Agenda packet — Modesto City Council, May 14, 2024 (part 4 of 4)

In March 2018, by Resolution No. 2018-107, the Council accepted an informational report on the Destination Modesto Task Force’s accomplishments as well as plans to restore the Bureau as an independent agency. This included hiring a consultant, StoryPowered, to oversee the Bureau transition, entering into a new agreement with the Bureau to provide Transient Occupancy Tax funding, and appointing the City Council as the Bureau’s Interim Board of Directors. To begin the transition, a Tourism Business Plan was completed and presented to the Economic Development Committee on August 8, 2018. Staff then negotiated an agreement with Civitas to establish the Modesto Tourism and Marketing District in 2019. The Bureau (now Visit Modesto) was officially re-established as an independent agency.

The City Council approved the 2019-2024 Transient Occupancy Tax Funding Agreement with the Bureau on February 26, 2019. Since that time the agreement was amended to accommodate for the economic impacts of the COVID-19 Pandemic and also a technical change to the name of the recipient for the capital improvements funding. The Agreement expires in 2024 and is being considered for renewal under separate cover. The Transient Occupancy Tax Funding Agreement is important to consider together with the District renewal because District funding and the Transient Occupancy Tax Funding Agreement comprise the operating budget for the Bureau—if one moves forward without the other it could cause interruption of services.

The Modesto Tourism Marketing District
The Modesto Tourism Marketing District (District or MTMD) is a benefit assessment district proposed to continue a revenue source to help fund marketing and sales promotion efforts for certain Modesto lodging businesses. This approach has been used successfully in other destination areas throughout the state to improve tourism and drive additional room nights to assessed lodging businesses. The renewed District includes all lodging businesses with twenty (20) rooms or more, existing and in the future, available for public occupancy located within the boundaries of the City of Modesto.

Lodging business owners decided to pursue renewal of the District in order to continue a revenue source devoted to marketing Modesto as a tourist, meeting and event destination. If renewed, the District would generate approximately $430,540 on an annual basis for promotion of travel and tourism specific to Modesto.

Tourism Marketing Districts (TMDs or districts) utilize the efficiencies of private sector operation in the market-based promotion of tourism. These special assessment districts allow lodging business owners to organize their efforts to increase tourism. Lodging business owners within a district fund the district, and those funds are used to provide services that are desired by and benefit the lodging businesses within the district.

Tourism Marketing Districts benefits:
 Funds cannot be diverted for other government programs.  They are customized to fit the needs of each destination.  They allow for a wide range of services, including destination marketing, tourism promotion, and sales lead generation.
 They are designed, created and governed by those who will pay the assessment; and  They provide a stable funding source for tourism promotion. #17..
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Ordinance to Renew the Modesto Tourism Marketing District

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In California, Tourism Marketing Districts are primarily formed pursuant to the Property and Business Improvement District Law of 1994 (‘94 Law). This law allows for the creation of special benefit assessment districts to raise funds within a specific geographic area. The key difference between Tourism Marketing Districts and other special benefit assessment districts is that funds raised are returned to the private non-profit corporation governing the Tourism Marketing Districts.

Formation of Property or Business Improvement Districts in California California Streets and Highways Code Division 18 Part 7 outlines the process for forming a property or business improvement district. Property or business owners in the proposed district who will pay more than 50 percent of the assessments proposed to be levied can submit a written petition. Upon receiving such a petition, the city council may initiate proceedings to form the district by adopting a resolution expressing its intention to do so. The petition must include a summary of the management district plan, including a map showing the district boundaries and information on where the complete plan can be obtained. The resolution of intention should describe the proposed improvements, maintenance, and activities, the assessment amount, whether bonds will be issued, and the exterior boundaries of the proposed district. The City of Modesto adopted the resolution of intent to renew the District at its March 12, 2024, regular meeting.

Following this, the City provides public notice of the proposed district, including details of the improvements and assessments. A public hearing is held to allow property and business owners to express their views, and written or oral protests can be submitted during the hearing. The voting process involves considering the overall support for the establishment based on the submitted petitions and protests. These procedures aim to ensure transparency and community involvement in the creation of improvement districts.

Taxpayer Protection and Government Accountability Act
The process to adopt the District renewal is slightly different this year—pursuant to the Taxpayer Protection and Government Accountability Act (TPGAA), an initiative certified eligible for qualification for the November 5, 2024, general election ballot, but now yet law, the proposed assessment is an exempt charge pursuant to TPGAA §5(j)(6). The District is considered exempt because it is a tourism marketing district formed under the provisions of the Property and Business Improvement District Law of 1994, as set forth in the Streets and Highways Code §36600, et seq. That law specifies that a tourism marketing district shall be formed by resolution. However, to ensure that the assessment is valid in the event the TPGAA is enacted, staff recommends also passing an uncodified ordinance to renew the District to comply with TPGAA. If passed, this aligns with the Taxpayer Protection and Government Accountability Act, which requires an ordinance for the adoption of all such assessments dating back to 2022.

While TPGAA is not codified law, adopting an ordinance is important out of an abundance of caution. The proposed ordinance and resolution are identical in substantive content.

The Modesto Tourism Marketing District Fee Rebate
In fiscal year 2022 the District Committee adopted the Modesto Tourism District Fee Rebate Program, which aims to support hotels that accept Community Housing and Shelter Services (CHSS) vouchers. Community Housing and Shelter Services (CHSS) is a primary agency in Stanislaus County, providing emergency shelter to families through motel voucher programs.

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shelter or motel stays into permanent rental housing. CHSS also assists low-income households in obtaining permanent, affordable housing and helps those at risk of homelessness. By participating, hotels contribute to the community by providing emergency shelter to vulnerable populations. Hotels can apply to receive a limited rebate on certain fees or taxes related to tourism and lodging. The goal is to encourage hotels to continue supporting CHSS and contribute to the well-being of the community. To date the District has had two hotels that requested the rebate: Modesto Hotel requested a rebate once and was reimbursed, and Apex Inn applies monthly and receives a reimbursement.

DISCUSSION:

Formation of Property or Business Improvement Districts in California California Streets and Highways Code Division 18 Part 71 outlines the process for forming a property or business improvement district. Property or business owners in the proposed district who will pay more than 50 percent of the assessments proposed to be levied can submit a written petition. Upon receiving such a petition, the city council may initiate proceedings to form the district by adopting a resolution expressing its intention to do so. The petition must include a summary of the management district plan, including a map showing the district boundaries and information on where the complete plan can be obtained. The resolution of intention should describe the proposed improvements, maintenance, and activities, the assessment amount, whether bonds will be issued, and the exterior boundaries of the proposed district. The City of Modesto adopted the resolution of intent to renew the District at its March 12, 2024, regular meeting.

Following this, the City provides public notice of the proposed district, including details of the improvements and assessments. A public hearing is held to allow property and business owners to express their views and written or oral protests can be submitted during the hearing. The voting process involves considering the overall support for the establishment based on the submitted petitions and protests. These procedures aim to ensure transparency and community involvement in the creation of improvement districts.

The Management District Plan (Attachment 1) includes the proposed boundary of the Modesto Tourism Marketing District (District), a service plan and budget and a proposed means of governance. The District will include all lodging businesses with twenty (20) rooms or more, existing and in the future, available for public occupancy located within the boundaries of the City of Modesto.

The annual assessment rate is one percent (1%) of gross short-term sleeping room rental revenue. Based on the benefit received, assessments will not be collected on: stays of more than twenty-seven (27) consecutive days; stays by any officer or employee of a foreign government who is exempt by reason of express provision of federal law or international treaty; stays by any officer or employee of the United States Government, or of a federal credit union, or of a state, county, city or other domestic public entity who pays rent in the discharge of official government business; and stays by any officer or employee of a bank or insurance company who pays rent in the discharge of official bank or insurance company business.

During the District’s ten (10) year term, upon the recommendation of the District Committee and approval by the Modesto City Council, the assessment rate may be increased by the Owners’ 1 Cal. SHC Code § 36600 - 36600. “Property and Business Improvement District Law of 1994” Added by Stats. 1994, Ch. 897, Sec. 1.
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Association to a maximum rate of three percent (3%) of gross short-term sleeping room rental revenue for assessed businesses as described in the Management District Plan. The increase in any year shall not exceed one-half of one percent (0.50%) of gross short-term sleeping room rental revenue as detailed in the Management District Plan and must be approved by Council prior to implementing.

The renewed District will have a ten (10) year life, beginning July 1, 2024, or as soon as possible thereafter, and ending ten (10) years from its start date. Once per year, beginning on the anniversary of District formation, there is a thirty (30) day period in which owners paying fifty percent (50%) or more of the assessment may protest and initiate a City Council hearing on District termination.

The City of Modesto will be responsible for collecting the assessment on a quarterly basis and is subject to change as determined by the City of Modesto from each assessed lodging business located in the District boundaries. The City of Modesto shall forward the assessments to Visit Modesto, Inc., which will have the responsibility of managing District programs as provided in this Management District Plan. The City of Modesto shall be paid based upon the actual costs it incurs in administering the assessment, subject to audit, but such amount shall not exceed three percent (3%) of the amount collected to cover the costs of collecting the assessment.

The Modesto Tourism Marketing District Renewal Process
March 12, 2024 RESOLUTION OF INTENTION HEARING - CITY COUNCIL (COMPLETED)
Upon the submission of a written petition, signed by the business owners in the renewed District who will pay more than fifty percent (50%) of the assessments proposed to be levied, the City Council may initiate proceedings to renew the District by the adoption of a resolution expressing its intention to renew the District.

Petition Status: Petitions in favor of District renewal were submitted by 6 lodging businesses, which represent 60.49% of the total District assessment. This majority petition allows the City Council to initiate proceedings for the District renewal at the March 12, 2024 meeting.

No later than
March 30, 2024 NOTICE (COMPLETED)
The 94 2Law requires the City to mail written notice to the owners of all lodging businesses proposed to be assessed within the District. Mailing the notice begins a mandatory forty-five (45) day period in which owners may protest District renewal.

May 7, 2024 PUBLIC MEETING AND INTRODUCTION/FIRST READING OF

ORDINANCE (COMPLETED)
Allow public testimony on the renewal of the District and levy of assessments. No City Council action required.
2 Cal. SHC Code § 36600 - 36600. “Property and Business Improvement District Law of 1994” Added by Stats. 1994, Ch. 897, Sec. 1.
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At the public meeting, the City Council shall introduce and conduct the first reading of the ordinance renewing the District and levying the assessment.

May 14, 2024 FINAL PUBLIC HEARING AND SECOND READING/ADOPTION OF

THE ORDINANCE AND RESOLUTION
If, following the end of the public hearing, written protests are received from the owners of lodging businesses in the renewed District which will pay more than fifty percent (50%) of the assessments proposed to be levied and protests are not withdrawn so as to reduce the protests to less than fifty percent (50%), no further proceedings to levy the proposed assessment against such businesses shall be taken for a period of one (1) year from the date of the finding of a majority protest by the City Council.

If the City Council, following the public hearing, decides to establish the renewed District, the City Council shall hold a second reading of and adopt the ordinance and resolution renewing the District and levying the assessment. Upon successful passage of the ordinance, the District shall be renewed, and the ordinance shall go into effect thirty (30) days after successful passage of the ordinance.

Taxpayer Protection and Government Accountability Act
The process to adopt the District renewal is slightly different this year—pursuant to the Taxpayer Protection and Government Accountability Act (TPGAA), an initiative certified eligible for qualification for the November 5, 2024, general election ballot, but now yet law, the proposed assessment is an exempt charge pursuant to TPGAA §5(j)(63). The District is considered exempt because it is a tourism marketing district formed under the provisions of the Property and Business Improvement District Law of 1994, as set forth in the Streets and Highways Code §36600, et seq. That law specifies that a tourism marketing district shall be formed by resolution. However, to ensure that the assessment is valid in the event the TPGAA is enacted, staff recommends also passing an uncodified ordinance to renew the District to comply with TPGAA. If passed, this aligns with the Taxpayer Protection and Government Accountability Act, which requires an ordinance for the adoption of all such assessments dating back to 2022.

While TPGAA is not codified law, adopting an ordinance is important out of an abundance of caution. The proposed ordinance and resolution are identical in substantive content.

FISCAL IMPACT:

If the District is renewed, the annual assessment rate is one percent (1%) of gross short-term sleeping room rental revenue for ten years. The City will receive a fee of up to three percent (3%) of the amount collected to cover its costs of administration. The Modesto Tourism Marketing District is projected to contribute 45% (or $384,982) of Visit Modesto’s ongoing revenue in Fiscal Year 2024. Separately from the District contributions, the City’s TOT contributions are expected at $468,347, approximately 55% of Visit Modesto’s funding. 3 Taxpayer Protection and Government Accountability Act §5(j)(6) #17..
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COMMITTEE RECOMMENDATION:

A Resolution of Intention to renew the Modesto Tourism Marketing District was presented to the Economic Development Committee on March 4, 2024, and was recommended to forward to Council for future adoption.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Motion approving Final Adoption of Ordinance 3780-C.S. of the City of Modesto declaring formation of the Modesto Tourism Marketing District, pursuant to the Property and Business Improvement District Law of 1994, for a renewed ten-year term.

Resolution declaring formation of the Modesto Tourism Marketing District, pursuant to the Property and Business Improvement District Law of 1994, for a renewed ten-year term.

Approved by:

Jessica Hill, Director of Community and Economic
Development
Joseph P. Lopez, City Manager
Attachments:

1. Ordinance Declaring Formation

2. Resolution Declaring Formation

3. Management District Plan
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- 1 - ORDINANCE NO. 3780-C.S.

EFFECTIVE DATE: June 13, 2024
ORDINANCE NO. 3780-C.S.

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF

MODESTO DECLARING FORMATION OF THE MODESTO TOURISM

MARKETING DISTRICT PURSUANT TO THE PROPERTY AND
BUSINESS IMPROVEMENT DISTRICT LAW OF 1994 FOR A

EFFECTIVE DATE: June 13, 2024
WHEREAS, the public meeting and public hearing to consider the renewal of the MTMD have been properly noticed in accordance with Streets and Highways Code §36623; and
WHEREAS, on May 7, 2024 at 5:30 PM at the City Council Chambers located at 1010 10th Street, Lower Level, Modesto, CA 95354, the City Council held a public meeting regarding the renewal of the MTMD, introduced and conducted a first reading of the Ordinance regarding the renewal of the MTMD, and the City Council heard comments from the public and interested partiesregarding the renewal of the MTMD and the levy of the proposed assessment; and
WHEREAS, on May 14, 2024 at 5:30 PM at the City Council Chambers located at 1010 10th Street, Lower Level, Modesto, CA 95354, the City Council held a public hearing regarding the renewal of the MTMD, and the City Council heard and received all objections and protests, if any, to the renewal of the MTMD and the levy of the proposed assessment; and
WHEREAS, the City Clerk has determined that there was no majority protest. A majority protest is defined as written protests received from owners of businesses in the renewed MTMD which would pay fifty percent (50%) or more of the assessments proposed to be levied. Protests are weighted based on the assessment proposed to be levied on each lodging business; and
WHEREAS, Streets and Highways Code sections 36625 and 36660 specify that the MTMD may be renewed through adoption of a Resolution of Formation; and WHEREAS, any action that is authorized or required to be taken by a resolution of the City Council may also be taken by an ordinance of the City Council; and WHEREAS, the City Council desires to adopt this Ordinance to renew the MTMD for a ten year term.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MODESTO DOES HEREBY ORDAIN AS FOLLOWS :

SECTION 1. ADOPTION OF UNCODIFIED ORDINANCE.

1. The recitals set forth herein are adopted by the City Council as findings and they are true and correct.

2. The MTMD is hereby renewed for a ten (10) year term, beginning July 1, 2024, or as soon as possible thereafter, and ending ten (10) years from its start date. #17..
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EFFECTIVE DATE: June 13, 2024

3. The Plan dated January 10, 2024, and included as an attachment to the City Council staff report dated May 14, 2024, is hereby adopted and approved.

4. The activities to be provided to benefit businesses in the MTMD will be funded by the levy of the assessment. The revenue from the assessment levy shall not be used: to provide activities that directly benefit businesses outside the MTMD; to provide activities or improvements outside the MTMD; or for any purpose other than the purposes specified in this Ordinance, the Resolution of Intention, and the Plan. Notwithstanding the foregoing, improvements and activities that must be provided outside the MTMD boundaries to create a specific benefit to the assessed businesses may be provided, but shall be limited to marketing or signage pointing to the MTMD.

5. The City Council finds as follows:
a) The activities funded by the assessment will provide a specific benefit to assessed businesses within the MTMD that is not provided to those not paying the assessment.
b) The assessment is a charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege.
c) The assessment is a charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product.
d) Assessments imposed pursuant to the MTMD are levied solely upon the assessed business, and the business owner is solely responsible for payment of the assessment when due. If the owner chooses to collect any portion of the assessment from a transient, that portion shall be specifically called out and identified for the transient in any and all communications from the business owner as the “MTMD Assessment” or “Tourism Assessment”.

6. The assessments levied for the MTMD shall be applied towards marketing and sales promotions to market MTMD lodging businesses as tourist, meeting and event destinations, and other improvements and activities as set forth in the Plan.

7. Assessments levied on lodging businesses pursuant to this ordinance shall be levied on the basis of benefit. Because the services provided are intended to increase sleeping room rentals, an assessment based on gross short-term sleeping room rental revenue is the best measure of benefit.

8. The assessments for the entire MTMD will total approximately $430,540 in year one (1).
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EFFECTIVE DATE: June 13, 2024

9. Bonds shall not be issued to fund the MTMD.

10. The MTMD shall include all lodging business with twenty (20) rooms or more, existing and in the future, located within the boundaries of the City of Modesto. A boundary map as shown in Exhibit A is attached hereto and incorporated herein by reference.

11. The assessments shall be used for the purposes set forth above and any funds remaining at the end of any year may be used in subsequent years in which the MTMD assessment is levied as long as they are used consistent with the requirements set forth herein.

12. The assessments to fund the activities and improvements for the MTMD will be collected by the City on a quarterly basis and is subject to change as determined by the City, and in accordance with Streets and Highways Code §36631.

13. The City Council, through adoption of this Ordinance and the Plan, has the right pursuant to Streets and Highways Code §36651, to identify the body that shall implement the proposed program, which shall be the Owners’ Association of the MTMD as defined in Streets and Highways Code §36612. The City Council has determined that Visit Modesto, Inc. shall be the MTMD Owners’ Association. The City Council may, from time to time, identify an alternative qualified entity to serve as Owner’s Association of the MTMD.

14. Visit Modesto, Inc., pursuant to Streets and Highways Code §36650, shall cause to be prepared a report for each fiscal year, except the first year, for which assessments are to be levied and collected to pay the costs of the improvement and activities described in the report. The first report shall be due after the first year of operation of the MTMD.

15. The MTMD renewed pursuant to this Ordinance will be subject to any amendments to the Property and Business Improvement District Law of 1994 (California Streets and Highways Code §36600 et. seq.).

16. The City Clerk, or his or her designee, is directed to take all necessary actions to complete the renewal of the MTMD and to levy the assessments.

