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:
title
Public Hearing to Adopt Resolution No. 2024-42 for Annual Assessment Approval in the Huntington Beach Downtown Business Improvement District for Fiscal Year (FY) 2024-2025
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Statement of Issue:
On September 3, 2024, the City Council adopted Resolution No. 2024-41, declaring its intention to levy an annual assessment for the Huntington Beach Downtown Business Improvement District (District), and authorized the City Clerk to schedule a public hearing for October 1, 2024. Each business within the District is assessed an annual fee that the City collects and distributes for use towards additional services for the defined geographic area that are beyond the City’s baseline services. The City Council is now requested to conduct the public hearing and consider adopting Resolution No. 2024-42 to approve the assessment for FY 2024-2025.
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:
recommendation
A) Conduct the Public Hearing; and,
B) If written protests of at least 50% or more of the total assessments are not received, adopt Resolution No. 2024-42, “A Resolution of the City Council of the City of Huntington Beach Approving an Annual Assessment within the Huntington Beach Downtown Business Improvement District for FY 2024-2025.”
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Alternative Action(s):
The City Council may amend elements of the Annual Report, including fees, activities, improvements, or district boundaries, and update the Resolution as needed. However, if written protests are received from business owners representing more than 50% of the total assessed value in the district, the City Council cannot approve the Resolution.
Analysis:
The District was established by the City Council in 2004 to fund extra services such as security, marketing, and maintenance that enhance the downtown area beyond what the City typically provides.
In 2008, the City Council appointed Downtown HB, a nonprofit formed by local businesses, as the District’s Advisory Board. The Advisory Board makes recommendations on how the collected fees should be spent and suggests any changes to the District’s boundaries or assessment formula. Each year, the City Council reviews these recommendations and either approves or adjusts them in a public meeting.
Downtown HB manages the funds collected from the District and ensures they are used to provide services that benefit the District. The City and Downtown HB work together under a formal agreement to manage the District’s operations.
Annual Report and Proposed Assessment Budget
For FY 2024-2025, Downtown HB will continue its efforts to maintain a clean, vibrant, and welcoming environment for residents and tourists. The Advisory Board recommends spending the $117,000 collected from business assessments as follows:
• Ambassador Security Program - $42,813 (37%): Enhances visitor experience and safety, especially during peak seasons and events. Ambassadors, funded by Downtown HB and Visit Huntington Beach, patrol the area, assist visitors, report safety concerns, and work with the Police Department to ensure a safer environment.
• Enhanced Maintenance - $20,000 (17%): These funds will supplement the City's cleaning services to keep Downtown clean and inviting, particularly during high-traffic times. The City’s current cleaning budget is $198,000 per year, managed by Downtown HB.
• Holiday Beautification - $20,000 (17%): During the holidays, Downtown is decorated with lights and festive displays to create a welcoming atmosphere for both locals and visitors.
• Marketing - $15,027 (13%): Marketing efforts, including advertising, social media, website updates, and email campaigns, will help promote Downtown as a destination.
• Community Events - $13,000 (11%): Downtown hosts popular events such as the Independence Day Block Party, Surf City Spooktacular, and Magic on Main Street. These events attract visitors and strengthen community ties.
• CRM Software and Staff - $4,000 (3%): Downtown HB uses Monday.com to manage relationships with stakeholders and event vendors, improving communication and marketing.
• Financial Services - $2,160 (2%): A third-party CPA provides financial oversight, ensuring transparency and accurate recordkeeping.
The total proposed budget for FY 2024-2025 is $911,102 (Page 20 in the Annual Report), which is an increase of $762 from the previous year. There is also $160,806 in unallocated reserves, available for future needs. Additional revenue sources include events like the Surf City Artisan Fair, Surf City Nights, and the City’s contribution for maintenance services.
District Renewal
The submitted Annual Report, required by state law, includes the following:
1. No changes to the District’s boundaries or benefit zones;
2. A list of planned improvements and activities, with estimated costs;
3. The method used to calculate the assessment for each business;
4. Any surplus or deficit from the previous fiscal year; and,
5. Contributions from sources other than assessments.
A ten-member Advisory Board, elected by District businesses, governs the District. State law requires that the funds collected benefit only the businesses in the District. Currently, around 270 businesses pay annual assessments ranging from $80 to $1,404 per year, with an additional processing fee of $12. There are no proposed changes to the assessment formula or the District’s boundaries this year.
Business owners may submit a written protest if they disagree with the proposed assessment. Protests must be filed by the business owner or their designated agent, as shown in the City’s records. Protests may be withdrawn at any time before the public hearing concludes. If written protests have been timely submitted by District businesses that pay 50% or more of the total assessments of the entire District, then no further proceedings to levy the assessments shall occur for FY 2024-2025. If the 50% or more written protest pertains only to a specific improvement or activity, then that type of improvement or activity shall not be included in the upcoming year.
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. 2024-42
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