REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Travis Hopkins, City Manager
VIA: Jennifer Villasenor, Director of Community Development
PREPARED BY: Christopher Kennedy, Economic Development Project Manager
Subject:
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Approve the Huntington Beach Downtown Business Improvement District’s (District) Annual Report and Budget for Fiscal Year (FY) 2026-2027 and Adopt Resolution No. 2026-26 to Continue Levying an Annual Assessment on Businesses within the District, with a Public Hearing Scheduled for October 6, 2026
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Statement of Issue:
The Huntington Beach Downtown Business Improvement District (District) was established by the City Council in 2004 to enhance services and improvements within the downtown area. Businesses within the District pay an annual assessment, which funds these enhancements beyond the City’s baseline services. Every year, the City Council must review and approve an Annual Report and budget submitted by the Huntington Beach Downtown Business Improvement District (Downtown HB), as required by state law. Additionally, the City Council must adopt a resolution to continue collecting the annual assessment.
Financial Impact:
The District’s FY 2026-2027 budget submitted by Downtown HB includes projected revenues of $1,044,500, with approximately $115,000 expected from business assessments. The remainder comes from other sources. The City’s FY 2026-2027 Operating Budget, specifically the Huntington Beach Downtown Business Improvement District Fund (Fund 710), includes $128,000 in related revenue and matching expenditures.
Recommended Action:
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A) Approve the Huntington Beach Downtown Business Improvement District Annual Report and Budget for FY 2026-2027; and
B) Adopt Resolution No. 2026-26, “A Resolution of the City Council of the City of Huntington Beach Declaring the City’s Intention to Levy an Annual Assessment for Fiscal Year 2026-2027 within the Huntington Beach Downtown Business Improvement District,” and schedule a public hearing on October 6, 2026, to consider the continuation of the Huntington Beach Downtown Business Improvement District.
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Alternative Action(s):
Do not approve the Annual Report and Proposed Budget, suggest alternative spending recommendations, and/or direct staff accordingly.
Analysis:
At the request of local businesses, the District was established and designated by the City Council in 2004. Businesses within this area pay an annual fee to fund extra services like security, marketing, and maintenance, which enhance the downtown experience beyond what the City provides. In 2008, the City Council appointed Downtown HB to serve as the District’s Advisory Board. The Advisory Board makes recommendations on how the collected assessments should be spent, as well as any changes to the District’s boundaries or assessment formula. Each year, the City Council reviews and either approves or adjusts these recommendations during a public meeting.
Downtown HB is a nonprofit organization created by the businesses within the District. It is responsible for managing the funds collected from the District and using them to provide the additional services that benefit the District. The City of Huntington Beach and Downtown HB work together under an approved agreement to manage the District. In addition, Downtown HB organizes other events and provides services funded through sources outside of assessment revenue.
Annual Renewal of the District
Pursuant to state law, an Annual Report has been submitted and includes the following details:
1. No changes are proposed to the District’s boundaries or benefit zones;
2. A list of planned improvements and activities, along with their estimated cost;
3. The method used to calculate the assessment for each business;
4. Any surplus or deficit revenues from the previous fiscal year; and,
5. Contributions from sources other than assessments.
The funding recommendations have been approved by Downtown HB’s elected Board of Directors, who serve in an advisory capacity to the City Council. State law requires that the funds collected benefit only the businesses located within the District. There are approximately 255 businesses in the District, which are assessed based on size, location, and business type. The assessments range from $80 to $1,404 per year, with an additional processing fee by the City of approximately $12. Downtown HB is not proposing any changes to the assessment formula or the District’s boundaries.
State law also requires a public hearing to allow businesses in the District to voice their opinions. The Resolution of Intention schedules this public hearing for October 6, 2026. During the hearing, the City Council will consider any protests and can adjust the assessments or boundaries if necessary; however, they cannot increase the assessments or expand the boundaries without proper notification. If written protests represent 50% or more of the total assessment value, the District cannot be renewed for one year. The City Council may also disestablish the District by ordinance following a public hearing, provided that a resolution of intention to disestablish is adopted prior to the hearing.