17. Adoption of this Ordinance shall constitute the levy of an assessment in each fiscal year referred to in the Plan.

SECTION 2. ENVIRONMENTAL REVIEW. The proposed Ordinance is exempt from CEQA under the general rule in CEQA Guidelines section 15061(b)(3), that CEQA only applies to projects that have the potential for causing a significant effect on the environment. The Ordinance adopts an assessment that will be used for tourism marketing #17..
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EFFECTIVE DATE: June 13, 2024
activities. It does not authorize or finance any development, improvements or any other project with the potneital to have a significant effect on the environment.

SECTION 3. SEVERABILITY. If any section, subsection, sentence, clause or phrase or word of this Ordinance is for any reason held to be unconstitutional, unlawful or otherwise invalid by a court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The Council of the City of Modesto declares that it would have passed and adopted this Ordinance and each and all provisions irrespective of the fact that any one or more of said provisions may be declared invalid or unconstitutional without regard to any such decision or preemptive legislation.

SECTION 4. EFFECTIVE DATE. This ordinance shall go into effect and be in full force and operation from and after thirty (30) days after its final passage and adoption.

SECTION 5. PUBLICATION. At least two (2) days prior to its final adoption, copies of this ordinance shall be posted in at least three (3) prominent and distinct locations in the City; and a notice shall be published once in The Modesto Bee, the official newspaper of the City of Modesto, setting forth the title of this ordinance, the date of its introduction and the places where this ordinance is posted.
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EFFECTIVE DATE: June 13, 2024
The foregoing ordinance was introduced at a regular meeting of the Council of the City of Modesto held on the 7th day of May 2024, by Councilmember ??, who moved its introduction and passage to print, which motion being duly seconded by Councilmember ??, was upon roll call carried and ordered printed and published by the following vote:

AYES: Councilmembers: Alvarez, Bavaro, Escutia-Braaton, Ricci, Williams, Wright, Mayor Zwahlen
NOES: Councilmembers: None
ABSENT: Councilmembers: None
APPROVED: _____________________________
SUE ZWAHLEN, Mayor
ATTEST:

By: _________________________________
DIANE NAYERES-PEREZ, City Clerk
(SEAL)
APPROVED AS TO FORM:

By: _________________________________
JOSE M. SANCHEZ, City Attorney
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EFFECTIVE DATE: June 13, 2024

FINAL ADOPTION CLAUSE
The foregoing ordinance, having been published as required by the Charter of the City of Modesto, and coming on for final consideration at the regular meeting of the Council of the City of Modesto held on the 14th day of May, 2024, Councilmember ?? moved its final adoption, which motion being duly seconded by Councilmember ??, was upon roll call carried and the ordinance adopted by the following vote:

AYES: Councilmembers: Alvarez, Bavaro, Escutia-Braaton, Ricci, Williams, Wright, Mayor Zwahlen
NOES: Councilmembers: None
ABSENT: Councilmembers: None
APPROVED: ________________________

SUE ZWAHLEN, MAYOR
ATTEST: ___________________________________
DIANE NAYARES-PEREZ, City Clerk
Effective Date: June 13, 2024
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EFFECTIVE DATE: June 13, 2024
Exhibit A
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EFFECTIVE DATE: June 13, 2024
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MODESTO CITY COUNCIL
RESOLUTION NO. 2024-XX

RESOLUTION DECLARING FORMATION OF THE MODESTO

TOURISM MARKETING DISTRICT PURSUANT TO THE PROPERTY
AND BUSINESS IMPROVEMENT DISTRICT LAW OF 1994 FOR A

RENEWED TEN-YEAR TERM
WHEREAS, the City of Modesto (City) created the MTMD on May 7, 2019 by Resolution No. 2019-213; and
WHEREAS, the MTMD was created for a four (4) year and eleven (11) month term which ends on June 30, 2024; and
WHEREAS, the Property and Business Improvement District Law of 1994 (Streets and Highways Code §36600 et. seq.) authorizes the City to renew business improvement districts upon petition by a weighted majority of the business owners located within the boundaries of the district; and
WHEREAS, lodging business owners who will pay more than fifty percent (50%) of the proposed assessment, as weighted according to the amount of the assessment to be paid by the petitioner, within the boundaries of the MTMD have petitioned the City Council to renew the MTMD; and
WHEREAS, the renewed MTMD will include all lodging businesses with twenty (20) rooms or more, existing and in the future, available for public occupancy within the boundaries of the City of Modesto; and
WHEREAS, included with the petitions was a Management District Plan (Plan) summary that describes the proposed assessment to be levied on certain lodging businesses, existing and in the future, available for public occupancy within the MTMD to pay for marketing and sales promotions, and other improvements and activities set forth in the Plan; and
WHEREAS, the Plan establishes that the assessment is imposed for a specific benefit received by the businesses paying the assessment is no more than necessary to cover the costs to the City in providing the specific benefit, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the specific benefits or specific government services received by the payor; and WHEREAS, the assessed lodging businesses within the MTMD will receive a specific benefit from the activities and improvements set forth in the Plan; and #17..
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WHEREAS, on March 12, 2024 at 5:30 PM at the City Council Chambers located at 1010 10th Street, Lower Level, Modesto, CA 95354, the City Council adopted a Resolution of Intention, Resolution No. 2024-087; and
WHEREAS, the public meeting and public hearing to consider the renewal of the MTMD have been properly noticed in accordance with Streets and Highways Code §36623; and
WHEREAS, on May 7, 2024 at 5:30 PM at the City Council Chambers located at 1010 10th Street, Lower Level, Modesto, CA 95354, the City Council held a public meeting regarding the renewal of the MTMD, and the City Council heard comments from the public and interested partiesregarding the renewal of the MTMD and the levy of the proposed assessment; and
WHEREAS, on May 14, 2024 at 5:30 PM at the City Council Chambers located at 1010 10th Street, Lower Level, Modesto, CA 95354, the City Council held a public hearing regarding the renewal of the MTMD, and the City Council heard and received all objections and protests, if any, to the renewal of the MTMD and the levy of the proposed assessment; and
WHEREAS, the City Clerk has determined that there was no majority protest. A majority protest is defined as written protests received from owners of businesses in the renewed MTMD which would pay fifty percent (50%) or more of the assessments proposed to be levied. Protests are weighted based on the assessment proposed to be levied on each lodging business; and
WHEREAS, Streets and Highways Code sections 36625 and 36660 specify that the MTMD may be renewed through adoption of a Resolution of Formation; aand WHEREAS, the City Council desires to adopt this Resolution to renew the MTMD for a ten year term.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto as follows:

1. The recitals set forth herein are adopted by the City Council as findings and they are true and correct.

2. The MTMD is hereby renewed for a ten (10) year term, beginning July 1, 2024, or as soon as possible thereafter, and ending ten (10) years from its start date.

3. The Plan dated January 10, 2024, and included as an attachment to the City Council staff report dated May 14, 2024, is hereby adopted and approved.

4. The activities to be provided to benefit businesses in the MTMD will be funded by the levy of the assessment. The revenue from the assessment levy shall not be #17..
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used: to provide activities that directly benefit businesses outside the MTMD; to provide activities or improvements outside the MTMD; or for any purpose other than the purposes specified in this Ordinance, the Resolution of Intention, and the Plan. Notwithstanding the foregoing, improvements and activities that must be provided outside the MTMD boundaries to create a specific benefit to the assessed businesses may be provided, but shall be limited to marketing or signage pointing to the MTMD.

8. The assessments for the entire MTMD will total approximately $430,540 in year one (1).

9. Bonds shall not be issued to fund the MTMD.

10. The MTMD shall include all lodging business with twenty (20) rooms or more, existing and in the future, located within the boundaries of the City of Modesto. A #17..
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boundary map as shown in Exhibit A is attached hereto and incorporated herein by reference.

16. The City Clerk, or his or her designee, is directed to take all necessary actions to complete the renewal of the MTMD and to levy the assessments.

17. Adoption of this Ordinance shall constitute the levy of an assessment in each fiscal year referred to in the Plan.

BE IT FURTHER RESOLVED that the proposed Resolution is exempt from CEQA under the general rule in CEQA Guidelines section 15061(b)(3), that CEQA only applies to projects that have the potential for causing a significant effect on the environment. The Resolution adopts an assessment that will be used for tourism marketing activities. It does not authorize or finance any development, improvements or any other project with the potneital to have a significant effect on the environment.

BE IT FURTHER RESOLVED that this resolution shall go into effect and be in full force and operation from and after thirty (30) days after its adoption.. #17..
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The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 14th day of May 2024, by Councilmember ??, who moved its adoption, which motion being duly seconded by Councilmember ??, was upon roll call carried and the resolution was adopted by the following vote:

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ATTEST:_______________________________
DIANE NAYERES-PEREZ, City Clerk
(SEAL)
APPROVED AS TO FORM:

By: _________________________________
JOSE M. SANCHEZ, City Attorney
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Exhibit A
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April 11, 2019
R

MODESTO TOURISM MARKETING DISTRICT

MANAGEMENT DISTRICT PLAN
Prepared pursuant to the Property and Business Improvement District Law of 1994, Streets and Highways Code section 36600 et seq.
2024-2034
January 10, 2024
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CONTENTS
I. OVERVIEW.......................................................................................................................................... 3 II. BACKGROUND................................................................................................................................. 5 III. ACCOMPLISHMENTS ..................................................................................................................... 6 IV. BOUNDARY........................................................................................................................................ 8 V. ASSESSMENT BUDGET AND SERVICES..............................................................................10 A. Annual Service Plan.......................................................................................................... 10 B. Annual Budget .................................................................................................................. 11 C. California Constitutional Compliance .............................................................................. 13 D. Assessment........................................................................................................................ 15 E. Interest and Penalties ........................................................................................................ 16 F. Time and Manner for Collecting Assessments................................................................. 16 VI. GOVERNANCE ...............................................................................................................................17 A. Owners’ Association......................................................................................................... 17 B. Brown Act and California Public Records Act Compliance ............................................ 17 C. Annual Report................................................................................................................... 17 APPENDIX 1 – LAW ....................................................................................................................................18 APPENDIX 2 – ASSESSED BUSINESSES..............................................................................................31 Prepared by
Civitas
(800)999-7781
www.civitasadvisors.com
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MTMD Management District Plan 3
January 10, 2024
I. OVERVIEW
Developed by Visit Modesto, Inc. (VM) and Modesto lodging businesses, the Modesto Tourism Marketing District (MTMD) is an assessment district proposed to continue to provide specific benefits to payors, by funding marketing and sales promotion efforts for assessed businesses. This approach has been used successfully in other destination areas throughout the country to provide the benefit of additional room night sales directly to payors. The MTMD was created in 2019 for a four (4) year and eleven (11) month term. VM, Modesto lodging businesses, now wish to renew the MTMD for an additional ten (10) year term.

Location: The renewed MTMD includes all lodging businesses with twenty (20) rooms or more, existing and in the future, available for public occupancy located within the boundaries of the City of Modesto (referred to herein as “assessed businesses”), as shown on the map in Section IV.

Services: The MTMD is designed to provide specific benefits directly to payors by increasing awareness and demand for room night sales. Marketing and sales promotions will increase demand for overnight tourism and market payors as tourist, meeting, and event destinations, thereby increasing demand for room night sales.

Budget: The total MTMD annual assessment budget for the initial year of its ten (10) year operation is anticipated to be approximately $430,540. A similar budget is expected to apply to subsequent years, but this budget is expected to fluctuate as room sales do, as businesses open and close, and if assessment rates are increased as detailed in Section V.

Cost: The annual assessment rate is one percent (1%) of gross short-term sleeping room rental revenue. Based on the benefit received, assessments will not be collected on:
stays of more than twenty-seven (27) consecutive days; stays by any officer or employee of a foreign government who is exempt by reason of express provision of federal law or international treaty; stays by any officer or employee of the United States Government, or of a federal credit union, or of a state, county, city or other domestic public entity who pays rent in the discharge of official government business; and stays by any officer or employee of a bank or insurance company who pays rent in the discharge of official bank or insurance company business.

During the MTMD’s ten (10) year term, upon the recommendation of the TMD Committee and approval by the Modesto City Council, the assessment rate may be increased by the Owners’ Association to a maximum rate of three percent (3%) of gross short-term sleeping room rental revenue for assessed businesses as described in Section V. The increase in any year shall not exceed one-half of one percent (0.50%) of gross short-term sleeping room rental revenue as detailed in Section V. #17..
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MTMD Management District Plan 4
January 10, 2024
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Collection: The City of Modesto (City) will be responsible for collecting the assessment (including any delinquencies, interest, and penalties) from each assessed business located in the boundaries of the MTMD. As the tax administrator, the City shall have the flexibility to determine and set the assessment collection schedule (monthly/quarterly). The City shall take all reasonable efforts to collect the assessments from each assessed business.

Duration: The renewed MTMD will have a ten (10) year life, beginning July 1, 2024, or as soon as possible thereafter, and ending ten (10) years from its start date. After ten (10) years, the MTMD may be renewed pursuant to the Property and Business Improvement District Law of 1994, Streets and Highways Code section 36600 et seq. (94 Law) if business owners support continuing the MTMD programs. Once per year, beginning on the anniversary of MTMD formation, there is a thirty (30) day period in which owners paying fifty percent (50%) or more of the assessment may protest and initiate a City Council hearing on MTMD termination.

Management: With the approval of the Modesto City Council, Visit Modesto, Inc. (VM) shall continue to serve as the MTMD’s Owners’ Association. The Owners’ Association is charged with managing funds and implementing programs in accordance with this Plan and must provide annual reports to the City Council. VM shall create a TMD Management Committee comprised of lodging business owners paying the assessment. The TMD Management Committee shall be tasked with determining how MTMD funds are spent within the designated programs in this Plan, subject to final approval by VM’s Board.
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MTMD Management District Plan 5
January 10, 2024
II. BACKGROUND
TMDs are an evolution of the traditional Business Improvement District. The first TMD was formed in West Hollywood, California in 1989. Since then, over 100 California destinations have followed suit. In recent years, other states have begun adopting the California model –Illinois, Minnesota, Massachusetts, Montana, South Dakota, Washington, Colorado, Texas, and Louisiana have adopted TMD laws. Several other states are in the process of adopting their own legislation. The cities of Wichita, Kansas and Newark, New Jersey used an existing business improvement district law to form a TMD. Additionally, some cities, like Portland, Oregon and Memphis, Tennessee have utilized their home rule powers to create TMDs without a state law.

California’s TMDs collectively
raise over $500 million
annually for local destination
marketing. With competitors
raising their budgets, and
increasing rivalry for visitor
dollars, it is important
that Modesto lodging
businesses continue to invest
in stable, commerce-specific
marketing programs.

TMDs utilize the efficiencies
of private sector operation in the market-based promotion of tourism districts. TMDs allow lodging business owners to organize their efforts to increase commerce. Lodging business owners within the TMD pay an assessment and those funds are used to provide services that increase commerce.

In California, most TMDs are formed pursuant to the Property and Business Improvement District Law of 1994. This law allows for the creation of a benefit assessment district to raise funds within a specific geographic area. The key difference between TMDs and other benefit assessment districts is that funds raised are returned to the private non-profit corporation governing the district.

There are many benefits to TMDs:
• Funds must be spent on services and improvements that provide a specific benefit only to those who pay;
• Funds cannot be diverted to general government programs; • They are customized to fit the needs of payors in each destination; • They allow for a wide range of services;
• They are designed, created, and governed by those who will pay the assessment; and • They provide a stable, long-term funding source for tourism promotion. #17..
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MTMD Management District Plan 6
January 10, 2024
III. ACCOMPLISHMENTS

1. TOT Revenue
• Since the 2018/19 Fiscal Year, total TOT (Transient Occupancy Tax) revenue has increased by over 21%
• In marketing spending on tour and travel related business has increased by over 24% (DRA reports)

2. Pandemic Revenue
Throughout the pandemic, the Modesto Hospitality market achieved the best results in the Central Valley. In the fiscal year 2021-22, the market performance for Modesto far exceeded all cities of the Central Valley in Occupancy and RevPAR resulting in a record year for TOT at $3.6M. More importantly, in the fiscal year ending June 30, 2020, after 90 days of a global standstill, the TOT performance in Modesto exceeded the best year in collection history (2018-19). All these achievements occurred while the global travel industry was in constant flux.

More importantly, compared to the Central Valley’s largest cities while experiencing the reduced room count, Modesto outperformed every city in pre-pandemic v post-pandemic performance for 2022-23 in both Occupancy and RevPAR. Note that while all cities experienced a loss in occupancy, Modesto had the lowest variance and was the only city to GROW in RevPAR.

3. February/March Growth
Upon inception, the Visit Modesto team committed to the MTMD that ‘shoulder periods’ would be the primary focus of efforts to grow occupancy & RevPAR. The first initiative was launched in February 2020, the Almond Blossom Cruise, for the February/March season with a unique Agricultural Tourism and a long-drive market-stay-overnight angle. The results have been incredible, though a global pandemic almost brought tourism to a grinding halt starting in February of 2020.

The results for RevPAR performance are below compared to pre-pandemic levels; REVPAR 2019 2020 2021. 2022. 2023.

February $64.27 $66.44 $66.80 $77.53 $83.17
March $71.28 $49.91* $77.84 $82.80 $79.60
*Global quarantines began in March 2020
The end result is incredible with a 29.5% increase for February and a 11.7% increase for March.

These types of results exemplify the reason the MTMD was formed and the potential that the team at Visit Modesto has to impact tourism when the market conditions and travel trends are aligned for new initiatives.

4. Destination Programs
During the pandemic, Visit Modesto had several successful initiatives that brought significant visitor impact during traditionally low occupancy, low visitation periods; • Almond Blossom Cruise; increased occupancy and revenues for February/March. In 2022, in the heart of the Pandemic when the weather was good (2023 had 40 out of 45 days with rain) the Almond Blossom Cruise generated over 100K Visitor Trips alone! • MoCheer impacts December visitor traffic.
• MoFresh is creating more opportunities for visitors to stay for more than gas fill-ups May through August
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MTMD Management District Plan 7
January 10, 2024
• MoPink has created both local and regional reasons to spend more in Modesto and have an impact on charities that keep money local in support of local programs

5. Global Perception of Modesto
With a change in focus from a one-dimensional value proposition of Modesto, Graffiti Summer, there has been an incredible public relations impact for the community. Modesto’s restaurants, agricultural attractions and murals have all received national press attention.

Awards & Accolades – Modesto is no longer on all the ‘naughty’ lists! - 2021; ESTO Award Finalist (1 of 3 in the US) US Travel Excellence Award - 2021; Poppy Award Finalist (1 of 3 in California) Visit CA Excellence Award - 2022; Top Cities for Cyclists
- 2022; Best Places to Live US News & World Report
- 2023; #8 Best Places to Live in CA Forbes2023
- 2023; #87 Best Cities in America (made the top 100 list!!!) - 2023; #1 Hidden Gem Live Music City in the US
Public Relations/Influencers & Major Media
- Key Highlights
o 2021; Good Day Sacramento (7 times), ABC 10 & Fox 40 Sacramento o 2022; HiTravel Tales, Forbes, Travel Pulse, SF Gate September o 2023; NBC Los Angeles, Thrillist, Secret San Francisco, Washington Post, Tasting Table, KNBC Los Angeles, KSND San Diego, KOVR Sacramento, SF Gate, HelloRubyDoodle, Momtastic, Travel Tweeks, Tennessee Tribune, Yahoo Canada #17..
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MTMD Management District Plan 8
January 10, 2024
IV. BOUNDARY
The MTMD will include all lodging businesses with twenty (20) rooms or more, existing and in the future, available for public occupancy within the boundaries of the City of Modesto (referred to herein as “assessed businesses”), as shown in the map on the following page.

