Business Item 5b
STAFF REPORT
City Council Business Item
DATE: March 3, 2025
TO: Honorable Mayor and Council Members
FROM: Amy Nilsen, City Manager
SUBJECT: Fortuna Business Improvement District Annual Report and By-Law Amendments
STAFF RECOMMENDATION:
Staff recommends the Council accept, with or without modification, the Fortuna Business Improvement District (FBID) Annual Report and the FBID By-Law Amendments.
EXECUTIVE SUMMARY
1. FBID By-Law Amendments
On October, 22, 2024 the FBID Advisory Committee created an FBID Ad Hoc Committee to review and update the by-laws as well as review modifying the method and basis of levying the assessment. On February 18, 2025, the FBID Advisory Committee approved by-law amendments as well as levying a flat $25 assessment as recommended by the FBID Ad Hoc Committee.
The FBID by-law amendments include:
Changes to Article II. Purpose
• Added clarifying language on purpose.
Changes to Article III. Committee Members and District City Staff Member • Removed core areas from committee members to business license holder in retail, professional and service, manufacturing/wholesale, and hospitality (four representatives). The City Council member would remain and become a voting member. This also reduces the committee members from seven to five. • Removed reference to FBID administrator.
• Added clarifying language for City staff’s role in FBID.
Changes to Article IV. Membership
• Updated language for consistency
• Provided more leeway for Advisory Committee members to be selected.
Changes to Article V. Term of Membership
• Removed reference to FBID administrator.
Business Item 5b
Article VI. Membership Duties and Responsibilities
• Provided voting privileges for the appointed City Council member. • Removed reference to FBID administrator
• Removed reference to Core areas.
Article VII. Meetings
• Added clarifying language on calling meetings.
Article IX. Agenda and Minutes and Article X. Finance
• These articles were moved to Article III.
Article XIV. Offices
• Removed this section since there is no longer an FBID administrator.
In addition, the FBID Advisory Committee recommends reinstating the assessment for Fiscal Year 2025-26 at a flat assessment of $25.00 for every business within the City of Fortuna which would generate approximately $16,500 annually.
2. FBID Annual Report
The Fortuna Business Improvement District (“FBID”) was established by the City in 1990 under the Parking and Business Improvement Area Law of 1989 (California Streets and Highways Code §§ 36500 et seq.) to benefit and promote the City’s businesses. Under the enabling statute, the Council is required to approve an annual report that contains the following information:
(1) Any proposed changes in the boundaries of FBID or in any benefit zones within the area.
(2) The improvements and activities to be provided for that fiscal year. (3) An estimate of the cost of providing the improvements and the activities for that fiscal year.
(4) The method and basis of levying the assessment in sufficient detail to allow each business owner to estimate the amount of the assessment to be levied against his or her business for that fiscal year.
(5) The amount of any surplus or deficit revenues to be carried over from a previous fiscal year.
(6) The amount of any contributions to be made from sources other than assessments levied pursuant to this part.
The annual report (Attachment 1) is before your Council. The Council may approve the report as filed or may modify the report and approve it as modified.
Business Item 5b
As noted above, FBID was established by the City for the purpose of imposing benefit assessments and charges on businesses for certain identified purposes, including:
• Promote public events which are to take place on or in public places in the district; • Decorate public places in the district;
• Furnish music in public places in the district;
• General promotion of business activities in the district; and • Demonstrate to the District through a report the use of funds, attendance, and/or community benefit.
A. PROPOSED CHANGES IN THE FBID BOUNDARIES:
There are no proposed changes to the FBID boundaries; however, as set forth below and in the annual report and by-law amendments, it is recommended that the Council remove the core area designations for the Downtown core area, the Strongs Creek core area, and the Redwood Village core area. This will reduce the number of FBID Advisory Committee Members from seven to five.
B. SUMMARY OF ACTIVITIES FOR FISCAL YEAR 2024/2025:
Calendar Year 2024
March
• Approved $360 in a one-time expense for Downtown Merchants for annual rent of a storage unit.
May
• City Council voted to not levy an assessment for FBID for Fiscal Year 2024-25.
June
• Approved $1,001 for the Fortuna Fireworks and 3rd of July Festival • Approved $7,500 for the Fortuna Downtown Business Association.
