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HomeMy WebLinkAboutAgenda: Study Session A: Property Based Business Improvement District (PBID) Pol iii STAFF REPORT Arcadia Redevelopment Agency DATE: November 15, 2011 TO: Chairman and Members of the Agency Board FROM: Jason Kruckeberg, Assistant City Manager/Development Services DirectorZ '- By: Jerry Schwartz, Economic Development Manager 1/ps SUBJECT: STUDY SESSION — REPORT FROM ARCADIA DOWNTOWN BUSINESS ASSOCIATION CONCERING ESTABLISHING A PROPERTY BASED BUSINESS IMPROVEMENT DISTRICT (PBID) BACKGROUND The Arcadia Downtown Business Association (ADBA) held its initial meeting in June 2010. In July 2010, the group held their first planning meeting that has since become known as the "core group". The core group now meets on the second Tuesday of the month, while the full ADBA meetings occur on the fourth Tuesday of the month. The ADBA developed a mission statement, established a map for the downtown area, and selected officers. On January 18, 2011, the Agency held a Study Session regarding the downtown where it heard from the leadership of the ADBA. They requested that the Agency provide some ARA funds to hire a downtown consultant to guide their group. On February 15th, staff presented some options to fund different phases of downtown consulting work. Based on Agency direction, on March 15th, the Agency Board approved a contract with Urban Place Consulting to work with the ADBA to refine its goals and help determine how it would fund its plans for the downtown. DISCUSSION Urban Place Consulting has worked with the Arcadia Downtown Business Association to help them understand some of the strengths of downtown and areas for growth and improvement. They have distributed a survey about downtown, assisted with creating a non-profit status, developed a logo and website for the ADBA, and helped the ADBA recognize some of the potential advantages of a Business Improvement District. The ADBA has hosted a number of guest speakers to talk about their experiences with downtown business groups. Rob Hammond from Monrovia spoke about his experience as a business owner in downtown Monrovia as part of a Business-Based BID, including time and effort that went into bringing the movie theater into town. Joe Biaunco, a business owner in downtown Arcadia, spoke about his experience as part of a BID on Lake Avenue in Pasadena. The ADBA also heard from Marsha Rood, Principal of Urban Reinventions, who was heavily involved in the growth of Old Town Pasadena and Culver City. The ADBA Core Group voted unanimously to pursue a Property-Based Business Improvement District (PBID) for downtown Arcadia. While they understand that the process to establish a PBID may be more time consuming upfront, the funding is more stable and the property owners would have more involvement in the future of downtown. Urban Place Consulting, as indicated in their contract, prepared a report on downtown Arcadia, including their work with the ADBA and their own evaluation of the downtown, and explained the benefits of a PBID and the timing of the process. The Urban Place. report is provided with this staff report. Representatives of Urban Place will be present during the Study Session. The ADBA leadership will be attending the Study Session, and, like the January meeting, will make a presentation about their efforts and activities to date and plans for the future. They will explain why they believe a PBID will provide them the best format to market the downtown, develop future downtown promotional events, and work on retail recruitment. The Urban Place contract was just for the first step of the formation and goal setting procedures for the ADBA. It did not include guiding the ADBA through the PBID process, because at that time, this group did not have a clear direction. The Agency Board authorized this initial contract to help establish this direction. If the Agency Board wants to provide redevelopment funds for the PBID process, it would involve a new contract which cannot be completed now with the temporary limits placed on our activities by redevelopment law. A decision on two redevelopment bills is expected by the State Supreme Court by mid-January of 2012. If directed, staff could request bids from downtown consultants to work with the ADBA on the PBID process, so that a recommendation could be put on an agenda once the ruling on redevelopment law is made. The formation of a PBID could take approximately eight months to complete. The steps for forming a PBID are described on page 12 of the Urban Place report. The cost for a downtown consultant to work with the ADBA on the PBID process is expected to range between $50,000 - 70,000. RECOMMENDATION Provide direction. Approved: -eo P � Donald Penman, City Manager/Executive Director Attachment: Urban Place report on downtown Arcadia ADBA Mission Statement Downtown Map— Showing ADBA's proposed boundaries. Property Based Business Improvement District November 15, 2011 Page 2 of 2 1 i— /:Ns -1 t14;r:, '.., x.4, ... .,,,, :.,, , ..., -, i , 4,1/4 :, r , „,,,i , , ..... -,lif„,,,,,....., , , ,...,, , `• + „ --k .'ii,, ti .. ' ter ,:d ` y`' ,-- - :,, : Iii...,..:,..„ ... 0*10, °A 404/Lixttautixi, wticiiti,e 1 Business District Revitalization Study October 3, 2011 RBAN PLACE Arcadia,CA caw at .