Lodging business means: any structure, or any portion of any structure within the City, which is intended or designed for lodging or sleeping purposes wherein the owner or operator thereof offers occupancy, defined as the use or possession, or the right to use or possession granted by the owner or operator thereof for compensation of any room or rooms or portion thereof for lodging or sleeping purposes. Lodging business does not include any vacational rental, vacation rental unit, short-term vacation rental, nor any hospital, medical clinic, convalescent home or other temporary or permanent domicile equipped primarily for the care of aged or infirm people.

A complete listing of assessed businesses within the renewed MTMD, can be found in Appendix 2. #17..
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MTMD Management District Plan 9
January 10, 2024
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MTMD Management District Plan 10
January 10, 2024
V. ASSESSMENT BUDGET AND SERVICES
A. Annual Service Plan
Assessment funds will be spent to provide specific benefits conferred or privileges granted directly to the payors that are not provided to those not charged, and which do not exceed the reasonable cost to the City of conferring the benefits or granting the privileges. The privileges and services provided with the MTMD funds are sales and marketing programs available only to assessed businesses.

A service plan assessment budget has been developed to deliver services that benefit the assessed businesses. A detailed annual assessment budget will be developed and approved by VM. The chart below illustrates the initial annual assessment budget allocations. These activities and allocations will also apply in subsequent years. The total initial assessment budget is estimated to be $430,540.

Although actual revenues will fluctuate due to market conditions, the proportional allocations of the budget shall remain the same. However, the City and VM’s Board shall have the authority to adjust budget allocations between the categories by no more than fifteen percent (15%) of the total budget per year. A description of the proposed improvements and activities for the initial year of operation is below. The same activities are proposed for subsequent years. In the event of a legal challenge against the MTMD, any and all assessment funds may be used for the costs of defending the MTMD.

Each budget category includes all costs related to providing that service in accordance with Generally Accepted Accounting Procedures (GAAP). For example, the sales and marketing budget includes the cost of staff time dedicated to overseeing and implementing the sales and marketing program. Staff time dedicated purely to administrative tasks is allocated to the administrative portion of the budget.

The costs of an individual staff member may be allocated to multiple budget categories, as appropriate Administration &
Collection, $64,581
, 15%
Contingency /
Reserve / Renewal,
$21,527 , 5%
Sales &
Marketing,
$344,432 , 80%
Initial Annual Assessment Budget - $430,540
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MTMD Management District Plan 11
January 10, 2024
in accordance with GAAP. The staffing levels necessary to provide the services below will be determined by VM on an as- needed basis.

Sales and Marketing
A sales and marketing program promotes assessed businesses as tourist, meeting, and event destinations. The sales and marketing program will have a central theme of promoting Modesto as a desirable place to visit. The program has the goal of increasing overnight visitation and room night sales at assessed businesses, and may include, but not limited to, the following activities:
• Multi-media marketing efforts including digital, print, and other diversified media strategies curated to target prospective visitors and maximize online presence and visibility; • Television ads targeted at potential visitors;
• Radio ads targeted at potential visitors;
• Attendance of trade shows;
• Special events highlighting unique aspects of Modesto; • Preparation and production of collateral promotional materials such as brochures, flyers, and maps;
• Data and industry analytics used for marketing;
• Participation fees and attendance of professional industry conferences and affiliation events; • Lead generation activities designed to attract tourists and group events to Modesto; and • Any agency fees and commissions related to the execution of programs and activities authorized by this Plan.

Administration and Collection
The administration portion of the budget shall be utilized for administrative staffing costs, office costs, and other general administrative costs such as insurance, legal, and accounting fees. The collection portion of the budget shall be utilized for paying the City of Modesto for the costs of collecting the assessment. The City of Modesto shall be paid based upon the actual costs it incurs in administering the assessment, subject to audit, but such amount shall not exceed three percent (3%) of the amount collected to cover the costs of collecting the assessment.

Contingency/Reserve/Renewal
A portion of the budget will be allocated to a contingency fund to account for lower than anticipated collections. If collected contingency funds remain in the budget near the expiration of the MTMD’s term, and business owners wish to renew the District, the contingency funds may be used for renewal costs.

B. Annual Budget
The total ten (10) year assessment budget is projected at approximately $430,540 annually, or $4,305,400 through FY 2033 – 34 if assessment rates are not increased. If the maximum assessment rate increases are adopted, the estimated total assessment budget through FY 2033 – 34 is $10,736,500 This amount may fluctuate as sales and revenue increase at assessed businesses, and as businesses open and close, but is not expected to change significantly over the term. #17..
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MTMD Management District Plan 12
January 10, 2024
The initial annual assessment rate is one percent (1%) of gross short-term sleeping room rental revenue. Upon the recommendation of the TMD Committee, the assessment rate may be increased by VM’s Board and subject to Modesto City Council approval, up to a maximum of one-half of one percent (0.50%) per year to a maximum rate of three percent (3%). However, the assessment rate increase in any given year may be an amount less than one-half of one percent (0.50%). For example, the assessment rate in FY 2025-26 could be increased by one-quarter of one percent (0.25%) and in FY 2026-27 the assessment rate could be increased by another one-quarter of one percent (0.25%), etc. up to a maximum assessment rate of three percent (3%).

The table below demonstrates the estimated maximum budget with the assumption that the assessment rate will be increased at the earliest opportunity as it is a required disclosure, it is not the anticipated course of action. Alternate courses of action may be taken in regard to implementing the assessment rate increase other than what is demonstrated in the chart below, within the parameters of this Management District Plan.

Estimated Annual Budget If Maximum Assessment Rates Are Adopted Fiscal
Year Sales & Marketing Administration & Collection
Contingency /
Reserve / Renewal Total
2024-25 $344,432 $64,581 $21,527 $430,540
2025-26 $516,648 $96,872 $32,291 $645,810
2026-27 $688,864 $129,162 $43,054 $861,080
2027-28 $861,080 $161,453 $53,818 $1,076,350
2028-29 $1,033,296 $193,743 $64,581 $1,291,620
2029-30 $1,033,296 $193,743 $64,581 $1,291,620
2030-31 $1,033,296 $193,743 $64,581 $1,291,620
2031-32 $1,033,296 $193,743 $64,581 $1,291,620
2032-33 $1,033,296 $193,743 $64,581 $1,291,620
2033-34 $1,033,296 $193,743 $64,581 $1,291,620
Total $8,610,800 $1,614,525 $538,175 $10,763,500
The table below demonstrates the annual improvement and service plan budget with the assumption that the rates will not be increased during the MTMD’s term. #17..
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MTMD Management District Plan 13
January 10, 2024
Estimated Annual Budget if Assessment Rates Are Not Increased Fiscal
Year Sales & Marketing Administration & Collection
Contingency /
Reserve / Renewal Total
2024-25 $322,905 $64,581 $21,527 $430,540
2025-26 $344,432 $64,581 $21,527 $430,540
2026-27 $344,432 $64,581 $21,527 $430,540
2027-28 $344,432 $64,581 $21,527 $430,540
2028-29 $344,432 $64,581 $21,527 $430,540
2029-30 $344,432 $64,581 $21,527 $430,540
2030-31 $344,432 $64,581 $21,527 $430,540
2031-32 $344,432 $64,581 $21,527 $430,540
2032-33 $344,432 $64,581 $21,527 $430,540
2033-34 $344,432 $64,581 $21,527 $430,540
Total $3,422,793 $645,810 $215,270 $4,305,400
C. California Constitutional Compliance
The MTMD assessment is not a property-based assessment subject to the requirements of Proposition 218. Courts have found Proposition 218 limited the term ‘assessments’ to levies on real property.1 Rather, the MTMD assessment is a business-based assessment, and is subject to Proposition 26.

Pursuant to Proposition 26 all levies are a tax unless they fit one of seven exceptions. Two of these exceptions apply to the MTMD, a “specific benefit” and a “specific government service.” Both require that the costs of benefits or services do not exceed the reasonable costs to the City of conferring the benefits or providing the services.

1. Specific Benefit
Proposition 26 requires that assessment funds be expended on, “a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege.”2 The services in this Plan are designed to provide targeted benefits directly to assessed businesses, and are intended only to provide benefits and services directly to those businesses paying the assessment. These services are tailored not to serve the general public, businesses in general, or parcels of land, but rather to serve the specific businesses within the MTMD. The activities described in this Plan are specifically targeted to increase demand for room night sales for assessed businesses within the boundaries of the MTMD, and are narrowly tailored. MTMD funds will be used exclusively to provide the specific benefit of increased demand for room night sales directly to the assessees.

Assessment funds shall not be used to feature non-assessed businesses in MTMD programs, or to directly generate sales for non-assessed businesses. The activities paid for from assessment revenues 1 Jarvis v. the City of San Diego 72 Cal App. 4th 230 2 Cal. Const. art XIII C § 1(e)(1) #17..
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MTMD Management District Plan 14
January 10, 2024
are business services constituting and providing specific benefits to the assessed businesses. Nothing in this Plan limits the ability of the Owners’ Association to enter into private contracts with nonassessed businesses for the provision of services to those businesses.

The assessment imposed by this MTMD is for a specific benefit conferred directly to the payors that is not provided to those not charged. The specific benefit conferred directly to the payors is an increase in demand for room night sales. The specific benefit of an increase in demand for room night sales for assessed businesses will be provided only to businesses paying the district assessment, with marketing and sales programs promoting businesses paying the MTMD assessment. The marketing and sales programs will be designed to increase demand for room night sales at each assessed business. Because they are necessary to provide the marketing and sales programs that specifically benefit the assessed businesses, the administration and contingency services also provide the specific benefit of increased demand for room night sales to the assessed businesses.

Although the MTMD, in providing specific benefits to payors, may produce incidental benefits to non-paying businesses, the incidental benefit does not preclude the services from being considered a specific benefit. The legislature has found that, “A specific benefit is not excluded from classification as a ‘specific benefit’ merely because an indirect benefit to a nonpayer occurs incidentally and without cost to the payor as a consequence of providing the specific benefit to the payor.”3

2. Specific Government Service
The assessment may also be utilized to provide, “a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product.”4 The legislature has recognized that marketing and promotions services like those to be provided by the MTMD are government services within the meaning of Proposition 265 . Further, the legislature has determined
that “a specific government service is not excluded from classification as a ‘specific government service’ merely because an indirect benefit to a nonpayer occurs incidentally and without cost to the payor as a consequence of providing the specific government service to the payor.”6

3. Reasonable Cost
MTMD services will be implemented carefully to ensure they do not exceed the reasonable cost of such services. The full amount assessed will be used to provide the services described herein. Funds will be managed by VM, and reports submitted on an annual basis to the City. Only assessed businesses will be featured in marketing materials, receive sales leads generated from MTMD-funded activities, be featured in advertising campaigns, and benefit from other MTMD-funded services. Nonassessed businesses will not receive these, nor any other, MTMD-funded services and benefits. 3 Government Code § 53758(a)
4 Cal. Const. art XIII C § 1(e)(2)
5 Government Code § 53758(b)
6 Government Code § 53758(b)
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MTMD Management District Plan 15
January 10, 2024
The MTMD-funded programs are all targeted directly at and feature only assessed businesses. It is, however, possible that there will be a spill over benefit to non-assessed businesses. If non-assessed businesses receive incremental room nights, that portion of the promotion or program generating those room nights shall be paid with non-MTMD funds. MTMD funds shall only be spent to benefit the assessed businesses, and shall not be spent on that portion of any program which directly generates incidental room nights for non-assessed businesses.

D. Assessment
The annual assessment rate is one percent (1%) of gross short-term sleeping room rental revenue on all lodging businesses with twenty (20) rooms or more, existing and in future, available for public occupancy, located within the boundaries of the City of Modesto. Based on the benefit received, assessments will not be collected on: stays of more than twenty-seven (27) consecutive days; stays by any officer or employee of a foreign government who is exempt by reason of express provision of federal law or international treaty; stays by any officer or employee of the United States Government, or of a federal credit union, or of a state, county, city or other domestic public entity who pays rent in the discharge of official government business; and stays by any officer or employee of a bank or insurance company who pays rent in the discharge of official bank or insurance company business.

During the ten (10) year term, the assessment rate may be increased by VM’s Board and Modesto City Council approval up to a total of three percent (3%) of gross short-term sleeping room rental revenue.

The initial annual assessment rate is one percent (1%) of gross short-term sleeping room rental revenue. The maximum increase in any year shall not exceed one-half of one percent (0.50%). Any assessment rate increase approved by VM’s Board shall be included in the annual report.

The assessment was calculated based on the total cost of the activities to be provided for the benefit of the assessed businesses within the MTMD, with costs allocated based on the proportional benefit conferred to each assessed business. Activities funded by the MTMD, are specifically targeted to increase demand for room nights at assessed businesses. All room night sales do not represent the same benefit to the payors. For example, a higher priced room night is of greater benefit than a lower priced room night because the assessee derives greater revenue. To account for this benefit differential and to make sure the benefits are proportional, an assessment formula based on a percentage of revenue has been selected. The proposed formula accurately reflects greater benefit to assessed businesses with higher priced room nights.

The term “gross short-term sleeping room rental revenue” as used herein means the consideration charged, whether or not received, for the occupancy of space in an assessed business valued in money, whether to be received in money, goods, labor or otherwise, including all receipts, cash, credits and property and services of any kind or nature, without any deduction therefrom whatsoever. Gross short-term sleeping room rental revenue does not include compensation for services or products.

Gross short-term sleeping room rental revenue shall not include, and therefore the assessment shall not be charged upon, any federal, state, or local taxes collected, including but not limited to transient occupancy taxes.
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MTMD Management District Plan 16
January 10, 2024
The assessment is levied upon and a direct obligation of the assessed business. However, the assessed business may, at its discretion, pass the assessment on to transients. The amount of assessment, if passed on to each transient, shall be disclosed in advance and separately stated from the amount of rent charged and any other applicable taxes, and each transient shall receive a receipt for payment from the business. If the MTMD assessment is identified separately it shall be disclosed as the “MTMD Assessment.” As an alternative, the disclosure may include the amount of the MTMD assessment and the amount of the assessment imposed pursuant to the California Tourism Marketing Act, Government Code §13995 et seq. and shall be disclosed as the “Tourism Assessment.” The assessment is imposed solely upon and is the sole obligation of the assessed business even if it is passed on to transients. The assessment shall not be considered revenue for calculation of transient occupancy taxes.

Bonds shall not be issued.

E. Interest and Penalty Charges
The MTMD shall reimburse the City of Modesto for any costs associated with collecting unpaid assessments. If sums in excess of the delinquent MTMD assessment are sought to be recovered in the same collection action by the City, the MTMD shall bear its pro rata share of such collection costs.

Assessed businesses which are delinquent in paying the assessment shall be responsible for paying:

1. Delinquency
Any assessed business that fails to remit any assessment imposed by this Plan within the time required shall, in addition to the amount of the assessment, pay a penalty of five percent (5%) of the amount of the assessment per month or fraction thereof until paid; the maximum penalty imposed on any one delinquency shall not exceed twenty-five percent (25%) of the amount of the assessment.

2. Fraud
If the City determines that the non-payment of any assessment due from any transient or assessed business under this Plan is due to intentional non-payment or fraud, a penalty of twenty-five percent (25%) of the amount of the assessment shall be added thereto in addition to the penalties stated above.

3. Penalties
Every penalty imposed and collected under the provisions of this section by the City, shall be required to be paid and shall be retained by the City to cover the cost of collection of the delinquency.

F. Time and Manner for Collecting Assessments
The MTMD assessment will be implemented beginning July 1, 2024, or as soon as possible thereafter, and ending ten (10) years from its start date. The City will be responsible for collecting the assessment on a quarterly basis and is subject to change as determined by the City (including any delinquencies, interest and penalties) from each assessed business located in the City of Modesto. The City shall take all reasonable efforts to collect the assessments from each assessed business. The City shall forward the assessments collected to the Owners’ Association.
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MTMD Management District Plan 17
January 10, 2024
VI. GOVERNANCE
A. Owners’ Association
The City Council, through adoption of this Management District Plan, has the right, pursuant to Streets and Highways Code §36651, to identify the body that shall implement the proposed program, which shall be the Owners’ Association of the MTMD as defined in Streets and Highways Code §36612. The City Council has determined that Visit Modesto, Inc. (VM) will continue to serve as the Owners’ Association for the MTMD.

TMD Management Committee
VM will create a TMD Management Committee charged with managing funds and implementing programs in accordance with this Plan. The TMD Management Committee will be required to provide an annual report on activities and expenditures to the City of Modesto, which will also be available to assessed business owners. The TMD Management Committee must also hold open meetings and make records available pursuant to the Brown Act and Public Records Act.

B. Brown Act and California Public Records Act Compliance An Owners’ Association is a private entity and may not be considered a public entity for any purpose, nor may its board members or staff be considered to be public officials for any purpose. The Owners’ Association is, however, subject to government regulations relating to transparency, namely the Ralph M. Brown Act and the California Public Records Act. These regulations are designed to promote public accountability. The Owners’ Association acts as a legislative body under the Ralph M. Brown Act (Government Code §54950 et seq.). Thus, meetings of VM board and certain committees must be held in compliance with the public notice and other requirements of the Brown Act. Accordingly, the Owners’ Association shall publicly report any action taken and the vote or abstention on that action of each member present for the action. The Owners’ Association is also subject to the record keeping and disclosure requirements of the California Public Records Act.

