Business Improvement District Assessment Billing Proposal

Business Improvement District Assessment Billing Proposal Our goal is to: a) Stabilize the financial status and the operating revenues of the BID in order to fulfill the mission of the DBA and mandate of the City BID ordinances. b) Create a more efficient and simplified billing process. c) Normalize the rates and services of the Core and Outer-Core. d) Rewrite the BID City Ordinance to include clarity of billing criteria and enforcement. e) Remove the conflict between downtown businesses and the DBA by casting the Association as a service provider, rather than a collection agency. Page Page 1

Background The Downtown Boise Association (DBA) is a non-profit organization designated by the City of Boise to administer the Downtown Boise Business Improvement District (BID). A Business Improvement District is a publicly sanctioned, yet privately directed organization that supplements public service to improve shared, geographically defined, outdoor public spaces. BIDs enhance the safety, cleanliness, image and competitiveness of city centers. There are at least 1,000 BIDs in north American with approximately six located in Idaho. Under Idaho Statute, Title 50 Municipal Corporations Chapter 26 defines Business Improvement Districts in the State of Idaho. On June 23, 1987 the Mayor and City Council of Boise passed Resolution # 9293 declaring among other things the intent of the City of Boise to create a Downtown Business Improvement District. By resolution of the Mayor and Council adopted the resolution. Pursuant to Idaho Code section 50-2611, the City designated the Downtown Boise Association to administer the operation of the Downtown Business Improvement District. Ordinance 5019 was signed by City Council on July 7, 1987. In 2003, City Council adopted Ordinance 6212 which provided for a base rate designated to the marketing of the district All businesses that locate within the district (generally bounded by 5th, State, 13th and Myrtle Streets) are subject to an annual assessment from the City of Boise for the BID. Tenants are assessed based on complicated formula of square footage, location and type of business. This rate sheet was established in 1987. A copy of the rate sheet and BID boundary map are included. Over 700 tenants and/or spaces are tracked in the district for billing purposes. The initial annual billing is sent out in January of each year following a physical inventory of downtown buildings and spaces, and a voluntary building audit that is provided by building owners. Quarterly reminders and pro-rated bills are sent out throughout the year including reminder letters in the 4 th Quarter for delinquent accounts. Delinquent accounts are sent to a collection agency. Page Page 2

The Downtown Boise Association provides the following services to businesses in the BID: Services: The DBA manages the "Clean Team" which provides supplemental cleaning seven days a week for downtown sidewalks, trash removal and manages the flower planters located throughout downtown. Over 400 flower pots are planted in May and are maintained till early November. The DBA provides supplemental snow removal* for downtown sidewalks whenever 1" or more snow accumulates. (*snow removal is the primary responsibility of property owners) 2080 Hours per year in the 60 Block BID Trash Removal 7 days a week Hot Spots daily (Old Boise, BoDo and 8 th Street.) 420 Planters filled annually Banners throughout downtown on the historic lamp posts Holiday Decorations installed in November and December Events: The DBA organizes downtown events such as Alive After Five, the Twilight Criterium, Downtown Urban Living Tour and the Holiday Tree Lighting Celebration. Events like Alive After Five also serve as a revenue source for the DBA and create vibrancy for downtown Boise. The DBA also organizes and markets downtown events aimed at the restaurant & retail sector such as First Thursday, Dine Out Downtown Boise Restaurant Week, Christmas in the City and a Mother s Day campaign. An estimated 100,000 people attend DBA events annually. Alive After Five 17/18 (50,000) First Thursday 12 (24,000) Holiday Tree Lighting 1 (4,000) Twilight Criterium 1 (15,000) Christmas in the City - City Santa 1,800 Mother s Day Raffle 1 (1,200) State of Downtown Annual Meeting (400) Downtown Bronco Shuttle (12,000) Dine Out Downtown Boise Restaurant Week (19 Restaurants/1 Week) Downtown Boise Urban Living Tour (300+ per location) Marketing: The DBA supports a downtown general marketing campaign, promoting downtown as a Shopping, Dining, Arts & Entertainment destination, through designing and producing the Downtown Map & Directory and budgets annually to purchase T.V., Radio and Print supporting shopping, dining, arts and entertainment throughout the year. The DBA manages a comprehensive gift card program aimed at both general public distribution and major employer incentive programs. In addition the DBA manages an online presence at www.downtownboise.org, and a social marketing campaign through Facebook and Twitter. Gift Card 7,000 sold annually - $2.4 million cards funded since 2003 Map & Directory 75,000+ distributed annually Website 92,845 visits per year Social Media Twitter - 5,100 Followers, Facebook 3,300 Friends Traditional Media Radio, Print & TV - $80K+ per year e-news 3,300 email updates monthly Page Page 3

