To: Honorable Mayor and Members of City Council
From: Dr. Peter Pirnejad, Assistant City Manager - Development Services
Prepared By: Robin Klingbeil, Senior Development Project Coordinator
TITLE:
Title
Annual Report for the Downtown Napa Property and Business Improvement District (PBID) and Levy of Assessments
LABEL
RECOMMENDED ACTION:
Recommendation
Adopt a resolution approving the 2018/2019 Annual Report for the Downtown Napa Property and Business Improvement District (PBID), levying assessments in the PBID, and determining that the actions authorized by this Resolution are exempt from CEQA pursuant to CEQA Guidelines Section 15301, Existing Facilities (Minor Alterations of Existing Streets and Sidewalks).
Body
DISCUSSION:
Annual Report:
The PBID is an assessment district in the Downtown Napa / Oxbow District area, whose owners have approved an assessment on their respective properties for financing improvements and activities to benefit the parcels and businesses within the boundaries of the district. In accordance with California Streets and Highways Code Section 36600, et seq., regarding governance of PBIDs, and the contract obligations contained in Agreement 9354, “Napa Downtown Association Agreement, Management of Assessment Districts,” the PBID Owners Association must prepare and file an annual report for Council review and approval, and to ensure accountability to assessed property owners. The report covers activities and accomplishments of the PBID in FY (calendar year) 2017, describes ongoing programs taking place currently in FY 2018, and provides an estimate for 2019 future revenues received from assessments that are scheduled to be levied through action by Council today. Activities of the PBID Owners’ Association are managed through the Napa Downtown Association. The fiscal year for the Downtown Napa PBID is January 1 - December 31.
Exhibit “A” to the attached resolution includes the following components of the report: an excerpt from the approved 2016-2020 Management District Plan (MDP) titled “Service Plan & Budget”, which outlines improvements and activities to be undertaken and the proportion of budget for each category; the current FY 2018 work program and budget and a preliminary budget and work program for 2019; the 2017 Budget vs. Actual profit and loss statement; the rules governing the content of the annual report; members of the PBID Owners’ Association; and the boundary map.
Exhibit “B” to the attached resolution is the chart of assessments to be levied in 2018 for receipt by the PBID in 2019 to fund activities in FY 2019.
The PBID boundaries span the general area in the central Downtown Napa core, along the Main Street corridor on the west side of Soscol, and along the First, Third and McKinstry Street corridors between Soscol and Silverado Trail, as shown on the map in Exhibit “A”. There are currently 274 properties assessed as part of the PBID; these parcels are commercial or are used to support commercial businesses such as parking lots or structures. Residential properties and those containing non-profit services are not assessed. The PBID is funded by annual assessments that are collected from properties within the PBID on the property tax bill . The assessment revenue is collected by the County, dispersed to the City, and the City distributes the revenue to NDA under the terms of Agreement 9354. Assessments for this particular PBID are calculated based upon the size of the parcel and its use. The assessment rate baseline was set during the renewal period, and has increased each year based upon the Consumer Price Index year-over-year percentage change. The Management District Plan limits annual increases to no more than 3 percent.
The PBID was originally formed in 2005. It was renewed in 2010, and again in 2015 for a third five-year term which will expire December 31, 2020. The boundaries of the PBID have remained constant since its adoption, although during the 2015 renewal process there were zone changes redesignating properties and their assessments according to their respective levels of benefit. The properties located in the central, more intense commercial corridors (shown in green on the boundary map) are in Zone 1. Zone 2 parcels are on the periphery (shown in blue on the boundary map) within transitional zones between the central core and the outlying neighborhoods to the north and south of Downtown and the Oxbow District. Because the parcels in Zone 2 contain uses that do not traditionally receive an equal level of promotions and benefits as those in Zone 1, they are assessed at roughly one-third to one-half of the rates applied to parcels in Zone 1.
For instance, a 1,000-square-foot retail property in Zone 1 will be assessed $216 for the next fiscal year, whereas a 1,000-square-foot retail property in Zone 2 will be assessed only $72 per year because it does not receive the same level of benefit due to its location and use. Funds generated in one zone have to be spent on promotions and activities in that particular zone.