C. Annual Report
VM shall present an annual report at the end of each year of operation to the City Council pursuant to Streets and Highways Code §36650 (see Appendix 1). The annual report shall include:
• Any proposed changes in the boundaries of the improvement district or in any benefit zones or classification of businesses within the district.
• The improvements and activities to be provided for that fiscal year. • An estimate of the cost of providing the improvements and the activities for that fiscal year. • 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.
• The estimated amount of any surplus or deficit revenues to be carried over from a previous fiscal year.
• The estimated amount of any contributions to be made from sources other than assessments levied pursuant to this part.
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MTMD Management District Plan 18
January 10, 2024
APPENDIX 1 – LAW
*** THIS DOCUMENT IS CURRENT THROUGH THE 2023 SUPPLEMENT *** (ALL 2022 LEGISLATION)

STREETS AND HIGHWAYS CODE
DIVISION 18. PARKING
PART 7. PROPERTY AND BUSINESS IMPROVEMENT DISTRICT LAW OF 1994 CHAPTER 1. General Provisions
ARTICLE 1. Declarations
36600. Citation of part
This part shall be known and may be cited as the “Property and Business Improvement District Law of 1994.” 36601. Legislative findings and declarations; Legislative guidance The Legislature finds and declares all of the following:
(a) Businesses located and operating within business districts in some of this state’s communities are economically disadvantaged, are underutilized, and are unable to attract customers due to inadequate facilities, services, and activities in the business districts. (b) It is in the public interest to promote the economic revitalization and physical maintenance of business districts in order to create jobs, attract new businesses, and prevent the erosion of the business districts. (c) It is of particular local benefit to allow business districts to fund business related improvements, maintenance, and activities through the levy of assessments upon the businesses or real property that receive benefits from those improvements.
(d) Assessments levied for the purpose of conferring special benefit upon the real property or a specific benefit upon the businessesin a business district are not taxesfor the general benefit of a city, even if property, businesses, or persons not assessed receive incidental or collateral effects that benefit them. (e) Property and business improvement districts formed throughout this state have conferred special benefits upon properties and businesses within their districts and have made those properties and businesses more useful by providing the following benefits:
(1) Crime reduction. A study by the Rand Corporation has confirmed a 12-percent reduction in the incidence of robbery and an 8-percent reduction in the total incidence of violent crimes within the 30 districts studied.
(2) Job creation.
(3) Business attraction.
(4) Business retention.
(5) Economic growth.
(6) New investments.
(f) With the dissolution of redevelopment agencies throughout the state, property and business improvement districts have become even more important tools with which communities can combat blight, promote economic opportunities, and create a clean and safe environment. (g) Since the enactment of this act, the people of California have adopted Proposition 218, which added Article XIII D to the Constitution in order to place certain requirements and restrictions on the formation of, #17..
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and activities, expenditures, and assessments by property-based districts. Article XIII D of the Constitution provides that property-based districts may only levy assessments for special benefits. (h) The act amending this section is intended to provide the Legislature’s guidance with regard to this act, its interaction with the provisions of Article XIII D of the Constitution, and the determination of special benefits in property-based districts.
(1) The lack of legislative guidance has resulted in uncertainty and inconsistent application of this act, which discourages the use of assessments to fund needed improvements, maintenance, and activities in property-based districts, contributing to blight and other underutilization of property. (2) Activities undertaken for the purpose of conferring special benefits upon property to be assessed inherently produce incidental or collateral effects that benefit property or persons not assessed.

Therefore, for special benefits to exist as a separate and distinct category from general benefits, the incidental or collateral effects of those special benefits are inherently part of those special benefits.

The mere fact that special benefits produce incidental or collateral effects that benefit property or persons not assessed does not convert any portion of those special benefits or their incidental or collateral effects into general benefits.
(3) It is of the utmost importance that property-based districts created under this act have clarity regarding restrictions on assessmentsthey may levy and the proper determination ofspecial benefits.

Legislative clarity with regard to this act will provide districts with clear instructions and courts with legislative intent regarding restrictions on property-based assessments, and the manner in which special benefits should be determined.
36602. Purpose of part
The purpose of this part is to supplement previously enacted provisions of law that authorize cities to levy assessments within property and business improvement districts, to ensure that those assessments conform to all constitutional requirements and are determined and assessed in accordance with the guidance set forth in this act. This part does not affect or limit any other provisions of law authorizing or providing for the furnishing of improvements or activities or the raising of revenue for these purposes.
36603. Preemption of authority or charter city to adopt ordinances levying assessments Nothing in this part is intended to preempt the authority of a charter city to adopt ordinances providing for a different method of levying assessments for similar or additional purposes from those set forth in this part. A property and business improvement district created pursuant to this part is expressly exempt from the provisions of the Special Assessment Investigation, Limitation and Majority Protest Act of 1931 (Division 4 (commencing with Section 2800)). 36603.5. Part prevails over conflicting provisions
Any provision of this part that conflicts with any other provision of law shall prevail over the other provision of law, as to districts created under this part.
36604. Severability
This part is intended to be construed liberally and, if any provision is held invalid, the remaining provisions shall remain in full force and effect. Assessments levied under this part are not special taxes.

ARTICLE 2. Definitions
36606. “Activities”
“Activities” means, but is not limited to, all of the following that benefit businesses or real property in the district:
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(a) Promotion of public events.
(b) Furnishing of music in any public place.
(c) Promotion of tourism within the district.
(d) Marketing and economic development, including retail retention and recruitment. (e) Providing security, sanitation, graffiti removal, street and sidewalk cleaning, and other municipal services supplemental to those normally provided by the municipality. (f) Other services provided for the purpose of conferring special benefit upon assessed real property or specific benefits upon assessed businesses located in the district. 36606.5. “Assessment”
“Assessment” means a levy for the purpose of acquiring, constructing, installing, or maintaining improvements and providing activities that will provide certain benefits to properties or businesses located within a property and business improvement district.
36607. “Business”
“Business” means all types of businesses and includes financial institutions and professions. 36608. “City”
“City” means a city, county, city and county, or an agency or entity created pursuant to Article 1 (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code, the public member agencies of which includes only cities, counties, or a city and county, or the State of California. 36609. “City council”
“City council” means the city council of a city or the board of supervisors of a county, or the agency, commission, or board created pursuant to a joint powers agreement and which is a city within the meaning of this part. 36609.4. “Clerk”
“Clerk” means the clerk of the legislative body.
36609.5. “General benefit”
“General benefit” means, for purposes of a property-based district, any benefit that is not a “special benefit” as defined in Section 36615.5.
36610. “Improvement”
“Improvement” means the acquisition, construction, installation, or maintenance of any tangible property with an estimated useful life of five years or more including, but not limited to, the following:
(a) Parking facilities.
(b) Benches, booths, kiosks, display cases, pedestrian shelters, and signs. (c) Trash receptacles and public restrooms.
(d) Lighting and heating facilities.
(e) Decorations.
(f) Parks.
(g) Fountains.
(h) Planting areas.
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(i) Closing, opening, widening, or narrowing of existing streets. (j) Facilities or equipment, or both, to enhance security of persons and property within the district. (k) Ramps, sidewalks, plazas, and pedestrian malls.
(l) Rehabilitation or removal of existing structures.
36611. “Management district plan”; “Plan”
“Management district plan” or “plan” means a proposal as defined in Section 36622. 36612. “Owners’ association”
“Owners’ association” means a private nonprofit entity that is under contract with a city to administer or implement improvements, maintenance, and activities specified in the management district plan. An owners’ association may be an existing nonprofit entity or a newly formed nonprofit entity. An owners’ association is a private entity and may not be considered a public entity for any purpose, nor may its board members or staff be considered to be public officials for any purpose. Notwithstanding this section, an owners’ association shall comply with the Ralph M. Brown Act (Chapter 9 (commencing with Section 54950) of Part 1 of Division 2 of Title 5 of the Government Code), at all times when matters within the subject matter of the district are heard, discussed, or deliberated, and with the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code), for all records relating to activities of the district.
36614. “Property”
“Property” means real property situated within a district. 36614.5. “Property and business improvement district”; “District” “Property and business improvement district,” or “district,” means a property and business improvement district established pursuant to this part.
36614.6. “Property-based assessment”
“Property-based assessment” means any assessment made pursuant to this part upon real property. 36614.7. “Property-based district”
“Property-based district” means any district in which a city levies a property-based assessment. 36615. “Property owner”; “Business owner”; “Owner”
“Property owner” means any person shown as the owner of land on the last equalized assessment roll or otherwise known to be the owner of land by the city council. “Business owner” means any person recognized by the city as the owner of the business. “Owner” means either a business owner or a property owner. The city council has no obligation to obtain other information as to the ownership of land or businesses, and its determination of ownership shall be final and conclusive for the purposes of this part. Wherever this part requires the signature of the property owner, the signature of the authorized agent of the property owner shall be sufficient. Wherever this part requires the signature of the business owner, the signature of the authorized agent of the business owner shall be sufficient. 36615.5. “Special benefit”
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(a) “Special benefit” means, for purposes of a property-based district, a particular and distinct benefit over and above general benefits conferred on real property located in a district or to the public at large. Special benefit includes incidental or collateral effects that arise from the improvements, maintenance, or activities of property-based districts even if those incidental or collateral effects benefit property or persons not assessed. Special benefit excludes general enhancement of property value.
(b) “Special benefit” also includes, for purposes of a property-based district, a particular and distinct benefit provided directly to each assessed parcel within the district. Merely because parcels throughout an assessment district share the same special benefits does not make the benefits general. 36616. “Tenant”
“Tenant” means an occupant pursuant to a lease of commercial space or a dwelling unit, other than an owner.

ARTICLE 3. Prior Law
36617. Alternate method of financing certain improvements and activities; Effect on other provisions This part provides an alternative method of financing certain improvements and activities. The provisions of this part shall not affect or limit any other provisions of law authorizing or providing for the furnishing of improvements or activities or the raising of revenue for these purposes. Every improvement area established pursuant to the Parking and Business Improvement Area Law of 1989 (Part 6 (commencing with Section 36500) of this division) is valid and effective and is unaffected by this part.

CHAPTER 2. Establishment
36620. Establishment of property and business improvement district A property and business improvement district may be established as provided in this chapter. 36620.5. Requirement of consent of city council
A county may not form a district within the territorial jurisdiction of a city without the consent of the city council of that city. A city may not form a district within the unincorporated territory of a county without the consent of the board of supervisors of that county. A city may not form a district within the territorial jurisdiction of another city without the consent of the city council of the other city.
36621. Initiation of proceedings; Petition of property or business owners in proposed district (a) Upon the submission of a written petition, signed by the property or business owners in the proposed district who will pay more than 50 percent of the assessments proposed to be levied, the city council may initiate proceedings to form a district by the adoption of a resolution expressing its intention to form a district.

The amount of assessment attributable to property or a business owned by the same property or business owner that is in excess of 40 percent of the amount of all assessments proposed to be levied, shall not be included in determining whether the petition is signed by property or business owners who will pay more than 50 percent of the total amount of assessments proposed to be levied. (b) The petition of property or business owners required under subdivision (a) shall include a summary of the management district plan. That summary shall include all of the following:
(1) A map showing the boundaries of the district.
(2) Information specifying where the complete management district plan can be obtained. #17..
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(3) Information specifying that the complete management district plan shall be furnished upon request.
(c) The resolution of intention described in subdivision (a) shall contain all of the following:
(1) A brief description of the proposed improvements, maintenance, and activities, the amount of the proposed assessment, a statement as to whether the assessment will be levied on property or businesses within the district, a statement as to whether bonds will be issued, and a description of the exterior boundaries of the proposed district, which may be made by reference to any plan or map that is on file with the clerk. The descriptions and statements do not need to be detailed and shall be sufficient if they enable an owner to generally identify the nature and extent of the improvements, maintenance, and activities, and the location and extent of the proposed district. (2) A time and place for a public hearing on the establishment of the property and business improvement district and the levy of assessments, which shall be consistent with the requirements of Section 36623.
36622. Contents of management district plan
The management district plan shall include, but is not limited to, all of the following:
(a) If the assessment will be levied on property, a map of the district in sufficient detail to locate each parcel of property and, if businesses are to be assessed, each business within the district. If the assessment will be levied on businesses, a map that identifies the district boundaries in sufficient detail to allow a business owner to reasonably determine whether a business is located within the district boundaries. If the assessment will be levied on property and businesses, a map of the district in sufficient detail to locate each parcel of property and to allow a business owner to reasonably determine whether a business is located within the district boundaries.
(b) The name of the proposed district.
(c) A description of the boundaries of the district, including the boundaries of benefit zones, proposed for establishment or extension in a manner sufficient to identify the affected property and businesses included, which may be made by reference to any plan or map that is on file with the clerk. The boundaries of a proposed property assessment district shall not overlap with the boundaries of another existing property assessment district created pursuant to this part. This part does not prohibit the boundaries of a district created pursuant to this part to overlap with other assessment districts established pursuant to other provisions of law, including, but not limited to, the Parking and Business Improvement Area Law of 1989 (Part 6 (commencing with Section 36500)). This part does not prohibit the boundaries of a business assessment district created pursuant to this part to overlap with another business assessment district created pursuant to this part. This part does not prohibit the boundaries of a business assessment district created pursuant to this part to overlap with a property assessment district created pursuant to this part. (d) The improvements, maintenance, and activities proposed for each year of operation of the district and the estimated cost thereof. If the improvements, maintenance, and activities proposed for each year of operation are the same, a description of the first year’s proposed improvements, maintenance, and activities and a statement that the same improvements, maintenance, and activities are proposed for subsequent years shall satisfy the requirements of this subdivision.
(e) The total annual amount proposed to be expended for improvements, maintenance, or activities, and debt service in each year of operation of the district. If the assessment is levied on businesses, this amount may be estimated based upon the assessment rate. If the total annual amount proposed to be expended in each year of operation of the district is not significantly different, the amount proposed to be expended in the initial year and a statement that a similar amount applies to subsequent years shall satisfy the requirements of this subdivision.
(f) The proposed source or sources of financing, including the proposed method and basis of levying the assessment in sufficient detail to allow each property or business owner to calculate the amount of the assessment to be levied against their property or business. The plan also shall state whether bonds will be issued to finance improvements.
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(g) The time and manner of collecting the assessments.
(h) The specific number of years in which assessments will be levied. In a new district, the maximum number of years shall be five. Upon renewal, a district shall have a term not to exceed 10 years. Notwithstanding these limitations, a district created pursuant to this part to finance capital improvements with bonds may levy assessments until the maximum maturity of the bonds. The management district plan may set forth specific increases in assessments for each year of operation of the district. (i) The proposed time for implementation and completion of the management district plan. (j) Any proposed rules and regulations to be applicable to the district. (k)
(1) A list of the properties or businesses to be assessed, including the assessor’s parcel numbers for properties to be assessed, and a statement of the method or methods by which the expenses of a district will be imposed upon benefited real property or businesses, in proportion to the benefit received by the property or business, to defray the cost thereof. (2) In a property-based district, the proportionate special benefit derived by each identified parcel shall be determined exclusively in relationship to the entirety of the capital cost of a public improvement, the maintenance and operation expenses of a public improvement, or the cost of the activities. An assessment shall not be imposed on any parcel that exceeds the reasonable cost of the proportional special benefit conferred on that parcel. Only special benefits are assessable, and a property-based district shall separate the general benefits, if any, from the special benefits conferred on a parcel. Parcels within a property-based district that are owned or used by any city, public agency, the State of California, or the United States shall not be exempt from assessment unless the governmental entity can demonstrate by clear and convincing evidence that those publicly owned parcels in fact receive no special benefit. The value of any incidental, secondary, or collateral effects that arise from the improvements, maintenance, or activities of a property-based district and that benefit property or persons not assessed shall not be deducted from the entirety of the cost of any special benefit or affect the proportionate special benefit derived by each identified parcel. (3) In a property-based district, properties throughout the district may share the same special benefits. In a district with boundaries that define which parcels are to receive improvements, maintenance, or activities over and above those services provided by the city, the improvements, maintenance, or activities themselves may constitute a special benefit. The city may impose assessments that are less than the proportional special benefit conferred, but shall not impose assessments that exceed the reasonable costs of the proportional special benefit conferred. Because one or more parcels pay less than the special benefit conferred does not necessarily mean that other parcels are assessed more than the reasonable cost of their special benefit. (l) In a property-based district, a detailed engineer’s report prepared by a registered professional engineer certified by the State of California supporting all assessments contemplated by the management district plan. (m) Any other item or matter required to be incorporated therein by the city council. 36623. Procedure to levy assessment
(a) If a city council proposes to levy a new or increased property assessment, the notice and protest and hearing procedure shall comply with Section 53753 of the Government Code. (b) If a city council proposes to levy a new or increased business assessment, the notice and protest and hearing procedure shall comply with Section 54954.6 of the Government Code, except that notice shall be mailed to the owners of the businesses proposed to be assessed. A protest may be made orally or in writing by any interested person. Every written protest shall be filed with the clerk at or before the time fixed for the public hearing. The city council may waive any irregularity in the form or content of any written protest. A written protest may be withdrawn in writing at any time before the conclusion of the public hearing. Each written protest shall contain a description of the business in which the person subscribing the protest is interested sufficient to identify the business and, if a person subscribing is not shown on the official records of the city as the owner of the business, the protest shall contain or be accompanied by written evidence that #17..
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the person subscribing is the owner of the business or the authorized representative. A written protest that does not comply with this section shall not be counted in determining a majority protest. If written protests are received from the owners or authorized representatives of businesses in the proposed district that will pay 50 percent or more of the assessments proposed to be levied and protests are not withdrawn so as to reduce the protests to less than 50 percent, no further proceedings to levy the proposed assessment against such businesses, as contained in the resolution of intention, shall be taken for a period of one year from the date of the finding of a majority protest by the city council. (c) If a city council proposes to conduct a single proceeding to levy both a new or increased property assessment and a new or increased business assessment, the notice and protest and hearing procedure for the property assessment shall comply with subdivision (a), and the notice and protest and hearing procedure for the business assessment shall comply with subdivision (b). If a majority protest is received from either the property or business owners, that respective portion of the assessment shall not be levied. The remaining portion of the assessment may be levied unless the improvement or other special benefit was proposed to be funded by assessing both property and business owners.
36624. Changes to proposed assessments
At the conclusion of the public hearing to establish the district, the city council may adopt, revise, change, reduce, or modify the proposed assessment or the type or types of improvements, maintenance, and activities to be funded with the revenues from the assessments. Proposed assessments may only be revised by reducing any or all of them. At the public hearing, the city council may only make changes in, to, or from the boundaries of the proposed property and business improvement district that will exclude territory that will not benefit from the proposed improvements, maintenance, and activities. Any modifications, revisions, reductions, or changes to the proposed assessment district shall be reflected in the notice and map recorded pursuant to Section 36627. 36625. Resolution of formation
(a) If the city council, following the public hearing, decides to establish a proposed property and business improvement district, the city council shall adopt a resolution of formation that shall include, but is not limited to, all of the following:
(1) A brief description of the proposed improvements, maintenance, and activities, the amount of the proposed assessment, a statement as to whether the assessment will be levied on property, businesses, or both within the district, a statement on whether bonds will be issued, and a description of the exterior boundaries of the proposed district, which may be made by reference to any plan or map that is on file with the clerk. The descriptions and statements need not be detailed and shall be sufficient if they enable an owner to generally identify the nature and extent of the improvements, maintenance, and activities and the location and extent of the proposed district. (2) The number, date of adoption, and title of the resolution of intention. (3) The time and place where the public hearing was held concerning the establishment of the district.
(4) A determination regarding any protests received. The city shall not establish the district or levy assessments if a majority protest was received.
(5) A statement that the properties, businesses, or properties and businesses in the district established by the resolution shall be subject to any amendments to this part. (6) A statement that the improvements, maintenance, and activities to be conferred on businesses and properties in the district will be funded by the levy of the assessments. The revenue from the levy of assessments within a district shall not be used to provide improvements, maintenance, or activities outside the district or for any purpose other than the purposes specified in the resolution of intention, as modified by the city council at the hearing concerning establishment of the district.

