Agenda Item Wording:
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Receive the May 2022 Annual Operations Report for the Downtown Visalia Property and Business Improvement District (DTVPBID); and approve the 5% annual assessment increase as proposed, or amended, to be included in the 2022/23 tax roll, as required by the DTVPBID Management District Plan (MDP).
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Deadline for Action: 5/23/2022
Submitting Department: Finance and Technology Services
Contact Name and Phone Number:
Melody Murch, 559-713-4379, melody.murch@visalia.city <mailto:melody.murch@visalia.city>
Department Recommendation:
That Council receive the Annual Operations Report for the DTVPBID, as submitted by the Downtown Visalia Property Owner’s Association (DTVPOA), and review and approve the proposed increase in assessments for the 2022-23 tax roll, making any changes they deem necessary prior to approval.
Background Discussion:
Summary:
The Downtown Visalia Property and Business Improvement District (DTVPBID) is an assessment district which provides activities and improvements to Downtown property owners. The DTVPBID was created in 1998 and has been extended by ballot of the affected property owners ever since. The current DTVPBID duration is January 1, 2020, through December 31, 2029. In accordance with the DTVPBID Management District Plan (MDP), the City has contracted with the Downtown Visalia Property Owner’s Association (DTVPOA) for the administration of the DTVPBID.
The DTVPBID is required to submit the attached annual operations report by May 31st each year in accordance with the Property and Business Improvement District Law of 1994 (PBID Law) and the current agreement between the City and the DTVPOA. The report summarizes past, current, and planned activities, improvements, and the financial state of the DTVPBID. The report must also include any planned assessment increases. Council’s role, according to PBID Law, is to review the attached report to ensure consistency with the Management District Plan (MDP) and make any changes it deems necessary to ensure compliance with the MDP as balloted by the affected property owners.
The MDP sets the maximum annual increase in assessments. To accommodate increases to the California Minimum Wage which occurred annually through January 2022, the MDP allowed a 10% increase through the 3rd year of the plan (2022). Beginning with year 4 (2023), annual increases are limited to 5% each year for the remainder of the plan. The requested 5% assessment increase for year 3 (2023) complies with the maximum allowed increase under the MDP. The proposed 5% increase for the 2023 year is shown in Table 1: Summary of Proposed 2023 DTVPBID Increase.
Table 1: Summary of Proposed 2023 DTVPBID Increase
(See fiscal impact below for the breakdown of the City of Visalia’s assessment distribution based on properties owned in the district)
Any assessment increase approved by Council tonight will be brought back on June 6, 2022, as part of the Tax Roll process.
Additional Information:
DTVPBID V Formation: Since 1998, the DTVPBID has collected assessments under PBID Law to provide funding for improvements and activities to preserve and enhance the economic condition of Downtown Visalia. The 5th iteration of the DTVPBID was formed on July 15, 2019 by a ballot of the owners of property located within the district and began on January 1, 2020. As prescribed by the current MDP, administration of the DTVPBID is being performed by the Downtown Visalia Property Owners Association (DTVPOA) under a management agreement approved by City Council on December 3, 2019. As required by PBID Law, and included in the agreement with the DTVPOA, the annual operations report is to be prepared and presented to the City Council each year. The deadline of May 31st has been set to allow the inclusion of any assessment increases approved by council in the annual Tax Roll process.
Reporting Requirement: The annual operations report is required by PBID Law and the DTVPOA Management Agreement to include certain information summarized by the following items excerpted from section 2.B. of the agreement. The full PBID Management Agreement is included as Attachment B to this item.
Agreement Section 2.B.
