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Home My WebLink About03 - CdM BID Reso to Establish Amnesty Programo��EWPORT == CITY OF 6 = NEWPORT BEACH C9�F00.�P City Council Staff Report Agenda Item No. 3 October 22, 2013 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: City Manager's Office Dave Kiff, City Manager 949 - 644 -3002, dkiff @newportbeachca.gov PREPARED BY: Mary Locey, Public Information Specialist APPROVED: "I_ Ate\ TITLE: Resolution of Intention to Establish a Penalty Amnesty Program to Forgive Businesses that Pay Certain Delinquent Assessments for the Corona del Mar Business Improvement District from Liability for Penalties ABSTRACT: The Corona del Mar Business Improvement District (Corona del Mar BID) Board of Directors supports the establishment of a penalty amnesty program to forgive member businesses that have fallen behind in paying BID assessments and have incurred financial penalties. RECOMMENDATIONS: 1. Adopt Resolution 2013 - 71, a Resolution of Intention establishing a penalty amnesty program to forgive businesses that pay certain delinquent assessments for the Coronal del Mar Business Improvement District from liability for penalties. 2. Set the public hearing date for November 12, 2013. FUNDING REQUIREMENTS: The City of Newport Beach, or its approved designee, collects the member assessments on behalf of the Corona del Mar BID and remits the monies back to the BID for funding the activities described in its FY 2013 - 2014 annual report. In addition to the assessments, the City's FY 2013 - 2014 budget includes sufficient funding for providing $40,000 to the BID for marketing and public area improvements. The proposed budget also includes $10,000 payable to Newport Beach & Company should the BID decide to accept website, branding and other marketing assistance from the marketing organization. Resolution of Intention to Establish a Penalty Amnesty Program to Forgive Businesses that Pay Certain Delinquent Assessments for the Corona del Mar Business Improvement District from Liability for Penalties October 22, 2013 Page 2 DISCUSSION: The Corona del Mar Business Improvement District (BID) was formed pursuant to the Parking and Business Improvement Area Law of 1989 (1989 Law), codified in Streets and Highways Code Sections 36500 et seq., for the purpose of financing activities and programs to benefit businesses located and operating in the area. The Corona del Mar BID territory encompasses the area generally located on East Coast Highway from Hazel Drive to Avocado Avenue in Corona del Mar. (Boundary Map is attached as Exhibit A.) On July 14, 1997, the City Council adopted Ordinance No. 97 -24, establishing the Corona del Mar BID and the method for levying assessments and penalties on the member businesses. On July 13, 1998 and August 23, 1999, the City Council adopted Ordinance No. 98 -15 and Ordinance 99 -18, respectively, modifying the basis for levying assessments and the penalty provisions. The assessments are mandatory levies that all businesses located within the Corona del Mar BID's boundaries are required to pay. Early in the fiscal year, Corona del Mar BID members are mailed invoices for their annual, mandatory assessments. If the assessment is not paid within 30 days, penalty charges are added to the amount owed. The established penalty for delinquent BID assessments mirrors what the City charges for delinquent business license taxes pursuant to NBMC Section 5.04.260. That is, 25% of the levy due is added each month past the original due date for a total penalty amount not -to- exceed 100% of the assessment due. The Corona del Mar BID has approximately 350 member businesses. Of those, 75 are currently delinquent in paying their BID assessments. Currently, the BID is owed nearly $94,000 ($51,060 in original assessments and $42,832 in penalties incurred). This figure does not reflect any late assessments and penalties incurred this fiscal year. The amnesty program would pertain to the penalties incurred. It would not forgive the delinquent assessments. The Corona del Mar BID has many projects and programs that directly benefit its members (as presented to the City Council in its Fiscal Year 2012 -2013 Annual Report). These activities are funded through member assessments and City funding. The Corona del Mar BID Board of Directors believes an assessment penalty amnesty program will help to increase member compliance with assessment payments. Additional monies received will help the Corona del Mar BID expand its activities and member benefits. On July 25, 2013 the Corona del Mar BID Board of Directors voted to approve a recommendation to the City Council to adopt a penalty amnesty program to forgive BID members past due penalties if full payment of past due assessments are made within 2 Resolution of Intention to Establish a Penalty Amnesty Program to Forgive Businesses that Pay Certain Delinquent Assessments for the Corona del Mar Business Improvement District from Liability for Penalties October 22, 2013 Page 3 the penalty amnesty period of 30 days. On September 26, 2013, the BID Board voted to amend the length of the amnesty period to a total of 60 days. The Corona del Mar BID Board recommends that the City commence collections proceedings on all past due assessments and delinquencies that remain unpaid following expiration of the amnesty program. Finally, a scrivener's error in the original Ordinances establishing the BID contained an incorrect Municipal Code reference. The prior reference to Chapter 5.08 will be corrected to read Chapter 5.04. Therefore, City staff is recommending adoption of Resolution 2013 - 71 , a Resolution of Intention establishing a penalty amnesty program to forgive businesses that pay certain delinquent assessments for the Corona del Mar Business Improvement District (Attachment B) and setting the public hearing date for November 12, 2013. A full copy of the Resolution of Intention, if adopted, will be mailed to each BID business within seven days of adoption. ENVIRONMENTAL REVIEW: Staff recommends the City Council find this action is not subject to the California Environmental Quality Act ( "CEQA ") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. NOTICING: The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item). Submitted