HomeMy WebLinkAboutStaff Report 5.A 12/03/2018z85s
DATE: December 3, 2018
TO: Honorable Mayor and Members of the City Council
FROM: John C. Brown, City Manager
SUBJECT: Public Hearing Regarding the Proposed Formation of a Petaluma Tourism
Improvement District
RECOMMENDATION
It is recommended the City Council conduct a public hearing, declare results of majority protest
proceeding, and adopt the attached Resolution.
BACKGROUND
The Property and Business Improvement District Law of 1994 (the 1994 Act) grants cities and
counties the authority to establish and renew business improvement districts. The purpose of
such districts is to levy assessments against property or businesses in the district, to raise funds
within a specific geographic area, and to pay for the cost of certain activities and improvements
benefitting property or businesses paying the assessment.
Tourism Improvement Districts (TIDs) allow lodging and tourism -related business owners to
organize their efforts to increase tourism. Lodging business owners within the district fund the
TID, and use those funds to provide services that benefit those lodging businesses. A
Management Plan governs the District. Funds are used to administer district activities per the
Management Plan. Funds cannot be redirected to other programs and must be utilized in
conformance with the Management Plan.
Lodging industry representatives and the Petaluma Downtown Association have requested that
the City Council establish a TID in Petaluma to support tourism marketing.
As drafted, the Management District Plan (The Plan) incorporates the interests and intentions of
lodging industry and PDA representatives, and addresses City considerations. The Plan includes
the proposed boundary of the PTID, a service plan and budget, quantifies an assessment, creates
a proposed means of governance and collections, and sets a term.
The proposed PTID will include all lodging businesses with 10 or more rooms, existing and in
the future, available for public occupancy within the boundaries of the City of Petaluma.
The PTID will, based on current transient occupancy tax estimates, generate approximately
$660,000 annually for promotion of travel and tourism specific to Petaluma. The total PTID
annual budget for the initial year, of its five (5) year operation, is set using estimated revenues of
$660,000. The budget is expected to fluctuate with room rentals, and as businesses open and
close, and is divided into the following categories and amounts:
• Marketing, Research and Communications, 60 percent ($396,000)
• Destination Development, 17 percent ($112,200)
• Administration/Advocacy, 16 percent ($105,600)
• Contingency/Reserve, four (4) percent ($26,400)
• City Administration, three (3) percent ($19,800)
The proposed annual assessment is two percent (2%) of gross room rental revenue, reflects the
same exceptions as are applicable to transient occupancy taxes, and will not be collected on stays
pursuant to contracts executed prior to January 1, 2019.
The Petaluma Lodging Association (PLA) will serve as the PTID's Owner's Association. It will
manage funds and implement programs in accordance with the 1994 Act. The PLA will contract
with a service to collect the assessment on a monthly basis from each lodging business inside
PTID boundaries.
The proposed PTID will have a five (5) year life, beginning January 1, 2019. Annually, business
owners paying fifty percent (50%) or more of the assessment would have a thirty -day period in
which they may protest and begin proceedings to terminate the PTID.
Pursuant to the 1994 Act, a petition asking the Council to form the TID was required of the
lodging owners who will pay more than 50 percent of the proposed assessment. A petition and
the proposed Plan were circulated to all lodging businesses with ten rooms or more, inside
Petaluma city limits, in early October 2018. Petitions in favor of district formation were
submitted by 9 hotels, representing 100% of the total PTID assessment.
At its October 15, 2018 meeting, the City Council adopted Resolution No. 2018-160 N.C.S., a
Resolution Declaring the City Council's Intention to Form the Petaluma Tourism Improvement
District and Giving Notice of the Time and Place of a Public Meeting and a Public Hearing on
the Establishment of the District and the Levy of Assessments. The resolution set a public
meeting for November 5, 2018, and set a public hearing for December 3, 2018.
The 1994 Act requires that written notice be mailed to all businesses within the PTID, 45 days
before the December 3, 2018 hearing. This notice was mailed on October 16, 2018, and began
the mandatory period in which lodging business owners may protest PTID formation.
Pursuant to the 1994 Act, the public meeting called for by the October 15, 2018 resolution was
conducted on November 5, 2018, and allowed for public testimony on the establishment of the
PTID and levy of assessments. The Council received no objections or protests to the PTID at the
meeting, but could take no action at that time.
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DISCUSSION
The December 3, 2018 hearing is the final opportunity for comments, objections, and the
submission of written protests to the formation of the PTID. If written protests are received from
the owners of businesses in the proposed PTID who will pay more than fifty percent (50%) of
the assessments proposed to be levied and protests are not withdrawn so as to reduce the protests
to less than fifty percent (50%), no further proceedings to levy the proposed assessment against
such businesses shall be taken for a period of one (1) year from the date of the finding of a
majority protest by the City Council.
At the conclusion of the public hearing, the City Council may adopt, revise, change, reduce, or
modify the proposed assessment or the type or types of improvements and activities to be funded
with the revenues from the assessments. Proposed assessments may only be revised by reducing
any or all of them. If the City Council, following the public hearing, decides to establish the
proposed PTID, the City Council must adopt a resolution of formation.
Holding the final hearing, declaring results of the majority protest proceedings, and adopting the
attached Resolution are the final steps in the formation process of the Petaluma Tourism
Improvement District and the levy of assessments on lodging businesses within District
boundaries.
A Management Agreement between the PLA and the City of Petaluma is necessary pursuant to
the 1994 Act. The PLA filed its articles of incorporation for 501(c) 6 status with the Secretary of
State, but cannot conduct official business — including executing the Management Agreement -
until Civitas (as incorporator) appoints the initial directors and bylaws. This can be completed
within a short time following adoption of the Resolution of Formation.
City and Civitas staff coordinated on the attached draft Management Agreement (Attachment 2),
but it is not deemed final at this writing. The draft Agreement is substantially in final form and
significant changes are not expected. The document is organized in, and includes the applicable
provisions of, the City's standard Professional Services Agreement (PSA) format. This includes
many of the conditions contained in the PSA in effect between the City and the Petaluma
Downtown Association for Visitor's Center Services. It also tracks to provisions in the
agreement between the City of Healdsburg and its Owners Association. Differences specific to
this agreement include a provision that delegates taxing authority to the PLA, a section outlining
a process for coordinating on the use of Destination Development funding, and setting out the
timing of payments to the City and the priority for how funding is distributed between uses. It
also reimburses the City for formation costs, and enables the City to audit assessments,
collections, and uses.
The resolution of formation includes a condition tying the validity of the PTID to execution of
the Management Agreement, and authorizes the City Manager to execute the Agreement at such
time as the PLA is ready and legally able to fulfill contractual obligations.
FINANCIAL IMPACTS
Formation of a TID will result in an estimated net increase in TOT revenue to the City of
$380,000. Collections in the initial year could be less, depending on the timing of formation of
the PLA and execution of the agreement. TID programs are intended to increase visits to the
City, which may result in increased TOT and sales tax collections. Shifting responsibility for
funding the Petaluma Visitors Program from the City to the TID Business Owner's Association
will result in annual savings up to $248,000, based on the agreement with the Petaluma
Downtown Association that expires in June 2019. The City will also receive an estimated
$112,200 per year from TID proceeds, for "Destination Development" activities, and an
estimated $19,800 per year to cover the cost of staff time spent on annual program
administration. In the initial year of the TID, the City will also receive a one-time
reimbursement of up to $18,800 for staff time spent on the formation process.