Advocacy: The DBA is recognized by Boise City Council as the primary advocate on downtown issues and actively engages in downtown advocacy on behalf of the membership. This enables the DBA to take leadership roles in downtown issues that impact the downtown economy such as parking, access and transportation; vending, vagrancy, noise; new business attraction, business retention, vacancy rates and other economic development issues. Liaison between various organizations and downtown businesses. City Events Team Coordination and Resource for local event organizers VRT Multi-Modal Center Planning City of Boise Ordinances Panhandling, Noise, Graffiti, Valet etc Downtown Neighborhood Association Boise Metro Chamber Advisory Board Boise Centre Marketing Advisory Committee WeCar Car Sharing Program Traffic Box Art Program Boise Police Department Project Downtown Communication: The DBA supports and maintains a web site located at www.downtownboise.org designed to promote all aspects of downtown including downtown shopping & dinning opportunities, new business attraction, DBA member services, and current downtown news & information. The DBA hosts member forums on a monthly basis, including a new member forum, a property owner/manager forum and a restaurant/retail forum. An e-newsletter is sent to downtown businesses on a weekly basis keeping business owners and managers informed of upcoming events and downtown happenings. Management & Oversight: The Downtown Boise Association is managed by a voluntary board of directors that is made of up representatives from the following sectors: Property Owner, Retail and Service, Restaurant, Lodging and Entertainment, Professional and Ex-Officio Directors that represent major downtown stakeholders including City Council & City Mayor s Office, CCDC, Boise Centre, BSU, St. Luke s, ACHD and Boise Police Department. The staff of three includes an Executive Director, a Service and Events Manager and a Membership Services Coordinator. Financial Synopsis: The DBA manages an annual budget of approximately $780,000. The assessment income is approximately 40% of that income with the balance made up from event income, sponsorships, advertising sales, grants and voluntary contributions from sources like CCDC and GBAD. Alive After Five makes up 32% of the annual income which is from beer/wine/soda sales and sponsorships. Alive After Five income is reliant on good weather and beverage sales. In other words we are always just a few bad weather days away from financial loss. Page Page 4