October
• Created an Ad Hoc Committee with members Kris Mobley and Fred Robinson to work with City Manager on FBID By-Laws and to consider a flat assessment. • Approved $2,500 for the Al Gray Lighted parade.
• Staff deleted FBID social media accounts and Adopt-a-Block signs were removed.
Calendar Year 2025 Year-To-Date
• Approved by-law amendments and recommendation to reinstate a flat $25.00 assessment per business.
C. BUDGET SUMMARY:
The FBID Advisory Committee reviewed and recommended that the Council accept the annual report and budget for FBID on February 18, 2024. FBID currently has no Business Item 5b
assessment for Fiscal Year 2024-25. FBID in prior fiscal years collected approximately $65,000 in assessments.
The total expenditures for Fiscal Year 2024-2025 year-to-date are $16,523.65. Total revenue for FY 2024-25 was $0.00 since no assessment was levied. If the City Council approves an assessment to be levied the proposed budget for the next fiscal year will be approved with the City’s annual budget.
The FBID fund has a current balance of $39,750 with $6,350 reserved for funding in the Redwood Village Core Area and $3,150 reserved for funding in the Strongs Creek Core Area. This leaves $30,250 that can be spent with no Core Area restrictions. The previous FBID administrator left earlier than expected in FY 2023-24 and therefore there were salary savings which explains the higher than anticipated fund balance.
D. LEVY OF ASSESSMENT
For Fiscal Year 2024-25 no assessment was levied on businesses. The FBID Ad Hoc Committee met on November 15 and 22, 2024 and December 19, 2024 where the committee considered multiple options for how the assessment should be LEVIED for Fiscal Year 2025-26. The FBID Ad Hoc recommended moving to a simplified assessment model with a flat rate of $25.00. The FBID Advisory Committee agreed with the Ad Hoc and on February 18, 2025 recommended to the City Council a flat $25.00 assessment be levied for Fiscal Year 2025-26. There are approximately 660 businesses in Fortuna and a $25.00 assessment would generate $16,500.
If an assessment is approved at a $25 flat fee and the core areas are removed, approximately $16,500 would be generated annually. This would cover “seed” money for events, or could be used to cover some of the costs to the Downtown Merchants to pay for event insurance, storage or other low cost projects. Additionally, other groups could request funding for new events or financial support for other activities consistent with the City’s municipal code. Under this model, the city would not have a staff person, and would not organize events using funds from the FBID assessment.
It is the recommendation of the FBID Advisory Committee and staff that the Council make the following changes:
1. That, without changing the overall boundaries of the District, the Council dedesignate the core areas within the District; and reassess and revise the basis and method of collection of the assessment to a flat rate of $25 per business.
A change in the amount of the assessment and the elimination of the core areas would need to be memorialized in the Council’s annual resolution declaring its intention to levy the assessment and the resolution (following a public hearing) adopting the levy for the next fiscal year. Staff is seeking direction on the proposed levy from the Council to be able to bring forward the intent to levy the assessment and the resolution at an upcoming Council meeting.
FINANCIAL IMPACT:
Business Item 5b
If an assessment is approved at a $25 flat fee and the core areas are removed, approximately $16,500 would be generated annually.
The total expenditures for Fiscal Year 2024-2025 year-to-date are $16,523.65. The FBID fund has a current balance of $39,750 with $6,350 reserved for funding in the Redwood Village Core Area and $3,150 reserved for funding in the Strongs Creek Core Area. This leaves $30,250 that can be spent with no Core Area restrictions.
For reference, below is the amount previously collected from a tiered benefit assessment in Fiscal Year 2023-24.
Core Area Assessment Distribution to Core
Area (62%)
Citywide Share
(38%)
Citywide $37,500 $0 $37,500
Downtown $12,500 $7,750 $4,750
Redwood Village $10,000 $6,200 $3,800
Strongs Creek $5,000 $3,100 $1,900
Total $65,000 $17,050 $47,950
RECOMMENDED COUNCIL ACTION:
1. Receive presentation of the FBID annual report and discuss
2. Open Public Comment
3. Close Public Comment
4. Motion to adopt the FBID Annual Report either (1) as presented or (2) with specified modifications and provide direction on the proposed changes to assessment. Voice vote.
ATTACHMENTS:
• FBID 2024-25 Annual Report
• Amended FBID By-Laws