ATTACHMENTS
1. Resolution with Exhibit 1, District Management Plan
2. Draft Owners' Association Agreement
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RESOLUTION NO. 2018 -
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PETALUMA
DECLARING THE RESULTS OF MAJORITY PROTEST PROCEEDINGS AND
AUTHORIZING FORMATION OF THE PETALUMA TOURISM
IMPROVEMENT DISTRICT AND THE LEVY OF ASSESSMENTS IN
ACCORDANCE WITH CALIFORNIA STREETS AND HIGHWAYS CODE
SECTION 36600 ET. SEQ. AND AUTHORIZING THE CITY MANAGER TO
EXECUTE ON BEHALF OF THE CITY A CONTRACT WITH THE
PETALUMA LODGING ASSOCIATION CONDITIONED ON THE
PETALUMA LODGING ASSOCIATION INCORPORATING AS A LEGAL
ENTITY AND ENTERING A CONTRACT WITH THE CITY TO ADMINISTER
THE DISTRICT
WHEREAS, the Property and Business Improvement Law of 1994, Streets and Highways Code
§ 36600 et seq. ("Improvement Law"), authorizes cities and other specified entities to establish business
improvement districts to levy assessments against businesses and/or property within the district to fund
various specified activities and improvements within the district benefitting businesses and/or property
owners subject to the levy; and
WHEREAS, in accordance with Section 36621, subdivision (a) of the Improvement Law, the
City Council may, upon submission of a written petition signed by the property or business owners in a
proposed district who will pay more than 50% of the assessments proposed to be levied, initiate
proceedings to form an improvement district by adoption of a resolution expressing the City Council's
intention to form the district; and
WHEREAS, in accordance with Section 36621, subdivision (a) of the Improvement Law, the
amount of assessment attributable to property or a business that is in excess of 40% of the amount of all
assessments proposed to be levied in a proposed district shall not be included in determining whether
the petition to form the district is signed by property or business owners who will pay more than 50%
of the total amount of assessments proposed to be levied; and
WHEREAS, in accordance with Section 36621, subdivision (b) of the Improvement Law, the
petition required to form a district must include a summary of the management district plan for the
district, including a map showing the district boundaries, information specifying where the complete
management district plan can be obtained, and information specifying that the complete management
district plan shall be furnished upon request; and
WHEREAS, in accordance with Section 36621, subdivision (c) of the Improvement Law, the
resolution of intent required to initiate district formation proceedings must contain a brief description of
the proposed improvements, maintenance and activities to be funded, the amount of the proposed
assessment, a statement as to whether the assessment will be levied on property or businesses within the
district (or both), a statement as to whether bonds will be issued, and a description of the exterior
boundaries of the proposed district, which may be made by reference to any plan or map that is on file
with the clerk, all sufficiently detailed to enable an owner to generally identify the nature and extent of
the improvements, maintenance and activities and the location and extent of the proposed district, as
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well as a time and place for a public meeting and a public hearing on the establishment of the district
and the levy of assessments consistent with the requirements of Section 36623 of the Improvement Law;
and
WHEREAS, in accordance with Section 36622 of the Improvement Law, management district
plans required to form a district must include, but are not limited to: a map of the district in sufficient
detail to locate each parcel of property and, if businesses are to be assessed, that identifies each business
within the district and the district boundaries in sufficient detail to allow a business owner to reasonably
determine whether a business is located within the district; the name of the proposed district; a
description of the boundaries of the district sufficient to identify the affected property and businesses
included, which may be made by reference to any plan or map on file with the clerk; the improvements,
maintenance and activities proposed for each year of operation of the district and their maximum cost;
the total annual amount proposed to be expended for improvements, maintenance or activities and debt
service in each year of district operation, which amount may be estimated based on the assessment rate
if the assessment is to be levied on businesses; the proposed source(s) of financing, including the
proposed method and basis of levying the assessment in sufficient detail to allow each property or
business owner to calculate the amount of the assessment to be levied against his or her property and/or
business; whether bonds will be issued; the time and manner of collecting assessments; the number of
years in which assessments will be levied (not to exceed 5 years for a new district); the proposed time
for implementation and completion of the management district plan; any proposed rules and regulations
to be applicable to the district; a list of the properties or business to be assessed, including assessor's
parcel numbers for properties to be assessed; and a statement of the method or methods by which district
expenses will be imposed upon benefited real property or businesses, in proportion to the benefit
received by the property or business; for property -based districts, the proportionate special benefits to
be derived by each parcel, the total amount of all special benefits to be conferred within the district, the
total amount of general benefits, and a detailed engineer's report supporting all contemplated
assessments; and any other item the city council requires to be incorporated in the management district
plan; and
WHEREAS, in accordance with Section 36623 of the Improvement Law, notice of new business
assessments must be mailed to the owners of the businesses proposed to be assessed; protests may be
made orally or in writing by any interested person; written protests must be filed with the clerk at or
before the time fixed for the public hearing; the city council may waive any irregularity in the form or
content of any written protest; written protests may be withdrawn in writing at any time before the
conclusion of the public hearing; each written protest shall contain a description of the business in which
the persons subscribing the protest is interested sufficient to identify the businesses; written protests that
do not satisfy Section 36623 requirements shall not be counted in determining a majority protest; and if
written protests are received from the owners or authorized representatives of businesses in the proposed
district that will pay 50% or more of the assessments proposed to be levied and protests are not
withdrawn so as to reduce the protest to less than 50%, no further proceedings to levy the proposed
assessment against such business shall be taken for a period of one year from the date of the finding of
a majority protest; and
WHEREAS, in accordance with Section 36623 of the Improvement Law, notice, protest and
hearing procedures for proposed new business assessment districts must comply with the requirements
of Government Code section 54954.6, which requires: at least one public meeting at which local
officials shall allow public testimony regarding proposed new or increased general taxes or assessments
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in addition to the noticed public hearing at which the legislative body proposes to enact the tax or
assessment; at least 45 days public notice given by mail of the public hearing at which the legislative
body proposes to enact the general tax or assessment; mailed notice of the public meeting included with
the notice of the public hearing; the mailed notice envelope must include the public agency's name and
return address; the mailed notice must be in at least 10 point type and be given to all property owners or
business owners proposed to be subject to the assessment addressed to those persons whose names and
addresses appear on the last equalized county assessment role, the State Board of Equalization
assessment roll, or the local agency's records pertaining to business ownership; holding of the public
meeting at least 10 days after mailed notice of the public hearing and meeting; and holding of the public
hearing at least 7 days after the public meeting; and
WHEREAS, in accordance with Section 54954.6 of the Government Code, the notice of a
meeting and hearing on a proposed new assessment must include the estimated amount of the assessment
per parcel or, in the case of proposed assessments on businesses, the proposed method and basis of
levying the assessment in sufficient detail to allow each business owner to calculate the amount of
assessment to be levied against each business; a general description of the purpose or improvements that
the assessment will fund; the address to which property owners may mail a protest against the
assessment; the telephone number and address of an individual, office or organization that interested
persons may contact to receive additional information about the assessment; a statement that a majority
protest will cause the assessment to be abandoned; the dates, times and locations of the public meeting
and hearing; and the proposed assessment formula or range; and
WHEREAS, in accordance with Section 36624 of the Improvement Law, at the conclusion of
the public hearing to form the district, the city council may adopt, revise, change, reduce or modify the
proposed assessment or the type or types of improvements, maintenance and activities to be funded with
the revenue from the assessments, but may only revise proposed assessments by reducing them and may
only change the boundaries of the proposed district that will exclude territory that will not benefit from
the proposed improvements, maintenance and activities; and
WHEREAS, in accordance with Section 36625, subdivision (a) of the Improvement Law, if,
following the public hearing, the city council decides to form the proposed district, it shall adopt a
resolution of formation that includes but is not limited to: a brief description of the proposed
improvements, maintenance, and activities; the amount of the proposed assessment; a statement as to
whether the assessment will be levied on property, businesses or both within the district; a statement on
whether bonds will be issued; a description of the exterior boundaries of the proposed district, which
may be made by reference to any plan or map that is on file with the cleric, such that an owner may
generally identify the nature and extent of the improvements, maintenance and activities and the location
and extent of the proposed district; the number, date of adoption and title of the resolution of intention
to form the district; the time and place where the public hearing was held concerning establishment of
the district; a determination regarding any protests received; a statement that the properties, business or
properties and business in the district established by the resolution shall be subject to any amendments
to the Improvement Law; a statement that the improvements, maintenance and activities to be conferred
on businesses and properties in the district will be funded by the levy of the assessments, and that the
revenue from the levy of assessments within the district shall not be used to provide improvements,
maintenance or activities outside the district or for any purpose other than the purposes specified in the
resolution of intention, as modified by the city council at the hearing concerning establishment of the