Assessments Billing Background: Annual assessment bills are sent to the tenants in the Core and OuterCore, and to property owners in the OuterZone in January of each year. Statements and pro-rated bills are sent out quarterly. See attached Rate Sheet. The square foot rate has not changed since the inception of the district in 1987. In 2003 a base rate was added to be used primarily for marketing purposes. An average of nearly $23,500 is written off each year in adjustments due to incorrect square foot data, business moves in and around the district, and business openings and closings. Since a large percentage of the assessments are billed to tenants, and tenants often change without our knowledge, we are required to adjust the billings in order to comply with approved rate structures. Our inability to maintain current tenant data puts the Association at a disadvantage in terms of providing accurate financial data. Additionally, we have written off an average of almost $17,800 per year as bad debt due to bankruptcies or uncollectible dues. (2005 2011) Note that $44,031 was written off in early 2012 (not reflected on the table below) as bad debt which will increase the average bad debt written off to over $25,000 per year. We average $69,500 in year end Accounts Receivable, which includes prior year receivables and collection accounts. Our current 2011 Year End AR balance is comprised of $64,071 in collectible assessments, and $40,573 of collections accounts. Year end A/R balances have experienced significant increases over the past four years. The following table provides a summary view of the Association s financial experience during the past seven years, and through December 31 of the current year. The next two tables provide additional detail. Annual Assessment Activities Yr Yr End Bal Fwd Net Assessments Total Assess Receivable Total Collections Ending A/R 2005 $ 41,849.37 $ 287,737.09 $ 329,586.46 $ 294,426.36 $ 35,160.10 2006 $ 35,160.10 $ 311,454.37 $ 346,614.47 $ 305,842.52 $ 40,771.95 2007 $ 40,771.95 $ 335,194.86 $ 375,966.81 $ 334,426.46 $ 41,540.35 2008 $ 41,540.35 $ 333,821.58 $ 375,361.93 $ 325,229.42 $ 50,132.51 2009 $ 50,132.51 $ 343,261.43 $ 393,393.94 $ 295,983.62 $ 97,410.32 2010 $ 97,410.32 $ 313,554.30 $ 410,964.62 $ 294,358.01 $ 116,606.61 2011 $ 116,606.61 $ 318,335.75 $ 434,942.36 $ 330,298.46 $ 104,643.90 Total $ 423,471.21 2,243,359.38 $ 2,666,830.59 $ 2,180,564.85 $ 486,265.74 Average Per Year $ 60,495.89 320,479.91 $ 380,975.80 $ 311,509.26 $ 69,466.53 Page Page 5

Annual Assessment Activities Yr Yr End Bal Fwd Current Yr Asses Adjustments Bad Debt Total Assess Receivable 2005 $ 41,849.37 $ 354,268.03 $ (60,575.02) $ (5,955.92) $ 329,586.46 2006 $ 35,160.10 $ 357,430.88 $ (35,566.33) $ (10,410.18) $ 346,614.47 2007 $ 40,771.95 $ 359,262.24 $ (9,905.05) $ (14,162.33) $ 375,966.81 2008 $ 41,540.35 $ 365,653.26 $ (15,462.98) $ (16,368.70) $ 375,361.93 2009 $ 50,132.51 $ 368,911.65 $ (6,272.68) $ (19,377.54) $ 393,393.94 2010 $ 97,410.32 $ 358,791.87 $ (13,221.41) $ (32,016.16) $ 410,964.62 2011 $ 116,606.61 $ 350,642.96 $ (23,562.74) $ (8,744.47) $ 434,942.36 Total $ 423,471.21 $ 2,514,960.89 $ (164,566.21) $ (107,035.30) $ 2,666,830.59 Average Per Year $ 60,495.89 $ 359,280.13 $ (23,509.46) $ (17,839.22) $ 380,975.80 Collections Ending Assessment Receivables Current Yr Billings Prior Years' Billings Total Collections Current Receivable In Collection Ending A/R $ 276,648.64 $ 17,777.72 $ 294,426.36 utd utd $ 35,160.10 $ 290,152.25 $ 15,690.27 $ 305,842.52 utd utd $ 40,771.95 $ 317,053.52 $ 17,372.94 $ 334,426.46 utd utd $ 41,540.35 $ 317,596.42 $ 7,633.00 $ 325,229.42 utd utd $ 50,132.51 $ 287,782.25 $ 8,201.37 $ 295,983.62 utd utd $ 97,410.32 $ 279,318.09 $ 15,039.92 $ 294,358.01 utd utd $ 116,606.61 $ 299,101.54 $ 31,196.92 $ 330,298.46 $ 64,070.89 $ 40,573.01 $ 104,643.90 $2,067,652.71 $ 112,912.14 $ 2,180,564.85 $ 486,265.74 $ 295,378.96 $ 16,130.31 $ 311,509.26 $ 69,466.53 Page Page 6