Over the life of the Downtown Napa PBID, assessment revenue has been used to support special events, marketing, collateral, and environmental improvements such as signage, public art, and contributions to downtown circulation improvements. For the 2016-2020 PBID, (see Exhibit “A” to the attached resolution), the distribution of revenue by category in the annual budget was set forth and approved in the DMP, and therefore remains constant. A majority of the revenue (57%) has been designated for “Beautification, Maintenance & Infrastructure Improvements” such as contributions for public sidewalk and parking garage cleaning and maintenance, installation of hanging flower baskets on Victorian lampposts, and holiday lights and decorations. About 26% of the budget is dedicated to “Marketing, Ambassador & Safekeeping Programs”, which includes special events such as the Main Street Reunion Car Show and the Napa Live Inside and Out music event series, which is in its third season. This category also includes travel writer and influencer familiarization tours, production of shopping guides and maps, and establishment of a new ambassador program which will debut this summer. Trained “ambassadors” will be stationed in the Downtown and Oxbow areas on Fridays and Saturdays to serve as guides for information, service and hospitality resources, and to be eyes on the street. The remainder of PBID revenue is for administrative costs.
As noted above, PBID assessments are calculated each year with cost of living / cost of business increases to continue funding the activities of the district, which is a standard practice for PBIDs. Owners in the district are aware of these increases per language in the adopted Management District Plan and from correspondence during the petition and ballot process. Because the Napa PBID assessments are due to the Assessor’s Office each August, the PBID is aware of the expected revenue to be received the following year and is able to budget accordingly. Incremental increases in revenue will be applied to long-term projects such as maintenance of the floral baskets or Downtown Ambassador Program, which required funding up front to recruit and train the participants. Any excess revenue will be retained in a reserve / contingency account for unexpected costs.
Exhibit A to Attachment 1 contains the FY 2019 proposed PBID work program and budget, broken out by Zone to reflect the specific activity to be funded from revenues in each zone. As noted, the estimated revenue for FY 2019 is approximately $445,000 which is the amount calculated on Attachment 2, Chart of Assessments, to be levied by Council action today.
Levy of PBID Assessments:
The City Council authorizes the levy of annual assessments on properties within the boundary of the PBID. Assessment rates are determined by the location, size and use of the property. As stated earlier, annual increases are calculated based on the percentage difference from year-to-year as determined by the Consumer Price Index (CPI) for All Urban Consumers, San Francisco/Oakland/San Jose Local Area Index, with a maximum annual increase of 3 percent. The most recent release (dated May 10, 2018), shows that the CPI percentage rate increased by 3.2 percent from April 2017 to April 2018. As required by the California Streets and Highways Code Section 36650 (b) (4), a chart of PBID properties showing the adjusted rates and assessments is attached as Exhibit “B” to the attached resolution.
For the assessments to be levied this year, rates per parcel square foot are increased by three percent, as follows:
Zone 1: Retail 0.216; Non-Retail 0.144; Parking 0.072; Vacant 0.036
Zone 2: Retail 0.072; Non-Retail 0.072; Parking 0.036; Vacant 0.036
Assessments levied by this action will be itemized on owners’ 2018 property tax bill, collected by the Napa County Tax Assessor and forwarded to the City. The City Finance Department issues payment of these funds to the NDA/PBID Owners’ Association after January 2019 to fund the 2019 calendar year work program. As indicated by Exhibit “B” in the attached resolution, the PBID is expected to receive about $445,000 in assessment revenue from the 274 qualifying properties.
FINANCIAL IMPACTS:
There are 27 properties in the PBID that are owned by various City entities, including the City of Napa, Housing Authority, Public Facilities Financing Authority, and the Parking Authority. Twenty parcels contain parking lots or structures, four are office buildings, and three are vacant land. The assessment on the City’s properties for the upcoming year will be approximately $55,510 which are part of the City’s budget.
CEQA:
City staff recommends that the City Council determine that the Recommended Action described in this Agenda Report is exempt from CEQA pursuant to CEQA Guidelines Section 15301 Existing Facilities (Minor Alterations of Existing Streets and Sidewalks).
DOCUMENTS ATTACHED:
ATCH 1 - Resolution
EX A - Excerpt from PBID Management District Plan
EX B - Downtown Napa PBID Chart
NOTIFICATION:
The NDA and Napa PBID Owners’ Association were notified of this agenda item prior to the meeting date, a public hearing notice was published in the Napa Valley Register on May 25, 2018, and the agenda was posted in publicly accessible locations as required by law.