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district; and a finding that the property or businesses with the area of the district will be benefited by the
improvements, maintenance and activities funded by the proposed assessments; and
WHEREAS, in accordance with Section 36625, subdivision (b), of the Improvement Law,
adoption of the resolution of formation shall constitute the levy of an assessment in each of the fiscal
years referred to in the management district plan; and
WHEREAS, in March, 2018, Petaluma City Council members received correspondence from
representatives of the Petaluma lodging industry and the Petaluma Downtown Association encouraging
the City Council to establish a benefit assessment district to support tourism funding, including an offer
to use some of the assessment proceeds to fund the Petaluma Visitors Center program; and
WHEREAS, the Petaluma lodging industry and the Petaluma Downtown Association have
proposed formation the Petaluma Tourism Improvement District ("PTID") to fund marketing and sales
promotion efforts for Petaluma lodging businesses; and
WHEREAS, the proposed PTID would provide specific benefits to assessed lodging businesses
with 10 or more rooms by funding marketing and sales promotion programs that are designed to increase
room night sales for assessed lodging businesses, an approach that has been successfully used in other
destination areas throughout the country; and
WHEREAS, owners of lodging businesses in Petaluma with 10 or more rooms have met to
consider the formation of the PTID; and
WHEREAS, City of Petaluma staff have worked with lodging business owners to draft a
Management District Plan (Management Plan) which sets forth the proposed boundary of the PTID, a
service plan and budget, and proposed means of governance; and
WHEREAS, the proposed PTID would include all lodging businesses with 10 or more rooms
in the City of Petaluma and would levy assessments to fund the activities occurring within the PTID to
benefit the assessed businesses pursuant to the Management Plan, and levies to fund the PTID pursuant
to the Improvement Law would be imposed on covered businesses within the PTID and not on real
property; and
WHEREAS, in accordance with Section 3 660 1, subdivision (d), of the Improvement Law,
assessments levied under the Improvement Law for the purpose of conferring specific benefits upon the
businesses in a business district are not taxes for the general benefit of a city, even if property, businesses
or persons not assessed receive incidental or collateral effects that benefit them; and
WHEREAS, proposed assessments pursuant to the PTID would not be taxes as defined in
Section 1, paragraph (e) of Article XIIIC of the California Constitution ("Proposition 26") because such
assessments would be imposed for a specific benefit conferred or privilege granted directly to the payer
that is not provided to those not charged, and which does not exceed the reasonable cost of providing
the services which the assessments would fund; and
WHEREAS, the proposed assessments pursuant to the PTID are not subject to the requirements
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of Article XIIID of the California Constitution ("Proposition 218") concerning property related
assessments and fees pursuant to 4partnient Association of Los Angeles Count) v. City of Los Angeles
(2001) 24 Ca1.4t" 830, because such assessments would not be imposed on real property but rather on
covered businesses, and such assessments would not be applicable to incidents of property ownership;
and
WHEREAS, in accordance with Section 36621 of the Improvement Law, lodging businesses in
Petaluma with 10 or more rooms who will pay more than fifty percent (50%) of the proposed assessment
under the PTID have signed petitions in favor of formation of the PTID; and
WHEREAS, in accordance with Section 36623 of the Improvement Law and Section 54954.6
of the Government Code, notices were mailed to owners of businesses proposed to be assessed pursuant
to the PTID on October 16, 2018 regarding a meeting held on November 5, 2018, at least ten (10) days
after the notice was mailed, at which meeting lodging business owners with 10 or more rooms and other
interested parties could comment, and the same mailed notice included notice of a public hearing to be
held on December 3, 2018, at least 45 days after the notice was mailed and at least 7 days after the public
meeting; and
WHEREAS, if the City Council finds in accordance with Section 36623 of the Improvement
Law that there is no majority protest against formation of the proposed PTID, the City Council may
adopt a Resolution of Formation after the conclusion of the public hearing in accordance with Section
36625 of the Improvement law; and
WHEREAS, on October 15, 2018, the City Council adopted Resolution no. 2018-160 N.C.S.
by a unanimous vote of the Council Members present (with Mayor Glass absent), accepting petitions to
form the PTID from all 9 hotels proposed to be assessed, representing 100% of the total PTID
assessment, and declaring the City Council's intention to form the Petaluma Tourism Improvement
District in accordance with Section 36621 of the Improvement Law and to levy and collect assessments
on lodging businesses with 10 or more rooms within the PTID boundaries, and giving notice of the time
and place of a public meeting and a public hearing on the establishment of the district and the levy of
assessments; and
WHEREAS, in adopting Resolution no. 2018-160 N.C.S., the City Council made the following
findings:
A. That lodging businesses with 10 or more rooms that will pay more than fifty percent (50%) of
the assessment proposed in the Plan have signed and submitted petitions in support of the
formation of the PTID in accordance with petitions attached as Exhibit A to the resolution;
B. That the Management District Plan satisfies all requirements of Section 36622 of the
Improvement Law;
C. That in accordance with Section 36621 of the Improvement Law:
i. The PTID shall include all lodging businesses with 10 or more rooms located within the
jurisdictional boundaries of the City of Petaluma, as shown on the map attached to and
made a part of the resolution as Exhibit B.
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ii. The name of the district to be formed pursuant to the Improvement Law shall be the
Petaluma Tourism Improvement District (PTID).
iii. The annual assessment rate in the PTID shall be two percent (2%) of gross short-term
room rental revenue. Based on the benefit received, assessments will not be collected
on: stays of more than thirty (30) consecutive days; stays by any officer or employee of
a Federal, state, or foreign government who is exempt by reason of express provision of
federal or state law or international treaty; and stays pursuant to contracts executed prior
to January 1, 2019.
iv. The assessments levied for the PTID shall be applied toward sales promotion and
marketing programs to market assessed lodging businesses in Petaluma as tourist,
meeting, and event destinations, as described in the Management District Plan. Funds
remaining at the end of any year may be used in subsequent years in which PTID
assessments are levied as long as they are used consistent with the requirements of this
resolution and the Management Plan.
V. The proposed PTID will have a five (5) year term, beginning January 1, 2019 through
December 31, 2023, unless renewed pursuant to Section 36660 of the Improvement law.
vi. Bonds shall not be issued to fund PTID programs or improvements; and
WHEREAS, Resolution no. 2018-160 N.C.S. provided notice of a public meeting to hear
testimony on establishing the PTID and levying assessments on November 5, 2018, at 6:45 PM, or as
soon thereafter as the matter may be heard, at the City Hall Council Chambers located at 11 English
Streer, Petaluma, CA 94952; and
WHEREAS, Resolution no. 2018-160 N.C.S. provided notice of a public hearing to establish
the PTID and the levy of assessments on December 3, 2018, at 6:45 PM, or as soon thereafter as the
matter may be heard, at the City Hall Council Chambers located at 11 English Street, Petaluma, CA
94952, and directed that written notice be provided to the lodging businesses with 10 or more rooms
subject to assessment of the date and time of the meeting and hearing, and that notice be provided as
required by Section 36623 of the Improvement Law, no later than October 16, 2018; and
WHEREAS, Resolution no. 2018-160 N.C.S. provided notice that at the public meeting and
hearing on formation of the PTID the testimony of all interested persons for or against the establishment
of the PTID will be received, and that if at the conclusion of the public hearing, there are of record
written protests by the owners of the lodging businesses within the proposed PTID that will pay more
than fifty percent (50%) of the estimated total assessment of the entire PTID, no further proceedings to
establish the PTID shall occur for a period of one year; and
WHEREAS, October 16, 2018, written notice was provided to the lodging businesses in the
City of Petaluma with 10 or more rooms subject to assessment of the date and time of the meeting and
hearing on formation of the PTID in accordance with Section 36623 of the Improvement Law; and
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WHEREAS, the City has received and the City Clerk has canvassed written protests from
owners of lodging businesses within the proposed PTID meeting the requirements of Section 36623 of
the Improvement Law, and such protests represent lodging business that will'pay a total of % of
the estimated total assessment of the entire PTID, and therefore formation of the PTID may proceed in
accordance with the Improvement Law; and
WHERAS, adoption of this resolution is exempt from the requirements of the California
Environmental Quality Act ("CEQA"), because it can be seen with certainty that formation of the PTID
and levying of assessments on lodging businesses within the PTID pursuant to this resolution to fund
sales and marketing programs and other improvements and activities set forth in the Management
District Plan in Exhibit B will not cause a direct physical change in the environment, or a reasonably
foreseeable indirect change in the environment;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Petaluma as follows:
1. The recitals set forth in this resolution are hereby declared to be true and correct and findings
of the City Council.
2. The PTID as depicted on the boundary map attached to and made a part of this resolution as
Exhibit A is hereby established for a five (5) year term, beginning January 1, 2019 through
December 31, 2023, subject to the conditions specified in 16, below, first being satisfied.
3. The Management District Plan for the PTID dated September 27, 2018 attached to and made
a part of this resolution as Exhibit B is hereby adopted and approved.
4. The assessments levied for the PTID shall be applied towards sales and marketing programs
to market. Petaluma lodging businesses as tourist, meeting and event destinations, and other
improvements and activities as set forth in the Management District Plan. Funds remaining
at the end of any year may be used in subsequent years in which PTID assessments are levied
as long as they are used consistent with the requirements of this resolution and the
Management District Plan.
The annual assessment rate in the PTID shall be two percent (2%) of gross short-term room
rental revenue. Based on the benefit received, assessments will not be collected on: stays of
more than thirty (30) consecutive days; stays by any officer or employee of a Federal, state,
or foreign government who is exempt by reason of express provision of federal or state law
or international treaty; and stays pursuant to contracts executed prior to January 1, 2019. The
assessments for the entire PTID will total approximately $660,000 in year one (1).
