REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Dave Kiff, Interim City Manager
PREPARED BY: Kellee Fritzal, Deputy Director of Economic Development
Subject:
title
Approve Annual Report and Fiscal Year 2019-2020 Huntington Beach Downtown Business Improvement District (DTBID) Budget; adopt Resolution No. 2019-54 declaring the City’s intention to levy an annual assessment for Fiscal Year 2019-2020 within the Huntington Beach Downtown Business Improvement District; and, schedule a Public Meeting for September 3, 2019, and a Public Hearing for September 16, 2019
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Statement of Issue:
In September 2004, the City Council approved Ordinance No. 3661, establishing the Huntington Beach Downtown Business Improvement District as a method of marketing the Downtown area. The State of California Parking and Business Improvement Law of 1989 requires an annual report be filled for each fiscal year, a Resolution of Intention be adopted to levy an assessment for the next fiscal year, and a public hearing date to be set.
Financial Impact:
No fiscal impact. Revenues and expenses are included in the City’s 2019-2020 Huntington Beach Downtown Business Improvement District budget (Fund 710). The expenditures are only reimbursed based upon revenue collected.
Recommended Action:
recommendation
A) Adopt Resolution No. 2019-54, “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 2019-2020 within Huntington Beach Downtown Business Improvement District,” including Exhibit A - Huntington Beach Downtown Business Improvement District 2019-2020 Annual Report, Exhibit B - Boundary Map, and List of Businesses to be assessed, and Exhibit C - Types of improvements and activities proposed to be funded; and,
B) Direct the City Clerk to agendize the item for the City Council’s regular meeting of September 3, 2019, hold a public hearing on September 16, 2019, send copies of the Resolution of Intention, including the BID Boundary Map and assessment formula to each business to be assessed, and publish in a newspaper of general circulation.
end
Alternative Action(s):
Do not approve the Annual Report and Fiscal Year 2019-20 Budget and deny the Resolution.
Analysis:
In September 2004, the City Council approved Resolution No. 3661 establishing the Huntington Beach Downtown Business Improvement District (DTBID) to fund promotional activities benefiting all businesses within the district area. In addition, pursuant to State Law, the City Council appointed an Advisory Board for the District. The purpose of the BID Advisory Board is to make recommendations to the City Council regarding the expenditures of revenues derived from the assessments, on the classifications of businesses, and on the method of levying the assessments. The Advisory Board recommendations are then considered by the City Council at a noticed public meeting and approved or modified by the City Council.
In February 2008, the City Council adopted Ordinance No. 3797, which amended Ordinance No. 3661, to change the manner in which the District’s Advisory Board was selected. Following adoption of Ordinance No. 3797, the City Council approved Resolution No. 2008-04 appointing a non-profit corporation known as the Huntington Beach Downtown Business Improvement District (the “Non-Profit Corporation”) to act as the Advisory Board for the District. The Non-Profit Corporation has continued to act as the Advisory Board for the District since the adoption of the Resolution.
In April 2017, the City Council recommended that the DTBID retain the services of an outside, industry-specific consultant to review and evaluate the DTBID’s operations and structure, and provide recommendations to improve the functionality and professionalism of an organization to the benefit of its members. The DTBID subsequently contracted with the International Downtown Association (IDA) to review the DTBID. The panel spent significant time in the Downtown area, interviewed over 55 stakeholders, and, in July 2017, produced a report detailing their observations and recommendations. Changes to the DTBID budget, organizational structure, and employee compensation were recommended.
During Fiscal Year 2018-2019, the DTBID made significant improvements including changing the position of BID Manager to Executive Director and hiring one in June. The new Executive Director will oversee previous responsibilities of Manager and will also include a stronger focus on financially related tasks including forecasting, budgeting, and overall tracking of fiscal performance.
