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HomeMy WebLinkAbout- - BIA Authorization - 9/7/2010CITY COUNCIL AGENDA REPORT MEETING DATE: SEPTEMBER 7, 2010 SUBJECT: BUSINESS IMPROVEMENT AREA (BIA) REAUTHORIZATION DATE: AUGUST 30, 2010 FROM: CITY MANAGER'S OFFICE PRESENTATION BY: THOMAS R. HATCH, ASSISTANT CITY MANAGER ITEM NUMBER: FOR FURTHER INFORMATION CONTACT: TOM HATCH, ASSISTANT CITY MANAGER AT (714) 754-5288 RECOMMENDATION: It is recommended that the City Council: 1) adopt a Resolution of Intention including: reauthorization of the Business Improvement Area (BIA) Assessment District boundaries; approval of the BIA budget; and the setting of a Public Hearing for October 19, 2010 and 2) approve and file the new annual report for the BIA for Fiscal Year 2010-2011. BACKGROUND: In 1995, the City Council adopted Ordinance No. 95-9 to establish a Business Improvement Area (BIA) for the purpose of assisting the Hotel and Motel Industry in their promotion of tourism within the City. The BIA imposed a one percent (1%) assessment on the sale of hotel and motel overnight guest room stays. This money was to be used for the establishment and maintenance of a local tourism and promotion council. The Costa Mesa City Council authorized the City Manager to contract with the Costa Mesa Tourism and Promotion Council to develop and administer the BIA. The Council later became the Costa Mesa Conference and Visitor Bureau. The Bureau's Board of Directors is comprised of the ten (10) general managers of the participating hotels, a representative from the City Council, and the City Manager or his designee. In January of 2000, the participating hotels requested, and the City Council approve an increase in the assessment from one percent (1 %) to two percent (2%). The authority to develop a Business Improvement Area is detailed in the Streets and Highways Code, Section 36500. This State law enables Costa Mesa to impose an assessment fee on businesses within an area designated by the City. All of Costa Mesa has been designated as the BIA benefit zone. Currently, the number of properties included in the BIA assessment levy is limited to the ten hotels that have expressed an interest in participating in the program as detailed in the attached Resolution of Intention (Attachment 1 — Exhibit A). 1 At a City Council meeting in May and June of this year, the City completed the annual renewal process for the BIA. As part of that process the following occurred: • All ten affected property owners were legally noticed of the assessment renewal and provided an opportunity to "protest" the annual assessment through the public hearing process. Staff also noticed all the hotels and motels in the City not currently included in the BIA to allow them the opportunity to be included in the BIA. • The Bureau provided a detailed Annual Report, as required by Section 36533 of the Streets and Highways Code. The Annual Report summarized the Bureau's activities and accomplishments over the past year and is on file in the City Clerk's Office as well as on-line as part of the May 4, 2010 staff report. • Lastly, Mayer, Hoffman, McCann P.C. has completed the annual audit of the Bureau for the fiscal year ending on June 30, 2009, as required by the Professional Services Contract in effect between the City and the Costa Mesa Conference and Visitor Bureau. The audit was included in the annual report as well. ANALYSIS: On August 30, 2010 the City received a letter from Mr. Shaun Robinson, Chairman, Costa Mesa Conference and Visitor Bureau (Bureau), stating that the Board of Directors requests that the BIA assessment be increased from two percent (2%) to three percent (3%). In addition, Mr. Robinson expressed interest in the assessment being effective November 1, 2010. In addition to what was provided to the City Council on May 4, 2010, Attachment A — Exhibit B includes the following information: • Letter from Shaun Robinson, Chairman, Costa Mesa Conference and Visitor Bureau outlining the justification for the proposed increase including eight key strategies. At the City Council Meeting on September 7, 2010, Mr. Robinson will provide the City Council with a PowerPoint Presentation that will explain in more detail the significant planning and thought that have guided the development of these strategies; • A Budget Summary comparison between Fiscal Year 2009-2010 and the Fiscal Year 2010-2011 Budget. The new FY 2010-2011 Budget includes the proposed increase in revenues from $1,114,379 for 2009-2010 to projected revenues of $1,600,000 for 2010-2011. The expenditure section includes a breakdown of where the increased expenditures would occur; • A Summary Packet of the highlights from the Barrett -Jackson Auction; • A 42 -page report entitled Competitive Assessment for the Bureau. The objectives of this Assessment include the interest in improving Costa Mesa's position as a visitor destination and to maximize visitor revenue to the Costa Mesa economy; and • The 2010 Destination Brand Marketing and Business Plan. This 31 -page report includes the identification of destination challenges, brand vision, Bureau vision, mission and goals, customer commitment and priority initiatives. E The final step to reauthorizing the BIA with an increase assessment of three percent (3%) is to schedule a public hearing and the invite the public to comment on this proposal. The recommendation is for the City Council to approve this new annual report and to adopt the attached Resolution of Intention including: reauthorization of the BIA Assessment District boundaries; approval of the BIA budget; and the setting of a Public Hearing for October 19, 2010. ALTERNATIVES CONSIDERED: Do not adopt the Resolution of Intention. FISCAL REVIEW: The City Finance Department reported that the Bureau received $1,137,854 in BIA revenue for fiscal year ending June 30, 2010. The Bureau's budget for FY 2010/11 includes $1,600,000 in revenue (which increased from the prior year due to the change in the proposed assessment effective November 1, 2010) and expenditures of $1,335,000. Expenditures are comprised of office rent of $25,000, office furniture, fixtures and equipment of $75,000, employee costs of $360,000, administrative expenses of $125,000 and marketing expenses of $750,000. This budget also includes $265,000 for the reserve fund. The City continues to provide a moderate level of assistance to CMCVB and receives one percent (1%) of the BIA assessment as reimbursement for collection and administrative costs. The one percent (1%) allocated to the City for reimbursement is estimated at $16,000 for the coming fiscal year. This fee will sufficiently cover the costs incurred by the City in assisting the Bureau. An audit of the CMCVB's expenditures has been completed by the City's independent auditor to determine if the expenditures are in compliance with State law and the agreement with the City. The most recent audit was included as part of the May 4, 2010 annual report and is on file with the City. LEGAL REVIEW: The City Attorney's Office has prepared the attached Resolution of Intention pursuant to the Parking and Business Improvement Area Law of 1989. In addition, the City Attorney's Office has provided legal guidance related to this revised BIA reauthorization process. CONCLUSION: This is the initial step in the reauthorization of the BIA assessment. As with other assessment districts, State law sets up a specific procedure to be followed in the establishment of such an area. The City Council will consider adopting a Resolution of Intention setting the date of the Public Hearing for October 19, 2010 and approving the new annual report of the Bureau. 3 THOMAS R. HATCH ASSISTANT CITY MANAGER COLLEEN O'DONOGHUE ASSIST. DIRECTOR OF FINANCE Attachments 1 Resolution of Intention DISTRIBUTION: CMCVB Chamber of Commerce KIMBERLY HALL BARLOW CITY ATTORNEY n