(i.-0-u . . 1 Downtown Arcadia Business District Revitalization Study Prepared for The City of Arcadia Arcadia Downtown Business Association October 3, 2011 Written by Ashley Westman Urban Place Consulting Group,Inc. Steve Gibson, President 5318 E. Second St.,Suite 336 Long Beach,CA 90803 562-439-6571 steve @urbanplaceconsulting.com www.urbanplaceconsulting.com . D Background In 2010,a group of stakeholders in Arcadia,CA came together to discuss the needs of property owners and businesses in the downtown area.The City of Arcadia has made significant improvements in public infrastructure downtown over the past years,but the business district suffers from many vacancies and a lack investment from the private sector.With a future Metro Gold Line station coming just two blocks north of the intersection of First Avenue and Huntington Drive,the stakeholder group wanted to spearhead a revitalization effort that would generate more business activity and improve the downtown atmosphere.They created an informal organization, the Arcadia Downtown Business Association ("ADBA") and held their first meeting in June 2010. The ADBA established a boundary map,officers, core group members,mission statement,and meeting schedule,with two meetings per month (one for the core group and one for the full membership.) They invited representatives of other downtown districts to their meetings to discuss the pluses and minuses of their organizations and experiences. On January 18,2011,the Redevelopment Agency held a Study Session to get an update on the ADBA,and it was at that time that the leadership told the Agency that they could benefit from some professional expertise in downtown management.The Agency supported it,gave staff direction,and,about 4 weeks later,completed a Request for Proposals process to find a consultant firm that could help the ADBA achieve its goals of formalizing their group and improving the downtown atmosphere. It selected Urban Place Consulting Group ("Urban Place")to organize the business group and to help the ADBA understand the different funding options to meet its goals, and the benefits and limitations of each. Purpose This report is a summary of stakeholder interviews and on-site research conducted by Urban Place from March to August 2011.The purpose of the report is to provide the City of Arcadia with the following: 1. A review of the work performed by Urban Place both with the ADBA and on its own; 2. An explanation of the two types of Business Improvement Districts (BIDS); 3. The ADBA's and Urban Place's recommendation to pursue a property-based Business Improvement District(PBID). Process In order to understand the needs of Downtown Arcadia's stakeholders and users,Urban Place conducted surveys,met with downtown individuals and groups,and established several means of reaching out to stakeholders. Mailed paper surveys and online surveys (the"May Survey")were conducted during the research timeframe,with 54 responses received. In addition,a condensed version of the survey(the "Parade Survey") was given to visitors of the ADBA's booth at the July 2,2011 Arcadia's Patriotic Festival,with 98 responses received.The respondents of both surveys were asked to rate various 1 attributes of the existing neighborhood and rank improvements or programs that would benefit their business or property in the future. Urban Place also met with and heard from Downtown Arcadia stakeholders regarding the issues facing downtown and how they affect their properties or businesses.These meetings included core group meetings of the ADBA officers,larger public ADBA meetings,and one-on-one meetings with area property owners. To help formalize the organization of the ADBA,Urban Place established a website, www.downtownarcadia.org,for the ADBA to communicate with and _• ._. -. •._• S t wIa.•0 .*....w*re"MINN....We W*010 e..r.w wwree..0 0 414.e. «1*yo S*1. ..-. inform the public.A logo was created r-for use use on the website and for other .1 Won I 1 N.ottian9. marketing and promotional materials. (.NNIsSA,Nl1.LL1• The organization's non-profit status will be formalized by the end of the "' ► year �� . 1 1- } 3 `,C Both a business owner database and a '`" � ' '''- property owner database were also x created to help analyze potential costs ► '"`_ a per business owner or property ® - -. owner based on an assumed budget. Additionally, Urban Place produced renderings to help stakeholders and members of the public visualize how small improvements could change the look and feel of public space downtown.The following images are of locations on First Avenue: .0 n. • : 1 , -11':,, • i . .4 `'f t • 6 Before After 2 o- - et y i{ x 'a rsM g � 7f of ',.,., i wim . ', 44# , Si 1 1 11 lii-iii .:'°::' I, A • fi tit, . _- M 1st . Before After The consultant team visited and walked the district numerous times to observe and assess its physical condition as well as the uses and behavioral patterns of people using the streets and sidewalks.The combination of surveys,interviews,research,and observations form the foundation of this report. Determining the Need Surveys The May Survey,distributed both online and via mail,sought to gain an understanding of the needs and opportunities for Downtown Arcadia.We received 54 responses,with roughly one- third of those being from property owners. Whet activities would you like to pursue in Downtown Arcadia? 