Special Meeting 08/04/2022
Special Meeting Agenda
Fortuna City Council
Thursday, August 4, 2022 – 5:30 P.M.
621 11th Street, Fortuna CA
Zoom Option: 1-669-900-9128 Meeting ID: 880 5183 3435 Passcode: 053024 We May Disagree, but We Will Be Respectful of One Another All Comments Will Be Directed to the Issue at Hand, and Addressed to the City Council Personal Attacks are Unacceptable
I. CALL TO ORDER / FLAG SALUTE / ROLL CALL
II. ORAL COMMENTS FROM THE PUBLIC
Members of the Public may be heard on any item on the Special Meeting Agenda. Speakers addressing the Council will be limited to 3 minutes per speaker. Be advised, by law the City Council cannot deliberate or take action on issues presented during Oral Comments that are not shown on the Agenda.
III. DISCUSSION ITEMS
A. Direction for future of Fortuna Business Improvement District IV. REPORT OUT AND ADJOURN
Pursuant to Government Code Section 54957.5, any non-confidential documents or writings that the City distributes, less than 72 hours before a regular meeting, to all or a majority of the legislative body's members must be made available to members of the public at the same time as the distribution. Documents and information related to the agenda topics are available for review at City Hall, 621 11th Street, between the hours of 8:00 AM to 4:00 PM. Members of the public are invited to come to the meeting and comment. In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the City Clerk at 725-7600. Notification prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting.
Buffy Gray, Deputy City Clerk
Discussion Item A
STAFF REPORT
City Council Business Agenda Item
DATE: August 4, 2022
TO: Honorable Mayor and Council Members
FROM: Merritt Perry, City Manager
SUBJECT: Direction for future of Fortuna Business Improvement District STAFF RECOMMENDATION:
Staff recommends that the City Council provide direction to staff on how best to fulfill the purpose of Fortuna Business Improvement District (FBID) in the current fiscal year.
EXECUTIVE SUMMARY
In June of this year, the FBID Board initiated the dissolution of the FBID non-profit corporation with which the City of Fortuna had contracted with for several years to fulfill the purposes of FBID. The City was forced to terminate the contract with the non-profit corporation when the dissolution was initiated. These changes initiated a transition of the administration of FBID back to the City and necessitated changes to the municipal code to reflect the dissolution of the nonprofit corporation, and revisions to how the governing composition of and appointment to the FBID advisory committee were made.
Once the municipal code changes were made, the City Council renewed the FBID assessment for fiscal year 2022-2023. No changes were made to the assessment amount, boundaries of the district, or the manner in which funds are allocated among the core areas (Downtown, Redwood Village Shopping Center, and Strongs Creek Plaza) and Citywide.
On June 21, three option options were presented to the City Council for fulfilling the purpose of FBID including:
1. Contracting with the Chamber of Commerce to perform the functions of FBID
2. Hiring a part-time city staff member to perform the functions of FBID
3. Hiring a full-time city staff member to perform the functions of FBID and split with other administrative duties (associated with an unfilled part-time administrative position included in the city budget)
A table summarizing the options with supporting information was provided to the City Council for considering the options and is attached to this staff report as Attachment A.
Discussion Item A
The council was not interested in Option 2, a part time FBID position focused on FBID, however they were undecided as to whether Option 1, contracting with the Chamber of Commerce, or Option 3, having a full time position with shared duties of FBID and administrative tasks would best serve the purposes of the business improvement district. The council requested that staff bring more specific information back to the council with regard to how the Chamber would carry out FBID duties if contracted to complete them.
In response to that request, and in consultation with the Chamber of Commerce CEO, Renee Lindsay, a revised scope of work was provided that listed specific tasks that the Chamber could complete, for a specific fee, opposed to taking on all of the duties of FBID for the full amount of the assessment (less the payment to core areas), and blending that with other chamber workload.
A copy of the revised scope of work from the Chamber is attached as Attachment B.
The revised scope of work is more focused, and describes discrete tasks including the following:
Organizing the Al Gray Lighted Parade
Organizing the Kids’ Free Christmas Movie Event
Hosting the Home-based Business Expo
Holding the “Shop Fortuna for the Holidays” contest
Providing support for existing events
Advertising for businesses
Designing and furnishing decorations
The proposed fee for the scope of work is $16,212 which roughly 36% of the funding available after distribution of the funds back to the core areas and would leave approximately $28,000 for other purposes. Therefore, Option 1 would be revised to include contracting with the chamber in the amount of $16,212, and reserving $28,000 for use by the City staff to conduct the purposes of FBID as directed by the Advisory Committee (once seated).
Option 3 remains unchanged and would include hiring a city staff member with the shared responsibility of carrying out the business of FBID and performing senior administrative assistant tasks under the direction of the City Manager. A specific job description has not yet been created for this position.
