REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Eric G. Parra, Interim 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) 2024-2025 and Adopt Resolution No. 2024-41 to continue levying an Annual Assessment on businesses within the District, with a public hearing scheduled for October 1, 2024
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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 fee, 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 pass a resolution to continue collecting the annual fee.
Financial Impact:
The District’s FY 2024-2025 budget submitted by Downtown HB includes projected revenues of $910,625, with $117,000 expected from business assessments. The remainder comes from other sources. The City’s FY 2024-25 Operating Budget, specifically the Huntington Beach Downtown Business Improvement District Fund (Fund 710), includes $125,000 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 2024-2025; and,
B) Adopt Resolution No. 2024-41, “A Resolution of the City Council of the City of Huntington Beach Declaring the City’s Intention to Levy an Annual Assessment for FY 2024-2025 within the Huntington Beach Downtown Business Improvement District,” and schedule a public hearing on October 1, 2024, to consider the continuation of the Huntington Beach Downtown Improvement District.
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Alternative Action(s):
Do not approve the Annual Report and Proposed Budget or modify accordingly, and/or deny the Resolution.
Analysis:
The District is an area 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.
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 are made by a ten-member Advisory Board (nine voting members, one non-voting member) elected by businesses in the District. State law requires that the funds collected benefit only the businesses located within the District. There are approximately 270 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 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 protest hearing for October 1, 2024. During the hearing, the City Council will consider any protests and can make adjustments to the assessments or boundaries if necessary. If written protests represent 50% or more of the total assessment value, the District cannot be renewed for one year.
Annual Report and Proposed Assessment Budget
Downtown HB provides various services to keep the area attractive and functional. In the coming year, Downtown HB will continue its efforts to maintain a vibrant, clean, and welcoming environment for residents and tourists, ensuring Downtown remains a top destination for business and leisure. The Annual Report for FY 2024-2025 outlines how the Advisory Board recommends spending the $117,000 collected from business assessments. Additional costs incurred by Downtown HB will be covered by other revenue sources.
• Ambassador Security Program - $42,813 (37%) - This program improves visitor experience and safety, especially during peak seasons and events. Funded by both Downtown HB and Visit Huntington Beach, ambassadors patrol the area, build relationships with businesses and visitors, report safety issues, assist police, and help visitors. Their presence makes Downtown safer and more welcoming.
• Enhanced Maintenance - $20,000 (17%) - To keep Downtown clean and inviting, especially during peak seasons and events, these funds will supplement the City's regular cleaning services. This ensures a pleasant experience for everyone who visits.
• Holiday Beautification - $20,000 (17%) - During the holidays, Downtown becomes a festive wonderland with lights, snowflakes, and a decorated tree on the 2nd Block. These decorations bring the community together and create a festive atmosphere for all.
• Marketing - $15,027 (13%) - Marketing is key to promoting Downtown. These funds will support advertising, social media, website updates, and email outreach, helping to attract visitors and keep Downtown in the spotlight.
• Community Events - $13,000 (11%) - Downtown hosts popular annual events such as the 4th of July Block Party, Surf City Spooktacular, and Magic on Main Street. These events draw crowds, create memorable experiences, and strengthen community ties.
• CRM Software and Staff - $4,000 (3%) - Downtown HB uses a software program called Monday.com to manage relationships with stakeholders and event vendors. The software helps track interactions and run targeted marketing campaigns more effectively.
• Financial Services - $2,160 (2%) - A third-party CPA handles monthly financial services, ensuring accurate recordkeeping, timely reports, and transparency in managing the District’s finances.
City Council can approve or adjust these spending recommendations as needed. The total proposed budget for Downtown HB (Page 20 in the Annual Report) will increase slightly from $910,340 this year to $911,102 next year. There is also $160,806 in unallocated reserves, as indicated in the Statement of Financials within the Annual Report. Other revenue sources include income from events like the Surf City Artisan Fair and Surf City Nights, as well as the City’s contribution for maintenance services. Downtown HB’s Board of Directors manages all non-assessment revenue and expenses.
Environmental Status:
Pursuant to CEQA Guidelines Section 15378(b)(4), government fiscal activities that do not result in a physical change in the environment and do not commit the lead agency to any specific project, do not constitute a project. Therefore, these activities are exempt in accordance with CEQA Guidelines Section 15060(c)(3).
Strategic Plan Goal:
Economic Development & Housing
Attachment(s):
1. Resolution No. 2024-41
Exhibit A: Annual Report and Proposed Budget for FY 2024-2025
Exhibit B: Boundary Map, Business List, and Assessment Schedule
Exhibit C: Improvements and Activities Proposed to be Funded
2. PowerPoint Presentation