6. Assessments imposed pursuant to the PTID are levied solely upon the assessed business, and
the business owner is solely responsible for payment of the assessment when due.
7. Bonds shall not be issued to fund the PTID.
The exterior boundaries of the PTID are as depicted on the boundary map in Exhibit A. The
PTID shall include all lodging businesses with 10 or more rooms located within the
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jurisdictional boundaries of the the City of Petaluma.
9. The City Council adopted Resolution no. 2018-160 N.C.S. entitled "A Resolution of the City
of Petaluma Declaring the City Council's Intention to Form the Petaluma Tourism
Improvement District and Giving Notice of the Time and Place of a Public Meeting and a
Public Hearing on the Establishment of the District and the Levy of Assessments" on October
15, 2018 giving notice of its intention to form the PTID.
10. The public hearing on formation of the PTID was held at 6:45 p.m. or as soon thereafter as
that matter could be heard on December 3, 2018 in the Petaluma City Council chambers at
Petaluma City Hall, 11 English Street, Petaluma, CA, 94952.
11. A majority protest was not received from owners of lodging businesses within the proposed
PTID.
12. The businesses in the PTID and the PTID established pursuant to this resolution will be
subject to any amendments to the Improvement Law, Property and Business Improvement
District Law of 1994, California Streets and Highways Code §36600 et. seq.
13. The activities to be provided to benefit businesses in the PTID will be funded by the levy of
the PTID assessment.
14.- The revenue from the PTID assessment levy shall not be used: to provide activities that
directly benefit businesses outside the PTID; to provide activities or improvements outside
the PTID; or for any purpose other than the purposes specified in this Resolution, the
Resolution of Intention, and the Management District Plan. Notwithstanding the foregoing,
improvements and activities that must be provided outside the PTID boundaries to create a
specific benefit to the assessed businesses may be provided, but shall be limited to marketing
or signage referring to the PTID.
15. If the owner chooses to collect any portion of the assessment fiom a transient, that portion
shall be specifically called out and identified for the transient in any and all communications
from the business owner as the "PTID Assessment" or "Tourism Assessment" as specified
in the Management District Plan.
16. Assessments levied on lodging businesses within the PTID pursuant to this resolution to fund
improvements, maintenance and activities in accordance with the Management District Plan
will benefit the lodging businesses within the PTID and shall be levied on the basis of benefit.
Because the services provided are intended to increase room rentals, an assessment based on
room rentals is the best measure of benefit.
17. The assessments to fund the activities and improvements for the PTID will be collected by a
contracted third -party, selected by the Petaluma Lodging Association, on a monthly basis, in
accordance with Section 36631 of the Improvement Law and the contract between the
Petaluma Lodging Association and the City providing for administration of the PTID.
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18. In accordance with Section 36651 of the Improvement Law, the body that shall implement
the PTID improvements and activities shall be Petaluma Lodging Association as the Owners'
Association of the PTID as defined in Section 36612 of the Improvement Law and pursuant
to the contract between the Petaluma Lodging Association and the City providing for
administration of the PTID:
19. The Petaluma Lodging Association, pursuant to Section 36650 of the Improvement Law and
the contract between the Petaluma Lodging Association and the City providing for
administration of the PTID, shall cause to be prepared a report for each fiscal year, except
the first year, for which assessments are to be levied and collected to pay the costs of the
improvements and activities described in the report. The first report shall be due after the
first year of operation of the PTID.
20. This resolution shall not be of any force or effect unless and until the following conditions
precedent are satisfied, and once all of the conditions have been satisfied, this resolution shall
become effective at that time without further action by the City Council:
a. The Petaluma Lodging Association has incorporated as a California corporation and
provided the City its corporation number assigned by the Secretary of State's Office.
b. The Petaluma Lodging Association has registered as a non-profit corporation with the
state and federal government, and provided the City confirmation of its non-profit status
under California and federal law.
c. An authorized representative of the Petaluma Lodging Association has executed an
agreement with the City substantially in accordance with the form agreement attached to
and made a part of this resolution as Exhibit C providing for administration of the PTID
in accordance with the Improvement Law and this resolution.
d. The Petaluma Lodging Association has provided the City proof of insurance and
endorsements as required by the agreement between the City and the PTID for
administration of the PTID.
21. Upon satisfaction of all of the conditions precedent specified in 16, above, the City Manager
is authorized and directed to execute on behalf of the City a contract with the Petaluma
Lodging Association substantially in accordance with the form agreement attached to this
resolution as Exhibit C providing for administration of the PTID.
22. If any section, subsection, sentence, clause, phrase or word of this resolution is for any reason
held to be unconstitutional, unlawful or otherwise invalid by a court of competent jurisdiction
or preempted by state legislation, such decision or legislation shall not affect the validity of
the remaining portions of this resolution. The City Council of the City of Petaluma hereby
declares that it would have passed and adopted this resolution and each and all provisions
thereof irrespective of the fact that any one or more of said provisions be declared
unconstitutional, unlawful or otherwise invalid.
9 1 P a g e
THIS RESOLUTION was passed by the City Council of the City of Petaluma at a regular
meeting thereof held on December 3, 2018, by the following vote:
AYES:
NOES:
ABSENT OR NOT VOTING:
ATTEST:
City Clerk
By:
Claire Cooper
David Glass, Mayor
APPROVED AS TO FORM;
City Attorney
By:
Eric Danly
101Page
EXHIBIT A
District Boundaries
11 IPage
EXHIBIT B
Management District Plan
121Page
CONTENTS
CONTENTS............ .......... ............. .................. ............ ............ ......... ............... ...:........ .... ....... l
I. OV-RRN71EV ........................... ...............................,......«. ................;.,...:,...,,; 2
H. BACKGROUND... ................................................................................................... .,......3
III. BOUNDARY. ........ ., ..,...,..««............................................« ... ....4
IAT. BUDGET AND SEIRVICEIS.................... ... ....,,...,............,.....,5
A, Avaual Service Plan. ................................................................. 5
B. Annual Budget .........................«,.............. ,......................,..........,................................... 7
C. California Constitutional Compliance...«..................................................................«......... 7
D, Asscssnlent..... ......................... ...........«...............................................I..................... 9
L. Penalties and Interest ............. .....,.................................. 10
P. Time and Manner for Collecting Assessments........................................................«........ 10
V. GOVEMANCF ......................... .. ...... « ..... .. .....11
A, Owlets' Association ...... ................... .................................................«................4, Il
B. Brawn Act and California Public Records Act Compliance ...« ....................................11
C. Annual Report.................................,.............,.................................«.... ......................11
APPRNDa1 -LAW.. ........................ I..................................................,...................................................12
APPRNM 2 - ASSESSED BUSINESSES- ............................................................................. ........23
Prepared by
Civitas
C I I TA S
PARTNERSHIPS .. PROGRESS - PROSPERITY
(800)999-778 1
wrw-w.elvitasadvisors,com
I. OVERVIEW
Developed by Petaluma Lodging Association (PLA), the Petaluma Tourism Improvement District
(PTID) is an assessment district proposed to provide specific benefits to payors, by funding marketing
and sales promotion efforts for assessed businesses. This approach has been used successfully in
other destination areas throughout the country to provide the benefit of additional room night sales
directly to payors.
Location: The proposed PTID includes all lodging businesses located within the boundaries of
City of Petaluma, as shown on the map in Section III.
Services: The PTID is designed to provide specific benefits directly to payors by increasing
room night sales. Marketing, sales, communications, and destination development
programs will increase overnight tourism and will market payors as tourist, meeting
and event destinations, thereby increasing room night sales.
Budget: The total PTID annual budget for the initial year, of its five (5) year operation, is
anticipated to be approximately $660,000. The budget is expected to fluctuate as room
sales do and as businesses open and close.
Cost: The annual assessment rate is two percent (20/6) of gross short-term room rental
revenue. Based on the benefit received, assessments will not be collected on: stays of
more than thirty (30) consecutive days; stays by any officer or employee of a Federal,
state, or foreign government who -is exempt by reason of express provision of federal
or state lav or international treaty; and stays pursuant to contracts executed prior to
January 1, 2019.
Collection: The Petaluma Lodging Asscociation Nvill be responsible for contracting with a service
for collecting the assessment on a monthly basis (including any delinquencies, penalties
and interest) from each lodging business located in the boundaries of the PTID. The
service shall take all reasonable efforts to collect the assessments from each lodging
business. -
Duration: The proposed PTID will Have a five (5) year life, beginning January 1, 2019 through
December 31, 2023. Once per year, beginning on the anniversary of PTID formation,
there is a thirty (30) day period in Nvhich owners paying fifty percent (50%) or more of
the assessment may protest and initiate a City Council hearing on PTID termination.
