Agenda Item Wording:
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Downtown Visalia Property and Business Improvement District Annual Report - Receive the 2025 Annual Operations Report for the organization.
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Deadline for Action: 5/31/2025
Submitting Department: Finance and Technology Services
Contact Name and Phone Number:
Melody Murch, Assistant Finance Director (559) 713-4379, melody.murch@visalia.city
Ruth Pena, Financial Analyst (559) 713-4327, ruth.pena@visalia.city
Department Recommendation:
That Council receive the Annual Operations Report for the Downtown Visalia Property and Business Improvement District (DTVPID), providing comment and direction as appropriate.
Background Discussion:
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 DTVPBID is in its 5th iteration, and the current 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, and the DTVPOA has subcontracted this administration to Downtown Visalians, Inc.
The DTVPBID is required to submit the 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 attached report (Attachment A) summarizes past, current, and planned activities, improvements, and the financial state of the DTVPBID. The report must also include any proposed assessment increases. No increase is proposed for the 2026 tax year and this recommendation is discussed in this agenda item. The 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 have been limited to 5% each year for the remainder of the plan. Although a maximum increase of 5% is allowed by the MDP for the 2026 tax year, no increase is proposed. The current assessment amounts will continue into the 2026 year and are shown in Table 1: Summary of Proposed 2026 DTVPBID Assessment.
Table 1: Summary of Proposed 2026 DTVPBID Assessment
Although none is proposed, any assessment increase approved, or changes directed by Council tonight would be included in the June 2, 2025, agenda item for 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 1 through December 31) prior to the year of the report;
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.
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.
Report Elements
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. Proposed items are intended to be reviewed by the City Council to ensure consistency with the MDP.
Financial and Budget Information: The report included in Attachment A contains a summary of receipts and disbursements for the 2024 Calendar Year (January 1-December 31) as well as the 2025 Budget which lists planned and projected revenues and disbursements. The expenditures summarized in the report comply with the Service Plan and Budget contained in section VI. of the Management District Plan (MDP).
PBID Fund (375) Balances: The City administers the collection of DTVPBID revenue through the annual tax roll process. Once collected, the funds are held in a Fiduciary Fund, pending quarterly payment requests from the POA. As of December 31, 2024, the balance of the PBID Fiduciary Fund (375) was $617,636. This balance consisted of $179,846 in prior year, unspent funds, and $437,790 in assessments collected through the 2024-25 Tax Roll in preparation for the start of the 2025 DTVPBID year. The balance of DTVPBID assessments remaining to be collected on December 31, 2023, was $236,721, which includes any prior year delinquent assessments. Table 2: PBID V - Fund 375 - Cash Balance below provides a summary of the cash balance in the PBID V fund over the last 5 years.
The cash balance summary in Table 2 is based upon funds collected and paid out by the City and does not include any cash balances paid to the DTVPOA that may remain unspent. The annual report in Attachment A provides a summary of any DTVPBID balances held by the DTVPOA.
Plan Changes and Assessment Increases: The attached report submitted by the DTVPOA (Attachment A) is accompanied by this staff report. The possibility of an increase was discussed by the POA Board on April 22, 2025, and the POA Board has recommended no increase in DTVPBID assessments for the 2026 tax year. 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 mandated increases to the California Minimum Wage were completed in January 2022.
The maximum assessment increase allowed for the 2026 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. To-date, the DTVPBID assessment increases have exceeded the CPI for All Urban Consumers (CPI-U) provided by the Bureau of Labor Statistics. This is due to the increases built into the years 2021 and 2022 which were affected by the mandatory California minimum wage increase, which is not fully reflected in the CPI-U. Although the CPI-U increased 2.4% over the 12 months leading up to March of 2025, the DTPOA Board is recommending no increase in assessment amounts to minimize the lingering effect on downtown businesses already dealing with the increased prices resulting from the high inflation experienced in recent years. Any increase, or lack thereof, has a compounding effect on future DTVPBID years, changing the maximum assessment which can be achieved in the 10-year term of PBID V. Table 3: Maximum Assessment DTVPBID V - Years 2020-2029 below shows the updated maximum assessment amounts based upon a 2% increase in 2026.
As shown on page 8 of the MDP (Attachment C), the original maximum annual assessment was $851,791 in the 2029 year, which will now be reduced to a final maximum assessment of $788,052 if the recommendation for no increase for 2026 is approved. Any assessment changes approved by Council tonight will be brought back on June 2, 2025, as part of the Tax Roll process.
Fiscal Impact:
As shown above in Table 1: Summary of Proposed 2026 DTVPBID Assessment, no additional cost to the City’s combined assessments is proposed. If approved, the City contribution of $156,245 to the DTVPBID would remain the same for the 2026 tax year. Shown below, in Table 4: City DTVPBID Assessment Detail, is the breakdown of the payment between the General Fund, Convention Center, and Visalia Transit.
Table 4: 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 (10% increase for 2021)
o May 17, 2021 (10% increase for 2022)
o May 16, 2022 (5% increase for 2023)
o May 15, 2023 (5% increase for 2024)
o June 3, 2024 (2% increase for 2025)
Other: The annual report for the Town-Center Business Improvement District managed by the Downtown Visalians is also being brought to Council on this same date.
Alternatives: None Recommended.
Recommended Motion (and Alternative Motions if expected):
recommendation
I move that Council accept the Annual Operations Report for the Downtown Visalia Property and Business Improvement District and approve a zero percent (0.0%) increase in assessments for the 2026 tax year (or as amended by Council).
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Environmental Assessment Status: N/A
CEQA Review: N/A
Attachments:
Attachment A: Annual DTVPBID Operations Report
Attachment B: Current DTVPBID Management Agreement dated January 1, 2020
Attachment C: DTVPBID Management District Plan & Engineer’s Report (MDP)