BID Financial History Overview: As the following table illustrates, assessment revenues have not traditionally been sufficient to cover our core operating expenses. Over the past seven years, assessments have covered between 55% and 69% of our basic costs of doing business. Events and Other Income provide the additional source of income needed to fill a funding gap that has ranged from nearly $133,000 to over $236,000 during recent years; this shortfall averaged almost $186,000 from 2005 to 2011. Additionally, reduced collections of assessments, and lower levels of net Eventrelated income contributed to net operating losses in 2009 & 2010. Assessments Expense Initial Cash Non-Assessment Income ^ Net Cash Paid Marketing Services Admin O/H Position * Events Other Position 2005 294,426 109,252 80,182 237,817 (132,824) 96,370 63,319 26,865 2006 305,843 113,670 90,995 279,796 (178,618) 89,327 127,016 37,725 2007 334,426 118,436 99,237 293,296 (176,542) 106,480 144,269 74,207 2008 325,229 134,798 99,690 249,491 (158,750) 146,587 57,966 45,803 2009 295,984 112,750 150,027 258,924 (225,717) 93,885 123,275 (8,557) 2010 294,358 121,583 151,822 257,275 (236,321) 96,491 117,111 (22,719) 2011 318,306 96,017 148,087 268,267 (194,065) 107,679 107,818 21,432 Total 2,168,573 Average Per Year 806,504 820,040 309,796 115,215 117,149 1,844,866 (1,302,838) 736,820 740,774 263,552 (186,120) 105,260 105,825 174,757 24,965 * - Before taking non-assessment income into account. ^ - Net of any associated expenses. Page Page 7

The Proposed Plan: A: Stability and Efficiency: We propose to direct bill the property owner of each building/parking lot, rather than the individual tenants. Instead of tracking over 700 tenants, the assessment bill will go to approximately 150 property owners. The property owner would be responsible for collecting the dues from their tenants on behalf of the DBA. A disclosure form will be made available to property owners to share with their tenants that will define what services the DBA provides. In addition the BID ordinance will be adjusted to include a due date and penalty for lack of payment. Year 1 2013 Assessments will be billed to the property owners in the Core, Outer-Core and Outer-Zone based on the average of the past 3 years (2010 2012) assessments total for each building. Property in Transition Zone 1 will be billed on the average of the past 3 years (2010 2012) assessments total. Non Government Businesses in Government owned buildings will continue to be billed directly. Any new buildings in the district will be billed at the core rate of.20 sf for ground floor,.06 sf for upper floors and.01 sf for basements and.01 sf for parking. Buildings that were less than 50% occupied in year 1 will be evaluated annually and once they reach occupancy of 50% or more will be billed at the core rate. All parking (garages and lots) will be billed at.01 sq ft B. Equalize Rates: Currently the Outer-Core (Old Boise Historic District, BODO/8 th Street Marketplace and a couple of blocks on Jefferson) pays half the rate of the Core. Over years 2-6 the rates in the outer-core will be increased incrementally to match rates in the Core. Year 2 2014 to Year 6-2017 Core, Transition Zone 1 and Outer Zone will be billed at the Year 1 rate. Parking will continue to be billed at 0.01 sq ft. Outer-Core rates will increase incrementally over years 2-6 at a rate of 10% per year. Page Page 8

Year 7 and ongoing All assessments will be adjusted annually from the rate established in Year 6 by the Consumer Price Index for all Urban Consumers, All Items, published by the United States Department of Labor, Bureau of Labor Statistics (CPI-U) not to exceed 3% annually. Stakeholder Outreach The BID Taskforce: The BID taskforce has been meeting on and off since 2005 to evaluate the billing system of the BID. The taskforce has included property owners and managers including: Scott Schoenherr Rafanelli & Nahas Clay Carley Old Boise Jim Tomlinson Tomlinson & Associates Liz Fitzgerald Unico Properties Jeremy Malone Oppenheimer Companies Gary Benoit Bencorp/Sonna Building David Wali Colliers International Charlie Schmoeger American Cleaning Company Ed Miller Givens Pursley LLP Legal Representation - Ken Howell Hawley Troxell Old Boise Property Owner Meeting Clay Carley hosted a meeting of property owners and managers in the Old Boise Historic District on Thursday September 27 th. BODO Property Owner Meeting David Wali held meetings with property owners and managers in the BODO area including Colliers, Hawkins, Drake Cooper and 8 th St Marketplace have taken place to date. Core Property Owner Meeting Scott Schoenherr & Jeremy Malone hosted a meeting of property owners and managers in the Core on Monday September 17 th. Residential Property Owners A meeting was hosted on September 14 th with residential property owners to get input on the proposed $4 per month per unit. Notification Mail to all BID business and property owners A letter was sent by at end of October to all business and property owners to notify them of the upcoming changes. Certified Mail to Property Owners Following the various meetings, all property & businessowners will be sent the notice of the City Council hearing. Page Page 9