Management: Petaluma Lodging Association will serve as the PTID's Owners' Association. The
Owners' Association is charged with managing funds and implementing programs in
accordance with this Plan, and in accordance with Streets and Highways Code Section
36600 et seq. The PLA is also requited to enter into an agreement or agreements with
the City governing the administration of the PTID, and the activities specified in this
Management District Plan, including administration of the Petaluma Visitors Center.
The PLA must also provide annual reports. to the City Council concerning the PTID
in accordance with the Streets and Highways Code,
PTID Management District Plan 2
September 27, 2018
II. BACKGROUND
TIDs axe an evolution of the traditional Business Itilprovement: Dlstdct. 'flie first TID was formed
in West Hollywood, California in 1989. Since then, over, Anety California destinations have followed
suit, In recent years, other states, have begun adopting the California model — Montana, Soutli Dakota,
W,,Oiington, Colorado, 'Texas and Louisiana have adopted TID laws, Several other states are M' the
processof adopting
I theit own legjsladon. The cities of Wichita, Kansas and Newark, Ncw jersey used
an existing b-LI'Siness ImprovemetiL district law to forma '1131D. And, some cities, like Portland,
�
Oregon and Meu-tphis, Tctmesse� have udlized their MoinerulePoWets to create TIDs withoina state
law.
100
810
60
40
26
Nijimhor M 1114ttritte t-Inpratina In CaliMmin 9s 89 '100
Califot-ntia's TIDs Collectively
raise over $250 million
annually for local destination
inaxiceting. With competitors
raising their budgets, and
increasing rivalry for visitor
dollars, it is unportant that
Petaluina lodging businesses
it)ve,st in stable, lodging
specific marketing progtprns.
U -(—I ---- - I - 0 1 1 1
1. N N N TIM utilize the efficiencies of
WV] W (M C) a 0 C) C) C) Co
W n P U t� '(n A private sector operation in tbe
Inat1ket-based ptotnodon of
tourism districts. TIDs alloNv lodging business owners to organize their efforts to increase room night
sales. Lodging business ownets within the TID pay an assessment and those funds are used to provide
services that increase room night sales.
Tn California, TIDs are formed pursuant to the Propetqr and Btisinc is Improvement Oistrict Law of
1994, This Env Allows for the creation of benefit, assessment district to raise funds within a specific
geographic area, 7y>? ke
y �ig'qmwee beInveii TIDs and olber heheftl dxressnivil disiricls is 1ha?_Uzz Us wifed eor
glyrned /o 1I)s4iptee Ln):pnifil mkoilgo,jejW n'
the dishict.
There are many benefits to TIDs;
o Vunds must be spent on services and int"rovernents that provide a specific benefit only to those
Who pay;
@ Funds cannot be diverted to general government Programs;
* They are customized to fit the treed.; of payors in each destina6on;
v 11-iey allow for a wide range of services;
a They are designed, crewed and go verned by th os e i0io i villpay t1i c a s ses sine nt; and
a Tliciy provide a stable, long-term funding source for toinism promotion,
PTID Management District Plan 3
September 27, 2018
111. BOUNDARY
The PTID Avill include all lodging businesses, existing and in the future, available for public occupancy
within die boundaries of die City of Petaluma.
Lodging business means: any structure or any portion of any atuative which is occupied or intended
or designed for occupancy by transients for dwelling, lodging or sleeping purposes And includes any
hotel, int -1, 1-notel with 10 or mote sleeping rooms, Lodging business also includes areas or places used
for a uanip, for catnpiug or for a camp meeting, or other sinlilar structure or poruon thereof.
The boundary, as shown in the map below, currently includes nine (9) lodging busirlesses. A complete
listing of lodging businesses within the proposed FFID cats be fo-und in Appendix 2,
Petaluma TID
A
V
I -A-
Petaluma TID
Boinidarle TASI.
S]
PTID Management District Plan 4
September 27, 2018
IV. BUDGE T AND SERVICES
A. Annual Service Plum
Assessment funds will he spe& to provide specific bcne.f.ts conferred or privileges granted directly to
the payors that are not provided to those not rhatged, and which do not exceed fire reasonable cast
to the 'City ofcoilferring the benefits or granting the privileges. The privileges and seivices provided
with the PTLD funds are ivarRetflig, sales, communications, and destination dcvelippment programs
available otily to assessed hu54ncsses.
A service plan budget has been developed to deliver set -vices that benefit the assessed businesses,
detailed annual budget will be develoed and approved by PM. 'floe tablee below ilhisttates the uutial
annual budget gflocat ons, The total initial budget is $660,000.
A1111111 - 401 Ili 11
Contingency
Reserve, $26,400,
4% ..., ..
Admihist(ation /
Advocacy,
$105,600, 16:s
Destination_
bevglopmeht,
$112,200,17%
Marketing,
Research, &
Communications,
$396,000, 60%
,although actual revenues will fluctuate clue to market conditions, the proportional allocatdojis of the
budget shall remain the sstta-ic. Ap-Wever, the PLA board shall hate the authot t}, to adjust budget
allocations between the categories by no more than fifteen percent (15%)) of the total budget per year.
A description of the proposed itnprovetnents midactivities for the initial year of operation is below.
The: satne activities are proposed for subsetluent years. In the event of a legal challenge ag-ainst the
PTID, any and allassessment funds may be used for the casts of defending alae PTID, In the first
year of operation, the casts of creating the PTID n -)ay be relaaid by deducting repayment funds
pwpott onalllr from budget categories. The City tell. be reimbursed up to $10,000 dollars for their
work on formation and tvay be repaid by deducting repayment funds proportionally Froin hpdget
c_ategorie9, excluding the CAy tiduain fee, during the first year of operation:$.
.Each budget category includes all costs related to providing that service, in accordance witlt Generally
Accepted Accounting Procedures (IGYAAII). For example, the sales and tnmiket:ng budget includes the
cost of staff time dedicated to overseeing and 1111plementing the sales and marketing program. Staff
tinac dediOted purely to admirlistcative tasks is allocated to the administrative portion of the budget.
The casts of an individual staff mernbor may be allocated to multiple budget catel ot_ies, as appropriate
in accordance with GAAP, ' "he staffing levels necessary to provide the services below will be
determined by flue PU on at) as- needed basis.
PTID Management District Plan
September 27, 2018
Marketing, Sales, & Communications
A sales and marketing program will be sixty percent (60%) or $396,000 of the annual proposed budget
of $660,000 (which is the 2019 forecasted collections) and will promote assessed businesses as tourist,
meeting, and event destinations. The program will have the goal of increasing overnight visitation and
room night sales at assessed businesses, and may include the following activities:
• Conduct research to understand the Petaluma visitor experience, brand, primary motivators for
visiting and most importantly, to develop an overall strategic marketing plan that solidifies the
Petaluma brand in Sonoma County.
• Develop Return on Investment (ROI) analysis on effectiveness ofTID funds to improve
effectiveness and increase overnight visitation at assessed businesses and toutism-related
businesses;
• Develop internet marketing efforts (including website and social media) to increase awareness
and optimize internet presence to drive overnight visitation and room sales to assessed
businesses;
• Proactively work with travel writers; social media influencers, bloggers and pursue other public
relations opportunities;
• Work closely with local businesses, organizations, associations and sports group to attract events
and meetings that drive overnight stays;
• Showcase Petaluma as a film and photography location with the goal of generating overnight
stays;
• Conduct familiarization tonus of assessed businesses and visitor -related businesses;
• Expand out overnight demand from foreign and domestic inbound visitors from SFO
(recognizing SFO as the gateway for leisure and business travel), Oakland and Santa Rosa
airports;
• Work closely with other DMOs including Visit California, Sonoma County Tourism and SF
Travel to expand the reach of our brand message;
• Create television / radio ads targeted at potential visitors to drive overnight visitation and room
sales to assessed businesses;
• Create print ads in selected magazines and newspapers targeted at potential visitors to dove
overnight visitation and room sales to assessed businesses;
• Preparation and production of collateral promotional materials such as brochures, flyers and
maps featuring assessed businesses;
• Attendance of professional industry conferences and affiliation events to promote assessed
businesses;
• Lead generation activities designed to attract tourists and group events to assessed businesses;
• Director of Sales and General Manager meetings to plan and coordinate tourism promotion
efforts for assessed businesses;
• Development and implementation of a public relations and communications strategy, inclusive
of social media outlets and press release distribution designed to increase overnight visitation at
assessed businesses,
• Training and support of Visitors Center staff and volunteers;
• Fund operations and tenant improvements directly related to the operations of the Visitors
Center in accordance with the license agreement;
• Attendance of trade shows to promote assessed businesses and the Petaluma brand.
