REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Al Zelinka, City Manager
VIA: Jennifer Villasenor, Acting Director of Community Development
PREPARED BY: Kriss Casanova, Economic Development Manager
Subject:
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Approve the Huntington Beach Downtown Business Improvement District’s Annual Report and Proposed Budget for Fiscal Year (FY) 2023-2024, and Adopt Resolution No. 2023-37 declaring the City’s Intention to Levy an Annual Assessment for FY 2023-2024 at a public hearing scheduled for October 3, 2023
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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 (District). Each business within the District is assessed an annual fee that is used to fund supplemental services that are above the City’s baseline services, within the defined geographic area. As part of the California Parking and Business Improvement Law of 1989, an annual report and budget for the District must be submitted each fiscal year for City Council approval. Council must also adopt a Resolution of Intention to levy an assessment for the upcoming fiscal year at a scheduled public hearing.
Financial Impact:
The District’s FY 2023-2024 budget submitted by the Huntington Beach Downtown Business Improvement District (HB Downtown) includes projected revenues of $910,340, of which $110,200 are anticipated to come from business assessments and the remaining from sources other than assessments. Expenditures are reimbursed based upon revenue collected.
In the City’s FY 2023-24 Operating Budget, the Huntington Beach Downtown Business Improvement District Fund (Fund 710) totals $107,000 in revenues and offsetting expenditures. It is recommended that an additional $3,200 in revenues and expenditures be appropriated to maintain a balanced budget.
Recommended Action:
recommendation
A) Approve the Huntington Beach Downtown Business Improvement District Annual Report and Proposed Budget for FY 2023-2024; and,
B) Adopt Resolution No. 2023-37, “A Resolution of the City Council of the City of Huntington Beach Declaring the City’s Intention to Levy an Annual Assessment for FY 2023-2024 within the Huntington Beach Downtown Business Improvement District”, which sets a public hearing for October 3, 2023 to consider continuation of the Huntington Beach Downtown Business Improvement District; and,
C) Authorize the revenue appropriation of $3,200 in account 71000710.40500 and an expenditure appropriation of $3,200 in account 71080101.69505, for a net zero impact to the fund.
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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:
Background
In September 2004, the City Council approved Ordinance No. 3661, establishing the District to fund activities and improvements, above the City’s baseline services, in order to benefit and support all businesses within the boundary area. Pursuant to state law, the City Council also appointed an Advisory Board to make recommendations regarding the activities or improvements the proposed assessment would fund and the related expenditures, as well as any changes to the boundary zone or assessment formula. The recommendations made by the Advisory Board are considered annually by the City Council at a public meeting, and the City Council can approve or modify the recommendations as it deems appropriate.
In 2008, the City Council adopted Ordinance No. 3797 that modified the selection of members to the Advisory Board and approved Resolution No. 2008-04, appointing the HB Downtown to act as the District’s Advisory Board. HB Downtown is a private, 501c(6) non-profit corporation that was formed by the businesses located within the boundaries of the District. The organization represents the collective interest of businesses within the District and focuses on creating a thriving downtown by providing marketing and events, security, maintenance, beautification, and member engagement. The District is managed by HB Downtown in accordance with an approved agreement between the City of Huntington Beach and HB Downtown.
Annual Report and Proposed Budget
HB Downtown provides supplemental services for businesses within the District. These services include increased marketing through promotions and events, a social media presence, and the management of services such as enhanced security and cleaning operations. Most notably, HB Downtown hosts weekly and signature events intended to add value to downtown by stimulating economic activity and fostering a strong sense of community.
The FY 2023-2024 Annual Report (Attachment 2) highlights accomplishments from last year and priorities for the upcoming year. Of importance is HB Downtown’s role in taking proactive measures to ensure the District is clean, safe and welcoming. HB Downtown also continues their role as operator of the Surf City Artisan Fair, a weekly event displaying local and regional artists at Pier Plaza, and Surf City Nights, the Tuesday night street fair. Curating these activations provides revenue to HB Downtown and greater control in ensuring that the events benefit District members. Other notable highlights include the management of various high profile events that drew thousands of visitors to downtown, including Surf City Spooktacular, Magic on Main, Chili at the Beach and the second annual HB4th Block Party. In addition to the above, during the past year HB Downtown filled staffing needs, conducted stakeholder outreach, refreshed its website, and the board of directors conducted a SWOT (Strengths, Weaknesses, Opportunities, Threats) Analysis, and identified focus areas for the upcoming year.