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district boundaries to create a special or specific benefit to the assessed parcels or businesses may be provided, but shall be limited to marketing or signage pointing to the district. (7) A finding that the property or businesses within the area of the property and business improvement district will be benefited by the improvements, maintenance, and activities funded by the proposed assessments, and, for a property-based district, that property within the district will receive a special benefit.
(8) In a property-based district, the total amount of all special benefits to be conferred on the properties within the property-based district.
(b) The adoption of the resolution of formation and, if required, recordation of the notice and map pursuant to Section 36627 shall constitute the levy of an assessment in each of the fiscal years referred to in the management district plan.
36627. Notice and assessment diagram
Following adoption of the resolution establishing district assessments on properties pursuant to Section 36625, the clerk shall record a notice and an assessment diagram pursuant to Section 3114. No other provision of Division 4.5 (commencing with Section 3100) applies to an assessment district created pursuant to this part. 36628. Establishment of separate benefit zones within district; Categories of businesses The city council may establish one or more separate benefit zones within the district based upon the degree of benefit derived from the improvements or activities to be provided within the benefit zone and may impose a different assessment within each benefit zone. If the assessment is to be levied on businesses, the city council may also define categories of businesses based upon the degree of benefit that each will derive from the improvements or activities to be provided within the district and may impose a different assessment or rate of assessment on each category of business, or on each category of business within each zone. 36628.5. Assessments on businesses or property owners
The city council may levy assessments on businesses or on property owners, or a combination of the two, pursuant to this part. The city council shall structure the assessments in whatever manner it determines corresponds with the distribution of benefits from the proposed improvements, maintenance, and activities, provided that any propertybased assessment conforms with the requirements set forth in paragraph (2) of subdivision (k) of Section 36622. 36629. Provisions and procedures applicable to benefit zones and business categories All provisions of this part applicable to the establishment, modification, or disestablishment of a property and business improvement district apply to the establishment, modification, or disestablishment of benefit zones or categories of business. The city council shall, to establish, modify, or disestablish a benefit zone or category of business, follow the procedure to establish, modify, or disestablish a property and business improvement district. 36630. Expiration of district; Creation of new district If a property and business improvement district expires due to the time limit set pursuant to subdivision (h) of Section 36622, a new management district plan may be created and the district may be renewed pursuant to this part.

CHAPTER 3. Assessments
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The collection of the assessments levied pursuant to this part shall be made at the time and in the manner set forth by the city council in the resolution levying the assessment. Assessments levied on real property may be collected at the same time and in the same manner as for the ad valorem property tax, and may provide for the same lien priority and penalties for delinquent payment. All delinquent payments for assessments levied pursuant to this part may be charged interest and penalties.
36632. Assessments to be based on estimated benefit; Classification of real property and businesses; Exclusion of residential and agricultural property
(a) The assessments levied on real property pursuant to this part shall be levied on the basis of the estimated benefit to the real property within the property and business improvement district. The city council may classify properties for purposes of determining the benefit to property of the improvements and activities provided pursuant to this part.
(b) Assessments levied on businesses pursuant to this part shall be levied on the basis of the estimated benefit to the businesses within the property and business improvement district. The city council may classify businesses for purposes of determining the benefit to the businesses of the improvements and activities provided pursuant to this part.
(c) Properties zoned solely for residential use, or that are zoned for agricultural use, are conclusively presumed not to benefit from the improvements and service funded through these assessments, and shall not be subject to any assessment pursuant to this part.
36633. Time for contesting validity of assessment
The validity of an assessment levied under this part shall not be contested in an action or proceeding unless the action or proceeding is commenced within 30 days after the resolution levying the assessment is adopted pursuant to Section 36625. An appeal from a final judgment in an action or proceeding shall be perfected within 30 days after the entry of judgment.
36634. Service contracts authorized to establish levels of city services The city council may execute baseline service contracts that would establish levels of city services that would continue after a property and business improvement district has been formed. 36635. Request to modify management district plan
The owners’ association may, at any time, request that the city council modify the management district plan. Any modification of the management district plan shall be made pursuant to this chapter. 36636. Modification of plan by resolution after public hearing; Adoption of resolution of intention (a) Upon the written request of the owners’ association, the city council may modify the management district plan after conducting one public hearing on the proposed modifications. The city council may modify the improvements and activities to be funded with the revenue derived from the levy of the assessments by adopting a resolution determining to make the modifications after holding a public hearing on the proposed modifications. If the modification includes the levy of a new or increased assessment, the city council shall comply with Section 36623. Notice of all other public hearings pursuant to this section shall comply with both of the following:
(1) The resolution of intention shall be published in a newspaper of general circulation in the city once at least seven days before the public hearing.
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(2) A complete copy of the resolution of intention shall be mailed by first class mail, at least 10 days before the public hearing, to each business owner or property owner affected by the proposed modification.
(b) The city council shall adopt a resolution of intention which states the proposed modification prior to the public hearing required by this section. The public hearing shall be held not more than 90 days after the adoption of the resolution of intention.
36637. Reflection of modification in notices recorded and maps Any subsequent modification of the resolution shall be reflected in subsequent notices and maps recorded pursuant to Division 4.5 (commencing with Section 3100), in a manner consistent with the provisions of Section 36627.

CHAPTER 3.5. Financing
36640. Bonds authorized; Procedure; Restriction on reduction or termination of assessments (a)The city council may, by resolution, determine and declare that bonds shall be issued to finance the estimated cost of some or all of the proposed improvements described in the resolution of formation adopted pursuant to Section 36625, if the resolution of formation adopted pursuant to that section provides for the issuance of bonds, under the Improvement Bond Act of 1915 (Division 10 (commencing with Section 8500)) or in conjunction with Marks-Roos Local Bond Pooling Act of 1985 (Article 4 (commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the Government Code). Either act, as the case may be, shall govern the proceedings relating to the issuance of bonds, although proceedings under the Bond Act of 1915 may be modified by the city council as necessary to accommodate assessments levied upon business pursuant to this part.
(b) The resolution adopted pursuant to subdivision (a) shall generally describe the proposed improvements specified in the resolution of formation adopted pursuant to Section 36625, set forth the estimated cost of those improvements, specify the number of annual installments and the fiscal years during which they are to be collected. The amount of debt service to retire the bonds shall not exceed the amount of revenue estimated to be raised from assessments over 30 years.
(c) Notwithstanding any other provision of this part, assessments levied to pay the principal and interest on any bond issued pursuant to this section shall not be reduced or terminated if doing so would interfere with the timely retirement of the debt.

CHAPTER 4. Governance
36650. Report by owners’ association; Approval or modification by city council (a) The owners’ association shall cause to be prepared a report for each fiscal year, except the first year, for which assessments are to be levied and collected to pay the costs of the improvements, maintenance, and activities described in the report. The owners’ association’s first report shall be due after the first year of operation of the district. The report may propose changes, including, but not limited to, the boundaries of the property and business improvement district or any benefit zones within the district, the basis and method of levying the assessments, and any changes in the classification of property, including any categories of business, if a classification is used.
(b) The report 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, with respect to that fiscal year, shall contain all of the following information:
(1) Any proposed changes in the boundaries of the property and business improvement district or in any benefit zones or classification of property or businesses within the district. #17..
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(2) The improvements, maintenance, and activities to be provided for that fiscal year. (3) An estimate of the cost of providing the improvements, maintenance, and activities for that fiscal year.
(4) The method and basis of levying the assessment in sufficient detail to allow each real property or business owner, as appropriate, to estimate the amount of the assessment to be levied against his or her property or business for that fiscal year.
(5) The estimated amount of any surplus or deficit revenues to be carried over from a previous fiscal year.
(6) The estimated amount of any contributions to be made from sources other than assessments levied pursuant to this part.
(c) The city council may approve the report as filed by the owners’ association or may modify any particular contained in the report and approve it as modified. Any modification shall be made pursuant to Sections 36635 and 36636.

The city council shall not approve a change in the basis and method of levying assessments that would impair an authorized or executed contract to be paid from the revenues derived from the levy of assessments, including any commitment to pay principal and interest on any bonds issued on behalf of the district. 36651. Designation of owners’ association to provide improvements, maintenance, and activities The management district plan may, but is not required to, state that an owners’ association will provide the improvements, maintenance, and activities described in the management district plan. If the management district plan designates an owners’ association, the city shall contract with the designated nonprofit corporation to provide services.

CHAPTER 5. Renewal
36660. Renewal of district; Transfer or refund of remaining revenues; District term limit (a) Any district previously established whose term has expired, or will expire, may be renewed by following the procedures for establishment as provided in this chapter. (b) Upon renewal, any remaining revenues derived from the levy of assessments, or any revenues derived from the sale of assets acquired with the revenues, shall be transferred to the renewed district. If the renewed district includes additional parcels or businesses not included in the prior district, the remaining revenues shall be spent to benefit only the parcels or businesses in the prior district. If the renewed district does not include parcels or businesses included in the prior district, the remaining revenues attributable to these parcels shall be refunded to the owners of these parcels or businesses. (c) Upon renewal, a district shall have a term not to exceed 10 years, or, if the district is authorized to issue bonds, until the maximum maturity of those bonds. There is no requirement that the boundaries, assessments, improvements, or activities of a renewed district be the same as the original or prior district.

CHAPTER 6. Disestablishment
36670. Circumstances permitting disestablishment of district; Procedure (a) Any district established or extended pursuant to the provisions of this part, where there is no indebtedness, outstanding and unpaid, incurred to accomplish any of the purposes of the district, may be disestablished by resolution by the city council in either of the following circumstances:
(1) If the city council finds there has been misappropriation of funds, malfeasance, or a violation of law in connection with the management of the district, it shall notice a hearing on disestablishment. (2) During the operation of the district, there shall be a 30-day period each year in which assessees may request disestablishment of the district. The first such period shall begin one year after the date of establishment of the district and shall continue for 30 days. The next such 30-day period shall #17..
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MTMD Management District Plan 30
January 10, 2024
begin two years after the date of the establishment of the district. Each successive year of operation of the district shall have such a 30-day period. Upon the written petition of the owners or authorized representatives of real property or the owners or authorized representatives of businesses in the district who pay 50 percent or more of the assessments levied, the city council shall pass a resolution of intention to disestablish the district. The city council shall notice a hearing on disestablishment. (b) The city council shall adopt a resolution of intention to disestablish the district prior to the public hearing required by this section. The resolution shall state the reason for the disestablishment, shall state the time and place of the public hearing, and shall contain a proposal to dispose of any assets acquired with the revenues of the assessments levied within the property and business improvement district. The notice of the hearing on disestablishment required by this section shall be given by mail to the property owner of each parcel or to the owner of each business subject to assessment in the district, as appropriate. The city shall conduct the public hearing not less than 30 days after mailing the notice to the property or business owners. The public hearing shall be held not more than 60 days after the adoption of the resolution of intention. 36671. Refund of remaining revenues upon disestablishment or expiration without renewal of district; Calculation of refund; Use of outstanding revenue collected after disestablishment of district (a) Upon the disestablishment or expiration without renewal of a district, any remaining revenues, after all outstanding debts are paid, derived from the levy of assessments, or derived from the sale of assets acquired with the revenues, or from bond reserve or construction funds, shall be refunded to the owners of the property or businesses then located and operating within the district in which assessments were levied by applying the same method and basis that was used to calculate the assessments levied in the fiscal year in which the district is disestablished or expires. All outstanding assessment revenue collected after disestablishment shall be spent on improvements and activities specified in the management district plan. (b) If the disestablishment occurs before an assessment is levied for the fiscal year, the method and basis that was used to calculate the assessments levied in the immediate prior fiscal year shall be used to calculate the amount of any refund.
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MTMD Management District Plan 31
January 10, 2024
APPENDIX 2 – ASSESSED BUSINESSES
Hotel Address City, State, Zip
Apex Inn 2225 Yosemite Blvd Modesto, CA 95354-3003
Baymont Inn & Suites 4100 Salida Blvd Modesto, CA 95358-8840 Best Western Palm Court Inn 2001 W Orangeburg Ave Modesto, CA 95350-3741 Comfort Inn Modesto 2025 W Orangeburg Ave Modesto, CA 95350-3741 Discovery Inn 115 Downey Ave Modesto, CA 95354-1201
Doubletree Hotel Modesto 1150 9th St Modesto, CA 95354-0823 Economy Inn 602 Mchenry Ave Modesto, CA 95350-5412
El Capitan Motel 1121 Needham St Modesto, CA 95354-0731 Modesto Days Inn 1312 Mchenry Ave Modesto, CA 95350-5377 Modesto Hotel 1720 Sisk Rd Modesto, CA 95350-2500
Modesto Marriott Residence Inn 2901 HealthCare Way Modesto, CA 95356 Motel 6 807 Needham St Modesto, CA 95354-0736
Motel 6 Modesto 1920 W Orangeburg Ave Modesto, CA 95350-3740 Quality Inn 500 Kansas Ave Modesto, CA 95351-1605
Ramada By Wyndham 1525 Mchenry Ave Modesto, CA 95350-4576 Rodeway Inn 912 Mchenry Ave Modesto, CA 95350-5417
Springhill Suites Modesto 1901 W Orangeburg Ave Modesto, CA 95350-3838 Tiki Lodge 936 Mchenry Ave Modesto, CA 95350-5417
Townhouse Lodge 909 16th St Modesto, CA 95354-1117
Travelers Motel 710 N 9th St Modesto, CA 95350-5795
Yosemite Inn 500 Kansas Ave Modesto, CA 95351-1605
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Date: May 8, 2024
TO: Mayor & City Council
THROUG: Joseph P. Lopez, City Manager
FROM: Jose M. Sanchez, City Attorney
SUBJECT: Ordinance Amending Compensation for the Mayor and Councilmembers’ Salaries pursuant to the Citizens’ Salary Setting Commission Final Recommendations CONTACT: Jose M. Sanchez, City Attorney, 209-577-5284, [email protected] DESCRIPTION:

Hearing to consider an Ordinance amending Compensation for the Mayor and Councilmembers’ Salaries pursuant to the Citizens’ Salary Setting Commission’s Final Recommendations pursuant to Modesto Charter Section 703. (Funding Source: General Fund) STRATEGIC PLAN ELEMENT:

This item supports the City’s 2020-2025 Strategic Plan Goal to build a high-performance organization.

BACKGROUND:

On February 5, 2008, voters approved Measures M, titled “Accountability in City Hall,” which amended Modesto City Charter Section 703. Charter Section 703 sets out the processes for establishing the salary for the Mayor and Councilmembers. Section 703(b)1 requires the formation of a Citizens’ Salary Setting Commission (“Commission”) whose function is to recommend the compensation for the Mayor and Members of the Council. According to the Charter, the Commission meets between March 1st and April 30th of every even-numbered year and make any salary recommendation to the Council by April 30th.

Compensation for the Mayor and Councilmembers was last adjusted in May of 2008. The Citizen’s Salary Commissions met again in 2010, 2012, and 2014, recommending no change in salary. The Commission also began the process in 2016, however was unable to meet during the timeframe required by the Charter, therefore no recommendation was provided.

Charter Section 703(c) establishes salary limitations for Mayor and Councilmember salaries.

The Section limits the salary of the Mayor as follows: “The salary of the Mayor shall not be more than 50 percent (50%) of the amount of the salary of a Judge of the Superior Court of Stanislaus County.” The salary of a Stanislaus County Superior Court Judge is currently $238,479; 50% of that amount is $119,239.50.

For Councilmembers, Charter Section 703(c) establishes the following salary limitation: “The salary of a Councilmember shall not be more than 50 percent (50%) of the median family 1 https://library.municode.com/ca/modesto/codes/code_of_ordinances?nodeId=CHTR_ARTVIITHCO_S703COELOF `

CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

May 14, 2024
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City Council, May 14, 2024
Ordinance Amending Compensation for the Mayor and Councilmembers‘ Salaries pursuant to the Citizens’ Salary Setting Commission Final Recommendations

Page 2 of 3 ends

income for the Modesto Metropolitan Statistical Area as reported by the United States Census Bureau. The salary of each Councilmember shall be the same.” The median family income for the Modesto Metropolitan Statistical Area is $73,375; 50% of that amount is $36,687.50.

DISCUSSION & PUBLIC PARTICIPATION:

On November 7, 2023, the Council appointed five members to serve on the Commission pursuant to the Commission’s requirements. In accordance with the Charter, the Commission held eight meetings during the months of March and April, which included two noticed public hearings on April 5, 2024, and April 11, 2024, to discuss possible salary recommendations for the Mayor and Councilmembers. Public input was solicited during the preparation of the Citizens’ Salary Setting Commission Final Report and Recommendations. The Commission reviewed information related to the duties of the Mayor and Councilmembers, compensation data from other cities, including cities in the surrounding area, listened to public comment, and had detailed discussions on what salaries they believe are fair and equitable.

At the April 23, 2024 City Council meeting, the Commission presented their final recommendation, including reasons for the recommendation, to the Council for acceptance. The recommendation was to increase the compensation for the Mayor from $43,200 to $54,000 annually and increase the compensation for Councilmembers from $24,000 to $30,000 annually.

Pursuant to Charter Section 703(d), “[w]hen such final recommendation has been submitted to the Council, it shall not thereafter be amended by the Commission.” Pursuant to Charter Section 703(d), “[u]pon receiving the final recommendation from the Commission, the Council may adopt the compensation as recommended by the Commission or may adopt compensation in some lower amount, but in no case may adopt compensation in some higher amount.” On April 23, 2024, the Council accepted the Commission’s recommendation and directed staff to set a public hearing on May 14, 2024, to consider an Ordinance adjusting the salaries for the Mayor and Council Members pursuant to the Commission’s recommendation. Pursuant to Charter Section 703(d), a 20-day public hearing notice was published in the Modesto Bee on April 24, 2024. The 2024 Recommendations from the Commission regarding the salaries of the Mayor and Councilmembers are attached.

FISCAL IMPACT:

Mayor and Councilmember salaries are paid out of the General Fund and will not exceed the amounts approved pursuant to Charter Section 703.

RECOMMENDED COUNCIL ACTION:

Motion Introducing and waiving the first reading of an Ordinance amending Sections 2-

1.24 “Compensation of Mayor,” and 2-1.26 “Compensation of City Councilmembers,” of Chapter 1, “City Council Organization and Procedure,” of Title 2, “Administration,” of the Modesto Municipal Code, to increase the salaries of the Mayor and City Councilmembers pursuant to Charter Section 703 and the recommendations of the Citizen’s Salary Setting Commission of 2024.