100% 80% 60% 40% 20% 0% I Dining Retail shopping Entertainment All Other Responses The majority of respondents wanted to see an increase in the amount of dining,shopping,and entertainment opportunities in Downtown.When asked more specifically,the entertainment opportunities most favored included museums and live theatre. Bars and nightclubs ranked lower: 3 Please rate the type of entertainment uses that would be appropriate for Downtown Arcadia. 5 4 3 2 DKni:ahs Mvd Anima fiMrrsm! Ben kgh»fuls MI.tlT116.t In many BIDs throughout Los Angeles and the country,one of the most common services provided is a Clean and Safe program to clean sidewalks and litter and provide information and safety services to the district. In Arcadia,however,the needs are different.As seen in the chart below,the City rates highly in terms of street cleaning,trash removal,security,and landscaping: How would you rate the City of Arcadia's performance in providing the following services to the streets adjacent to the properties/businesses you own within the district? Street cleaning Trash removal Securitylpolice Landscaping 0 1 2 3 4 5 Instead,what are needed in Downtown Arcadia are programs related to marketing and the appearance of private property,as opposed to public property: 4 wok Which of the following programs would benefit your property and attract tenants or business? Street festivals Storefront Retail/office Cooperative and events improvement recruitment marketing grant program program In terms of traffic and parking,visitors to the downtown like having free parking,but feel that there is room for improvement in additional on-street and off-street parking and in way finding signage to access that parking. Mid-block crossings for pedestrians also ranked highly,likely due to relatively heavy traffic on Huntington Drive: Please rate the parking and access Improvements that are needed. 4 z i 0 ,naaa■d off Incwaai on Pies,;voi,lonon mean parkin' meat parks;• pro;ram ••ibbd.padaatnan 9attar pack'';i7na;a 9hun4 sauce Loadn;zone a'for>a•ant 'rout's The Parade Survey taken in July 2011 reinforced the findings of the previous survey. Respondents were asked what changes needed to take place in order to improve business downtown; the top responses were the mix of uses and marketing/events. 5 Changes Needed to Improve Business Downtown 80 70 N d C 60 0 N 50 C i�, 0 40 4, 30 i Z 20 , 6 , 10 um il ilil WI 0 e> cti5 area a ae ,y �Q c4, `c e� aa� 446 4. ' Caro �a' ale .� .b �a� �a b$ /\ ,/ I l 4 qt Respondents were also asked what specific programs they thought would improve Downtown Arcadia.Top responses for this question included street festivals and events,and a storefront improvement grant program (which the City has,but a BID could provide better access to): Programs That Would Improve Downtown 90 80 yM JI 70 QC a 60 41 oc so It o 40 30 Z 20 10 o ` ` oi, 0 S ` $1 c/ ...% � '� o� l� a', to% `a a c � a �c a a � c c � fi4%, a`\ °� � � F a .c b/ / IS /� � `a y 4.0 Q-e�� . 4 The conclusion from both of these surveys is that Downtown Arcadia needs more investment to improve the physical appearance of private property,as well as promotional and marketing efforts to attract a better mix of businesses and to host events that lure residents and future customers to the downtown area. 6 Stakeholder Interviews The consultant team met with business owners, property owners,and other stakeholders to assess the needs of Downtown Arcadia. Stakeholder concerns mirrored those of the survey respondents,with marketing,events,and private property investment being top issues.Urban Place also met with representatives from Rusnak Mercedes-Benz and Embassy Suites. Both properties are located at the perceived boundary of Downtown Arcadia.Both representatives stated that an improved and more vibrant Downtown Arcadia would greatly benefit their properties and customers. Research and Observations Downtown Arcadia is a quaint,if sleepy,downtown that already has a wonderful infrastructure in place.The sidewalks are clean and wide,the streets are landscaped,and the street furniture is appealing.What's missing,however,are the people. The City's past investments in the public infrastructure are apparent,but so is the need for a vitality and liveliness that can only be achieved through the efforts of a dedicated organization. The streets are riddled with vacancies; many of the buildings and facades are in great need of repair; and the current business offering is largely office-or service-oriented.There seems to be ample parking,but the perception is that parking is difficult to find.To create a vibrant atmosphere,some City ordinances may need to be changed to allow outdoor dining and other activities on the sidewalks. Downtown Arcadia must make a � dedicated effort to improve its , ►RR4Yt�LAND' offering if it wants to compete with nearby Myrtle Avenue and Old EX ( HOT 'E" OO DS Pasadena.With a new organization (such as a BID) dedicated to „. revitalizing the downtown,and the consistent financial means to back it (annual assessments),Downtown Arcadia could become a beautiful and , vibrant,pedestrian-friendly neighborhood that would offer a = • unique and festive atmosphere for visitors and residents,and encourage new