PTID Management District Plan 6
September 27, 2018
Destination Development
Destination Development (DD) projects will be designed to improve the visitor experience in an
effort to increase overnight visitation at assessed lodging businesses. These funds will be directed to
the City of Petaluma to provide activities, projects, and improvements that benefit lodging businesses,
promote tourism, and increase room rentals, consistent with the 1994 Act. The City and Petaluma
Lodging Association will collaborate on the use of these monies; final approval `vill rest with the City
Council as part of the City's annual budgeting process. As the total number of rooms sold and room
prices increase over time, the amount of available fiends for DD projects will increase. DD projects
may include:
• Destination product development programs and improvements designed to drive overnight
visitation and room sales to assessed businesses;
• Services designed to improve the visitors experience;
• Other activities that increase the profile and notoriety of Petaluma as an overnight travel
destination and promote greater room night sales for assessed businesses.
Administration/Advocacy
The administration/advocacy portion of the budget shall be utilized for administrative staffing costs,
office costs, advocacy, and other general administrative costs such as insurance, legal, and accounting
fees.
City Administration Fee
The City of Petaluma shall be paid a fee equal to three percent (3%) of the amount of assessment
collected to cover its costs of administration related to the agreement Nvith the PIA for administering
the PTID and agreements governing operation of the Visitors Center and other administrative
activities related to the PTID.
Contingency/Reserve
The budget includes a contingency line item to account for uncollected assessments, if any. If there
are contingency funds collected, they may be held in a reserve fund or utilized for other program,
administration or renewal costs at the discretion of the PLA Board. Policies relating to contributions
to the reserve fund, the target amount of the reserve fund, and expenditure of monies from the reserve
fund shall be set by the PIA Board. Contingency/reserve funds may be spent on District programs
or administrative and renewal costs in such proportions as determined by the PLA Board. The reserve
fund may be used for the costs of renewing the PTID.
B. Annual Budget
The total five (5) year improvement and service plan budget is projected at approximately $660,000
annually, or $3,300,000 through 2023. This amount may fluctuate as sales and revenue increase at
assessed businesses, but is not expected to change significantly over the term,
C. California Constitutional Compliance
The PTID assessment is not a property -based assessment subject to the requirements of Proposition
218. Courts have found Proposition 218 Iunited the term `assessments' to levies on real property.'
Rather, the PTID assessment is a business -based assessment, and is subject to Proposition 26.
' Jarvis v. the City of San Diego 72 Cal App. 4a' 230
PTID Management District Plan 7
September 27, 2018
Pursuant to Proposition 26 all levies are a tax unless they fit one of seven exceptions. Two of these
exceptions apply to the PTID, a "specific benefit" and a "specific government service." Both requite
that the costs of benefits or services do not exceed the reasonable costs to the City of conferring the
benefits or providing the services.
1, Specific Benefit
Proposition 26 requires that assessment funds be expended on,. "a specific benefit conferred or
privilege granted directly to, the payor that is not provided to those not charged, and which does not
exceed the reasonable costs to the local government of conferring the benefit or granting the
privilege."2 The services in this Plan ate designed to provide targeted benefits directly to assessed
businesses, and are intended only to provide benefits and services directly to those businesses paying
the assessment. These services are tailored not to serve the general public, businesses in general, or
parcels of land, but rather to serve the specific businesses within the PTID. The activities described
in this Plan are specifically targeted to increase room night sales for assessed lodging businesses within
the boundaries of the PTID, and are narrowly tailored. PTID funds will be used exclusively to provide
the specific benefit of increased room night sales directly to the assessees. Assessment funds shall not
be used to feature non -assessed lodging businesses in PTID programs, or to directly generate sales for
non -assessed businesses. The activities paid for from assessment revenues are business services
constituting and providing specific benefits to the assessed businesses.
The assessment imposed by this PTID is for a specific benefit conferred directly to the payors that is
not provided to those not charged. The specific benefit conferred directly to the payors is an increase
in room night sales. The specific benefit of an increase in room night sales for assessed lodging
businesses will be provided only to lodging businesses paying the district assessment, with marketing,
sales and communications, and destination development programs promoting lodging businesses
paying the PTID assessment. The marketing, sales'and communications, and destination development
programs will be designed to increase room night sales at each assessed lodging businesses. Because
they are necessary to provide the marketing, research and communications, and destination
development programs that specifically benefit the assessed lodging businesses, the administration
and contingency services also provide the specific benefit ofincreased room night sales to the assessed
lodging businesses.
Although the PTID, in providing specific benefits to payors, may produce incidental benefits to non-
paying businesses, the incidental benefit does not preclude the services ftom being considered a
specific benefit. The legislature has found that, "A specific benefit is not excluded from classification
as a `specific benefit' merely because an indirect benefit to a nonpayor occurs incidentally and without
cost to the payor as a consequence of providing the specific benefit to the payor."
2. Specific Government Service
The assessment may also be utilized to provide, "a specific government service or product provided
directly to, the payor that is not provided to diose not charged, and which does not exceed die
reasonable costs to the local government of providing the seivice or product.i' The legislature has
recognized that marketing and promotions services like those to be provided by the PTID are
government services within the meaning of Proposition 265. Further, the legislature has determined
that "a specific government service is not excluded from classification as a `specific government
2 Cal. Const, art XIII C § 1(e)(1)
3 Government Code § 53758(a)
4 Cal. Const. art XIII C § 1(e)(2)
5 Government Code § 53758(b)
PTID Management District Plan
September 27, 2018
service' merely because an indirect benefit to a nonpayot occurs incidentally and without cost to dle
payor as a consequence of providing the specific government service to the payor."
3. Reasonable Cost
PTID services will be implemented carefully to ensure they do not exceed the reasonable cost of such
services. The full amount assessed will be used to provide the services described herein. Funds will
be managed by the PLA, and reports submitted on an annual basis to the City.. Only assessed lodging
businesses will be featured in marketing materials, receive sales leads generated from PTID-funded
activities, be featured in advertising campaigns, and benefit from other PTID-funded services. Non -
assessed lodging businesses will not receive these, not any other, PTID-funded services and benefits.
The PTID-funded programs are all targeted directly at and feature only assessed businesses. It is,
however, possible that there will be a spill over benefit to non -assessed businesses. If non -assessed
lodging businesses receive incremental room nights, that portion of the promotion or program
generating those room nights shall be paid with non-PTID funds. PTID funds shall only be spent to
benefit the assessed businesses, and shall not be spent on that portion of any program which directly
generates incidental room nights for non -assessed businesses.
D. Assessment
The annual assessment rate is two percent (21/16) of gross short-term room rental revenue. Based on
the benefit received, assessments will not be collected on: stays of more than thirty (30) consecutive
days; stays by any officer or employee of a Federal, state, or foreign government who is exempt by
reason of express provision of federal or state law or international treaty; and stays pursuant to
contracts executed prior to January 1, 2019.
The term "gross room rental revenue" as used herein means: the consideration charged, whether or
not received, for the occupancy of a space in a lodging business, valued in money, whether to be
received in money, goods, labor or otherwise, including all receipts, cash, credits and property and
services of any kind or nature, without any deduction therefrom whatsoever. Gross room rental
revenue shall not include any federal, state or local taxes collected, including but not limited to
transient occupancy taxes.
The assessment is levied upon and a direct obligation of the assessed lodging business. However, the
assessed lodging business may, at its discretion, pass the assessment on to transients. The amount of
assessment, if passed on to each transient, shall be disclosed in advance and separately stated from the
ainount of rent charged and any other applicable taxes, and each transient shallreceive a receipt for
payment from the business. If the PTID assessment is identified separately it shall be disclosed as the
"PTID Assessment" As an alternative, the disclosure may include the amount of the PTID
assessment and the amount of the assessment imposed pursuant to the California Tourism Marketing
Act, Government Code §13995 et seq. and shall be disclosed as the "Tourism Assessment." The
assessment is imposed solely upon, and is die sole obligation of the assessed lodging business even if
it is passed on to transients. The assessment shall not be considered revenue for any purpose,
including calculation of transient occupancy taxes.
Bonds shall not be issued.
6 Government Code § 53758(b)
PTID Management District Plan
September 27,2018'
M
E. Penalties and Interest
The PTID shall reimburse the Petaluma Lodging Association (PLA) for any costs associated with
collecting unpaid assessments. If sums in excess of the delinquent PTID assessment are sought to be
recovered in the same collection action by the PLA, the PTID shall bear its pro rata share of such
collection costs. Assessed businesses which are delinquent in paying the assessment shall be
responsible for paying:
1. Oizghlal Delingileily
Any lodging business that fails to remit any assessment imposed within the time required shall
pay a penalty of ten percent (10%) of the amount of the assessment in addition to the amount
of the assessment.