This upcoming year, HB Downtown will continue to focus on providing enhanced security and maintenance, district management and communication, holiday beautification, and marketing and events. The Advisory Board recommends allocating the District’s business assessment funds ($110,200) toward the following expenses with the remaining expenses to be funded by other revenue received by HB Downtown:
• Ambassador Security Program - $33,060 (30%) - In coordination with Visit Huntington Beach (VHB), the Ambassador Security Program will continue to work closely with the Police Department primarily during peak season, holidays, and special events to address safety-related matters and establish a positive rapport and visible presence.
• District Management - $22,040 (20%) - Funds will support the Executive Director position, who is responsible for the administration, finances, and day-to-day operations of the District.
• Enhanced Maintenance - $16,530 (15%) - HB Downtown will continue to manage downtown cleaning operations with funds mostly administered through the City of Huntington Beach Public Works Department. During peak season and major events, HB Downtown will use assessment funds to provide additional porters to uphold the area’s appearance.
• Holiday Beautification - $16,530 (15%) - To promote visitation during the holiday season, Main Street will be transformed with festive lighting, snowflakes, and a holiday tree.
• Marketing & Events - $16,530 (15%) - Funds will be used for community events, advertising, and marketing programs (website/email) that strengthen the downtown‘s brand identity.
• CRM Software Program and Staff - $5,510 (5%) - Per City Council’s recommendation in FY 2022-2023, funds have been allocated this year towards the purchase of a Customer Relationship Management (CRM) software program to improve the management of HB Downtown’s business relationships.
The proposed overall budget for HB Downtown (Page 30 in the Annual Report) will increase from the previous year from $822,796 to $910,340. The increase is mainly due to the inclusion of VHB’s contribution for the Ambassador Security Program and increased revenue as a result of Surf City Nights returning to its original, expanded footprint. Surf City Artisan Fair ($268,000) and Surf City Nights ($263,140) make-up approximately 58% of HB Downtown’s total revenue. Annual revenue received from business assessments is projected to be $115,000, however only $110,200 is anticipated to be collected (12% of the total budget) due to some business vacancies.
Other notable changes to the budget this year include adjustments to event revenues and expenses, as well as staff modifications. For Surf City Artisan Fair, which is managed under a separate agreement between HB Downtown and the City’s Community and Library Services Department, revenue adjustments were made for the upcoming year. Staffing expenses are now included under payroll instead of events, including replacing the Surf City Nights Coordinator position with an Events & Social Media Manager. HB Downtown will maintain $160,784 (reflected on the Statement of Financials in the Annual Report) in reserves that is unbudgeted.
Summarized below is the proposed total budget, which includes variances from last year’s approved budget.
|
INCOME |
FY 2022-2023 (APPROVED) |
FY 2023-2024 (PROPOSED) |
VARIANCE |
|
City of HB Maintenance |
$198,396 |
$198,000 |
-$396 |
|
Business Assessments |
$107,000 |
$110,200 |
$3,200 |
|
VHB Ambassador Program |
|
$36,000 |
$36,000 |
|
Surf City Artisan Fair |
$310,000 |
$268,000 |
-$42,000 |
|
Surf City Nights |
$182,400 |
$263,140 |
$80,740 |
|
Surf City Days |
$10,000 |
$10,000 |
$0 |
|
Chili at the Beach |
$10,000 |
$25,000 |
$15,000 |
|
Halloween |
$5,000 |
$0 |
-$5,000 |
|
TOTAL INCOME |
$822,796 |
$910,340 |
$87,544 |
|
|
|
|
|
|
EXPENSES |
|
|
|
|
City of HB Base Maintenance |
$186,396 |
$198,000 |
$11,604 |
|
Enhanced Maintenance |
$39,251 |
$21,000 |
-$18,251 |
|