businesses to open their doors. t '' The future light rail station within " ;ti', the downtown boundaries will . ;v. ,1 , = _ ,, : , coincide perfectly with the ,: establishment of a BID,adding % _ ' w -- further to the appeal and ► , accessibility of Downtown Arcadia Iiik. and confirming that it is indeed one .. -`, '. of the area's"Next Hot'Hoods." Summary of Needs In the surveys,interviews,research,and observations,the same message was repeated. People perceive that there"is not much going on"in Downtown Arcadia and agree that private investment,as well as marketing and programming,is needed to make the area lively and competitive with other downtowns nearby.Arcadia's needs are similar to other commercial districts across the country.Many of these districts,especially the ones that are striving to be "Great Places,"have implemented BIDs to resolve issues similar to the ones faced here. Support While the survey sample is potentially biased towards people in support of a BID,the percentage of respondents who claimed that they were"Interested"or"Very Interested"in a BID for Arcadia (almost 90%) is very high at this point in the process. How interested are you In exploring a BID for Downtown Arcadia? Very interested Interested - Not Interested - No Opinion Additional meetings during the next phase of the process will help establish a better estimate of support for a BID. Business Improvement Districts Business Improvement Districts have been in existence since the 1970s as funding mechanisms to revitalize commercial districts. In the United States,they currently raise well over$100 million annually to improve commercial centers,"Main Streets"and downtowns.The number of BIDs in North America is approaching 1,000 and several countries,including the United Kingdom, Australia, New Zealand, Ireland, France,Sweden,japan,South Africa,and Mexico,are beginning to organize BID structures in their cities. BIDs help improve the economic vitality of commercial districts and neighborhoods by receiving annual mandatory assessments from business or property owners,and using those assessments to fund the resources most needed in the district,from "clean and safe"services to marketing and promotions. Research by the Furman Center for Real Estate and Urban Policy at New York 8 University in 2007 found that,on average,the value of commercial property within New York City BIDs is approximately 15%higher than comparable properties in the same neighborhood but outside the BID's boundaries.Likewise in Los Angeles,for example,the Fashion District BID created an atmosphere of investment that led to 6.3 million square feet of new development in 10 years.Vacancy rates there declined 3%in only three years. Discussion of BID Types One of the tasks of this phase of the project was to determine which type of BID would best suit Downtown Arcadia.While most states allow for assessment districts based only on property- ownership (PBIDs),California law also allows the establishment of assessment districts based on business ownership (BBIDs).Urban Place presented the pros and cons of each BID type at ADBA's public meetings.The following tables summarize these differences: Business-Based BIDs (BBIDs) Pros Cons • Quicker,easier,and cheaper to form • Smaller budgets • More frequent renewals • Budget approved annually by City Council (not by non-profit Board) • No property owner involvement • Vacancies will reduce o eratin revenue Pros Cons • Larger budget • Longer,more difficult,and more • Longer term (less frequent renewals) expensive to form • Budget approved by non-profit governing Board • Property owner involvement • Vacancies will not effect operating revenue While the majority of BIDs in California are PBIDs,there are several examples of BBIDs that have been successful (such as Belmont Shore in Long Beach). BBIDs have been successful in implementing events and promotions to bring people to the district,but they generally lack the funding or vision to make any sustaining,long-term physical change. For that,property owners must be involved.The larger budgets and longer terms of PBIDs allow the managing non-profit organization,and its Board,to focus on programs that will change the physical appearance of a neighborhood in addition to producing events and marketing,instead of just promoting a few events and working to get renewed each year. Arcadia's closest neighbor, Monrovia,established a BBID on Myrtle Avenue in which businesses are assessed based on sales revenue. Monrovia City Manager Scott Ochoa stated that the BBID must now audit businesses because of potential sales reporting misconduct. Ochoa stated that,if he had to repeat the process,he would establish a PBID on Myrtle Avenue. 