2. Con imied Delitiqu ncy
Any lodging business that fails to remit any delinquent assessment on or before a period of
flhuty (30) days following the date on which the assessment fust became delinquent shall pay
a second delinquency penalty of ten percent (10%) of the amount of the assessment in addition
to the amount of the assessment and the ten percent (109/6) penalty first imposed.
3. Fuad
If PLA determines that the nonpayment of any assessment is due to fraud, a penalty of twenty-
five percent (259/6) of the amount of the assessment shall be added thereto in addition to the
penalties stated above.
4. Litenst
In addition to the penalties imposed, any lodging business that fails to remit any assessment
imposed shall pay interest at the rate of one-half of one percent (0.59/6) per month or fraction
thereof on the amount of the assessment, exclusive of penalties, from the date on which the
assessment first became delinquent until paid.
3. Penalties Meiged with Assesswea
Every penalty imposed and such interest as accrues under the provisions of subparagraphs 1-
4 of this subsection E, shall become a part of the assessment required to be paid.
F. Time and Manner for Collecting Assessments
The PTLD assessment will be implemented beginning January 1, 2019 and will continue for five (5)
years through December 31, 2023. PLA will be responsible for contracting with a service for collecting
the assessment on a monthly basis (including any delinquencies, penalties and interest) from each
lodging business. The service shall take allreasonable efforts to collect the assessments from each
lodging business. The service shall forward the assessments collected to the Owners' Association.
PTID Management District Plan 10
September 27, 2018
V. GOVERNANCE
A. Owners' Association
The City Council, through adoption of this Management District Plan, has the right, pursuant to
Streets and Highways Code §36651, to identify the body that shall implement the proposed program,
which shall be the Owners' Association of the PTID as defined in Streets and Highways Code §36612.
The City Council has determined that Petaluma Lodging Association will serve as the Owners'
Association for the PTID. The PLA as Owners Association shall contract with the City regarding the
administration of the PTID and the Visitors Center.
B. Brown Act and California Public Records Act Compliance
An Owners' Association is a private entity and may not be considered a public entity for any purpose,
nor may its board members or staff be considered to be public officials for any purpose. The Owners'
Association is, however, subject to government regulations relating to transparency, namely the Ralph
M. Brown Act and the California Public Records Act. These regulations are designed to promote
public accountability. The Owners' Association acts as a legislative body under the Ralph M. Brown
Act (Government Code §54950 et seq.). Thus, meetings of the PLA board and certain committees
must be held in compliance with the public notice and other requirements of the Brown Act. The
Owners' Association is also subject to the record keeping and disclosure requirements of the California
Public Records Act. Accordingly, the Owners' Association shall publicly report any action taken and
the vote or. abstention on that action of each member present for the action.
C. Annual Report
The PLA shall present an annual report at the end of each year of operation to the City Council
pursuant to Streets and Highways Code §36650 (see Appendix 1). The annual report shall include:
• Any proposed changes in the boundaries of the improvement district or in any benefit zones
or classification of businesses within the district.
• The improvements and activities to be provided for that fiscal year.
• An estimate of the cost of providing the improvements and the activities for that fiscal year.
• The method and basis of levying the assessment in sufficient detail to allow each business
owner to estimate the amount of the assessment to be levied against his or her business for
that fiscal year.
• The estimated amount of any surplus or deficit revenues to be carried over from a previous
fiscal year.
• The estimated amount of any contributions to be made from sources other than assessments
levied pursuant to this part.
PTID Management District Plan 11
September 27, 2018
APPENDIX 1 -LAW
*** THIS DOCUMENT IS CURRENT THROUGH THE 2018 SUPPLEMENT ***
(ALL 2017 LEGISLATION)
STREETS AND HIGHWAYS CODE
DIVISION 18. PARKING
PART 7. PROPERTY AND BUSINESS IMPROVEMENT DISTRICT LAW OF 1994
CHAPTER 1. General Provisions
ARTICLE 1. Declarations
36600. Citation of part '
This part shall be known and may be cited as the "Property and Business Improvement District Law of 1994."
36601. Legislative findings and declarations; Legislative guidance
The Legislature finds and declares all of the following:
(a) Businesses located and operating within business districts in some of this state's communities are
economically disadvantaged, are underutilized; and are unable to attract customers due to inadequate
facilities, services, and activities in the business districts.
(b) It is in the public interest to promote the economic revitalization and physical maintenance of business
districts in order to create jobs, attract new businesses, and prevent the erosion of the business districts.
(c) It is of particular local benefit to allow business districts to fund business related improvements,
maintenance, and activities through the levy of assessments upon the businesses or real property that receive
benefits from those improvements.
(d) Assessments levied for the purpose of conferring special benefit upon the real property or a specific
benefit upon the businesses in a business district are not taxes for the general benefit of a city, even ifproperty,
businesses, or persons not assessed receive incidental or collateral effects that benefit them.
(e) Property and business improvement districts formed throughout this state have conferred special benefits
upon properties and businesses within their districts and have made those properties and businesses more
useful by providing the following benefits:
(1) Crime reduction. A study by the Rand Corporation has confirmed a 12 -percent reduction in the
incidence of robbery and an 8 -percent reduction in the total incidence of violent crimes within the
30 districts studied.
(2) Job creation.
(3) Business attraction.
(4) Business retention.
(5) Economic growth.
(6) New investments.
(f) With the dissolution of redevelopment agencies throughout the state, property and business improvement
districts have become even more important tools with which communities can combat blight, promote
economic opportunities, and create a clean and safe environment.
(g) Since the enactment of this act, the people of California have adopted Proposition 218, which added
Article XIII D to the Constitution in order to place certain requirements and restrictions on the formation of,
and activities, expenditures, and assessments by property -based districts. Article XIII D of the Constitution
provides that property -based districts may only levy assessments for special benefits.
(h) The act amending this section is intended to provide the Legislature's guidance with regard to this act, its
interaction with the provisions of Article XIII D of the Constitution, and the determination of special benefits
in property -based districts.
(1) The lack of legislative guidance has resulted in uncertainty and inconsistent application of this
act, which discourages the use of assessments to fund needed improvements, maintenance, and
activities in property -based districts, contributing to blight and other underutilization of property.
(2) Activities undertaken for the purpose of conferring special benefits upon property to be assessed
inherently produce incidental or collateral effects that benefit property or persons not assessed.
Therefore, for special benefits to exist as a separate and distinct category from general benefits, the
PTID Management District Plan 12
September 27, 2018.
incidental or collateral effects of those special benefits are inherently part of those special benefits.
The mere fact that special benefits produce incidental or collateral effects that benefit property or
persons not assessed does not convert any portion of those special benefits or their incidental or
collateral effects into general benefits.
(3) It is of the utmost importance that property -based districts created under this act have clarity
regarding restrictions on assessments they may levy and the proper determination of special benefits.
Legislative clarity with regard to this act will provide districts with clear instructions and courts with
legislative intent regarding restrictions on property -based assessments, and the manner in which
special benefits should be determined.
36602. Purpose of part
The purpose of this part is to supplement previously enacted provisions of law that authorize cities to levy assessments
within property and business improvement districts, to, ensure that those assessments conform to all constitutional
requirements and are determined and assessed in accordance with the guidance set forth in this act. This part does not
affect or limit any other provisions of law authorizing or providing for the furnishing of improvements or activities or
the raising of revenue for these purposes.
36603. Preemption of authority or charter city to adopt ordinances levying assessments
Nothing in this part is intended to preempt the authority of a charter city to adopt ordinances providing for a different
method of levying assessments for similar or additional purposes from those set forth in this part. A properly and
business improvement district created pursuant to this part is expressly exempt from the provisions of the Special
Assessment Investigation, Limitation and Majority Protest Act of 1931 (Division 4 (commencing with Section 2800)).
36603.5. Part prevails over conflicting provisions
Any provision of this part that conflicts with any other provision of law shall prevail over the other provision of law,
as to districts created under this part.
36604. Severability
This part is intended to be construed liberally and, if any provision is held invalid,. the remaining provisions shall
remain in full force and effect. Assessments levied under this part are not special taxes.
ARTICLE 2. Definitions
36606. "Activities"
"Activities" means, but is not limited to, all of the following that benefit businesses or real properly in the district;
(a) Promotion of public events.
(b) Furnishing of music in any public place.
(c) Promotion of tourism within the district.
(d) Marketing and economic development, including retail retention and recruitment.
(e) Providing security, sanitation, graffiti removal, street and sidewalk cleaning, and other municipal services
supplemental to those normally provided by the municipality.
.(f) Other services provided for the purpose of conferring special benefit upon assessed real property or
specific benefits upon assessed businesses located in the district.
