PURPOSE

The purpose of this item is for the City Council to consider the options available for the use of the outstanding fund balance of the former Downtown Burbank Business Improvement District.

BACKGROUND

In July 1994, the Downtown Burbank Business Improvement District No. 1 was formed as a tool for raising funds to promote the Burbank Village.  Business tenants, located in the District paid an assessment to the City that was based on their location within the District and the amount of annual gross retail receipts generated by the business.  Through a management contract with the City, the Downtown Burbank Stakeholders� Association (Stakeholders) was given the authority to administer the funds levied from the Business Improvement District.  From the inception of the District through June 30, 2003, the Stakeholders� Association administered the proceeds, creating programs and events in an effort to increase the commercial activity of the Burbank Village.  Each year, the City Council renewed the management agreement; however in June 2003, the City Council chose not to renew the contract, because the Property-Based Improvement District was created to replace the Business Improvement District.

After June 30, 2003, the Stakeholders� Association recognized that a fund balance of $7,049.43 existed; however, since the management agreement has expired, it was determined by the City Attorney�s Office that the funds could no longer be expended under the authority of the Stakeholders� Association.  At the February 10, 2004 City Council meeting, a check for this amount was presented to the City of Burbank by Mary Ann Sutliff, the former President of the Stakeholders� Association.  During the presentation of the check, Ms. Sutliff requested that the funds be used on a project to commemorate the work of the Stakeholders.  The proposal called for bronze lettering reading either �Downtown Burbank� or �Burbank Village�, being inlayed on the concrete pillars that are located on San Fernando Blvd. at Magnolia Avenue and on San Fernando at Verdugo Avenue (Exhibit A).  Although a formal vote was never made prior to the expiration of the administration agreement, Ms. Sutliff stated that she has since obtained roughly 30 signatures from former Stakeholder members indicating the former Association�s wishes to expend the funds on this use.  Since expiration of the Stakeholder contract, the Burbank City Council is the only body that has the authority to spend the funds. 

ANALYSIS

In accordance with state law and the FY 2002-03 Annual Levy Report, there are two options available for the use of these funds:

1) Consider spending the funds in accordance with the defined scope of responsibilities of the Business Improvement District and then disestablish the District.  When the City Council made the last levy of the Business Improvement District, it approved an Annual Levy Report that defines, among other things, the eligible uses for the assessment proceeds of the District.  The Report authorizes District funds to be used for the maintenance of public improvements and the promotional activities to be conducted by the District [and] may include but is not limited to:

• Promotion of public events that benefit businesses in the District and take place in public places within the area;

• [Support of] Any other activities that benefit businesses located and operating in the area;

• Management of parking, security, lighting, directional signage, decorations, banners, events, such as the �Summer Concert Series� and �Oktoberfest Fair� and book fairs and art shows; and

• Maintenance of public improvements, i.e. sidewalk cleaning, litter collection, and graffiti removal.

2) The second option involves disestablishing the Business Improvement District without spending the remaining funds, and instead refunding those monies back to the businesses that contributed the funds.  The California Streets and Highways Code Section 36550-36551 states that �upon disestablishment of an area, any remaining revenues derived from the levy of assessments�shall be refunded to the owners of the businesses then located and operating within the area��.  If the City Council chooses to refund the money, the Council would have to disestablish the district, then refund the money to the assessed in the same proportion that the businesses paid in the FY 2002-03 assessment.

This matter was presented to the newly formed Property-Based Improvement District Board during the Board�s monthly meetings of February 23, 2004 and March 15, 2004.  During the March 15, 2004 meeting, the Board invited Mary Ann Sutliff to participate in the discussion.  The Board had a number of questions and comments that included discussions on the allowable uses of the funds, the possibility for any outstanding debt or expense that may arise that has not been paid by the Stakeholders, and the compatibility of the proposal with the public improvements being planned for the area.  Additionally, the Board discussed whether or not the funds should be refunded to the businesses that were levied.

It was determined that it is unlikely that any new expense or claim will be made on the funds, however, a claim could be made at any time until the statute of limitations on such claims expire.  It was later determined by the City Attorney�s office that the statute of limitations will not expire until June 30, 2007.

There was also concern about whether the bronze lettering on the pillars is the appropriate use of the funds.  The Property-Based Business Improvement District plans to undertake a number of public improvements including streetscape improvements, but have yet to study the improvements in any detail.  The concern of the Board is that the bronze lettering on the pillars may ultimately be inconsistent with the proposed public improvements.  The Board concluded it will need more time to begin studying the proposed public improvements, before considering whether the Stakeholders� proposal is appropriate.

Finally, the Board concluded that given the turnover of businesses and the relatively small amount of remaining funds, it would be impractical to refund what may end up being a relatively small amount of money for each business.  The Board voted to study the matter and assist the City Council with determining the possible uses for the funds which staff would then bring back for Council consideration.              

CONCLUSION

Based on the information presented, there are two options to consider: 1) reimbursing the monies to those businesses that paid into the assessment; or 2) expending the funds on one or more of the allowable uses defined in the Annual Levy report.  If the first option is preferred, the City Council would disestablish the BID, then reimburse the money to those businesses in the Downtown, in the same proportion that payments were made.  If the second option is selected, the City Council has the authority to determine an appropriate use of the funds and expend them accordingly.  The Property-Based Improvement District Board offered to evaluate the possible uses for the funds.  Staff recommends allowing the Property-Based Improvement District Board to review the matter and suggest a possible use of the funds; thereafter, staff will return with a recommendation to the City Council.  Upon disbursement of the funds, staff would then return to the City Council to formally initiate the process of disestablishing the Business Improvement District.

FISCAL IMPACT

The $7,049.43 has already been received; therefore, there will be no fiscal impact.

RECOMMENDATION

It is recommended that the City Council direct staff to work with the Property-Based Improvement District Board to determine an acceptable use of the funds that is compatible with the overall public improvements that are planned for the Downtown and that staff return to the City Council once the Board has formulated a recommendation.

EXHIBITS

A         Proposal Letter from Mary Ann Sutliff, dated February 10, 2004

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