Marketing/Advertising |
$10,883 |
$12,000 |
$1,117 |
|
Ambassadors |
$56,200 |
$81,151 |
$24,951 |
|
Office Supplies/Expenses |
$4,200 |
$6,000 |
$1,800 |
|
Bank Charges |
$1,200 |
$1,200 |
$0 |
|
Dues & Subscriptions |
$4,200 |
$8,400 |
$4,200 |
|
Insurance |
$2,100 |
$2,207 |
$107 |
|
Accounting |
$7,350 |
$6,150 |
-$1,200 |
|
License & Fees |
$3,000 |
$3,000 |
$0 |
|
Repairs & Maintenance |
$960 |
$2,400 |
$1,440 |
|
Rent & Storage |
$16,400 |
$16,400 |
$0 |
|
Telephone/Internet |
$2,400 |
$2,400 |
$0 |
|
Meeting/Training |
$800 |
$2,250 |
$1,450 |
|
BOD Election |
$2,000 |
$1,600 |
-$400 |
|
Website |
$6,000 |
$0 |
-$6,000 |
|
CRM |
|
$3,600 |
$3,600 |
|
EIDL Repayment |
$10,224 |
$12,000 |
$1,776 |
|
Payroll: |
|
|
$0 |
|
Executive Director |
$105,000 |
$105,000 |
$0 |
|
Event Manager |
$0 |
$67,200 |
$67,200 |
|
SCAF Operator |
$0 |
$58,960 |
$58,960 |
|
SCAF Support Staff |
$0 |
$12,900 |
$12,900 |
|
Administrative |
$9,600 |
$30,000 |
$20,400 |
|
Surf City Nights Coordinator |
$25,800 |
$0 |
-$25,800 |
|
Events: |
|
|
$0 |
|
Surf City Nights |
$42,056 |
$85,970 |
$43,914 |
|
BID Event Misc. |
$6,000 |
$0 |
-$6,000 |
|
Surf City Artisan Fair |
$235,776 |
$100,552 |
-$135,224 |
|
Chili at the Beach |
$10,000 |
$25,000 |
$15,000 |
|
Surf City Days |
$5,000 |
$12,000 |
$7,000 |
|
Halloween |
$5,000 |
$5,000 |
$0 |
|
Miracle on Main |
$5,000 |
$5,000 |
$0 |
|
Holiday Beautification |
$20,000 |
$20,000 |
$0 |
|
HB 4th Block Party |
$0 |
$3,000 |
$3,000 |
|
TOTAL EXPENSES |
$822,796 |
$910,340 |
$87,544 |
District Renewal
The City Council is asked to approve the FY 2023-2024 Annual Report and proposed Budget, adopt a Resolution declaring the City’s intent to levy an annual assessment for the upcoming year, and schedule a duly noticed public hearing for October 3, 2023.
Per the California Streets and Highways Code, Chapter 3, Section 36533, the Annual Report has been filed with the City Clerk and includes the following information:
1. No proposed changes in the boundaries or in the benefit zones;
2. Improvements and activities and their estimated cost;
3. The method and basis of levying the assessment for each business;
4. Amount of any surplus or deficit revenues to be carried over from the previous fiscal year; and,
5. Amount of contributions to be made from sources other than assessments.
Funding recommendations to the City Council are made by a ten-member (nine voting members, one non-voting member) Advisory Board, which is elected annually by businesses located within the District. State law requires that improvements and activities funded by assessments benefit businesses located within the District. Approximately 255 businesses are active in the District and assessed based on size, location, and business type. Assessments range from $80 to $1,404 per annum with an approximate $12 processing fee by the City. HB Downtown is not proposing any changes to the boundary map or the assessment formula (Attachment 3).
As required by state law, a public hearing must be held to provide the opportunity for member businesses to protest. The Resolution of Intention sets this public protest hearing for October 3, 2023. At that time, the City Council will tally the percentage of assessments protested and will hear additional public comment on the renewal of the District. The City Council can reduce assessments or modify the boundary area if public comments prompt adjustments. If written protests are received from member business owners totaling 50% or more of the assessment value, no further proceedings to continue the District can be considered for a period of one 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. Att #1 Resolution No. 2023-37
2. Att #2 Exhibit A - Annual Report and Proposed Budget for FY 23-24
3. Att #3 Exhibit B - Boundary Map, Business List, and Assessment Schedule
4. Att #4 Exhibit C - Improvements and Activities proposed to be funded
5. Att #5 PPT - BID Annual Report and Proposed Budget for FY 23-24