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HomeMy WebLinkAboutItem 2a: Introduce Ordinance No. 2306, concerning the establishment of community benefit districtsR-ASMAIM DATE: December 18, 2012 STAFF REPORT Development Services Department TO: Honorable Mayor and City Council FROM: Jason Kruckeberg, Assistant City Manager /Development Services Director_tl'-- By: Jerry Schwartz, Economic Development Manager (f 6 SUBJECT: ORDINANCE NO. 2306, AN ORDINANCE OF THE CITY OF ARCADIA, CALIFORNIA, AMENDING ARTICLE I OF THE ARCADIA MUNICIPAL CODE BY ADDING CHAPTER 14 CONCERNING THE ESTABLISHMENT OF COMMUNITY BENEFIT DISTRICTS Recommendation: Introduce Ordinance No. 2306 SUMMARY Streets and Highway Code Section 36600 et seq. governs the establishment of Property or Business Based Business Improvement Districts in California. It provides the requirement for the percentage of supportive petitions returned (50% of total business owners in the district) before an election can be held, and the voting requirement for approval of the District (50% +1 of total assessments in favor). It also provides for a five year time period for a new Property Based Business Improvement District (PBID). As a Charter City, the City of Arcadia has the legal right to pass an ordinance that sets up its own parameters for PBIDs. At the November 20, 2012, City Council meeting, the Council gave direction to prepare an ordinance for that purpose. Ordinance 2306 has been drafted to provide distinct parameters for such districts in Arcadia and is presented for introduction. BACKGROUND On May 15, 2012, the City Council authorized a contract with New City America to work with the Arcadia Downtown Business Association (ADBA) on the formation of a PBID. One reason that the ADBA leaders were unanimous in their support for New City America was the company's vast experience establishing PBIDs in cities large and small throughout California. New City America has held five meetings with an expanded group of downtown property and business owners. It has surveyed downtown property owners and received enough support for the proposed district to move forward with the formation process. At the November 20, 2012, City Council meeting, Marco Li Mandri, the President of New City America, provided an update to the City Council about the efforts to date and the Ordinance No. 2306 December 18, 2012 Page 2 of 3 next steps in the process. One issue he raised is the advantage to the District if the City of Arcadia were to adopt a Community Benefit District Ordinance that would provide more flexibility compared to the Streets and Highways Code. New City America has successfully established Community Benefit Districts in several Charter cities, and has provided copies of Community Benefit District ordinances used by the City of Glendale and the City and County of San Francisco. The City Attorney reviewed these ordinances and determined that Arcadia could take a similar action. DISCUSSION The existing process to establish a PBID is based on the Streets & Highways Code. It specifies the steps that are required, the support levels that are necessary at each benchmark, and the term of the PBID. These requirements are challenging to meet, and can make the makes the establishment of a PBID uncertain. For example, 50% of the petitions received must support having a vote on the establishment of a PBID before it can proceed. This is a level that can be difficult to reach. Another requirement is that when a PBID is first established, it can exist for five years before it must be renewed. There are two major impacts of the five year rule; the first is that because of the lead time to receive assessment funds from Los Angeles County and then implement the Plan for the District, there is not sufficient time to make a positive impact before the renewal process must begin. The second impact is that the short time before renewal requires hiring and paying a downtown consultant to assist with the renewal process after seemingly having just paid for the establishment of the PBID. The proposed Ordinance No. 2306 creates local rules for Community Benefit Districts. It resolves the limitations in the Streets and Highways Code by utilizing the City's Charter status to establish provisions that can offer greater flexibility in the PBID formation process. Importantly, it does not change the level of support needed for final approval of the District. The Ordinance provides flexibility to a PBID through the following: • Reduction in threshold percentage of supportive petitions needed to request a vote on the establishment of a PBID from 50% to 30 %. • Extension of the potential initial length of a PBID from five (5) years to twenty (20) years. The ultimate length will be decided by the committee of property and business owners that has been involved with the establishment process. • The ability for the City to be repaid for its costs to establish the PBID from future assessment revenues. These costs can include; consultant costs, mailing costs for PBID establishment vote, and other expenditures on the part of the City. • The City could potentially loan the PBID funds to start its work before assessment revenues are received. Any loan would be repaid, with interest, from assessment revenues. Ordinance No. 2306 December 18, 2012 Page 3of3 The Streets and Highways Code requires the vote to establish the PBID to have the support of 50% + 1 of the total assessments. Ordinance No. 2306 does not change that threshold. The Ordinance will allow the PBID, to have ample to time to get established, implement the work plan, and show some positive results before starting the renewal process. Ordinance No. 2306 is Citywide rather than specific to the Downtown area. If at some future time, another commercial area of the City decides to pursue the formation of a PBID, Ordinance No. 2306 would apply to that area and could benefit their efforts. FISCAL IMPACT There is no fiscal impact to the introduction or adoption of Ordinance No. 2306. The impact of the passing of a Property Based Business Improvement District will be longer term and is difficult to quantify. More shoppers in downtown Arcadia and greater demand for currently vacant commercial spaces would be positive for the local economy. There is a provision for repayment of City costs for the formation of a PBID once it is operating and generating assessment revenues if the City wishes to pursue this at a later