Approved by: _____
Jose M. Sanchez, City Attorney
_____
Joseph P. Lopez, City Manager
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City Council, May 14, 2024
Ordinance Amending Compensation for the Mayor and Councilmembers‘ Salaries pursuant to the Citizens’ Salary Setting Commission Final Recommendations

Page 3 of 3 ends

Attachment:

1. Ordinance Amending Compensation for the Mayor and Councilmembers

2. Final Report: Recommendations for Mayor and Councilmembers Salaries

3. Modesto City Charter Section 703

4. MMC Sections 2-1.24 & 2-1.26 Reflecting Changes
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1 ORDINANCE NO. ________
ORDINANCE AMENDING SECTIONS 2-1.24 “COMPENSATION OF MAYOR,” AND 2-1.26 “COMPENSATION OF CITY COUNCILMEMBERS,” OF
CHAPTER 1, “CITY COUNCIL ORGANIZATION AND PROCEDURE,” OF TITLE 2, “ADMINISTRATION,” OF THE MODESTO MUNICIPAL CODE, TO

INCREASE THE SALARIES OF THE MAYOR AND CITY
COUNCILMEMBERS PURSUANT TO CHARTER SECTION 703 AND THE
RECOMMENDATIONS OF THE CITIZEN’S SALARY SETTING
COMMISSION OF 2024
WHEREAS, on February 5, 2008, voters approved Measures M, titled “Accountability in City Hall,” which amended Modesto City Chater Section 703; and WHEREAS, Charter Section 703 sets out the processes for establishing the salaries for the Mayor and Councilmembers. Section 703(b) requires the formation of a Citizens’ Salary Setting Commission (“Commission”) whose function is to recommend the compensation for the Mayor and Members of the Council; and WHEREAS, according to the Charter, the Commission shall meet between March 1st and April 30th of every even-numbered year and make any salary recommendation to the Council by April 30th; and
WHEREAS, compensation for the Mayor and Councilmembers was last adjusted in May of 2008; and
WHEREAS, the Commissions met again in 2010, 2012, and 2014, recommending no change in salary. The Commission also began the process in 2016; however was unable to meet during the timeframe required by the Charter, therefore no recommendation was provided; and
WHEREAS, pursuant to Charter Section 703(b), on November 7, 2023, the Council appointed five members to serve on the Commission; and #18..
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2 WHEREAS, the Commission held eight (8) public meetings during the months of March and April, which included two (2) noticed public hearings on April 5, 2024 and April 11, 2024 to discuss possible salary recommendations for the Mayor and Councilmembers. All Commission meetings were open to the public; and WHEREAS, the Commission reviewed information related to the duties of the Mayor and Councilmembers, compensation data from other cities, including cities in the surrounding area, and received comments from the public; and WHEREAS, Charter Section 703(c) establishes salary limitations for Mayor and Councilmember salaries. The Charter Section limits the salary of the Mayor as follows:
“The salary of the Mayor shall not be more than 50 percent (50%) of the amount of the salary of a Judge of the Superior Court of Stanislaus County.” The salary of a Stanislaus County Superior Court Judge is currently $238,479; 50% of that amount is $119,239.50; and
WHEREAS, Charter Section 703(c) establishes the following Councilmember salary limitation: “The salary of a Councilmember shall not be more than 50 percent (50%) of the median family income for the Modesto Metropolitan Statistical Area as reported by the United States Census Bureau. The salary of each Councilmember shall be the same.” The median family income for the Modesto Metropolitan Statistical Area is $73,375; 50% of that amount is $36,687.50; and
WHEREAS, at the April 23, 2024 Council meeting, the Commission presented their final recommendation, including reasons for the recommendation, to Council for acceptance. Pursuant to Charter Section 703(d), “[w]hen such final recommendation has #18..
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3 been submitted to the Council, it shall not thereafter be amended by the Commission;” and
WHEREAS, the recommendation was to increase the compensation for the Mayor from forty-three thousand two hundred dollars ($43,200) to fifty-four thousand dollars ($54,000) annually and increase the compensation for Councilmembers from twenty-four thousand dollars ($24,000) to thirty thousand dollars ($30,000) annually; and WHEREAS, pursuant to Charter Section 703(d), “[u]pon receiving the final recommendation from the Commission, the Council may adopt the compensation as recommended by the Commission or may adopt compensation in some lower amount, but in no case may adopt compensation in some higher amount;” and WHEREAS, on April 23, 2024, Council accepted the Commission’s recommendation and directed staff to set a public hearing on May 14, 2024, to consider the recommended compensation increases by the Commission; and WHEREAS, pursuant to Charter Section 703(d), a 20-day public hearing notice was published in the Modesto Bee on April 24, 2024; and WHEREAS, the Council may only adopt changes to compensation by ordinance.

Pursuant to Charter Section 703(d), “[s]alaries established by ordinance adopted pursuant to the provisions of this Section shall remain in effect until amended by a subsequent ordinance adopted pursuant to the provisions of this Section.” NOW, THEREFORE, the City Council of the City of Modesto does ordain as follows:

SECTION 1. “COMPENSATION OF MAYOR” - AMENDMENT.
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4 The City of Modesto Municipal Code Section 2-1.24, titled “Compensation of Mayor,” of Chapter 1, “City Council Organization and Procedure,” of Title 2, “Administration” is hereby amended to read as follows:
“2-1.24 Compensation of Mayor.

The annual salary of the Mayor shall be fifty-four thousand dollars ($54,000), pursuant to the recommendation of the Citizens Salary Setting Commission. In accordance with Section 703 of the Charter, the Mayor's compensation and appropriate benefits shall be reviewed by the Citizens Salary Setting Commission biannually, and a recommendation made to the City Council as to the appropriate compensation. The annual salary shall be payable from and after the operative date of the ordinance at the same time and in the same manner as the salaries are paid to other officers and employees of the City.”
SECTION 2. “COMPENSATION OF COUNCILMEMBERS” – AMENDMENT.

The City of Modesto Municipal Code Section 2-1.26, titled “Compensation of City Councilmember,” of Chapter 1, “City Council Organization and Procedure,” of Title 2, “Administration” is hereby amended to read as follows:
“2-1.26 Compensation of City Councilmembers.

The annual salary of each member of the City Council, except the Mayor, shall be thirty thousand dollars ($30,000). In accordance with Section 703 of the Charter, the Councilmember's compensation and appropriate benefits shall be reviewed by the Citizens Salary Setting Commission biannually, and a recommendation made to the City Council as to the appropriate compensation. The annual salary shall be payable from and #18..
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5 after the operative date of the ordinance at the same time and in the same manner as the salaries are paid to other officers and employees of the City.” SECTION 3. SEVERABILITY.

If any portion of this Ordinance, or its application to any person or circumstance, is for any reason held to be invalid, unenforceable, or unconstitutional, by a court of competent jurisdiction, that portion shall be deemed severable, and such invalidity, unenforceability or unconstitutionality shall not affect the validity or enforceability of the remaining portions of the Ordinance, or its application any other person or circumstance.

The City Council or the City of Modesto hereby declares that it would have adopted each section, sentence, clause, or phrase of this Ordinance, irrespective of the fact that any one or more other sections, sentences, clauses, or phrases of this Ordinance be declared invalid, unenforceable or unconstitutional.

SECTION 4. CALIFORNIA ENVIRONMENTAL QUALITY ACT (“CEQA”) The City Council hereby finds that the adoption of this Ordinance is exempt from CEQA pursuant to CEQA Guidelines section 15061(b)(3) of the State CEQA Guidelines.

Specifically, this Ordinance will not result in a direct or reasonably foreseeable indirect physical change in the environment because it does not authorize the construction of any new structures or other physical changes to the environment.

SECTION 5. EFFECTIVE DATE.

This Ordinance shall go into effect and be in full force and operation from and after thirty (30) days after its final passage and adoption.

SECTION 6. PUBLICATION.
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6 At least two (2) days prior to its final adoption, copies of this Ordinance shall be posted in at least three (3) prominent and distinct locations in the City; and a notice shall be published once in the Modesto Bee, the official newspaper of the City of Modesto, setting forth the title of this Ordinance, the date of its introduction and the places where this ordinance is posted.

The foregoing ordinance was introduced at a regular meeting of the Council of the City of Modesto held on the 14th day of May, 2024, by Council Member _________, who moved its introduction and passage to print, which motion being duly seconded by Council Member_____, was upon roll call carried and the ordinance adopted by the following vote:

AYES: Councilmembers:

NAYS: Councilmembers:

Absent: Councilmembers:

APPROVED:_________________________
SUE ZWAHLEN, Mayor
ATTEST:

BY: __________________________________
DIANE NAYARES-PEREZ City Clerk
(SEAL)
APPROVED AS TO FORM:

BY: __________________________________
JOSE M. SANCHEZ, City Attorney
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7 FINAL ADOPTION CLAUSE
The foregoing ordinance, having been published as required by the Charter of the City of Modesto, and coming on for final consideration at the regular meeting of the Council of the City of Modesto held on the ____day of May , 2024, Councilmember ______________moved its final adoption, which motion being duly seconded by Councilmember ________________, was upon roll call carried and the ordinance adopted by the following vote:

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

APPROVED: ________________________

SUE ZWAHLEN, MAYOR
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8 ATTEST: ____________________________
DIANE NAYARES-PEREZ City Clerk
Effective Date: _________________, 2024
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Citizens’ Salary Setting Commission 2024 Final Recommendations Background:

City of Modesto Charter Section 703 sets the maximum limitations on salaries. The salary of the Mayor shall not be more than fifty percent (50%) of the salary for a Superior Court Judge ($238,479) in Stanislaus County (CAP: $119,239/year or $9,936.625/month). The salary of a Councilmember shall not be more than fifty percent (50%) of the median family income ($73,375) for the Modesto Metropolitan statistical area as reported by the United States Census Bureau (CAP: $36,687.50/year or $3,057.25/month).

Charter Section 703(b) states that, “the Citizens’ Salary Commission shall meet between March 1st and April 30th of every even numbered year.” The Citizens’ Salary Commission has not met since 2014. The salaries for both the Mayor and Councilmembers have not been increased since 2008. The Mayor’s current salary is $43,200/year or $3,600/month. The Councilmembers’ current salary is $24,000/year or $2,000/month.

Public input was solicited during the preparation of the Citizens’ Salary Setting Commission’s recommendations. The Commission met on nine (9) occasions, including two (2) noticed public hearings, one of which was held in the evening.

The City Charter requires that the Citizens’ Salary Setting Commission consist of five qualified electors residing within the City and appointed by the City Council. The 2024 Commission has a member from a bona fide local nonpartisan political organization with tax exempt status (the League of Women Voters), two former Civil Grand Jury members (one with a strong financial background), and two members who have demonstrated civic involvement and a capacity to serve in an honest, independent, and impartial fashion. All members are qualified electors, living within the city limits of Modesto, and were appointed by the unanimous vote of the City Council. All Members serve without compensation.

Final Recommendations:

The Mayor’s salary shall be set at no more than $54,000/year or $4,500 /month.

The Councilmembers’ salary shall be set at no more than $30,000/year or $2,500/month.

Rationale:

There is a wide disparity of mayoral salaries and duties between normal comparable cities in the San Joaquin Valley (cities used by the City of Modesto when doing salary studies for staff increases) from Fresno (admittedly a full-time position) of $141,520 annually to Merced at $6,000 annually and Stockton at $90,480 annually. The average salary of mayors in the San Joaquin Valley is $51,352.
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Stanislaus County cities mayoral salaries range from $3,000 annually in Newman to $8,400 annually in Ceres.

Charter cities with similar populations as Modesto provide an annual salary to the mayor as follows: Glendale: $28,008, Huntington Beach: $1,479, San Bernardino:
$122,918, and Santa Rosa: $12,956 for a median annual salary of $20,482.

Charter cities with similar budgets as Modesto provide an annual salary to the mayor as follows: Burbank: $20,765, Oceanside: $32,851, Berkeley: $79,608, and Santa Rosa:
$12,956 for a median annual salary of $26,808.

There is a wide disparity of councilmember salaries and duties between normal comparable cities In San Joaquin Valley (cities used by the City of Modesto when doing salary studies for staff increases) from Fresno at $85,100 annually to Merced at $4,800 annually and Stockton at $29,363 annually. The average salary of councilmembers in the San Joaquin Valley is $29,865.

Stanislaus County cities councilmembers salaries range from $1,200 annually in Newman to $6,000 annually in Ceres.

Charter cities with similar populations as Modesto (Glendale, Huntington Beach, San Bernardino, and Santa Rosa) provide an annual salary to councilmembers as follows:

Glendale: $28,058, Huntington Beach: $1,101, San Bernardino: $27,077, and Santa Rosa: $9,600 for a median annual salary of $18,338.

Charter cities with similar budgets as Modesto provide an annual salary to council members as follows: Burbank: $22,258, Oceanside: $32,694, Berkeley: $79,608, and Santa Rosa: $9,600 for a median annual salary of $27,476.

A Stanislaus County Board of Supervisor, a part-time position, is paid an annual salary of $107,640 or $8,970 a month. The population of Stanislaus County is 552,999. The annual budget for Stanislaus County is approximately $1.6 billion.

The median household income of Modestans is $73,375. (2022 U.S. Census Bureau).

The median salary of all employed Modestans is $59,446. (Bureau of Labor Statistics) The Mayor, while not “full-time,” has increased accountability according to the City Charter and is more engaged dealing with complex issues. The Charter identifies mandated mayoral duties as the official head of the City for all political, representative, and ceremonial purposes and by the Governor for military purposes.

The Mayor has one vote like other Councilmembers. The Mayor may not infringe or limit the powers of the City Manager.

Since 2008, Modesto’s population has increased by approximately 16,000 residents to its current population of approximately 218,000. Modesto is currently the 19th largest city in California. The U.S. News and World Report’s ranking of the best places to live in the U.S. in 2023-2024 placed Modesto No. 145 out of the 150 largest metropolitan areas across the country.
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The Commission recognizes that expenses incurred related to authorized City business are reimbursed pursuant to City of Modesto Charter Section 703(a): “The Mayor and members of the Council shall also receive reimbursement for expenses incurred while performing official duties of their office only so long as evidence of such expenses incurred is presented to the City in the manner prescribed for all other employees of the City. No compensation or reimbursement shall be established for any member of the Council, including the mayor, except as provided in this Section.” April 12, 2024
Respectfully submitted,
JAN VISS, Chair
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Created: 2024-02-16 17:27:04 [EST]
(Supp. No. 66)

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SECTION 703. COMPENSATION FOR ELECTED OFFICIALS.
(a) Compensation and Reimbursement. The Mayor and each member of the Council shall be paid as compensation for his or her services as a member of the Council for each calendar month during which he or she is a member of the Council a monthly salary together with appropriate benefits which shall be established by ordinance only after the Citizen's Salary Setting Commission has made a written recommendation for compensation pursuant to the strict limits of the section, such written recommendation has been published for review pursuant to the requirements of this section, and the mandated public hearings required by this section have been held on the recommendation.

The Mayor and members of the Council shall also receive reimbursement for expenses incurred while performing official duties of their office only so long as evidence of such expenses incurred is presented to the City in the manner prescribed for all other employees of the City.

No compensation or reimbursement shall be established for any member of the Council, including the Mayor, except as provided in this Section.
(b) Citizen's Salary Setting Commission. There shall be established a Citizen's Salary Setting Commission, hereinafter "Commission," whose function shall be to recommend the compensation it deems appropriate for the Mayor and members of the Council. This Commission shall meet between March 1st and April 30th of every even-numbered year.

The Citizen's Salary Setting Commission shall consist of five qualified electors residing within the City and shall be appointed by the City Council pursuant to the provisions below:
(A) Strong consideration shall be given to composing the Commission of:
(i) a retired Stanislaus County judge as chairperson;
(ii) one member from a bona fide local taxpayer's association with tax exempt status under the relevant provisions of the Internal Revenue Code;
(iii) one member from a bona fide local nonpartisan political organization, with tax-exempt status under Section 501(c)(3) of the Internal Revenue Code, dedicated to encouraging informed and active participation in government;
(iv) one member from, a former Civil Grand Jury who has served in that role within in the previous five years;
(v) additional members who have demonstrated civic involvement and a capacity to serve in an honest, independent, and impartial fashion.
(B) No member of the Commission shall be a relative by blood or marriage within the third degree of the Mayor, a member of the Council, any Charter officer, or any department head or deputy department head.
(C) No member of the Commission shall be an employee of the City nor any bargaining unit for employees of the City, nor be a person who receives compensation from the City or from bargaining units of the City in any manner, including retirement benefits. (D) No member of the Commission shall be a lobbyist or other person with business before the City that represents an economic interest in excess of the limit for material financial effect as established by local ordinance for the time periods established by local ordinance. (E) In all other respects, the members of the Commission shall be chosen pursuant to the provisions of this Charter.
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Created: 2024-02-16 17:27:04 [EST]
(Supp. No. 66)

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Except as provided herein below, the regular term of office of each member of the Commission shall be four years.

The initial five members of the Commission shall be appointed during the month of March 2008. Two of the members so appointed shall be appointed for a term expiring on December 31, 2010. Three of the members, including the initial chairperson, so appointed shall be appointed for a term expiring on December 31, 2012.

Commencing in December 2010, new appointments shall be made during the month of December of each evennumbered year to fill the offices of the members whose terms are expiring at the end of such even-numbered years. Such appointments shall be for regular terms of four years commencing on the first day of January of the following odd-numbered year and expiring on the 30-first day of December of the second even-numbered year thereafter.

No Commission member may serve for more than two terms. A Commission member may be removed from office at any time for misconduct, inefficiency or willful neglect in the performance of the duties of his or her office providing the Council first states in writing the reasons for such removal and gives such member an opportunity to be heard before the Council in his or her own defense. No tax dollars shall be expended on behalf of a Commission member for such defense. If a vacancy occurs before the expiration of a member's term, the Council shall appoint a qualified person to fill such vacancy for the remainder of the unexpired term of such member. (c) Salary Limitations and Penalties. The salary of the Mayor shall not be more than 50 percent (50%) of the amount of the salary of a Judge of the Superior Court of Stanislaus County.

The salary of a Councilmember shall not be more than 50 percent (50%) of the median family income for the Modesto Metropolitan Statistical Area as reported by the United States Census Bureau. The salary of each Councilmember shall be the same.

Any appropriate benefits established under this provision may not include retirement or pension benefits of any sort.

No recommendation shall be made by the Commission except upon the affirmative vote of three members of the Commission.

No recommendations may be made in odd-numbered years. The recommendation of the Commission will be made to the Council by April 30th of every even-numbered year to be effective for a two-year period commencing not before July 1 of that even numbered year. Failure of the Commission to make a recommendation in any even numbered year within the prescribed time shall be deemed to be a recommendation that no changes be made to existing compensation levels.

Any monthly salary shall be reduced by one-fourth for each regular meeting of the Council not attended by a councilmember each month, unless absent on official duty with the consent of the Council. (d) Process to Set Compensation. Each recommendation by the Commission, together with the reasons for the recommendation, shall be made in writing by the Commission.

Before any such recommendation is provided to the Council, a draft recommendation shall be made available to the public and the Commission shall hold at least two public hearings on the matter before it adopts its final recommendation.

When such final recommendation has been submitted to the Council, it shall not thereafter be amended by the Commission.

Upon receiving the final recommendation from the Commission, the Council may adopt the compensation as recommended by the Commission or may adopt compensation in some lower amount, but in no case may adopt compensation in some higher amount. The Council may only adopt all such compensation by ordinance and after a public hearing of which legal notice is published in a newspaper of general circulation within the City at least 20 days prior to said hearing. Salaries established by ordinance adopted pursuant to the provisions of this Section shall remain in effect until amended by a subsequent ordinance adopted pursuant to the provisions of this Section. #18..
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Created: 2024-02-16 17:27:04 [EST]
(Supp. No. 66)

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The compensation being paid to Councilmembers as of the effective date of this Section shall continue until any subsequent compensation is established pursuant to the requirements of this Section. (e) Subject to Referendum.

Any final decision by the Council on compensation under this Section shall be subject to the referendum provisions of the Charter.
(As amended April 29, 1971, November 4, 1980, and February 5, 2008) #18..
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Created: 2024-02-16 17:27:09 [EST]
(Supp. No. 66)

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Edits (additions underlined and deletions in strikethrough):
2-1.24 Compensation of Mayor.