Staff is prepared to move forward with either of the two options being considered by the City Council. Once direction is provided, staff will develop a work plan for carrying out the duties.
With either option, one of the most important tasks will be to solicit volunteers for the advisory committee to provide oversight and direction moving forward. Recently, it has been difficult to recruit members of the business community to serve on the board. Obtaining input and participation from the business community will be very important for the district to be successful.
Since the last meeting staff have heard from a number of businesses wondering what is happening, if they should pay the required assessment, and how the City will be conducting FBIDs function moving forward, as well as businesses which wish to see the assessment discontinued.
Discussion Item A
The City is at a critical time to decide how best to move forward. Regardless of which option is selected, there will be a significant amount of effort necessary to move things forward.
The evaluation of the Options presented on June 21, 2022 included with Attachment A is still valid.
Option 1, contracting with the Chamber would require less staff time and would have less of a long term commitment of the FBID assessment were discontinued in the future. The Chamber has also demonstrated the ability to successfully organize events, plan for decorations and carryout the types of activities included in its proposal. Contracting with the Chamber for specific tasks only would allow for the FBID funded work to remain separate from routine chamber function. This is important, as there was some concern with the original proposal that FBID funds would support the chamber without providing additional benefit.
Option 2, hiring a full time staff member at the city, would require a significant amount of staff time to develop and train an employee and would have an implied commitment of long term employment. If the future of the assessment is uncertain, Option 2 would not be recommended.
However, if the assessment is expected to continue in the future, this option could provide a valuable link between the City and its businesses. Having a full-time position, even with shared responsibilities, could provide a longer term reliable solution.
With either option, it is important that the businesses that pay the assessment become more involved moving forward. The assessment was initiated to provide a benefit to the businesses and future success will rely on their involvement. Input from the business community has been mixed and ranges from those wanting to see the improvement district continue to discontinuing the district and no longer assessing businesses. Given that the assessment has been renewed by the council for the current fiscal year, staff would recommend moving forward with one of the proposed options this year, and only direct staff to discontinue the district next fiscal year if ending the assessment is desired.
Background
FBID was established by the City for the purpose of imposing benefit assessments and charges on businesses for certain purposes in accordance with the Parking and Business Improvement Area Law of 1989 (Streets and Highways Code §§ 36500 et seq.). The founding Resolution (90-10) and subsequent Ordinance (90-550) included a boundary and the proposed uses for which the revenue was to be used and included the following:
Promotion of public events which are to take place on or in public places in the District; Decoration of any public place in the District;
Furnishing of music in any public place within the District; The general promotion of business activities within the District; and Marketing to fill available space, recruiting and expansion of commercial enterprise.
The founding ordinance and resolution also included an assessment schedule for how much each business within the District would be assessed on an annual basis, and how those funds would be Discussion Item A
distributed between the core areas and the Citywide district. The distribution of the funds between the Core Areas and the Citywide district was divided as follows:
62% raised within each core area to be used to promote that Core Area 38% raised within each core area to be used to promote the entire community FBID collects approximately $62,000 in assessments annually and the city contributes an equal amount for an approximate total $124,000 annually. Of that amount, the core areas receive approximately the following amounts:
Core Area Assessment Distribution to Core
Area (62%)
Citywide Share
(38%)
Citywide $34,500 0 $34,500
Downtown $13,000 $8,060 $4,940
Redwood Village $9,000 $5,580 $3,420
Strongs Creek $5,000 $3,100 $1,900
Total $61,500 $16,740 $44,760
FINANCIAL IMPACT:
Option 1 would result in an annual savings to the City of approximately $62,000 that has traditionally been provided as match by the City.
Option 2 could be implemented within the amount budgeted for FBID in the Fiscal Year 2022- 2023 Budget.
RECOMMENDED COUNCIL ACTION:
1. Receive staff presentation and review Council questions with staff
2. Open Public Comment
3. Close Public Comment
4. Provide direction to staff on how best to fulfill the purpose of Fortuna Business Improvement District (FBID) in the current fiscal year.
ATTACHMENTS:
Attachment A – Summary of FBID Options Presented at the Fortuna City Council Special Workshop on 6/21/2022
Attachment B – Revised Proposal from the Chamber of Commerce for Option 1 Comparison Points
Option 1 Option 2 Option 3
Chamber with Assessment Only Part Time City Employee Full Time City Employee (Split with Part Time Admin Position)
Associated Links Chamber Proposal & Chamber Budget P/T City Position Details F/T City Split Position Details General Description Chamber employee performing FBID functions shared with Chamber responsibilities
Part-time City employee dedicated to FBID
purposes
Full-time City Employee with responsibilities split
between City Admin and FBID purposes
FBID-Dedicated Hours per Week 35-40 29 28
Annual Cost $62,000 $88,000 $125,000($101K FBID,$24K City) Annual Savings (from Current) $62,000 $36,000 $27,000 ($22K FBID, $5K City) Advantages · Less oversight required by City
(staff/Committee)
· Shared overhead between Chamber/FBID
· Ability of Chamber to have team dynamic
· Saves 100% of City Matching
· Fewer demands on City Finance Dept.
