SEE BELOW

Date:

May 27, 2003

=COUNCIL DISTRICT: 3

SNI AREA: St. James Square; University;

Josefa/Auzerais;Burbank/DelMonte

SUBJECT: ADOPTION OF A RESOLUTION TO APPROVE THE 2003-2004 BUDGET REPORT AND TO LEVY DOWNTOWN BUSINESS IMPROVEMENT DISTRICT ASSESSMENTS FOR FISCAL YEAR 2003-04

RECOMMENDATION

Adoption of a resolution to approve the Downtown Business Improvement District budget report for fiscal year 2003-04, as filed or as modified by the Council, and to levy the Downtown BID assessments for 2003-04.

BACKGROUND

The Downtown Business Improvement District (“BID”) was established by the Council in 1988 pursuant to the California Parking and Business Improvement Area Law (“BID Law”) to promote the economic revitalization and physical maintenance of the Downtown business district. The Council appointed the San José Downtown Association as the Advisory Board (“Advisory Board”) for the BID, to advise the Council on the levy of assessments in the BID and the expenditure of revenues derived from the assessments.

This year the Advisory Board has recommended an increase in assessments in the BID as described in Exhibit 1. Pursuant to BID Law, an annual public hearing is required in order to approve the annual budget report and levy the annual BID assessments. On April 22, 2003, the Council set May 27, 2003 at 1:30 p.m. as the date and time for the public meeting and set June 17, 2003 at 1:30 p.m. as the date and time for the public hearing on the proposed 2003-04 assessments. On May 27, 2003, the Council preliminarily approved the 2003-04 budget report as filed by the Advisory Board or as modified by the City Council and adopted a resolution of intention to levy the annual assessments for fiscal year 2003-04 for the BID. The 2003-04 budget report submitted to the Council on May 27, 2003 is attached to this memo as Exhibit 1.

In accordance with the BID Law, the City Clerk has published the required legal notice with regard to the levy of assessments for fiscal year 2003-04.

ANALYSIS

When a hearing is held under BID Law with regard to the levy of assessments of a BID, the City Council shall hear and consider all protests against the continued authorization of the BID, the extent of the area, the assessments, or the furnishing of specified types of improvements or activities. Protests may be made orally or in writing. Written protests must be filed with the City Clerk at or before the time fixed for the public hearing. BID Law requires that the proceedings shall terminate if protests are made in writing against the continued authorization of the BID by businesses or property owners in the proposed district that will pay a majority of the charges to be assessed. If the majority protest is only against the furnishing of a specified type or types of improvement or activity within the area, those improvements or activities shall be eliminated.

The Advisory Board has prepared a budget report (the “report”) attached as Exhibit 1, for the Council’s consideration as the budget for the Downtown BID for Fiscal Year 2003-04. As required by BID Law, the report has been filed with the City Clerk and contains, among other things, a list of the improvements and activities proposed to be provided in the BID in Fiscal Year 2003-04 and an estimate of the cost of providing the improvements and activities. The Advisory Board has recommended no change in the BID boundaries, but has recommended changes to the method and basis for levying assessments. In addition to the increase in assessments, the Advisory Board also proposes a change to the current BID property owner flat fee by creating a commercial landlord category that is scaled more equitably to anticipated benefit. Therefore, the proposed changes to assessments in the BID for Fiscal Year 2003-04 are outlined in Exhibit 1.

During the course or upon the conclusion of the public hearing the City Council may order changes in any of the matters provided in the Advisory Board’s report. At the conclusion of the public hearing the City Council may adopt a resolution confirming the report as originally filed or as modified by the Council. The adoption of the resolution constitutes the levy of the assessment for the fiscal year 2003-04.

PUBLIC OUTREACH

The budget for Fiscal Year 2003-2004 and the increase to the proposed method and basis for levying the annual assessments were reviewed and approved by the Advisory Board at a public meeting conducted on April 11, 2003.

COORDINATION

This memorandum has been coordinated with Finance-Treasury, the Redevelopment Agency’s General Counsel’s Office, the San José Downtown Association, and the City Clerk.

COST IMPLICATIONS

Approval of the proposed BID budget and the increase in assessments do not impact City revenue. BID assessments are restricted for use exclusively by the BID. It is anticipated that a healthy Business Improvement District will encourage growth of the retail community and consequently result in additional business tax and sales tax revenue for the City.

CEQA

CEQA: Exempt, PP03-05-165

PAUL KRUTKO

Director of Economic Development

Attachment