TOTAL MEDIA IMPRESSIONS
519,663 TOTAL WRISTBANDS SOLD AT ICE
AT SANTA MONICA
2009–2017
MEMBERS
6
MEMBER
1
A DECADE OF DATA
06
2016
$1,089,765,400
Total Taxable Sales Generated
in Downtown Santa Monica
Percentage of Citywide Taxable Sales
Generated in Downtown Santa Monica
2008
16% | 2008
32% | 2016
$462,406,100
4,277,282
Average Annual
Office Rent
Total Sq. Ft.
of Office Space
Office
Vacancy Rates
2017 8.8% | 2008
6.9% | 2017
2008 2017
$54.47
/sq. ft.
$65.36
/sq. ft.
2,587,367
Average Annual
NNN Retail Rent
Total Sq. Ft.
of Retail Space
Retail
Vacancy Rates
2017
2008 2017
$52.45
/sq. ft.
$85.53
/sq. ft.16.8% | 2008
4.9% | 2017
TESTIMONIALS
07
The homeless crisis is one of the most challenging issues
we face today, requiring a considerable amount of
time, resources, partnerships and patience to help
make a meaningful difference. Partners like Downtown
Santa Monica, Inc. play a critical role, helping to not
only connect those living on the streets to services,
but also hiring those who are working their way out
of homelessness through their contract with Chrysalis.
In addition, downtown ambassadors educate residents
and visitors on the programs available for homeless
individuals and where they can volunteer their time,
further expanding the network of those who care and
want to help bring an end to this crisis.
—JOHN MACERI
Executive Director, The People Concern
I’ve been a Santa Monica resident for over 20 years,
since before the Promenade as we now know it. I just
want to tell you that I love the ambassadors (in this
case Dion) who are sitting on the lower level of parking
structure 4 near the elevators, who are available to
be of service, who always have a friendly “hello” and
make me feel a hell of a lot more secure. The whole
climate of the place has changed. I actually used the
bathroom in one structure! And it was nice!
So thank you for helping to dramatically improve the
environment and, I’m sure, making more than one
person safe and happy. Cheers!
—CATHY L.
Santa Monica, CA
—CHIEF KENNETH SEMKO
Santa Monica Police Department
The ambassador program managed by Downtown Santa Monica,
Inc. is a tangible model of success in community policing. Providing
additional eyes and ears with an open line of communication to the
Police Department, the ambassador program continues to be a valu-
able public safety asset as we continually strive to improve the safety
and wellbeing of our community.
—TIM TOMPKINS
President, Times Square Alliance
President, International Downtown Association
Downtown Santa Monica, Inc. is at the forefront of urban place man-
agement and is one of the leaders in the industry. It’s CEO, Kathleen
Rawson, has been an invaluable presence on the International Downtown
Association board of directors, providing sound leadership and insight
gathered during her nearly 30 years of work in the field. Santa Monica
is lucky to have an organization like Downtown Santa Monica, Inc.
looking after its downtown.
We’ve got your back.
VOTE NOW FOR 10 MORE
YEARS OF SERVICE.
APN Site Address Site Description Lot or Bldg Sq.Ft.FY 2017-18
Assessment
1 4291-002-901 1235 2nd Street Parking Structure #2 240,000 $39,600.00
2 4291-003-903 1234 4th Street Parking Structure #1 134,663 $22,219.40
3 4291-012-900 1318 4th Street Parking Structure #3 134,663 $22,219.40
4 4291-013-901 1321 2nd Street Parking Structure #4 225,000 $37,125.00
5 4291-016-902 1431 2nd Street Parking Structure #6 284,899 $47,008.34
6 4291-017-905 1440 4th Street Parking Structure #5 216,762 $35,765.73
7 4291-026-916 320 Broadway Parking Structure #7 310,048 $51,157.92
8 4291-026-917 215 Colorado Avenue Parking Structure #8 381,702 $62,980.83
9 4291-009-900 1343 6th Street Library Consolidated 108,250 $17,861.25
10 4291-010-901 1323 5th Street Surface Parking Lot 7,497 $1,237.01
11 4291-011-900 1324 5th Street 4th + AZ Development Site 8,999 $1,484.84
12 4291-011-901 1324 5th Street 4th + AZ Development Site 5,998 $989.67
13 4291-011-902 1324 5th Street 4th + AZ Development Site 7,497 $1,237.01
14 4291-011-903 1324 5th Street 4th + AZ Development Site 7,497 $1,237.01
15 4291-011-904 1324 5th Street Surface Parking Lot 7,501 $1,237.67
16 4291-011-905 1326 5th Street Angelo's Parking Lot 7,497 $1,237.01
17 4291-011-906 1338 5th Street Carlson Park Lot Swap 7,497 $1,237.01
18 4291-011-907 1342 5th Street Former Carlson Building 7,501 $1,237.67
19 4291-011-908 1334 5th Street Former Angelo's Building 7,501 $1,237.67
20 4290-011-909 402 Colorado Avenue Expo Adjacent 46,942 $7,745.43
21 4290-011-901 402 Colorado Avenue Expo Adjacent 4,900 $808.50
22 4290-011-902 402 Colorado Avenue Expo Adjacent 5,387 $888.86
23 4291-020-900 1444 7th Street Fire Station #1 15,002 $2,475.33
24 4291-025-900 1527 4th Street Ken Edwards Center 26,926 $8,858.65
25 4292-020-013 1125 3rd Street Parking Structure #10 39,857 $6,576.41
26 4292-020-014 1148 4th Street Parking Structure #9 120,000 $19,800.00
27 4290-010-908 505 Olympic Boulevard BBB minus Samoshel 34151 $5,634.92
28 4290-011-905 1636 5th Street Surface Parking Lot 4400 $726.00
29 4290-011-904 1636 5th Street Surface Parking Lot 4761 $785.57
30 4290-011-903 1636 5th Street Surface Parking Lot 5166 $852.39
31 4290-011-906 1636 5th Street Office Building 15,803 $2,607.50
$406,069.92
CITY-OWNED PARCELS - DOWNTOWN PBAD FY 2017-18 ASSESSMENTS
REFERENCE:
Agreement No. 10641
(CCS)