City Council
Report
City Council Meeting: June 13, 2023
Agenda Item: 5.I
1 of 6
To: Mayor and City Council
From: David Martin, Director, Administration
Subject: Approval of agreements with Main Street BID regarding: Fiscal Agent, Disbursement and Revocable License
Recommended Action
Staff recommends that the City Council authorize the City Manager to:
1. Adopt a finding of no possibility of significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines.
2. Negotiate and execute the following agreements with the Main Street Business Improvement Association (MSBIA) for a term of five (5) years with two five-year renewal options that renew on the same terms and conditions:
a. a new Fiscal Agent Agreement to manage and administer the businessbased assessment fees and any other revenue collected for the promotion and marketing of the Main Street Business Improvement Area; and b. a new Revocable License Agreement which grants MSBIA a license to operate and maintain the decorative lights in the public right-of-way between Pico Boulevard and the southern City boundary, just south of Marine Street
c. a new Disbursement Agreement to administer the property-based assessments collected and use these funds in the Main Street Commercial District for the decorative lighting and sidewalk cleaning, in accordance with Resolution 10325 (CCS).
Summary
Since 2005, the Main Street Business Improvement Association (MSBIA) has administered the assessment funds that the Business Improvement District (BID) receives, through business- and property-based assessments, and MSBIA administers the operation and maintenance of the decorative lights. In order for MSBIA to continue these responsibilities, the following new agreements are required: a Fiscal Agent 2 of 6
Agreement, a Disbursement Agreement, and a Revocable License Agreement. Staff recommends that the term for each agreement and license be for five (5) years with two five-year options that renew on the same terms and conditions. These agreements are administered by the Economic Development Division and the Engineering and Street Services Division.
Discussion
Santa Monica has four (4) established BIDs – Downtown Santa Monica, Inc. (DTSM), Pico Improvement Organization (PIO), Montana Avenue Merchant Association (MAMA) and the Main Street Business Improvement Association (MSBIA). These BIDs were created to raise funds for marketing, supplemental cleaning services, and promotions--all factors that help to create more vibrant and viable business districts.
The Main Street BID was created in 1984 to finance promotion, advertising and events through a business-based assessment district. The City collects a special assessment from the businesses within each BID based on a formula created for that BID. The City retains five percent of the amount collected for its administrative expenses, and remits the remainder to a fiscal agent to be used by the BID Board of Directors for programs and projects that benefit their members.
The Main Street Business Area Festoon Lighting and Sidewalk Cleaning Assessment District (Assessment District) is a property-based assessment district that was formed in 2008 to finance additional sidewalk cleaning and to finance the ongoing operation and maintenance of the decorative lighting along Main Street. The decorative lighting was installed in 2005 along both sides of Main Street, between Pico Boulevard and the southern City boundary, just south of Marine Street using grant funds from the City.
The MSBIA is a non-profit corporation that represents the businesses on Main Street and contracts with the City to administer the assessment funds collected from businesses and property owners through the following agreements.
Fiscal Agent Agreement
The City collects a special annual assessment from the businesses within each BID based on a formula created for that BID. The City retains five percent of the amount 3 of 6
collected for its administrative expenses and remits the remainder to a fiscal agent to be used by the BID Board of Directors for programs and projects that benefit their members in accordance with the BID’s Bylaws. Fiscal agents:
1. Receive assessments from the City and deposit them into the BID’s bank account;
2. Prepare, sign and mail checks for the BID upon receiving approved invoices;
3. Provide monthly checking account and money market account reconciliation statements;
4. Provide monthly financial statement and cash flow statements to both the BID and the City; and
5. May prepare the BID’s annual tax returns.
At its September 13, 2005 meeting, and again at its January 22, 2013 meeting, Council authorized an agreement with the MSBIA to provide its own fiscal agent services and administer its assessment funds. The Main Street BID uses a fee-based bookkeeping firm and provides monthly and annual accounting reports to the City.
On August 15, 2013, the City and MSBIA entered into a Fiscal Agent Agreement (CCS 9689) which allowed MSBIA to manage and administer the Main Street BID assessment fees and any other revenue collected by the City in accordance with the terms of that Agreement and Ordinance Number 1940 (CCS). The Fiscal Agent agreement had an initial five-year term with five successive one-year option periods, thereby extending the term to August 15, 2023. Staff is requesting the City enter into a new Fiscal Agent Agreement for a five-year term with two five-year options.