by —VV— b2vtil- Mary Locey Public Information Specialist Attachments: A. CdM BID Boundary Map B. Resolution of Intention 2013 - 71 3 RESOLUTION NO. 2013- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH, CALIFORNIA, DECLARING ITS INTENTION TO ESTABLISH A PENALTY AMNESTY PROGRAM TO FORGIVE BUSINESSES THAT PAY CERTAIN DELINQUENT ASSESSMENTS FOR THE CORONA DEL MAR BUSINESS IMPROVEMENT DISTRICT FROM LIABILITY FOR PENALTIES WHEREAS, on July 14, 1997, the City Council of the City of Newport Beach ( "City Council ") adopted Ordinance No. 97 -24, establishing the Corona del Mar Business Improvement District ( "BID ") pursuant to the Parking and Business Improvement Area Law of 1989, California Streets and Highways Code Section 36500 et seq.; and WHEREAS, on July 13, 1998 and August 23, 1999, the City Council adopted Ordinance No. 98 -15 and Ordinance No. 99 -18, respectively, modifying the basis for levying assessments in the BID and the penalty provisions; and WHEREAS, each year since establishment of the BID, the City Council has renewed the BID and confirmed the levy of assessments and penalties; and WHEREAS, on June 11, 2013, the City Council adopted Resolution No. 2013 -46, declaring its intention to renew the BID, levy assessments for the fiscal year July 1, 2013 through June 30, 2014, and restating the penalty provisions for delinquent payments; and WHEREAS, there are approximately 350 businesses within the BID, of which approximately 75 are delinquent in the payment of their assessments and /or penalties on their delinquencies; and WHEREAS, the total amount of delinquent assessments is approximately Fifty -One Thousand Sixty Dollars and 75/100 ($51,060.75) and the total amount of penalties incurred is approximately Forty -Two Thousand Eight Hundred Thirty Two Dollars and 561100 ($42,832.56) through Fiscal Year 2012/2013; and WHEREAS, the City Council desires to encourage BID member businesses to pay delinquent assessments and bring their accounts up to date by offering a one -time exemption from penalties on delinquent assessments, if said delinquent assessments are paid in full within the time frame established by the City Council; and WHEREAS, after the time frame established for the penalty amnesty program has expired, the City Council desires to enforce existing provisions Ordinance Nos. 97 -24, 98 -15 and 99 -18 relating to collection of debts to the City; and Resolution No. 2013 - Corona del Mar Business Improvement District -1- 5 WHEREAS, the City Council desires to correct a scrivener's error in Ordinance No. 98 -15 relating to the collection of unpaid BID assessments. NOW, THEREFORE, the City Council of the City of Newport Beach resolves as follows: Section 1: The City Council hereby declares its intention to establish an amnesty program to forgive penalties for past due BID assessments ( "BID Penalty Amnesty Program ") under the following conditions: A. The BID Penalty Amnesty Program shall commence upon the effective date of the ordinance adopting the program and terminate at the close of business on February 28, 2014. B. The delinquent assessments qualifying for the BID Penalty Amnesty Program shall be for the Fiscal Years commencing July 1, 1997 and ending June 30, 2014 only ( "Amnesty Period "). C. All penalties assessed upon a delinquent BID assessment pursuant to Ordinance Nos. 97 -24, 98 -15, 99 -18 and related resolutions, shall be forgiven upon application by a business if all delinquent BID assessments for a specific business, if any, are paid in full during the BID Penalty Amnesty Program. D. The City Finance Director or his /her designee shall administer the BID Penalty Amnesty Program. Section 2: Penalty for Delinquent Payment. Section 6 of Ordinance No. 98 -15 shall be amended in its entirety to read as follows: The penalty for delinquent payments shall be equal to that established for delinquent business license taxes pursuant to Chapter 5.04 of the Municipal Code, requiring that a penalty amount of twenty -five percent (25 %) shall be added on the last day of each month after the due date thereof, provided that the amount of such penalty to be added shall in no event exceed one hundred percent (100 %) of the assessment amount due. BE IT FURTHER RESOLVED, that the City Council of the City of Newport Beach shall conduct a public hearing on November 12, 2013 at 7:00 p.m., or as soon thereafter as this matter may be heard, in the Council Chambers located at 100 Civic Center Drive, Newport Beach, California, at which time the City Council will hear all interested persons for or against the establishment of the BID Penalty Amnesty Program. Protests may be made orally or in writing, but if written shall be filed with the City Clerk at or before the time fixed for the hearing and shall contain sufficient documentation to verify business ownership within the BID. If written protests against the establishment of the BID Penalty Amnesty Program are received by the owners of businesses within the BID that owe fifty percent (50 %) or more of the total assessments levied for Fiscal Year 2013/2014, no further proceedings on that matter shall be taken Resolution No. 2013 - Corona del Mar Business Improvement District -2- 6 for a period of one year from the date of the finding of a majority protest by the City Council. The City Clerk shall cause this Resolution of Intention to be published once in a newspaper of general circulation in the City at least once seven (7) days before the public hearing. This City Clerk shall mail a complete copy of this Resolution of Intention by first class mail to each business owner of record within the BID within seven (7) days after its adoption. Section 3: The City Council finds the adoption of this resolution is not subject to the California Environmental Quality Act ( "CEQA ") pursuant to Section 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential to have a significant effect on the environment. Section 4: This resolution shall take effect immediately upon its adoption by the City Council and the City Clerk shall certify the vote adopting the resolution. ADOPTED this _ day of October, 2013. ATTEST: Leilani I. Brown, City Clerk By: Keith D. Curry, Mayor Resolution No. 2013 - Corona del Mar Business Improvement District -3- 7