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APPROVE A RESOLUTION OF INTENTION FOR THE FORMATION OF THE MIRACLE MILE 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 Miracle Mile Community Improvement District;
2. Accepting Petitions of Property Owners;
3. Preliminarily approving the Management District Plan and Engineer’s Report;
4. Approving the proposed Boundary Map;
5. Setting a date for a Public Hearing on the establishment of the Miracle Mile Community Improvement District and the levy of assessments for September 13, 2022;
6. Providing for property owner ballots and notices of the public hearing to be mailed;
7. Authorizing and directing the City Manager, or designee, to sign the ballots for City-owned properties in the proposed district to be in favor of formation; 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 enhanced security and maintenance, landscape beautification, advocacy services, marketing, events, and administration, throughout the district. The Miracle Mile Community Improvement District (MMCID) has requested that the City of Stockton consider the formation of the district for a term of 20 years, beginning January 1, 2023.
DISCUSSION
Background
Local and state governments are often unable to provide specialized services to meet an area’s unique needs. A Community Improvement District (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 Miracle Mile Property and Business Improvement District (MMPBID) is one of two existing Property and Business Improvement Districts within the City of Stockton. The MMPBID was established by Council Resolution No. 07-0310 (Attachment B - Resolution No. 07-0310) on July 17, 2007, with an initial term of five years. It was subsequently renewed by Council Resolution No. 2012-06-26-1601 (Attachment C - Resolution No. 2012-06-26-1601) for an additional five-year term with an expiration date of December 31, 2017. Presently the MMPBID operates under the 3rd approved five-year term renewed by Council Resolution No. 2017-12-28-0801 (Attachment D - Resolution No. 2017-12-28-0801) with an expiration date of December 31, 2022.
On May 24, 2022, the City Council adopted Resolution No. 2022-05-24-1503, stating its intention to form the MMCID, accepting the petitions of property owners, preliminarily approving the Management District Plan and Engineer’s Report, approving a proposed boundary map, setting a date for a public hearing on July 26, 2022, providing for property owner ballots, and authorizing the City Manager to sign the ballot for all City-owned property which was proposed to be assessed in favor of the formation of the MMCID. Due to a mailing error, not all property owners were provided a timely ballot pursuant to Resolution No. 2022-05-24-1503. Therefore, the City Council is being presented with both a resolution rescinding Resolution No. 2022-05-24-1503 and this newly-proposed Resolution of Intention. Previously submitted petitions to initiate the district formation process are being accepted, as the district’s Management District Plan and Engineer’s Report remain unchanged since petitions were first circulated.
Present Situation
The MMCID 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 MMCID proposes a 20-year district term beginning January 1, 2023, as provided under the law. To initiate the process, the MMCID 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. The property uses within the boundaries of the proposed MMCID are a mix of retail, service, office, mixed-use, residential, public visitor related, cultural, and parking.
Under the City’s ordinance, district formation requires submitting petitions from property owners in the proposed district representing more than 30% of the total assessments to be paid into the proposed MMCID. 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 MMCID 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 MMCID 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 MMCID 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 April 20, 2022, along with an MDP summary describing the district boundaries, assessments, and services of the MMCID. On May 24, 2022, the MMCID delivered signed petitions to the City indicating support from 40.27% of the property owners; only 30% is required by law to adopt a resolution of intention and begin the district formation process. Property owners may submit petitions to the Miracle Mile until July 12, 2022. These petitions will be on file with the City Clerk.
MANAGEMENT DISTRICT PLAN
The MDP (Exhibit 2 to the resolution) includes the proposed boundary map of the MMCID, 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 MMCID consists of approximately 25 square blocks consisting of 155 parcels owned by 95 property owners, as identified in the MDP. The MDP includes a detailed map and full description of the boundaries of the District.
The MMCID 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 MMCID’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 MMCID 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 four 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. Civil Sidewalks (clean & safe) - 60%
2. District Identity and Placemaking - 15%
3. Administration/District Management - 22%
4. Contingency/Reserve - 3%
The assessment will be implemented beginning January 1, 2023. The county will collect the assessments annually from each assessed property owner and forward them directly to the MMCID. The projected annual budget for operations for the MMCID is $230,550, which property assessments will fund.
The district renewal process involves a great amount of outreach, planning, organization, and documentation. The current MMCID 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 MMCID, pursuant to Article XIIID of the State of California Constitution.
The proposed assessments are a sum of the building square footage, lot size, and linear frontage costs per parcel, per Benefit Zone. 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.
|
Property Variable |
Zone 1 |
Zone 2 |
Zone 3 |
Zone 4 |
|
Building Square Footage |
$0.13 |
$0.07 |
$0.11 |
N/A |
|
Lot/Parcel Size |
$0.13 |
$0.07 |
$0.11 |
N/A |
|
Linear Frontage |
N/A |
N/A |
N/A |
$2.00 |
There are 11 City-owned properties along the MMCID. Total assessment for calendar year 2023 is $21,639.84 and will be paid from the Administrative Services Department General Fund, General Administration Division, Tax Collection Costs program account.
Attachment A - SMC Ordinance 2022-03-22-1211
Attachment B - Resolution No. 07-0310
Attachment C - Resolution No. 2012-06-26-1601
Attachment D - Resolution No. 2017-12-28-0801