The BID understands the importance of communication and marketing, and launched a new and improved hbdowntown.com website in March. The website is more visually appealing and has a number of interactive features for visitors including the ability to locate and link directly to members of the BID. Their monthly e-newsletter continues to be a success with over 6,600 subscribers, and allows BID members the opportunity to advertise for free. The Downtown BID social media exposure continues to grow with over 10,500 Facebook fans over 300 followers on Instagram.
Safety continues to be a priority for the DTBID, for its members and visitors alike. In July 2018, the BID launched a trial program that provided daytime security patrolling to address issues such as skateboarding, and homelessness. The program was well-received and in May of 2019, the DTBID board entered into a contract with Allied Universal, which now provides daily private security.
The DTBID also manages the Downtown maintenance operations with funds administered through the City of Huntington Beach Public Works Department and, as the Non-Profit Corporation, the Surf City Nights event with funds generated from event vendor and sponsor feeds.
The City Council is asked to approve the 2018-2019 Annual Report and 2019-2020 Fiscal Year Budget for the DTBID, adopt a Resolution declaring the City’s intent to levy an annual assessment for Fiscal Year 2019-2020 and schedule a duly noticed public hearing for September 3, 2019. Funding recommendations to the City Council are made by a ten (10) member (nine voting members, one non-voting member) Advisory Board which is elected annually by assessed members. State law requires that DTBID activities benefit businesses located and operating in the assessment area. Downtown businesses are assessed based on their size, location, and business type. Assessments range from $40 to $1,200 per annum.
The BID has amended the boundary map (Exhibit B) and assessment formula (Exhibit C) from the current year. The northeast corner of Main Street and Orange Avenue (which is under construction) has been added to Zone 1. Fees for businesses within Zone 1 under categories Retail Businesses, Restaurants, Hotels, Services/Office, and Cart/Kiosk have been increased by 17%. For businesses under the category of Services/Office that are located on the second floor, a new category has been created based on square footage. In addition, another new category, Seasonal, has been created for businesses that are open fewer than nine months per year. This category includes the beach cabanas businesses.
The Board of Directors approved a Revised Reserves Operating Policy establishing guidelines for how the board can best use these resources for the benefit of business improvement in downtown. As of June 30, 2019, there is a reserve of $200,000. These funds can be used for beautification projects, security in Downtown or events. The DTBID’s total operations budget now includes the operations and revenues of Surf City Nights and the Malco agreement, which previously operated under its own budget. The budget for 2019-2020 is summarized in the Annual Report with an additional line item attachments (both as Exhibit A). The summary is as follows:
|
INCOME: |
2018-2019 |
2019-2020 (PROPOSED) |
VARIANCE |
|
City of HB Maintenance |
$160,000 |
$162,000 |
$2,000 |
|
BID Assessments |
$121,460 |
$120,000 |
($1,460) |
|
Surf City Nights |
$308,000 |
$315,000 |
$7000 |
|
Chili at the Beach |
$30,000 |
$30,000 |
$0 |
|
Surf City Days |
$15,000 |
$15,000 |
$0 |
|
Air Show |
$0 |
$0 |
$0 |
|
Halloween |
$0 |
$0 |
$0 |
|
Miracle on Main |
$0 |
$0 |
$0 |
|
Transfer From Reserves |
$17,000 |
$66,000 |
$49,000 |
|
TOTAL INCOME: |
$651,460 |
$708,000 |
$56,540 |
|
EXPENSES: |
|
MALCO Maintenance |
$148,000 |
$150,000 |
$2,000 |
|
SCN Rental & Set up |
