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APPROVE A RESOLUTION OF INTENTION FOR THE FORMATION OF THE DOWNTOWN STOCKTON COMMUNITY IMPROVEMENT DISTRICT AND AUTHORIZING BALLOTS FOR CITY-OWNED PROPERTY IN THE PROPOSED DISTRICT BE CAST IN FAVOR OF FORMATION
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a Resolution of Intention:
1. Expressing Council’s intent to form the Downtown Stockton Community Improvement District;
2. Authorizing and directing the City Manager, or designee, to sign the petitions and ballots for City-owned properties in the proposed district to be in favor of formation;
3. Accepting Petitions of Property Owners;
4. Preliminarily approving the Management District Plan and Engineer’s Report;
5. Approving the proposed Boundary Map;
6. Setting a date for a Public Hearing on the establishment of the Downtown Stockton Community Improvement District and the levy of assessments for September 23, 2025;
7. Providing for property owner ballots and notices of the public hearing to be mailed; and
8. Authorizing the City Manager, or designee, to take whatever actions are necessary and appropriate to carry out the purpose and intent of this Resolution.
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Summary
A Community Improvement District (CID) is a flexible financing tool to allow Stockton business districts new mechanisms to establish innovative ways of attracting, retaining, and expanding their businesses to remain competitive with other areas of the region. Formation of a CID is authorized under the City of Stockton’s Community Improvement District Ordinance 2022-03-12-1211 (Attachment A - SMC Ordinance #2022-03-22-1211). The levy of assessments on real property within the proposed district will support activities and improvements for the assessed properties, including Community Ambassadors, maintenance teams, landscape beautification, advocacy services, marketing, business development, and administration, throughout the district. The Downtown Stockton Community Improvement District (DSCID) has requested that the City of Stockton consider the formation of the district for a term of 20 years, beginning January 1, 2027.
DISCUSSION
Background
Local and state governments are often unable to provide specialized services to meet an area’s unique needs. A CID is a flexible financing tool for creating private-sector, self-governed management districts. These districts provide the means for enhanced maintenance, safety, marketing, management, and advocacy services through property assessments. Property owners pay these assessments directly as part of their annual tax bill. Funds raised through a CID cannot be diverted to government programs.
Currently, the Downtown Stockton Property and Business Improvement District (DSPBID) is one of two existing Property and Business Improvement Districts within the City of Stockton. The DSPBID was first established by Council resolution in 1997, with an initial term of five years. It was subsequently renewed by Council resolutions in 2002, 2007, and 2017. Presently, the DSPBID is set to expire on December 31, 2026. Downtown Stockton Alliance (DSA), the management organization for the DSPBID, requested to initiate the conversion/ establishment of the new CID to replace the current DSPBID during 2025, as the County has allocated funding to DSA to support the costs associated with the process. These funds must be spent prior to the end of December 2025. Failure to complete the CID process in advance of the December deadline will leave the DSA without a means of supporting the new CID establishment process. While the process is requested to be completed in 2025, the conversion from PBID to CID will not be effective until January of 2027.
Present Situation
The DSCID proponents have requested that the City consider the establishment of a new Community Improvement District (CID) allowed under the City’s CID ordinance, as recently amended by Ordinance No. 2022-03-22-1211 on March 22, 2022. A CID is a community-driven partnership with the City to improve the quality of life in neighborhoods and mixed-use commercial districts. The DSCID proposes a 20-year district term beginning January 1, 2027, as provided under the law. To initiate the process, the DSCID has complied with the required provisions, including the preparation of a Boundary Map (Exhibit 1 to the Resolution) showing the territory proposed to be included within the district.
Under the City’s ordinance, district formation requires submission of petitions from property owners in the proposed district representing more than 30% of the total assessments to be paid into the proposed DSCID. Once the 30% threshold is met, a Resolution of Intention for the district formation is presented to the City Council for consideration.