9 Based on the needs in Downtown Arcadia to not only host events and activities,but to encourage new long-term development and a better mix of businesses, the ADBA voted unanimously to pursue a property-based BID(PBID). Urban Place also recommends that the City pursue the formation of a property-based BID(PBID)for Downtown Arcadia. PBID Establishment PBIDs address issues such as retail recruitment,retention,economic development,homelessness, security,cleaning and maintenance,parking,etc.By addressing these issues,they change the reality and more importantly,the perception,of a business district. PBIDs can fund services that are above and beyond what the City currently provides.PBIDs are also a source of leadership and management.The property owners take control and manage the business district by assessing themselves,which makes the PBID a provider of finances,as well.This assessment is on the County tax bill and is collected by the County; however,it is then returned to the PBID to perform the services that the property owners have deemed necessary to make their district a great place. Preliminary Programs and Budget Our initial research indicates that an annual budget of approximately$200,000 to$300,000 is needed to fund the programs and activities that Downtown Arcadia needs.In response to surveys, interviews,research and consultant observations,we believe improvements in the following areas would strengthen the perception of Downtown Arcadia and greatly enhance the user experience: 1. Marketing/Communication a. Newsletter b. Website/Social Media c. Street Directories d. Banners 2. Development a. Business Recruitment and Retention b. District Visioning and Façade Improvement Assistance c. District Events Boundaries Boundaries will be determined in the next phase of the project,but generally include the area surrounding the axis of Huntington Drive and First Avenue. Assessment Equality One of the important tenets of PBID law is that the manner of assessment is one that fairly and equitably distributes the burden of financing the supplemental services among real property owners within the district.The most common assessment variables are property frontage,lot square footage,and building square footage. Most PBIDs use one or more of these variables to assess property. Many PBIDs also use"benefit zones"to modify assessments in certain areas of the PBID where more or less benefit is received than the whole.This option may be useful in Downtown Arcadia, especially for the hotels or car dealership on the periphery that would benefit from increased 10 w activity downtown,but not as much as,perhaps,a business located at First Avenue and Huntington Drive. The choice of assessment variables and zones depends to some extent on the type of services that are provided by the PBID.The variables to be used in Downtown Arcadia will be determined in the next phase of the project along with programs and budgets. Recommendation Urban Place recommends that the City of Arcadia commit to forming a PBID to revitalize Downtown Arcadia.This will help to establish a strong private sector organization with a dependable financial core.This self-sufficient organization is necessary in order to implement the many steps needed to create a great business district. We also recommend that the Arcadia Downtown Business Association evolve into a leadership organization with adequate staff to manage the programs that are funded by the PBID.This organization would have a Board whose majority would be property owners,with business owners and other downtown stakeholders also represented.The Board would establish the vision, set the goals for the district,and act in an oversight capacity.The staff would be charged with developing the programs and initiatives to fulfill the vision and meet the goals. Next Steps The following table outlines the tasks and relative timeframes required to successfully establish a PBID in Downtown Arcadia.The steps follow a general outline;some tasks from different phases may occur simultaneously. 11 TIME FRAME PHASE TASKS -- City Council approves funding for PBID establishment Days 1-60 Phase 1 Stakeholder focus groups Program Development One-on-one meetings Budget and program development Continue steering committee meetings Database development Days 61 -90 Phase 2 Draft management plan Plan Development Define assessment methodology Draft engineer's report Continue database development Develop governance structure Days 91 - 120 Phase 3 Plan review workshops Plan Review One-on-one consensus building Continue steering committee meetings Final plan development Days 121 - 180 Phase 4 Campaign strategy and training Property Owner Develop communication/newsletter Acceptance Draft petition, review by City Petition packaging and distribution Campaign management and meetings Days 181 - 240 Phase 5 City Council hearings Public Hearing/City 218 Ballot process Council Process Develop contracts with City Prepare database for assessor Summary Downtown Arcadia has a solid foundation.Although the area is currently suffering from vacancies and other effects of a down economy,the formation of a PBID would bring renewed vitality to the area through events,marketing,business recruitment and retention,and renewed private investment.The long-term vision,funding,and leadership of a PBID are exactly what Downtown Arcadia needs to turn itself around and be a truly vibrant,authentic,transit-and pedestrian- friendly neighborhood. 12 A 51,./i. 40/40/10/11,1/ BUSINESS ASSOCIATION Mission Statement: The Arcadia Downtown Business Association is the unified voice of businesses and property owners, together, to revitalize and promote the downtown business area through increased public improvement, stimulation of new capital investment and blending of public and private economic development strategies. 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