$34,020 |
$30,000 |
($4,020) |
|
SCN Street Cleaning |
$2,400 |
$3,000 |
$600 |
|
SCN Closure |
$7,200 |
$5,000 |
($2,200) |
|
SCN Parking |
$8,400 |
$9,000 |
$600 |
|
BID Manager |
$64,999.92 |
$0 |
$64,999.92 |
|
Marketing/Advertising |
$42,000 |
$17,000 |
($25,000) |
|
Sponsorships/Donations |
$3,600 |
$0 |
($3,600) |
|
Ambassador |
$48,000 |
$48,000 |
$0 |
|
Office Expense |
$3,000 |
$3,000 |
$0 |
|
Bank Charges |
$600 |
$600 |
$0 |
|
Dues & Subscriptions |
$1,000 |
$3,000 |
$2,000 |
|
Insurance |
$7,400 |
$7,400 |
$0 |
|
Accounting |
$6,200 |
$7,000 |
$800 |
|
License & Fees |
$1,800 |
$2,000 |
$200 |
|
Meeting/Training |
$5,000 |
$2,000 |
($3,000) |
|
PAYROLL: |
|
|
|
|
Events Coordinator |
$51,996 |
$62,000 |
$10,004 |
|
Consulting |
$0 |
$102,000 |
$102,000 |
|
Admin. Asst. |
$18,960 |
$20,000 |
$1,040 |
|
Payroll Taxes |
$6,720 |
$7,000 |
$280 |
|
Workers Comp. |
$1,000 |
$1,000 |
$0 |
|
Payroll Expenses |
$1,200 |
$1,500 |
$300 |
|
Security |
$44,000 |
$128,000 |
$84,000 |
|
Repairs/Maintenance |
$500 |
$500 |
$0 |
|
Rent & Storage |
$13,800 |
$14,000 |
$200 |
|
Telephone |
$1,980 |
$2,000 |
$20 |
|
Contingency |
$42,000 |
$0 |
($42,000) |
|
BID EVENTS: |
|
|
|
|
SCN Events |
$15,580 |
0 |
($15,580) |
|
Chili at the Beach |
$15,000 |
$15,000 |
$0 |
|
Surf City Days |
$7,500 |
$7,500 |
$0 |
|
Air Show |
$5,000 |
$0 |
($5,000) |
|
Halloween |
$7,500 |
$7,500 |
$0 |
|
Miracle on Main |
$10,000 |
$10,000 |
$0 |
|
Holiday Beautification |
$25,000 |
$25,000 |
$0 |
|
SCN Misc. Event |
$0 |
$18,000 |
$18,000 |
|
VARIANCE: |
$104.08 |
$0 |
($104.08) |
|
TOTAL: |
$651,355.92 |
$708,000 |
$54,644.08 |
The DTBID’s projected 2019-2020 Budget has significantly increased funds for security in the Downtown Area. In addition to continuing with their annual events, Surf City Nights and participation in the Ambassador Program, the DTBID plans to pursue projects and activities that support the priorities as part of the Perception Project. The perceptions include addressing homelessness, increasing public safety, improving the parking structure, adding restrooms, increasing lighting, improving visual appeal, and informational directories. The DTBID also expects to develop a meaningful vision for the future based on the results of the IDA study, while collaborating even more closely with the City and Visit Huntington Beach to make a positive difference in the Downtown destination.
As required by State law, a protest hearing must be held to provide the opportunity for those businesses affected to voice their protest or submit their protest in writing. The Resolution of Intention sets this public protest hearing for September 3, 2019. At that time, the City Council will tally the percentage of assessments protested and will hear additional public comments on the renewal of the DTBID. The City Council also as the option of reducing assessments or modifying the boundary area if public comments prompt adjustments. If written protests are received from affected businesses owners totaling 50% or more of assessment value, no further proceedings to continue the Business Improvement District can be considered for a period of one (1) year.
Environmental Status:
None Applicable
Strategic Plan Goal:
Strengthen long-term financial and economic sustainability
Attachment(s):
1. Resolution No. 2019-54 “A Resolution of the City Council of the City of Huntington Beach declaring the City’s attention to level annual assessment for Fiscal Year 2019-2020 within the Huntington Beach Downtown Business Improvement District”
2. Exhibit A - Huntington Beach Downtown Business Improvement District 2018-2019 Annual Report
3. Exhibit B - Boundary Map
4. Exhibit B - List of businesses to be assessed
5. Exhibit B - Assessment Schedule 2019-202
6. Exhibit C - Types of improvements and activities proposed to be funded