Upon the Council’s approval, assessment ballots and notice of public hearing are mailed to property owners within the proposed district. The notice shall contain the total amount of the assessment proposed to be levied, the assessment rate proposed, the reason for the assessment, the duration of the assessment, the basis upon which the amount of the assessment was calculated, and the time and date of a public hearing on the proposed assessment. A public hearing is held at least forty-five (45) days after mailed notice to property owners to receive public testimony and tabulate the ballots received. If the weighted majority of all returned mail ballots support district formation, the City Council may adopt a Resolution of Formation to levy the assessments on the benefiting parcels, and the DSCID will be formed.
In addition, a Management District Plan (MDP) must be adopted that specifies how the assessment funds are to be spent. Property owners establish the spending priorities and limits through the MDP. The DSCID MDP contains:
• District formation requirements, regulations, governance, and boundary map.
• The proposed examples of special benefit services, the percentage allocated, and how the district will be governed.
• Proposed funding sources, including proposed method and basis of levying the assessment presented.
• The time and manner of collecting the assessment.
• The specific number of years the district will levy the assessment.
• A list of assessed properties.
Further, the DSCID must prepare an annual report to the City Council outlining its accomplishments each year.
Written petitions were distributed to property owners of record beginning on March 1, 2025, along with an MDP summary describing the district boundaries, assessments, and services of the DSCID. On July 2, 2025, the DSCID delivered signed petitions to the City indicating support from 31.89% of the property owners. This percentage does not include City petitions, which will increase the percentage to 51.89% once the City is included. Only 30% support is required by law to adopt a resolution of intention and begin the district formation process. Submitted petitions are on file with the City Clerk.
MANAGEMENT DISTRICT PLAN
The MDP (Exhibit 2 to the Resolution) includes the district improvement and activity plan, assessment methodology, district rules, regulations and governance, implementation timetable, assessment roll of properties included, and other provisions required by law. The DSCID consists of approximately 150 blocks consisting of 841 parcels owned by 440 property owners, as identified in the MDP. The MDP includes a detailed map and full description of the boundaries of the District.
The DSCID will provide services funded by the assessments to specifically benefit the properties within the district that are above and beyond those provided by the City and other government agencies, including:
• Support increased commerce
• Enhance business attraction and retention
• Retain and increase commercial property rentals
• Attract new residential developments
• Enhance safety and cleanliness in the district
• Improve District identity
• Fund specialized beautification and enhanced services for the property owners, businesses, visitors, and residents within the district
The DSCID’s MDP gives property owners flexibility in determining the type and frequency of special benefit services that will be allocated on a year-to-year basis. As DSCID evolves, services needed one year may not be required the next. Therefore, “bundles” or categories of special benefit funding have been created and divided into three broad categories. Each bundle is allocated funding percentages with the flexibility to prioritize or minimize a service within each bundle. The following bundles of services and allocations are included in the MDP:
1. Clean, Safe and Beautiful - 77%
2. Business Development - 10%
3. Advocacy, Administration, Reserve - 13%
The assessment will be implemented beginning January 1, 2027. The County will collect the assessments annually from each assessed property owner and forward them directly to the DSCID. The projected annual budget for operations for the DSCID that property assessments will fund is $1,862,000.
The district renewal process involves a great amount of outreach, planning, organization, and documentation. The current DSCID has initiated the district formation process by contracting with a consultant, conducting stakeholder meetings, and developing the MDP and Engineer’s Report.
FINANCIAL SUMMARY
The MDP requires that local governmental agencies, including the City of Stockton, pay assessments for special benefits conferred to their property within the boundaries of the DSCID, pursuant to Article XIIID of the State of California Constitution.
The proposed assessments are calculated by a sum of the lot square footage plus the total building square footage. The initial annual rate for each parcel is shown in the table below. Assessment rates may be subject to yearly increases not to exceed 5% per year and shall not exceed the actual increases in costs and services.
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Assessment Rates: |
Lot + Building Sq.Ft. |
|
Commercial/Govt/Multi Family |
$0.07881 |
|
Res 1-3 Units/Non-Profit |
$0.04728 |
Total assessments for calendar year 2025/26 have been included in the approved budget. Fiscal Year 2024/25 actual assessments paid are as follows: General Fund $187,850.00; Parking Fund $105,987.00; Venues Fund $87,613.00; and Successor Agency $811.00.
Attachment A - SMC Ordinance 2022-03-22-1211