B. Prepare and provide to the City, for review by the City Council, an annual operations report for all matters covered under this Agreement on or prior to May 31, 2020, and thereafter no later than May 31st of each year. Such annual report shall include financial summaries to be provided in the format set forth in Exhibit A, and account for:
i. all actual revenue, activities and expenditures during the fiscal year of the District (January I through December 31) prior to the year of the report;
ii. ii. all to-date and projected revenue, activities and expenditures during the then current fiscal year; and
iii. a specific management plan, including operating budget, for the fiscal year following the year of the report. The specific management plan and budget for the following fiscal year shall specify the actual maintenance, activities and improvements proposed to be provided for in that year along with their estimated cost; and
iv. shall be filed with the clerk and shall refer to the property and business improvement district by name, specify the fiscal year to which the report applies and also include any additional information required under §36650(b) of the PBID Statute, such as:
1. Any proposed changes to the boundaries, benefit zones, or classification of property within the district.
2. The method and basis of levying assessments, including any proposed increases, in sufficient detail to allow property owners to estimate the amount of their individual assessments.
3. The estimated amount of any surplus or deficit revenues to be carried from previous fiscal years.
4. The estimated amount of any contributions to be made from sources other than district assessments.
The City Council shall review the report to ensure consistency with the Plan. In accordance with the provisions of PBID Statute, the City Council may approve the report as filed by the DVPOA or may modify any particular contained in the report and approve it as modified.
Plan Changes and Assessment Increases: While the City is required by the MDP to contract with the DTVPOA for management of the DTVPBID, the power to modify any aspect of the annual report, prior to approval, lies with the City Council, with one notable exception. The City Council may not make or approve any changes that would prevent the DTVPBID from funding scheduled payments on any executed contract or debt service obligation. This is the City Council’s opportunity to review the justification for any changes or assessment increases and hold the DTVPBID accountable for any controllable rising costs.
The attached report submitted by the DTVPOA (Attachment A) details the proposed activities and the proposed 5% assessment increase for the 2023 PBID year. These proposed items are intended to be reviewed by the City Council to ensure consistency with the MDP. The maximum annual inflationary increase allowed by the MDP was set at 10% for years two and three (2021 and 2022) and reduced to 5% for the remaining 7 years (2023 to 2029). This was due to the expectation that costs would continue to increase at a rate higher than 5% until the mandated increases to the California Minimum Wage were completed in January 2022. The proposed 5% increase for the 2023 year is shown above in Table 1: Summary of Proposed 2023 DTVPBID Increase.
The maximum assessment increase allowed for the 2023 DTVPBID year is set by the MDP rather than by any Consumer Price Index (CPI) rate. For this reason, it is important to consider the justification for any requested increase in the DTVPBID assessments. According to the Bureau of Labor Statistics, the CPI for All Urban Consumers (CPI-U) increased 8.5% over the 12 months leading up to March of 2022. While the future rate of inflation is difficult to predict, the documented 8.5% increase in the cost of goods and services over the last year is ample justification for the requested 5% increase to the DTVPBID assessments, and staff recommends approval of the proposed 2023 assessment amount.
Any assessment increase approved by Council tonight will be brought back on June 6, 2022, as part of the Tax Roll process.
Fiscal Impact:
As shown above in Table 1: Summary of Proposed 2023 DTVPBID Increase, the additional cost of the City’s combined assessment would increase by $6,957 if the 5% assessment increase is approved. This would bring the total City contribution to the DTVPBID to $145,886. Shown below, in Table 2: City DTVPBID Assessment Detail, is the breakdown of the payment between the General Fund, Convention Center, and Visalia Transit.
Table 2: City DTVPBID Assessment Detail
Prior Council Action:
• July 15, 2019: DTVPBID V Ballot process and formation
• December 3, 2019: Approval of Management Agreement with DTVPOA
• Annual Reports received and Assessment Increases approved on:
o May 18, 2020
o May 17, 2021
Other: N/A
Alternatives: None recommended.
Recommended Motion (and Alternative Motions if expected):
recommendation
I move that Council receive the 2022 Downtown Visalia Property Based Improvement District Annual Operations Report and approve the proposed 5% increase in PBID assessments to be included in the 2023 Tax Roll amount to be brought back for adoption in June 2022.
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Environmental Assessment Status: N/A
CEQA Review: N/A
Attachments:
Attachment A: 2022 Annual DTVPBID Operation Report
Attachment B: DTVPBID Final POA Agreement 12/3/19
Attachment C: DTVPBID MDP 4/22/19