License Agreement
The MSBIA has administered the operation and maintenance of the decorative lights since they were installed in 2005 using initial grant funds provided by the City. The decorative lights are hung from light poles along both sides of Main Street, beginning at Pico Boulevard and extending to the southern City boundary, just south of Marine Street (the “License Area”). The Main Street commercial district benefits from the decorative lighting as the lights help to enhance the evening atmosphere and the business vitality 4 of 6
in this retail and restaurant district. The MSBIA and City are in the process of evaluating replacing the existing decorative lighting with newer technology.
At its September 28, 2004 meeting, Council approved the grant of Mitigation Funds to MSBIA for the capital and operational costs associated with the installation, operation and maintenance of the decorative lighting system in the License Area. On October 12, 2004, the City and MSBIA entered into a Revocable License and Funding Agreement No. 8389 (CCS) which granted MSBIA $220,000 to install the decorative lighting and the agreement granted MSBIA a license to operate and maintain the lighting in the public right-of-way in the License Area. As the grant funds were expended, the businesses and property owners along Main Street indicated that they wanted to retain the decorative lights permanently. The property owners within the boundaries of the Main Street BID voted in 2008 to create a property-based assessment district and assess themselves to pay for the ongoing operation and maintenance of the lights as well as to pay for supplemental sidewalk cleaning services.
Currently, MSBIA collects approximately $55,000 annually with $35,000 of this amount reserved for maintenance of these lights and the remaining $20,000 of this annual amount is spent on sidewalk cleaning. A First Modification was executed on October 10, 2011, that updated the agreement to be a Revocable License Agreement with a tenyear term that expired on October 12, 2021. Staff is requesting the City enter into a new Revocable License Agreement for a five-year term with two five-year options. This would give MSBIA and City staff additional time to assess options for a capital improvement project to replace the existing lights due to their age and wear. In addition, MSBIA will be assessing funding options such as the creation of a new, expanded assessment district and work with the City to explore other potential sources of funds to assist with future lighting replacements.
Disbursement Agreement
The Disbursement Agreement (CCS 9041) is associated with the formation of the Assessment District. This agreement specifies the timeframe when the City will disburse the Assessment District funds to MSBIA and requires that the assessment proceeds shall be used by MSBIA in accordance with the Engineer’s Report and Resolution No. 10325 (CCS) (Resolution). At its July 22, 2008 meeting, Council adopted this Resolution which approved the formation of the Assessment District 5 of 6
consistent with the Engineer’s Report and approved levying the assessments for the Assessment District.
The term of the original Disbursement Agreement expired February 24, 2014. A first modification was executed on February 10, 2014 and extended the term for one-year to February 24, 2015. A second modification was executed on January 16, 2015, with an initial three-year term and five successive one-year option periods, thereby extending the term to August 15, 2023. Staff is requesting the City enter into a new Disbursement Agreement for a five-year term with two five-year options.
Environmental Review
The MSBIA agreements with the City are categorically exempt from CEQA pursuant to Section 15061(b)(3) of the CEQA Guidelines, which states that CEQA does not apply, “where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment.” The agreements establishes administrative parameters for the MSBIA, and therefore, it can be seen with certainty that the recommended actions would not result in adverse physical impacts on the environment, and as such, is categorically exempt from CEQA.
Past Council Actions
Meeting Date Description
01/22/2013
(attachment A)
Fiscal Agent Services for Business Improvement Districts 07/22/2008
(attachment B)
Formation of the Main Street Assessment District
09/13/2005
(attachment C)
Termination of VEDC Contract and Approval of Contract
with Main Street Improvement Association
09/28/2004
(attachment D)
Grant of Mitigation Funds to MSBIA
Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of the recommended actions. The City will continue to retain five percent of the amount collected as its administrative expense, and remit the remainder to the fiscal agent. 6 of 6
Prepared By: Erika Cavicante, Senior Development Analyst Approved Forwarded to Council
Attachments:
A. 2013 01.22 Fiscal Agent Services
B. 2008. 07.22 Formation of Main Street Assessment District C. 2005. 09.13 Termination of VEDC Contract and Approval of Contract with Main Street Business Improvement Association
D. 2004. 09.28 Grant of Mitigation Funds to MSBIA