DATE: December 4, 2024
TO: Honorable Mayor and City Councilmembers
FROM: City Manager's Office
TITLE: RESOLUTION RENEWING THE DOWNTOWN OCEANSIDE PROPERTY BUSINESS IMPROVEMENT DISTRICT (DTOPBID) AND APPROVING THE ASSESSMENT FORMULA AND LEVYING THE ASSESSMENTS
RECOMMENDATION
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Staff recommends that the City Council hold a public hearing, declare results of majority protest proceedings and adopt a Resolution of Formation to renew the DTOPBID and levy the assessments.
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BACKGROUND AND ANALYSIS
On June 19, 2019, the City Council authorized the City Manager to execute two petitions to execute special assessment proceedings to form the DTOPBID, and adopt a Resolution of Intention to establish the DTOPBID.
On August 7, 2019, the City Council conducted a public hearing regarding the proposed formation of the DTOPBID, authorized the City Clerk to count ballots received from affected property owners and unanimously adopted Resolution 19-R0487-1 forming the DTOPBID, approving the Management District Plan, approving the assessment formula and levying the assessments. The current assessment period expires in December 2024.
On December 18, 2019, the City Council approved an agreement with MainStreet Oceanside for implementation of the Management District Plan for the DTOPBID and approved the by-laws proposed for the DTOPBID Governing Committee.
On April 24, 2024, the City Council authorized the City Manager to sign the petition and ballot on behalf of properties owned by the City of Oceanside in support of the renewal of the DTOPBID, and approve an appropriation in the amount of $29,440 from the General Fund unassigned fund balance to account for an increase in City-owned property assessments for Fiscal Year 2024-2025.
Subsequent to the City Council’s action in April, it became apparent that petitions in favor of district renewal submitted by property owners would not achieve the 50 percent (50%) plus one requirement to allow the Council to initiate proceedings for DTOPBID renewal. In response to concerns from property owners in the newly proposed “Zone 2” area of the DTOPBID, Zone 2 was removed from the Management District Plan and the petition process was restarted.
On September 11, 2024, the City Council approved a resolution authorizing the City Manager to sign the petition and ballot for the City-owned properties in support of the DTOPBID renewal.
On September 25, 2024, the City Council approved a Resolution of Intention to renew the DTOPBID with the understanding that the 50% plus one threshold of petitions had been reached. However, following the September 25 City Council meeting, it was determined that the 50% plus one threshold had not been reached. A clerical error had occurred in which a property owner manually crossed out a property they had recently sold that had not yet been recorded with the County. The new property owner of that recently sold property was located and subsequently signed the petition; however, the signature was not collected until September 30, which made the Resolution of Intent approved on September 25 invalid. As a result, the Resolution of Intention to renew that was approved on September 25 was brought back to City Council for approval on October 9, 2024 with the 50% plus one threshold confirmed.
On October 9, 2024, the City Council adopted a Resolution of Intention to renew the Downtown Oceanside Property Business Improvement District (DTOPBID) beginning on January 1, 2025.
The DTOPBID is a benefit assessment district whose main goal is to continue a supplemental revenue source to provide maintenance, safety, destination development, economic enhancement, advocacy and administration services, providing special benefits to assessed properties. The programs funded by the DTOPBID provide a level of service beyond that which could be provided with basic government financial support. This approach is used successfully in other cities throughout the country to provide special benefits to property owners, namely increased sales, attraction of new tenants, increased occupancies, and increased property values.
DTOPBID property owners are pursuing renewal of the DTOPBID in order to continue a revenue source devoted to providing special benefits to assessed property owners. If renewed, the DTOPBID would generate approximately $751,413 in assessment revenue on an annual basis for improvements and activities that are above and beyond those provided by the City and other government agencies. The assessment funds would be supplemented by non-assessment funds. The total budget for the initial year is estimated at $776,350.
MainStreet Oceanside would continue to serve as the Owners’ Association for the DTOPBID. MSO is a nonprofit organization established in 2000 to assist the City in developing Downtown Oceanside as a pedestrian-friendly community with unique and exciting attractions, including both daytime and evening activities for residents and visitors alike. MSO is focused on improving and enhancing the economic viability of Downtown Oceanside by supporting the preservation of unique existing structures and encouraging new development by attracting visitors, customers and residents.
The PBID Governing Committee (PGC), a standing advisory committee formed by the MSO Board of Directors and comprised of downtown property owners, including the City, and their representatives, would retain the authority to manage DTOPBID assessment funds and full decision-making authority regarding DTOPBID programs.
Management District Plan
The attached Management District Plan (MDP) includes the proposed boundary of the DTOPBID, a service plan, assessment methodology, budget, a proposed means of governance and Engineer’s Report. The renewed DTOPBID generally includes parcels in the downtown area of the City of Oceanside. There are two notable changes to the DTOPBID MDP from its current iteration: 1.) The service area has been expanded; and 2.) The renewed DTOPBID will have a 10-year term, beginning January 1, 2025, or as soon as possible thereafter, and ending ten (10) years from its start date. A map of the current DTOPBID boundaries is included on page 7 of the attached Management District Plan, and a map of the expanded boundaries proposed for the DTOPBID renewal is included on page 9 of the attached Management District Plan. If renewed, the assessment will be implemented beginning January 1, 2025. Once per year beginning on the anniversary of DTOPBID renewal, there is a 30-day period in which property owners paying 50 percent or more of the assessment (collectively) may protest and begin proceedings to terminate the DTOPBID.
As provided by State Law, the district assessment would appear as a separate line item on annual property tax bills prepared by the County of San Diego. Property tax bills are generally distributed in the fall, and payment is expected by lump sum or installment. The County of San Diego would distribute funds collected to the City of Oceanside, and the City would forward those funds to Mainstreet Oceanside. Existing laws for enforcement and appeal of property taxes, including penalties and interest, apply to the DTOPBID assessments.
DTOPBID Renewal Timeline:
No Later Than October 20: Notice and Proposition 218 Ballot (COMPLETED)
The Property and Business Improvement District Law of 1994 and Proposition 218 require the City to mail written notice and assessment ballots to the owners of all properties proposed to be assessed within the DTOPBID. Mailing the notice and assessment ballot begins a mandatory 45-day period in which owners may cast ballots.
December 4, 2024: Public Hearing and Ballot Count
The City Council will open a public hearing and receive public testimony. At the end of testimony, the City Council will close the public hearing and direct tabulation of assessment ballots submitted and not withdrawn to determine whether there is a majority protest against the assessment. A majority protest exists if the ballots in opposition to the proposed assessment exceed the ballots in support of the proposed assessment, weighted by the amount each owner will pay. If there is no majority protest, Council may adopt a Resolution of Formation to renew the DTOPBID and levy the assessment.
FISCAL IMPACT
If the DTOPBID is renewed, the City’s annual contribution would be $115,987 beginning in Fiscal Year 2024-2025 and charged to account 170174101.5395.0032 which has an available balance of $142,416. Future assessment rates may be subject to an increase of no more than six percent (6%) annually for the 10-year duration of the DTOPBID, which shall not exceed the San Diego Area Consumer Price Index (SDCPI) for the year the increase occurs.
CITY ATTORNEY’S ANALYSIS
The referenced documents have been reviewed by the City Attorney and approved as
to form.
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Prepared by: Michelle Geller, Economic Development Manager
Reviewed by: Michael Gossman, Assistant City Manager
Submitted by: Jonathan Borrego, City Manager
ATTACHMENTS:
1. Staff Report
2. Resolution
3. Management District Plan