The annual salary of the Mayor shall be forty-three fifty-four thousand two hundred dollars ($54,00043,200.00), pursuant to the recommendation of the Citizens' Salary Setting Commission. In accordance with Section 703 of the Charter, the Mayor's compensation and appropriate benefits shall be reviewed by the Citizens' Salary Setting Commission biannually, and a recommendation made to the City Council as to the appropriate compensation. The annual salary shall be payable from and after the operative date of the ordinance at the same time and in the same manner as the salaries are paid to other officers and employees of the City. (Added by Ord. 3487-C.S., § 1, effective 6-26-08)
2-1.26 Compensation of City Councilmembers.

The annual salary of each member of the City Council, except the Mayor, shall be twenty-four thirty thousand dollars ($30,00024,000.00). In accordance with Section 703 of the Charter, the Councilmember's compensation and appropriate benefits shall be reviewed by the Citizens' Salary Setting Commission biannually, and a recommendation made to the City Council as to the appropriate compensation. The annual salary shall be payable from and after the operative date of the ordinance at the same time and in the same manner as the salaries are paid to other officers and employees of the City. (Added by Ord. 3487-C.S., § 1, effective 6-26-08)
#18..
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CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

May 14, 2024
Date: April 18, 2024
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: Brandon Gillespie, Chief of Police
SUBJECT: Non-Emergency Transport Application for Mediwest Non-Emergency Transport Application
CONTACT: Kalani Souza, Lieutenant, [email protected], 209-572-9500 DESCRIPTION:

Hearing to consider approving the application and issuance of a Permit to operate as a NonEmergency Medical Transport Company to Mediwest Non-Emergency Medical Transportation in the City of Modesto. (Funding Source: General Fund)
STRATEGIC PLAN ELEMENT:

This item is related to the 2020-2025 Strategic Plan goal of improving community safety and quality of life through a combination of prevention and intervention efforts that address safety and its underlying issues. (Goal A of Quality of Life Goals and Strategies) BACKGROUND:

The City of Modesto allows non-emergency medical transport companies to apply for a nonemergency transport permit. In addition to the application, the transport company is required to pay a filing fee of $1,000 and provide all the necessary documents and information as outlined in Modesto Municipal Code 3-9.01 to 3-9.20. Once the application, documentation, and necessary fees have been received by the Modesto Police Department (MPD), a background investigation must be completed by the department. Upon successful completion of the background investigation, the application proceeds to a hearing before the City Council to determine whether the public convenience and necessity require the proposed service. The Council must grant the applicant a permit upon making the following findings:
(a) That the vehicles described in the application and proposed to be used are appropriate for the purpose of nonemergency transport.
(b) That the color scheme, insignia, name, monogram or other distinguishing characteristics proposed to be used upon such nonemergency transport vehicles is not in conflict with and do not imitate any color scheme, insignia, name, monogram or other distinguishing #19..
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characteristics used by any other person, in such manner as to mislead or tend to mislead, deceive, or defraud the public.
(c) That the applicant is fit, willing and able to perform nonemergency transport service and to conform to the provisions of this chapter, and such rules and regulations as may be promulgated by the Council. In making such findings, the Council shall take into consideration the character, experience, and responsibility of the applicant. (d) That the proposed nonemergency transport service is required by the public convenience and necessity. In making such finding, the Council shall take into consideration the number of nonemergency transport vehicles already in operation, whether existing nonemergency transport service is adequate to meet public need, and the probable effect of increased nonemergency transport service on local traffic conditions; and
(e) None of the factors enumerated in Section 3-9.07 of the Modesto Municipal Code exist, such as misleading color schemes, disqualifying background factors, and proof of insurance.

After approval from Council has been provided, the permit will be issued by the Modesto Police Department.

Currently there are thirteen permitted ambulance companies in Modesto to provide nonemergency transport: America West, Amwest Ambulance, Bay Medic Transportation, Citizens Medical Transport, Heavenly Medical Transport LLC, MacIntosh Transport LLC, Medics Plus, NorCal Ambulance, Provident Senior Solutions, Inc, Quality Care Transport Inc, Remedy Medical Transportation and Star Nonemergent Transportation.

DISCUSSION:

Mediwest Non-Emergency Medical Transportation has applied to operate a non-emergency medical transportation service in the City of Modesto. Mediwest Non-Emergency Medical Transportation has paid the $1,000 filing fee to cover administrative, investigative, and other incidental costs associated with the application and have provided all necessary information as outlined in Sections 3-9.01 to 3-9.20 of the Modesto Municipal Code. Photos of the proposed vehicles are provided. They depict vehicles that are appropriate for their intended use, and the vehicle color and markings are not misleading. In reviewing the application and subsequent background, it appears the applicant can perform the proposed services, and these services benefit the public convenience and necessity based on the number of licensed providers currently operating in the city. There are no disqualifying factors at this time. The MPD concluded the required background investigation on Mediwest Non-Emergency Medical Transportation indicating the applicant has complied with the requirements contained in the Modesto Municipal Code 3-9.01 through 3-9.20 and recommended to staff to proceed with Council approval to issue the operational permit.

FISCAL IMPACT:

Mediwest Non-Emergency Medical Transportation will be required to obtain a City Business license and renew it annually – which currently costs $75 and includes a $4 fee to the State of California for Disability Act AB1379. Additionally, Mediwest Non-Emergency Medical Transportation will be required to pay mill tax, which is currently at a rate of 0.002, on their gross #19..
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receipts while operating in the city. Fees and mill tax paid to the City are revenue to the General Fund.

COMMITTEE RECOMMENDATION:

This was presented to the Safety & Communities Committee on April 15, 2024, and was recommended to forward to City Council for approval.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution approving the application and issuance of a Permit to operate as a Non-Emergency Medical Transport Company to Mediwest Non-Emergency Medical Transportation in the City of Modesto.

Approved by:

Brandon Gillespie, Chief of Police
Joseph P. Lopez, City Manager
Attachments:

1. Resolution
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05/14/2024/MPD/KSouza/Item X 1 2024-XX

MODESTO CITY COUNCIL
RESOLUTION NO. 2024-XX

RESOLUTION APPROVING THE APPLICATION AND ISSUANCE OF A

PERMIT TO OPERATE AS A NON-EMERGENCY MEDICAL TRANSPORT

COMPANY TO MEDIWEST NON-EMERGENCY MEDICAL

TRANSPORTATION IN THE CITY OF MODESTO
WHEREAS, Mediwest Non-Emergency Medical Transportation has submitted an application to provide non-emergency medical transport services within the City of Modesto; and
WHEREAS, the City allows non-emergency medical transport companies to apply for a non-emergency transport permit. In addition to the application, the transport company is required to pay a filing fee of $1,000 and provide all the necessary documents and information as outlined in Modesto Municipal Code 3-

9.01 to 3-9.20. Once the application, documentation, and necessary fees have been received by the Modesto Police Department (MPD), a background investigation must be completed by the department. Upon successful completion of the background investigation, the application proceeds to a hearing before the City Council to determine whether the public convenience and necessity require the proposed services; and
WHEREAS, the Modesto Police Department has completed background investigations regarding Mediwest Non-Emergency Medical Transportation, In per Modesto Municipal Code Section 3-9.05; and
WHEREAS, Council approval is required for Mediwest Non-Emergency Medical Transportation to function as a non-emergency medical transport service provider within the City of Modesto; and
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05/14/2024/MPD/KSouza/Item X 2 2024-XX
WHEREAS, a duly noticed public hearing was held by the City Council of the City of Modesto on May 14, 2024, at 5:30 p.m. in the Tenth Street Place Chambers located at 1010 Tenth Street, Modesto, California, to consider authorizing the issuance of a permit to Mediwest Non-Emergency Medical Transportation for a non-emergency medical transport service within the City of Modesto; and
WHEREAS, Modesto City Council finds that Mediwest Non-Emergency Medical Transportation will serve the public convenience and necessity requirements.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby approves the application of Mediwest Non-Emergency Medical Transportation and issues Mediwest Non-Emergency Medical Transportation a permit to operate as a non-emergency medical transport company in the City of Modesto. #19..
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05/14/2024/MPD/KSouza/Item X 3 2024-XX
The foregoing resolution was introduced in a regular meeting of the Council of the City of Modesto held on the 14th day of May 2024, by Councilmember ________, who moved its adoption, which motion being duly seconded by Councilmember ______, was upon roll call carried and the resolution adopted by the following vote:

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ATTEST: _____________________________
DIANE NAYARES-PEREZ, City Clerk
(SEAL)
APPROVED AS TO FORM:

BY: _________________________________
JOSE M. SANCHEZ, City Attorney
#19..
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CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

May 14, 2024
Date: April 24, 2024
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: Jessica Hill, Director of Community and Economic Development SUBJECT: Cannabis Dispensary Permits
CONTACT: Sean Rando, Business Analyst,
[email protected], 209-577-5473
DESCRIPTION:

Consider directing staff to prepare a Request for Proposals (RFP) for the purpose of issuing one (1) commercial cannabis retail permit under the City of Modesto’s Cannabis Equity Program (Providing Local Equity Development Grants and Education (PLEDGE)). (Funding Source:

Cannabis Application Fee)
STRATEGIC PLAN ELEMENT:

Expanding opportunity and reducing barriers to enter the regulated commercial cannabis market promotes economic vitality consistent with the City Council 2020-2025 Strategic Plan Goal E, Drive Economy Vitality.

BACKGROUND:

In December 2017, the Council adopted Ordinance 3684-C.S. legalizing certain commercial cannabis business operations in particular zoning districts. While there were no limitations placed on the number of cannabis wholesale business permits that may be issued under the requirements of the Modesto Municipal Code, there is a limitation placed on dispensary permits.

Pursuant to Modesto Municipal Code section 10-3.704(b), the total number of Commercial Cannabis Permits granted for each State license type may be established by Council Resolution. On December 12, 2017, by Resolution No. 2017-525, Council limited the total number of permits that may be issued for commercial cannabis retail dispensaries to an amount not to exceed ten (10) permits. Council also directed Staff to prepare a Request for Proposal (RFP) process to gather applications for dispensary permits under the authority of the same resolution.

As a result of the RFP process, the City received twenty (20) cannabis dispensary proposals.

City staff, along with the cannabis program consultant HDL, reviewed the applications against technical requirements and assigned each a score, up to a maximum of fifty-five (55) points.

Technical scoring included an assessment of applicant qualifications, business plan and #20..
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budgets, proof of capitalization, security and operating plan, facility, environmental, and design issues, and convenience to the community.

Council appointed an Ad Hoc Cannabis Committee who conducted interviews of each applicant regarding the community benefits of each proposal. The specific community benefits explored in the interviews were the creation of local jobs and wages, neighborhood improvements and nuisance mitigation, and contributions to the community including youth programs and intervention work. Each applicant team was asked the same questions and had the same time limitations.

The Ad Hoc Cannabis Committee considered the technical and community benefit scores, as well as issues related to the collective impact of having up to ten (10) retail dispensaries Citywide. Areas considered included diversity of operator background, variety of operation sizes and business locations, as well as general neighborhood and safety impacts. The Committee expressed a desire to have the dispensaries dispersed in various locations throughout the City to lessen collective impacts, increase chances of success, and allow for accessibility from various areas of the City.

The Committee recommended that eight (8) applications be awarded cannabis dispensary permits and forwarded to Council for approval based on a combination of technical scores, community benefit scores, and applicant interviews. On December 19, 2018, by Resolution No. 2018-566, Council approved the issuance of eight (8) commercial cannabis retail dispensary permits based on the recommendation of the Committee. These dispensaries were to be assessed an eight (8) percent excise tax on the business’ gross receipts.

In November 2016, California voters approved Proposition 64, the Control, Regulate, and Tax Adult Use of Marijuana Act (AUMA). In its statement of purpose and intent, AUMA calls for regulating cannabis in a way that “reduces barriers to entry into the legal, regulated market.” Although a legal framework now exists to participate in the adult use commercial cannabis industry, barriers to start a commercial cannabis business may still exclude some Modesto entrepreneurs from entering the legal cannabis market. Individuals convicted of a cannabis offense during the era of prohibition and criminalization policies have a more difficult time entering the new adult-use cannabis industry due, in part, to a lack of access to capital, business space, technical support, and regulatory compliance assistance. In response to this, the California legislature passed the Cannabis Equity Act in 2018 which established a State-run program intended to widen participation among marginalized and economically disadvantaged communities in the cannabis industry.

The City, in alignment with the intentions of the Cannabis Equity Act and in partnership with key members of the community, worked towards the creation of its own local cannabis equity program. On December 13, 2022, by Resolution No. 2022-478, Council accepted the findings in the Cannabis Equity Assessment Report and on the same date by Resolution No. 2022-479, Council adopted a Cannabis Equity Program where eligible equity applicants will be eligible for direct technical assistance courses as well as grants.

DISCUSSION:

Staff worked with HDL to review neighboring cities of similar populations and determined the average cannabis retail business permits per capita is 32,058 and the average sales per capita is $138. Stanislaus County’s cannabis retailer per capita is 19,750 with a sale per capita of #20..
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$292 as of the date of HDL’s report on September 21, 2022. The City, as of the date of the report, had seven (7) dispensaries in operation within the City. In addition to this, there were two (2) dispensaries which were in the City Sphere of Influence, and nineteen (19) county-wide.

County; All Agencies Population Number of
Retailers
Population
per Retailer
Total Retail Sales Sales per
Capita
Alameda 1,656,791 204 8,122 $273,569,272 $165
Calaveras 45,040 4 11,260 $12,423,700 $276
Contra Costa 1,154,158 18 64,120 $120,344,037 $104
El Dorado 195,380 12 16,282 $33,003,661 $169
Humboldt 130,859 41 3,192 $49,077,328 $375
Imperial 186,064 14 13,290 $20,842,841 $112
Kern 915,273 8 114,409 $20,419,736 $22
Lake 63,948 6 10,658 $9,718,775 $152
Los Angeles 10,045,420 434 23,146 $1,554,227,438 $155
Marin 257,879 8 32,235 $14,162,740 $55
Mendocino 86,672 30 2,889 $28,613,877 $330
Merced 284,857 9 31,651 $52,402,374 $184
Mono 13,296 5 2,659 $5,899,438 $444
Monterey 437,347 26 16,821 $77,441,041 $177
Napa 137,689 6 22,948 $11,508,038 $84
Orange 3,154,577 29 108,779 $273,249,465 $87
Riverside 2,454,741 137 17,918 $374,176,140 $152
Sacramento 1,561,232 101 15,458 $304,252,948 $195
San Bernardino 2,177,209 41 53,103 $113,933,330 $52
San Diego 3,316,066 62 53,485 $464,746,668 $140
San Francisco 875,062 74 11,825 $231,270,261 $264
San Joaquin 783,722 8 97,965 $63,426,658 $81
San Luis Obispo 271,190 21 12,914 $55,021,831 $203
San Mateo 765,487 17 45,029 $31,851,931 $42
Santa Barbara 441,224 29 15,215 $72,488,624 $164
Santa Clara 1,934,704 17 113,806 $220,033,935 $114
Santa Cruz 261,131 27 9,672 $62,332,024 $239
Shasta 177,810 12 14,818 $52,694,135 $296
Siskiyou 44,338 8 5,542 $6,371,830 $144
Solano 438,603 23 19,070 $68,154,581 $155
Sonoma 484,238 33 14,674 $106,595,333 $220
Stanislaus 552,999 28 19,750 $161,463,512 $292
Tulare 481,818 10 48,182 $59,822,581 $124
Ventura 835,467 19 43,972 $58,482,685 $70
Yolo 217,531 8 27,191 $35,786,055 $165
Totals: 36,839,825 1,529 $5,099,808,823 $138
32,058
Average Sales per Capita:
$138
$84
$207
$226
$283
Note: This data assumes that all microbusinesses include a retail component Cannabis Retailers, Sales, and Sales per Capita by County 2021 Counties with more than 1 retailer per 40,000 residents Counties with more than 1 retailer per 10,000 residents Counties with more than 1 retailer per 20,000 residents All counties with active cannabis retailers
Average Population per Retailer:

Counties with fewer than 1 retailer per 40,000 residents Since the approval of the cannabis retail dispensaries in 2018, the City has been collecting the excise tax revenue at eight percent (8%) of the business’ gross receipts. Revenue and sales #20..
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peaked from January 2019 – May 2021 at $5,572,406. Following this time, sales have consistently declined from 1-7% on a monthly basis with an average decline of 25% annually over the last three (3) fiscal years.

Staff completed an assessment of the sales and dispensaries within California in 2022. From this study, the consultant recommended a ratio of one (1) commercial cannabis retail business to every twenty thousand (20,000) citizens. As of June 1, 2022, there were approximately twenty-eight (28) cannabis retailers serving an approximate population of 552,878 within Stanislaus County resulting in a current ratio of one (1) dispensary to nineteen thousand seven hundred and fifty (19,750) residents.

Since the inception of the cannabis program and following the formal creation of the Cannabis Equity Program, staff has received multiple inquiries regarding the remaining retail dispensary permits, from the general population, and more so from those interested in participating in the Cannabis Equity Program.

Participants of the adopted Cannabis Equity Program, Providing Local Equity Development Grants and Education (PLEDGE) will be eligible for direct technical assistance workshops as well as grants to assist with the payment of business start-up expenses necessary to become an operational commercial cannabis business.

There is precedent for this across other cannabis equity programs in California to also open cannabis retail business permits to equity only participants. For example, in November of 2020, The City of Sacramento approved 10 dispensary permits exclusively for participants in their Cannabis Opportunity Reinvestment and Equity (CORE) program.

FISCAL IMPACT:

On November 9, 2021, by Resolution 2021-441, Council approved a nonrefundable application fee which currently amounts to $6,380. Commercial cannabis businesses are required to remit an annual permit fee in addition to the application fee. On November 14, 2023, by Resolution No. 2023-504, Council approved two separate annual commercial cannabis permit fees which covers costs related to the administration and monitoring of the cannabis permits. Operational businesses remit $18,732 while non-operational businesses are required to pay a lower fee of $4,307. The annual permit fee is reviewed and reconciled annually to capture increases or decreases related to administrative oversight of the cannabis permit program, and it is budgeted and recognized in the Cannabis Fund – 1820 and Cost Center 14471. A cannabis excise tax is also paid based on total gross receipts which is currently set at 8% for commercial cannabis retail businesses.

The addition of one (1) new cannabis retailer into the market in Stanislaus County will reduce the retailer per capita rate to 19,068 which would result in sales revenue being spread across a wider market. Based on the current cannabis consultant’s general rule of one (1) dispensary to every 20,000 citizens it is unlikely that the addition of more retail businesses will result in increased sales revenue.
#20..
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COMMITTEE RECOMMENDATION:

The Cannabis Program and Permit Review Committee met on April 22, 2024 and provided a recommendation to issue one (1) of the two (2) remaining unissued commercial cannabis retail permits to businesses owned by verified PLEDGE program participants and to forward the recommendation to Council for approval with a vote of two (2) in favor and one (1) opposed.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution directing staff to prepare a Request for Proposals (RFP) for the purpose of issuing one (1) commercial cannabis retail permit under the City of Modesto’s Cannabis Equity Program (Providing Local Equity Development Grants and Education (PLEDGE)).