· Ability to direct FBID Activities
· Saves 40%± of City Matching Funds
· 100% Dedicated FBID Employee
· Ability to direct FBID Activities
· Saves 35%± of City Matching Funds
· Allows for full-time position (stability)
Disadvantages · Employee with Split Responsibility
· Less distinction between FBID functions vs.
Chamber Functions
· More oversight required by City
(staff/Committee)
· More demands on City Finance Dept.
· Employee with Split Responsibility
· More oversight required by City
(staff/Committee
· More demands on City Finance Dept.
Attachement A - FBID Options Summary Presented to Fortuna City Council 6/21/22 PO Box 797 • Fortuna, CA 95540 • (707) 725-3959
June 20, 2022
Merritt Perry, City Manager
City of Fortuna
621 11th St
Fortuna, CA 95540
RE: Collaboration between Fortuna Chamber, City of Fortuna, and Fortuna Business Improvement District
Dear Merritt,
Enclosed for your consideration is a proposal that would combine the assets of the Fortuna Chamber with the Fortuna Business Improvement District assessment taxes.
Utilizing the FBID assessments, the Chamber would be able to:
• Employ a full-time District Coordinator (or similarly titled position) who would be the point of contact for FBID.
• Help existing and future businesses with business support services. • Provide networking opportunities (mixers, events, workshops) for all businesses to attend. • Provide marketing assistance to businesses (post shares, social media basics). • Leverage partnerships with CR, HAF, Cal Poly Humboldt, and others to bring business training to owners and their employees (e.g., HR, finance, time management, social media). • Develop workforce & retention tools (job fairs, expos, employer resources) in collaboration with SBDC, Humboldt Workforce Coalition, and Cal Poly Humboldt (for example). • Plan and implement FBID annual events (Home-based business expo, Al Gray Electric Lighted Parade, Kids’ Free Movies).
• Assist the core area associations with event planning, marketing, and general support. • Coordinate business recruitment for empty spaces with Retail Strategies and City staff. • Create a plan for outreach to the Limited-English-Proficiency community. • Work with the high schools on projects that would connect businesses with students. • Source grant opportunities for special programming or business-support projects (e.g., façade improvements, security upgrades, workforce training/retention).
Actual work product is open for discussion and feedback by yourself and/or Council. Some overlap of responsibilities is likely due to working in the same office, but we anticipate this will be minimal. As the Visitor’s Center, we assist anyone who walks through our door, whether they are a business owner, a resident, or a tourist. That level of service will continue under this arrangement.
Below is an example of how time could be allocated under the District Coordinator position.
Option 1 Summary
PO Box 797 • Fortuna, CA 95540 • (707) 725-3959
Deliverable Description
Projected
Hours (%)
Liaison for Business
Community
Physical presence in the community. Contact for general business questions and concerns. Maintains records and
databases of business prospects and contacts.
40%
Create Initiatives for
Businesses
Workshops (e.g., HR, finance), employee trainings
(hard/soft skills), recruitment events (e.g., job fairs). 20%
Events Plan and organize community events. 20%
Business Attraction,
Expansion, and
Retention
Work with Retail Strategies, City staff, and property
managers/owners on vacancies/development. Assist
potential new businesses with site analysis, market
research, etc.
10%
Funding/grants for
Businesses
Identify funding sources and participate in writing grants (e.g., redevelopment and community development
projects, programs, and activities).
5%
Marketing &
Promotion
Social media, advertising, business promotion, and event promotion.
5%
By allowing the Chamber to direct the assessments, the City would save $61,500 (matching funds) each year, businesses would be supported, and annual events would proceed uninterrupted.
Combined with the Chamber’s budget, money can be spent more efficiently as there wouldn’t be a need for two offices and separate expenses (storage, postage, office supplies, G/L insurance, board insurance). The Chamber would pay for an annual audit of the assessment money and keep separate records, akin to Measure W funding we receive for tourism and marketing. We/Council would create an advisory committee, similar to the T&M Committee, that would direct Chamber staff, review financials, and make recommendations to City staff and/or Council. Chamber staff would prepare an annual report and financial statement each year to present to City Council.