date. RECOMMENDATION Introduce Ordinance No. 2306, an Ordinance of the City Council of the City of Arcadia, California amending Article 1 of the Arcadia Municipal Code by adding Section 14, establishing Community Benefit Districts. Approved: �oinicLaz to City Manager Attachment: Ordinance No. 2306 ORDINANCE NO. 2306 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ARCADIA, CALIFORNIA, AMENDING ARTICLE I OF THE ARCADIA MUNICIPAL CODE BY ADDING CHAPTER 14 CONERNING THE ESTABLISHMENT OF COMMUNITY BENEFIT DISTRICTS THE CITY COUNCIL OF THE CITY OF ARCADIA, CALIFORNIA, DOES ORDAIN AS FOLLOWS: SECTION 1. The Arcadia Municipal Code is hereby amended by adding Chapter 14 to Article I to read in its entirety as follows: "CHAPTER 14 COMMUNITY BENEFIT DISTRICTS 1960. PURPOSE AND INTENT. The purpose of this chapter is to enhance the ability of the City and businesses therein to establish property and business improvement districts pursuant to the Property and Business Improvement District Law of 1994 (Streets & Highways Code Section 36600 et seq.) by: (1) reducing the percentage of property owners whose signatures are required to initiate formation of a property and business improvement district (`Property BID ") from fifty percent (50 %), as authorized by the Property and Business Improvement District Law of 1994, to thirty percent (30 %); (2) extending the period for which a Property BID may exist from five years, as authorized by the Property and Business Improvement District Law of 1994, to twenty years; and (3) authorizing the reimbursement of formation costs. 1 1961. ALTERNATIVE PROCEDURES. A. The procedures established in this chapter shall be additional or alternative to any other procedure established by ordinance or state law, and are intended to supplement those procedures. B. In forming assessment districts to fund activities and improvements that confer a special benefit on property, the City Council may elect to use the procedures set forth in the Property and Business Improvement District Law of 1994 (Streets & Highways Code §§ 36600 et seq.) (the "PBID Law ") as modified by this chapter. The City Council shall be bound by, and comply with, applicable state law governing the establishment and operation of property and business improvement districts in all respects not inconsistent with the chapter. C. An assessment district established pursuant to this chapter shall be denominated a "Community Benefit District" or "District" and the assessment levied in connection with such a district shall be denominated a "Community Benefit Assessment." D. Except where otherwise provided in this chapter, "Community Benefit District' shall have the meaning given to "Property and Business Improvement District' by Section 36611 of the PBID Law and each reference in the PBID Law to a "Property and Business Improvement District' or a "District' shall be deemed also a reference to a "Community Benefit District." E. Except where otherwise provided in this chapter, "Community Benefit Assessment' shall have the meaning given to "Assessment' by Section 36606 of the PBID Law and each reference in the PBID Law to an "Assessment' shall be deemed also a reference to a "Community Benefit District." 2 1962. PETITION REQUIREMENT. Upon the written petition, signed and acknowledged, of the property owners in the proposed District who will pay more than thirty (30) percent of the assessments proposed to be levied, the City Council may initiate proceedings to form a District by adopting a resolution expressing its intention to form a District. The amount of assessment attributable to property owned by the same property owner which is in excess of twenty percent (20 %) of the amount of all assessments proposed to be levied shall not be included in determining whether the petition is signed by property owners who will pay more than thirty percent (30 %) of the total amount of assessments proposed to be levied. 1963. ADVANCE REIMBURSEMENT OF FORMATION COSTS. A. The City Council may authorize a District formed pursuant to this chapter to recover through assessments the costs incurred in forming the District, including: 1. The costs of preparation of the management plan and engineer's report required by state law; 2. The cost of circulating and submitting the petition to the City Council seeking establishment of the District; 3. The costs of printing, advertising and the giving of published, posted or mailed notices; 4. Compensation of any engineer or attorney employed to render services in proceedings under this chapter or the PBID Law; and 5. Costs associated with any ballot proceedings required by law for approval of a new or increased assessment. 3 If the District will be authorized to recover these costs, the management plan required pursuant to Streets & Highways Code Section 36622 shall specify the formation costs eligible for recovery through assessments, the schedule for recovery of those costs, and the basis for determining the amount of the additional assessment for recovery of costs, including the maximum amount of the additional assessment, expressed either as a dollar amount, or as a percentage of the underlying assessment. B. The City may advance funds for the first year of a District so that the District can commence work prior to the initial collection of the assessments. The funds advanced shall not exceed the total assessment for the first year. The funds advanced shall be repaid, with interest, within five (5) years of the collection of the first annual assessment. 1964. DURATION OF A DISTRICT. A District established pursuant to this chapter may have a duration of up to twenty (20) years, if so specified in the resolution of intention. SECTION 2. If any portion of this Ordinance or the application thereof to any person or circumstance shall be invalid or unenforceable to any extent, the remainder of this ordinance shall not be affected thereby and shall be enforced to the greatest extent permitted by law. SECTION 3. The City Clerk shall certify to the adoption of this Ordinance and shall cause a copy of same to be published at least once in the official newspaper of said City within fifteen (15) days after its adoption. This Ordinance shall take effect on the thirty -first (31S) day after its adoption. [SIGNATURES ON THE NEXT PAGE] 4 Passed, approved and adopted this day of 2013. Mayor of the City of Arcadia ATTEST: City Clerk APPROVED AS TO FORM: Stephen P. Deitsch City Attorney