CITY OF SAN MATEO
CITY OF SAN MATEO
Agenda Report
City Hall
330 W. 20th Avenue
San Mateo CA 94403
www.cityofsanmateo.org
Agenda Number: 18 Section Name: PUBLIC HEARING Account Number: 10-1311 File ID: 26-11130 TO: City Council
FROM: Alex Khojikian, City Manager
PREPARED BY: City Manager's Office
MEETING DATE: May 18, 2026
SUBJECT:
Downtown Business Improvement Area – Annual Renewal
RECOMMENDATION:
Adopt a Resolution to Levy the Annual Assessments for the Downtown Business Improvement Area for fiscal year 2026-27.
BACKGROUND:
The Downtown Business Improvement Area (DBIA) was formed in 1986 for the purpose of improving Downtown San Mateo and promoting businesses within the area. The Downtown San Mateo Association (DSMA) has served as the DBIA administrator since its formation. The DSMA provides the City Council with a report of its activities and expenditures for the previous fiscal year and proposes an assessment schedule for the upcoming fiscal year, as required by the California Street and Highways Code Section 36533. In April 2026, the DSMA submitted its annual report, incorporating a summary of fiscal year 2025-26 activities and proposed program and budget for fiscal year 2026-27 (included as Attachment 2).
Before the City Council may act on the DSMA’s request to renew the DBIA assessments, the request must be considered at two City Council meetings. At the May 4, 2026, meeting, the City Council accepted the DSMA’s annual report, adopted a Resolution of Intent to Levy the Annual Assessment, and set a public hearing for May 18, 2026. At this second meeting, the City Council is being asked to adopt the Resolution levying the annual assessment (included as Attachment 1).
The DSMA continues to strengthen its role as a champion for Downtown businesses and the community. In 2022, the City Council updated Downtown business assessments, the first change since 2009, making them more equitable and increasing funding for long-term sustainability. This allowed the DSMA to expand operations, hire an Executive Director in 2023, and strengthen partnerships, resulting in more coordination, events, and resources for Downtown.
Key Accomplishments, 2025–2026:
• Engaged 80+ Downtown merchants in DSMA-led events and activations • Supported the opening of 50+ new businesses in Downtown San Mateo • Deployed $100K for Downtown clean-up and beautification efforts • Grew DSMA’s Facebook audience to 10,000 followers
• Had over 53,000 visits to DSMA.org
• Generated 1.7 million Facebook content views
• Expanded Instagram reach to 55,000 accounts
• Continued the annual Lunar New Year celebration, attracting hundreds of visitors to Downtown businesses • Relaunched the Head West Marketplace as a monthly retail market on the pedestrian mall • Expanded the Boba Day celebrations
CITY OF SAN MATEO
Financial Overview:
Fiscal Year 2025–26 marks DSMA’s third year operating under the updated assessment structure approved by the City Council. Revenue in FY 2023–24 ($443,000) exceeded projections due in part to an $11,000 grant and adjustments related to assessment billing. Revenue in FY 2024–25 declined as those assessments were reconciled, with FY 2025–26 revenues ($417,000) expected to more closely align with intended assessment levels.
Event sponsorships provided an additional revenue stream. As contributions to DSMA are not tax-deductible, sponsorship fees are intentionally kept low and function primarily as a marketing and engagement tool for BID members. While these funds help offset event costs, they do not fully cover expenses.
The following key investments reflect DSMA’s focus on marketing, activation, and district maintenance for FY 2026-27:
Funding for community events is increasing from $35,000 to $40,000 to enhance recurring events and allow for additional pop-up activations.
Advertising and promotion is budgeted at $60,000 to expand digital and print outreach. Civic partnership investments include an increase of $25,000 for Downtown cleaning, power washing services, and beautification projects to enhance the district’s overall appeal. Payroll and professional services reflect a modest increase to accommodate a cost-of-living adjustment for the Executive Director, and include a contingency to address unanticipated expenses.
DSMA maintains approximately $350,000 in reserves (as of March 27, 2026), held in a money market account and a certificate of deposit. These reserves have historically been used to support Downtown businesses during periods of reduced assessments, such as during COVID-19. Maintaining a healthy reserve provides flexibility to respond to future economic uncertainty and continue supporting the business community. As part of DSMA’s due diligence, a financial review of fiscal years 2024 and 2025 was conducted (Attachment 3). While this review does not constitute a full audit, it indicates that DSMA remains financially stable, with strong liquidity, declining liabilities, and positive operating cash flow.
The review found the organization is well positioned to meet its ongoing operational needs while managing revenue variability and expense trends.
Finally, DSMA benefits from office space provided by the City of San Mateo, allowing resources to be redirected toward programs and services. While DSMA does not utilize City equipment, the shared space supports close coordination with City staff and Downtown stakeholders. DSMA appreciates the City’s continued partnership and support.
Next Steps
After the Council adopts the Resolution of Intent to Levy the Annual Assessments (Attachment 1), a notice will be published in the newspaper announcing the public hearing for no less than seven days prior to the meeting on May 18, 2026. According to Streets and Highways Code Section 36535, if written protests are submitted by business owners in the DBIA, and these protests collectively represent 50 percent or more of the proposed assessments, no additional actions to impose the assessments will occur for a period of one year. Any written protests received will be provided at the May 18, 2026 Council meeting.
At the May 18th public hearing, Mackenzie Jakoubek, Executive Director of the DSMA, will provide an overview of DSMA’s accomplishments and will be available to address any questions from the City Council and the public prior to Council consideration of levying the assessment for the next fiscal year.
BUDGET IMPACT:
The levying of the annual DBIA assessment does not have an impact on the General Fund.
ENVIRONMENTAL DETERMINATION:
This item is not a project subject to CEQA, because it is a government fiscal activity which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. (CEQA Guidelines Section 15378(b)(4).)
CITY OF SAN MATEO
NOTICE PROVIDED
All meeting noticing requirements were met. Pursuant to California Streets and Highways Code Section 36534, a notice for the public hearing was published in the San Mateo Daily Journal at least seven (7) days prior to the May 18, 2026 City Council hearing.
ATTACHMENTS
Att 1 – Proposed Resolution
Att 2 – DSMA Annual Report 2025-2026
Att 3 – Financial Review
Att 4 – Support Letters
STAFF CONTACT
Zachary Reda, Senior Management Analyst
[email protected]
(650) 522-7000