Approved by:

Jessica Hill,
Director of Community and Economic Development
Joseph P. Lopez, City Manager
Attachments:

1. Resolution
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05/14/2024CED/SRando/Item-XX 1 2024-XX

MODESTO CITY COUNCIL
RESOLUTION NO. 2024-

A RESOLUTION DIRECTING STAFF TO PREPARE A REQUEST FOR
PROPOSALS (RFP) FOR THE PURPOSE OF ISSUING ONE (1) COMMERCIAL CANNABIS RETAIL PERMIT UNDER THE CITY OF MODESTO’S CANNABIS

EQUITY PROGRAM (PROVIDING LOCAL EQUITY DEVELOPMENT

GRANTS AND EDUCATION (PLEDGE))
WHEREAS, the City Council has adopted a Commercial Cannabis Ordinance, Ordinance 3684-C.S., that established the City’s regulatory framework for commercial cannabis uses; and
WHEREAS, under Section 10-3.704(b) of the Ordinance, the City Council via Resolution 2017-525 established the total number of commercial cannabis permits issued by the City for cannabis dispensaries at a maximum of ten (10) permits; and WHEREAS, under Section 10-3.704(g) and City Council Resolution 2017-525, the City Manager designed the application forms and procedures for commercial cannabis dispensary renewal permits, with input from the City Council Ad Hoc Cannabis Committee; and
WHEREAS, as a result of the RFP process, the City received twenty (20) cannabis dispensary proposals. City staff, along with the cannabis program consultant HDL, reviewed the applications against technical requirements and assigned each a score, up to a maximum of fifty-five (55) points; and
WHEREAS, the City Council Ad Hoc Cannabis Committee recommended that eight (8) applications be awarded cannabis dispensary permits based on a combination of technical scores, community benefit scores, and applicant interviews; and WHEREAS, City Council via Resolution 2018-566 issued commercial cannabis permits to the following dispensary businesses:
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 CR & D, Inc. 439 Maze Blvd.
 Authentic 209 426 McHenry Ave.
 Cookies 1944 W. Orangeburg Ave.
 People's Remedy - McHenry 2308 McHenry Ave.
 People’s Remedy- Planet 8ths 500 E. Glenn Ave.
 Doctor's Choice 2039 Yosemite Ave.
 Phenos Cooperative 1234 McHenry Ave.
 Medallion Wellness 1313 McHenry Ave.
; and
WHEREAS, the California Legislature passed the California Equity Act of 2018 to provide funding to local jurisdictions to develop and operate local cannabis equity programs that focus on the inclusion and support of individuals in California’s legal cannabis marketplace who are from communities negatively or disproportionally impacted by cannabis criminalization; and
WHEREAS, the City in alignment with the intentions of the Cannabis Equity Act and in partnership with key members of the community worked towards the creation of its own local cannabis equity program; and
WHEREAS, on December 13, 2022, by Resolution No. 2022-478, Council accepted the findings in the Cannabis Equity Assessment Report and on the same date by Resolution No. 2022-479, Council adopted a Cannabis Equity Program; and WHEREAS, two (2) commercial cannabis retail permits have remained unissued following the 2018 request for proposal process; and
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WHEREAS, participants of the adopted Cannabis Equity Program, Providing Local Equity Development Grants and Education (PLEDGE) will be eligible for direct technical assistance workshops as well as grants to assist with the payment of business start-up expenses necessary to become an operational commercial cannabis business; and WHEREAS, since the inception of the cannabis program and following the formal creation of the Cannabis Equity Program, staff has received multiple inquiries regarding the remaining dispensary permits, from the general public, and from those interested in the Cannabis Equity Program; and
WHEREAS, the Cannabis Program and Permit Review Committee met on April 22, 2024, and provided a recommendation to issue one (1) of the two (2) remaining unissued commercial cannabis retail permits under the City’s Cannabis Equity Program (PLEDGE) with a vote of two (2) in favor and one (1) opposed; and WHEREAS, there is precedent for this across other cannabis equity programs in California to also open cannabis retail business permits to equity program participants only; and
WHEREAS, Section 10-3.704(g)(1) of the Modesto Municipal Code authorizes the City Manager, or his or her designee, to design application forms and procedures specific to each permitted license type with such procedures including a request for proposal process for certain license types where deemed necessary.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that staff is directed to prepare a request for proposals (RFP) for the purpose of issuing one (1) commercial cannabis retail permit under the City of Modesto’s Cannabis Equity Program (Providing Local Equity Development Grants and Education (PLEDGE)). #20..
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05/14/2024CED/SRando/Item-XX 5 2024-XX
The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 14th day of May, 2024 by Councilmember , who moved its adoption, which motion being duly seconded by Councilmember , was upon roll call carried and the resolution adopted by the following vote:

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ATTEST: _____________________________
DIANE NAYARES-PEREZ, City Clerk
(SEAL)
APPROVED AS TO FORM:

BY: ____________________________________
JOSE M. SANCHEZ, City Attorney
#20..
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CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

May 14, 2024
Date: April 23, 2024
TO: Mayor and City Council
FROM: Joseph P. Lopez, City Manager
SUBJECT: Mayor’s Final Budget Modifications and Fiscal Year 2024-25 Proposed Budget CONTACT: Steve Christensen, Budget Manager, [email protected] 209-577-5390
DESCRIPTION:

Consider and review the Draft Budget as submitted by the City Manager with the Mayor’s Final Budget Modifications and combining the documents into the Proposed Budget for Fiscal Year 2024-25 and noticing a Public Hearing to be held on June 4, 2024, for Council’s consideration and adoption of the Fiscal Year 2024-25 Proposed Budget and related actions. (Funding Source: All City Funds)
STRATEGIC PLAN ELEMENT:

This item supports the City of Modesto 2020-2025 Strategic Plan focus on Governance and Service Delivery under Goal H: Achieve Financial Sustainability.

BACKGROUND:

According to the City of Modesto’s Charter, there are specific steps to adopt a final budget.

Initial steps include the compilation and review of the City Manager’s Draft Budget. This Draft Budget is then submitted to the City Council’s Finance Committee for review under public budget workshops. These workshops occurred on April 15th, April 16th, and April 17th, 2024. The City Manager’s Draft Budget totals approximately $579 million in operating expenditures, of which $194.3 million is in the General Fund and $41.3 million is in the Measure H Sales Tax Fund. The public received notice of these workshops through the City’s website, social media, and agenda postings from the City Clerk’s Office.

In accordance with Section 1303 of the City of Modesto Charter, the Mayor is to prepare and deliver final modifications, if any, to the Draft Budget at least forty-five (45) days prior to the new fiscal year. The Mayor has prepared her Final Budget Modifications Message which includes language related to final budget modifications. This message has been delivered to Councilmembers via email and will be made available to the public on the City’s website. The message will also be included in the final City of Modesto Fiscal Year 2024-25 Adopted Budget book.
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DISCUSSION:

The City Manager’s Fiscal Year 2024-25 Draft Budget
With the additional funding brought into the City through the Measure H general sales tax, the City’s budget continues to focus on improving the services offered to the residents of Modesto.

The City Manager’s Draft Budget for Fiscal Year 2024-25 focuses on innovative approaches to public safety, improving facilities, and improving the overall quality of life to transform Modesto into a safer and more vibrant community through the proposed use of Measure H funds in the Fiscal Year 2024-25 Measure H Spending Plan.

The Measure H one-cent sales tax for general city services, was approved by the voters on November 8, 2022. This is estimated to generate approximately $42.8 million annually in sales tax revenue for the City of Modesto. These funds are critical in improving the services and infrastructure in Modesto. As part of addressing those needs, the Draft Proposed Budget has included a Measure H Spending Plan that works toward achieving those goals and improving the quality of life for the residents and visitors of Modesto.

The Fiscal Year 2024-25 Measure H Spending Plan will appropriate $41.3 million in Measure H funds across various categories to address the types of expenditures that were included with the Measure H ballot language. The expenditures will support the following:
 Addressing homelessness.
 Supporting neighborhood police patrols, gang, drug, and crime prevention.  Supporting fire protection and paramedic/911 emergency response.  Fixing and maintaining roads and sidewalks.
 Keeping parks, recreation facilities, and public areas safe and clear of trash and litter.

The following chart provides a breakdown of the proposed funding for Measure H in Fiscal Year 2024-25 in its various categories:

Category
FY 24-25 Measure H
Spending Plan
Public Safety $ 8,478,871
Parks Improvements $ 7,868,239
Forestry $ 3,989,477
Blight $ 3,932,070
Deferred Maintenance $ 2,200,000
Homelessness $ 1,816,453
Sidewalk $ 1,800,000
Fire/EMS $ 1,717,007
Measure H Admin Support $ 999,484
Equipment $ 399,300
Totals $ 33,200,901
The specific program improvements for each of the amounts referenced in the chart above can be found in the FY 2024-25 Proposed Budget book or at the following link https://www.modestogov.com/DocumentCenter/View/22375/FY-2024-25-Measure-HAdjustment-Requests-Approved-PDF. #21..
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The Fiscal Year 2024-25 General Fund Operating Budget contains a structural deficit (expenditures exceeding revenues) in the amount of $8.1 million. This amount is proposed to be offset by revenues that will be received through the Measure H Sales Tax revenue in the upcoming fiscal year. The cause of the General Fund structural deficit continues to be caused by the rate of growth of expenditures outpacing the growth of revenues. While revenues are rising from the current budgeted amounts, the pace at which they are increasing (2%) is lower than the pace of growth for expenditures (4%). For example, pension costs continue to rise and other costs for discretionary related expenditures are rising as well due to the increases in inflation. This amount, along with the proposed funding shown in the categories on the preceding table, sum to the total FY 2024-25 Measure H Spending Plan appropriations.

Below is a chart that shows the breakdown of the major funds that make up the total operating expenditure budget of $579 million for the City Manager’s Draft Budget for Fiscal Year 2024-25:

Fund Name
FY 2024-25 Draft Proposed
Operating Budget
General Fund $ 194,358,709
Water Enterprise Funds $ 71,957,008
Wastewater Enterprise Funds $ 51,262,302
Measure H Spending Plan Expenditures $ 41,369,485
Employee Benefits Administration and Management ISF Funds $ 40,052,647 Fleet Management and Replacement ISF Funds $ 29,012,317 Insurance Funds $ 24,320,156
Solid Waste Funds $ 17,420,736
Surface Transportation Fund $ 17,361,902
Information Technology ISF Fund $ 13,265,000
Storm Drainage Fund $ 9,432,925
Liability Insurance ISF Fund $ 8,990,500
Capital Improvement Support Fund $ 7,212,909
Inventory Purchases Fund $ 7,210,428
Community Facilities District (CFD) Funds $ 6,824,882
Other Special Revenue and Grant Funds $ 6,142,635
Workers Compensation ISF Fund $ 6,003,938
Debt Service Fund $ 3,729,000
Golf Funds $ 3,634,118
Housing and Urban Development (HUD) Funds $ 3,227,894
Building Services ISF Fund $ 3,098,610
Joint Powers Authority (JPA) Funds $ 3,022,125
Parking Fund $ 2,542,642
Property Insurance ISF Fund $ 2,405,200
Community Center Operations Fund $ 2,006,879
Airport Funds $ 1,463,390
Insurance Administration ISF Fund $ 1,278,324
Mail Services ISF Fund $ 369,635
Landscape District Funds $ 83,881
All Funds Total $ 579,060,177
The General Fund continues to be the largest portion of the City’s total expenditure budget at 34% followed by the Water Funds (12%), Wastewater (9%) and the Measure H Fund (7%). #21..
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Mayor’s Final Budget Modifications
As required by the City’s Charter (Article XIII Section 1303 and Section 1304), the Mayor shall prepare and deliver to Council the Mayor’s Final Budget Modifications on the Draft Budget.

Following the receipt of the Mayor’s Final Budget Modifications, the Council shall then consider and review the draft budget as submitted by the City Manager together with the Mayor’s Final Budget Modifications and may make such revisions as the Council may deem advisable. The document that results from this process shall be deemed the “Proposed Budget” and shall be considered for approval at a hearing prior to June 30th for adoption of the Final Budget.

This year, the City Councilmembers were able to attend and participate in the Finance Committee Budget Workshops that were held on April 15th, April 16th, and April 17th, 2024 The Draft Budget that is being presented to City Council is largely a collaborative effort.

As part of this item, the Mayor has submitted her Final Budget Modifications Message. The message describes the Mayor’s position that no changes are being recommended to the budget at this time and that Draft Budget be moved forward for consideration by the Council as the Proposed Budget in June.

FISCAL IMPACT:

The Fiscal Year 2024-25 Proposed Operating Expenditure Budget (inclusive of Transfers Out) is approximately $579 million of which the General Fund budget is $194.3 million. Public Safety continues to be the largest portion of the General Fund expenditure budget at $158.8 million.

This represents 81% of the total General Fund operating expenditure budget.

This year’s budget also includes the second year of the Measure H Spending Plan which includes proposed expenditures of $41.3 million. A breakdown of the overall Measure H spending has been provided for the Fiscal Year 2024-25 Measure H Spending Plan below:

Description Amount
FY 2024-25 Measure H Spending Plan
One-Time $ 15,982,850
Ongoing $ 17,218,051
Total Measure H Spending Plan $ 33,200,901
General Fund Budget Deficit Funding $ 8,168,584
Total FY 2024-25 Measure H Spending $ 41,369,485
All other active funds of the City are shown to be solvent and include adjustments to expenditures to maintain appropriate reserve levels.

The Proposed Budget can be found on the City’s website at the following link:
https://modestogov.com/ArchiveCenter/ViewFile/Item/3809 COMMITTEE RECOMMENDATION:

This Finance Committee approved and recommended forwarding the City Manager’s Draft Budget for Fiscal Year 2024-25 to Council for final review and adoption by a 3-0 vote on April 17, 2024, at the Finance Committee Budget Workshops.
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As other financial impacts develop throughout Fiscal Year 2024-25, staff will report back to Finance Committee and City Council for recommendation and approval of modifications to the adopted budget within the first quarter of the new fiscal year.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution combining the City Manager’s Draft Budget and the Mayor’s Final Budget Modifications into the Proposed Budget for Fiscal Year 2024-25 and noticing a public hearing to be held on June 4, 2024, for Council’s consideration and adoption of the Fiscal Year 2024-25 Proposed Budget and related actions.

Approved by:

Joseph P. Lopez, City Manager
Attachments:

1. Resolution Mayor’s Final Budget Modifications and Combining of Budgets

2. Mayor’s FY 2024-25 Final Budget Modifications

3. Fiscal Year 2024-25 Proposed Budget –
https://modestogov.com/ArchiveCenter/ViewFile/Item/3809 #21..
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1 MODESTO CITY COUNCIL
RESOLUTION NO. 2024-
RESOLUTION COMBINING THE CITY MANAGER’S DRAFT
BUDGET AND THE MAYOR’S FINAL BUDGET MODIFICATIONS
INTO THE PROPOSED BUDGET FOR FISCAL YEAR 2024-25, AND
NOTICING A PUBLIC HEARING TO BE HELD JUNE 4, 2024, FOR
COUNCIL’S CONSIDERATION AND ADOPTION OF THE FISCAL
YEAR 2024-25 PROPOSED BUDGET AND RELATED ACTIONS
WHEREAS, the Finance Committee heard the City Manager’s Draft Budget on April 15th, April 16th, and April 17th, 2024, through a series of Budget Workshops, and WHEREAS, the Finance Committee approved the City Manager’s Draft Budget with a 3- 0 vote and approved the budget to be moved on to Council for final review and adoption, and WHEREAS, the City’s Charter, Article XIII Section 1303 and Section 1304 requires that the Mayor has the opportunity to make any final budget modifications to the City Manager’s Draft Budget at least 45 days prior to the end of the fiscal year and adoption by City Council, and WHEREAS, the Mayor has presented her Final Budget Modifications Message of the City Manager’s Draft Budget to City Council and has presented no changes and recommended that the Draft Budget be moved forward to Council as the City of Modesto’s Fiscal Year 2024-25 Proposed Budget for adoption consideration, and
WHEREAS, the City of Modesto’s Fiscal Year 2024-25 Proposed Budget will be inclusive of the City Manager’s Draft Budget and the Mayor’s Final Budget Modifications and will be heard at a public hearing scheduled to be held on June 4, 2024.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby approves the combination of the City Manager’s Draft Budget as well as the Mayor’s Final Budget Modifications into the City of Modesto’s Fiscal Year 2024-25 Proposed Budget and that a public hearing will be held on June 4, 2024, for the adoption of the Fiscal Year 2024- 25 Proposed Budget.

The foregoing resolution was introduced at a regular meeting of the Council of the City #21..
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2 of Modesto held on the 14th day of May 2024, by Councilmember _________, who moved its adoption, which motion being duly seconded by Councilmember ______, was upon roll call carried and the resolution adopted by the following votes:

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ATTEST: ________________________________
DIANE NAYARES-PEREZ, City Clerk
(SEAL)
APPROVED AS TO FORM:

BY: _____________________________________
JOSE M. SANCHEZ, City Attorney
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4/23/2024 5:00:00 PM

OFFICE OF THE CITY CLERK

NOTICE OF SPECIAL MEETING
Please take notice that a special Closed Session meeting of the Council of the City of Modesto has been called pursuant to Section 2-1.02 of the Modesto Municipal Code to be convened on
TUESDAY, MAY 14, 2024 AT 4:45 PM
and after the regularly scheduled meeting in the Tenth Street Place, Chambers Conference Room, Basement Level, 1010 Tenth Street, Modesto, California.

Any and all of the following agenda items are subject to action being taken by the Modesto City Council.

The business to be considered at said City Council meeting shall consist of a Closed Session concerning the following:

CLOSED SESSION
CONFERENCE WITH LABOR NEGOTIATOR:
(Pursuant to Section 54957.6 of the Government Code) – MCEA Negotiator: Christina Alger
Employee Organization: Modesto City Employees Association CONFERENCE WITH LABOR NEGOTIATOR:
(Pursuant to Section 54957.6 of the Government Code) – MCMA Negotiator: Christina Alger
Employee Organization: Modesto Confidential & Management Association CONFERENCE WITH LABOR NEGOTIATOR:
(Pursuant to Section 54957.6 of the Government Code) – MPOA Negotiator: Christina Alger
Employee Organization: Modesto Police Officers’ Association CONFERENCE WITH LABOR NEGOTIATOR:
(Pursuant to Section 54957.6 of the Government Code) – MPNSA Negotiator: Christina Alger
Employee Organization: Modesto Police Non-Sworn Association CONFERENCE WITH LABOR NEGOTIATOR:
(Pursuant to Section 54957.6 of the Government Code) –MPMA Negotiator: Christina Alger
Employee Organization: Modesto Police Management Association #22..
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CONFERENCE WITH LABOR NEGOTIATOR:
(Pursuant to Section 54957.6 of the Government Code) – MCFFA Negotiator: Christina Alger
Employee Organization: Modesto City Firefighters Association CONFERENCE WITH LABOR NEGOTIATOR:
(Pursuant to Section 54957.6 of the Government Code) – Unrepresented Negotiator: Christina Alger
Employee Organization: Unrepresented Management and Confidential Employees

BY ORDER OF THE CHAIR
/S
Diane Nayares-Perez, City Clerk
Posted pursuant to Government Code Section 54956 on the bulletin board at Tenth Street Place on at by
date time signature
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Modesto City CouncilMay 14, 2024

Modesto City Council
May 14, 2024