As you know, Covid-19 hurt the Chamber by limiting our fundraising and special event income. While we received a PPP loan and a California Relief Grant, this money went to making up for lost income due to the City withdrawing their $13,000 contribution in FY 2020-21, a loss of membership dues, and limited fundraising due to public health restrictions.
Without additional funding, the Chamber board will be making some difficult decisions as we will be unable to support a second employee beyond August 2022. Chamber staff have taken on additional events and responsibilities in the last two years, some as a result of the current crisis with FBID, but also because businesses and the community know they can contact us, and we’ll assist in whatever manner we can. Unfortunately, that takes staff time and resources that we just don’t have going into FY 22-23.
PO Box 797 • Fortuna, CA 95540 • (707) 725-3959
We are asking for one year (12 months from signing an MOU/contract) to show city businesses and City Council that this is the best way to have all businesses supported in Fortuna. If City Council is not satisfied after one year, the City may cancel the MOU/contract with thirty (30) days’ notice to the Chamber.
Thank you for your time and consideration.
Sincerely,
Renee Lindsay
President & CEO
FBID Joins City of Fortuna (Part-Time)
OPERATION
The part-time FBID employee will function as an independent department head operating under the direct supervision of the City Manager. The City of Fortuna will provide accounting and payroll support for FBID. FBID will continue to operate out of a city-owned facility.
ADVISORY COMMITTEE
The FBID Advisory Committee would fall under the City Council.
FINANCIALS
Many of the costs associated with operations can be absorbed by the City of Fortuna as part of its normal operating costs. However, the salary for the FBID Executive Director and the majority of FBID’s expenses will be paid with FBID funds.
ESTIMATED FBID BUDGET
INCOME
Assessments $61,500.00
Matching Revenue City $61,500.00
Special Events/Sponsorships $7,400.00
Total Income $130,400.00
EXPENSES
PAYROLL
Payroll - FBID Executive Director ($28 @ 29 hrs/wk) $42,224.00 ED Trainings/ Networking Events $1,000.00
PT VALIC $1,688.96
Workers' Comp $470.80
Total Payroll Expenses $45,383.76
ADMINISTRATIVE/OPERATIONS
FBID Admin/Op Costs $31,714.00
SPECIAL EVENTS/FUNCTIONS/PROJECTS
Special Events/Functions/Projects $16,900.00
TOTAL EXPENSES $93,997.76
Total Income $130,400.00
Total Expenses $93,997.76
NET PROFIT/LOSS $36,402.24
For a more detailed budget, click HERE.
1 Option 2 Summary
FBID Joins City of Fortuna (Full-Time Split)
OPERATION
The full-time employee will function as 70% FBID coordinator and 30% Administrative Assistant II. The employee will operate as part of the City Manager’s department, under the direct supervision of the City Manager. The City of Fortuna will provide accounting and payroll support for FBID. FBID will continue to operate out of a city-owned facility.
ADVISORY COMMITTEE
The FBID Advisory Committee would fall under the City Council.
FINANCIALS
Many of the costs associated with operations can be absorbed by the City of Fortuna as part of its normal operating costs. The majority of FBID’s operating expenses will be paid with FBID funds. The Employee’s salary and similar costs will be shared between FBID (70%) and the City (30%).
ESTIMATED FBID BUDGET
INCOME
Assessments $61,500.00 $61,500.00
Matching Revenue City $61,500.00 $61,500.00
Special Events/Sponsorships $7,400.00 $7,400.00
City Budget for P/T Admin Assistant $30,000.00
Total Income $130,400.00 $30,000.00 $160,400.00
EXPENSES
PAYROLL
Salary ($22 @ 40 hrs/wk) $32,032.00 $13,728.00 $45,760.00 Health Insurance $19,264.98 $8,256.42 $27,521.40
Medicare $325.12 $59.72 $384.84
ED Trainings/ Networking Events $700.00 $300.00 $1,000.00 Retirement $3,280.40 $602.52 $3,882.92
Workers Comp $250.01 $45.92 $295.93
CalPERS Unfunded Liability $5,243.14 $2,247.06 $7,490.20 Total Payroll Expenses $61,095.65 $25,239.64 $86,335.29
ADMINISTRATIVE/OPERATIONS
FBID Admin/Op Costs $29,914.00 $0.00 $29,914.00
SPECIAL EVENTS/FUNCTIONS/PROJECTS
Special Events/Functions/Projects $16,900.00 $0.00 $16,900.00 Total Expenses $107,909.65 $25,239.64 $133,149.29
Total Income $130,400.00 $30,000.00 $160,400.00
Total Expenses $107,909.65 $25,239.64 $133,149.29
NET PROFIT/LOSS $22,490.35 $4,760.36 $27,250.71
For a more detailed budget, click HERE.
1 Option 3 Summary