Annual Report and Proposed Assessment Budget
Downtown HB provides various services to maintain a vibrant, clean, and welcoming environment for residents and tourists, ensuring Downtown remains a top destination for business and leisure. Over the past year, Downtown HB has invested in downtown improvements including new lighting for Z Park, expanded marketing and promotional efforts with more than 400% growth in social media followers, views, and interactions, and launched two successful food competitions generating more than 1,700 votes. Downtown HB also established annual and quarterly marketing plans, hosted a Strategic Plan Workshop, and partnered with the Chamber of Commerce and The Strand on two Business Expos on 5th Street.
The total proposed budget for Downtown HB for FY 2026-2027 is $1,044,500, an increase from $972,445. This overall budget includes $115,000 from business assessment revenue, as well as revenue from other sources such as the Surf City Artisan Fair, Surf City Nights, and the City’s contribution toward maintenance services. Downtown HB’s Board of Directors manages the organization’s total budget including non-assessment revenue and related expenses as shown below.
The Annual Report for the District outlines the Advisory Board’s recommendations for spending the $115,000 in proposed assessment revenue collected from businesses within the District. These funds are limited to programs and services that directly benefit businesses within the District. Additional Downtown HB expenses are supported by non-assessment revenue sources.
The chart below compares the prior fiscal year’s assessment allocations with those proposed for FY 2026-2027.
City Council may approve or adjust these recommendations as needed. The proposed assessment revenue would support the following programs and services:
• Ambassador Security Program - $35,000 (30%) - This investment prioritizes public safety, visitor experience, and business confidence in the Downtown area. Assessment funds will support a portion of the Downtown ambassador program, with additional contributions from Visit Huntington Beach (VHB) and Downtown HB. A strong ambassador presence deters unwanted activity, supports the Huntington Beach Police Department through early issue reporting, and ensures that residents and visitors feel welcomed and secure. Positive perceptions of safety can increase foot traffic, encourage longer stays, and support repeat visitation.
• Holiday Beautification - $25,800 (22%) - Downtown lights up for the holidays with aerial displays, themed lighting, and a decorated tree on Main Street. Assessment funds will support holiday décor and enhancements that draw visitors, foster community spirit, and strengthen the Downtown experience. Plans for the upcoming holiday season include a beach-themed design and expanded decorations through the fourth block and onto 5th Street.
• Enhanced Maintenance - $21,000 (18%) - Enhanced maintenance services, including daily porter coverage and expanded steam cleaning during high-traffic periods, help create a cleaner and more enjoyable Downtown experience. In addition to City-funded maintenance services, assessment funds will help cover a portion of the difference between City-sponsored services and actual costs, as well as additional porter services during holidays and major events.
• Community Events - $18,000 (16%) - Annual events help boost exposure, build community, and strengthen the Downtown brand. Assessment funds will support events such as the Halloween celebration, Tree Lighting, July 4th Block Party sponsorship, and a new off-season community event, bringing locals and visitors together and creating opportunities for Downtown businesses.
• Marketing - $10,000 (9%) - Marketing efforts focus on storytelling and brand-building for Downtown HB. Assessment funds support a portion of the social media consultant costs, helping create strong engagement with stakeholders and reinforce Downtown’s identity.
• CRM Software - $3,000 (3%) - The CRM system centralizes stakeholder data, improving communication, marketing, and relationship management.
• Financial Services - $2,200 (2%) - A third-party CPA oversees monthly financials using QuickBooks. Along with bank management, this ensures transparency, accuracy, and accountability.
For the upcoming fiscal year, Downtown HB’s goals include reestablishing and restructuring the nonprofit, strengthening member communication and engagement through monthly newsletters and welcome packets, creating quarterly opportunities to connect with the Board of Directors, and developing a donation package to support Downtown HB and special events. Together, these efforts are intended to strengthen Downtown HB’s organizational capacity, increase business engagement, and support a vibrant and welcoming Downtown for businesses, residents, and visitors.
Environmental Status:
Pursuant to CEQA Guidelines Section 15378(b)(5), administrative activities of governments that will not result in direct or indirect physical changes in the environment do not constitute a project.
Strategic Plan Goal:
Goal 1 - Economic Development, Strategy A - Develop an updated economic development strategy to ensure business retention, local investments and job growth.
For details, visit www.huntingtonbeachca.gov/strategicplan.
Attachment(s):
1. Resolution No. 2026-26
Exhibit A: Annual Report and Proposed Budget for FY 2026-2027
Exhibit B: Boundary Map, Business List, and Assessment Schedule
Exhibit C: Improvements and Activities Proposed to be Funded
2. PowerPoint Presentation