Timeline December 2011: January 2012: Feb- Aug 2012: Aug-Oct 2012: Nov 6 2012: Nov 27 2012: Dec 4 & 11: Nov Dec: January 2013: Meet with City Auditor. DBA staff and City P & D staff to analyze building and parking lot county data and match to BID boundaries. City IT staff to assist with incorporating county s/f data into the DBA database, eliminate duplications and account for parking lots. Continue with data input and analyze rate scenarios. Bill at the current rate for 2012 and plan on incorporating the new billing plan in 2013. BID Taskforce to review rate scenarios and approve rates. Prepare new ordinance draft. Stakeholder Outreach. City Council Resolution City Council Public Hearing & First Reading 2 nd and 3 rd Readings at City Council Work with City IT to update database to accommodate new method of billing. Prepare final data for billings Send out new bills to property owners. Page Page 10

Attachment A: BID Districts Page Page 11

Attachment B: Current Rate Sheet All Rate Code Description Location Annual Rate Basis 0715 All Property All $25.00 ANNUAL 0716 Non-Profit All $1.000 ANNUAL Max $250 0717 Base Rate Retail All $225.000 Per year 0718 Base Rate Commercial All $100.000 Per year 0720 Associate Member All $1.000 Usage 0721 Contributing Member All $1.000 Usage 0722 Exempt All $0.000 Exempt Core 0701 Ground Floor Retail Core Area $0.200 Per SQFT 0702 Ground Floor Commercial Core Area $0.100 Per SQFT 0703 Other Retail Space (Above Ground or Core Area $0.075 Per SQFT Basement) 0704 Other Commercial Space Core Area $0.060 Per SQFT 0705 Theaters Core Area $2.000 Per seat 0706 Vacant Space Core Area $0.050 Per SQFT 0710 Hotels Core Area $15.000 Per ROOM Outer Core 0712 Retail Space Outer Core $0.100 Per SQFT 0713 Commercial Space Outer Core $0.050 Per SQFT 0723 Other Retail Space (Above Ground or Basement) Outer Core $0.0375 Per SQFT 0724 Other Commercial Space Outer Core $0.030 Per SQFT 0725 Vacant Space Outer Core $0.025 Per SQFT 0726 Theaters Outer Core $1.00 Per seat 0727 Hotels Outer Core $7.50 Per Room Outer Zone 0714 All Property Outer Zone $0.040 per $100 assessed Value 0719 Outer Core Space Outer Core $0.030 per SQFT Definitions/Explanations Assessment is on business owner, except un-leased vacant space and outer zone property, which is an assessment on property owner. Minimum assessment of $15 for 1987 and $25 thereafter. Retail businesses are those oriented to public trade (includes restaurants, barber shop, etc.), selling a product including financial products Outer Core areas are the four areas bordered by: 1. Bannock - Front - Capitol - 5 th Streets; 2. Capitol - 9 th - Front - Myrtle Streets; Grove - Idaho -12 th - 13 th Streets; 3. 8 th - 10 th - State - Jefferson Streets Square footage would be total rentable, not depending on use (office, selling, etc.), but according to type of business. Below ground-level storage would be exempt from assessment. Non-profits (as recognized by I.R.S.) assessed at commercial rate, to a maximum of $250. Ground-level means the business opens to the ground level or if inside a building is on the main level. Other property in Outer Core areas not covered under category (2) above will be assessed at half the rate in the core area. Page Page 12