36606.5. "Assessment"
"Assessment" means a levy for the purpose of acquiring, constructing, installing, or maintaining improvements and
providing activities that will provide certain benefits to properties or businesses located within a property and business
improvement district.
36607. "Business"
PTID Management District Plan 13
September 27, 2018
"Business" means all types of businesses and includes financial institutions and professions.
36608. "City"
"City" means a city, county, city and county, or an agency or entity created pursuant to Article 1 (commencing with
Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code, the public member agencies of which
includes only cities, counties, or a city and county, or the State of California.
36609. "City council"
"City council" means the city council of a city or the board of supervisors of a county, or the agency, commission, or
board created pursuant to a joint powers agreement and which is a city within the meaning of this part.
36609.4. "Clerk"
"Clerk" means the clerk of the legislative body.
36609.5. "General benefit"
"General benefit" means, for purposes of a property -based district, any benefit that is not a "special benefit" as defined
in Section 36615.5.
36610. "Improvement"
"Improvement" means the acquisition, construction, installation, or maintenance of any tangible property with an
estimated useful life of five years or more including, but not limited to, the following;
(a) Parking facilities.
(b) Benches, booths, kiosks, display cases, pedestrian shelters and signs.
(c) Trash receptacles and public restrooms.
(d) Lighting and heating facilities.
(e) Decorations.
(f) Parks.
(g) Fountains.
(h) Planting areas.
(i) Closing, opening, widening, or narrowing of existing streets.
0) Facilities or equipment, or both, to enhance security of persons and properly within the district.
(k) Ramps, sidewalks, plazas, and pedestrian malls.
(1) Rehabilitation or removal of existing structures.
36611. "Management district plan"; "Plan"
"Management district plan" or "plan" means a proposal as defined in Section 36622.
36612. "Owners' association"
"Owners' association" means a private nonprofit entity that is under contract with a city to administer or implement
improvements, maintenance, and activities specified in the management district plan. An owners' association may be
an existing nonprofit entity or a newly formed nonprofit entity. An owners' association is a private entity and may not
be considered a public entity for any purpose, nor may its board members or staff be considered to be public officials
for any purpose. Notwithstanding this section, an owners' association shall comply with the Ralph M. Brown Act
(Chapter 9 (commencing with Section 54950) of Part 1 of Division 2 of Title 5 of the Government Code), at all times
when matters within the subject matter of the district are heard, discussed, or deliberated, and with the California
Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code),
for all records relating to activities of the district.
36614. "Property"
"Property" means real property situated within a district.
PTID Management District Plan 14
September 27, 2018
36614.5. "Property and business improvement district"; "District"
"Property and business improvement district," or "district," means a property and business improvement district
established pursuant to this part,
36614.6. "Property -based assessment'
"Property -based assessment" means any assessment made pursuant to this part upon real property.
36614.7. "Property -based district"
"Property -based district" means any district in which a city levies a property -based assessment.
36615. "Property owner"; `Business owner"; "Owner"
"Property owner" means any person shown as the owner of land on the last equalized assessment roll or otherwise
known to be the owner of land by the city council. "Business owner" means any person recognized by the city as the
owner of the business. "Owner". means either a business owner or a property owner. The city council has no obligation
to obtain other information as to the ownership of land or businesses, and its determination of ownership shall be final
and conclusive for the purposes of this part, Wherever this part requires the signature of the property owner, the
signature of the authorized agent of the property owner shall be sufficient. Wherever this part requires the signature
of the business owner, the signature of the authorized agent of the business owner shall be sufficient.
36615,5. "Special benefit'
"Special benefit" means, for purposes of a property -based district, a particular and distinct benefit over and above
general benefits conferred on real property located in a district or to the public at large. Special benefit includes
incidental or collateral effects that arise from the improvements, maintenance, or activities of property -based districts
even if those incidental or collateral effects benefit property or persons not assessed. Special benefit excludes general
enhancement of property value.
36616. "Tenant"
"Tenant" means an occupant pursuant to a lease of commercial space or a dwelling unit, other than an owner.
ARTICLE 3, Prior Law,
36617. Alternate method of financing certain improvements and activities; Effect on other provisions
This part provides an alternative method of financing certain improvements and activities. The provisions of this part
shall not affect or limit any other provisions of law authorizing or providing for the furnishing of improvements or
activities or the raising of revenue for these purposes. Every improvement area established pursuant to the Parking
and Business Improvement Area Law of 1989 (Part 6 (commencing with Section 36500) of this division) is valid and
effective and is unaffected by this part.
CHAPTER 2. Establishment
36620: Establishment of property and business improvement district
A property and business improvement district may be established as provided in this chapter.
36620.5. Requirement of consent of city council
A county may not form a district within the territorial jurisdiction of a city without the consent of the city council of
that city. A city may not form a district within the unincorporated territory of a county without the consent of the board
PTID Management District Plan 15
September 27, 2018
of supervisors of that county. A city may not form a district within the territorial jurisdiction of another city without
the consent of the city council of the other city.
36621. Initiation of proceedings; Petition of property or business owners'in proposed district
(a) Upon the submission of a written petition, signed by the property or business owners in the proposed
district who will pay more than 50 percent of the assessments proposed to be levied, the city council may
initiate proceedings to form a district by the adoption of a resolution expressing its intention to form a district.
The amount of assessment attributable to property or a business owned by the same property or business
owner that is in excess of 40 percent of the amount of all assessments proposed to be levied, shall not be
included in determining whether the petition is signed by property or business owners who will pay more
than 50 percent of the total amount of assessments proposed to be levied.
(b) The petition of property or business owners required under subdivision (a) shall include a summary of
the management district plan. That summary shall include all of the following:
(1) A map showing the boundaries of the district.
(2) Information specifying where the complete management district plan can be obtained.
(3) Information specifying that the complete management district plan shall be furnished upon
request.
(c) The resolution of intention described in subdivision (a) shall contain all of the following:
(1) A brief description of the proposed improvements, maintenance, and activities, the amount of
the proposed assessment, a statement as to whether the assessment will be levied on property or
businesses within the district, a statement as to whether bonds will be issued, and a description of
the exterior boundaries of the proposed district, which may be made by reference to any plan or map
that is on file with the clerk. The descriptions and statements do not need to be detailed and shall be
sufficient if they enable an owner to generally identify the nature and extent of the improvements,
maintenance, and activities, and the location and extent of the proposed district.
(2) A- time and place for a public hearing on the establishment of the property and business
improvement district and the levy of assessments, which shall be consistent with the requirements
of Section 36623.
36622. Contents of management district plan
The management district plan shall include, but is not limited to, all of the following:
(a) If the assessment will be levied on property, a map of the district in sufficient detail to locate each parcel
of property and, if businesses are to be assessed, each business within the district, if the assessment will be
levied on businesses, a map that identifies the district boundaries in sufficient detail to allow a business owner
to reasonably determine whether a business is located within the district boundaries. If the assessment will
be levied on property and businesses, a map of the district in sufficient detail to locate each parcel of property
and to allow a business owner to reasonably determine whether a business is located within the district
boundaries.
(b) The name -of the proposed district.
(c) A description of the boundaries of the district, including the boundaries of benefit zones, proposed for
establishment or extension in a manner sufficient to identify the affected property and businesses included,
which may be made by reference to any plan or map that is on file with the clerk. The boundaries of a
proposed property assessment district shall not overlap with the boundaries of another existing property
assessment district created pursuant to this part. This part does not prohibit the boundaries of a district created
pursuant to this part to overlap with other assessment districts established pursuant to other provisions of law,
including, but not limited to, the Parking and Business Improvement Area Law of 1989 (Part 6 (commencing
with Section 36500)). This part does not prohibit the boundaries of a business assessment district created
pursuant to this part to overlap with another business assessment district created pursuant to this part. This
part does not prohibit the boundaries of a business assessment district created pursuant to this part to overlap
with a property assessment district created pursuant to this part.
(d) The improvements, maintenance, and activities proposed for each year of operation of the district and the
maximum cost thereof, If the improvements, maintenance, and activities proposed for each year of operation
are the same, a description of the first year's proposed improvements, maintenance, and activities and a
statement that the same improvements, maintenance, and activities are proposed for subsequent years shall
satisfy the requirements of this subdivision.
PTH) Management District Plan 16
September 27, 2018
(e) The total annual amount proposed to be expended for improvements, maintenance, or activities, and debt
service in each year of operation of the district. If the assessment is levied on businesses, this amount may
be estimated based upon the assessment rate, If the total annual amount proposed to be expended in each year
of operation of the district is not significantly different, the amount proposed to be expended in the initial
year and a statement that a similar amount applies to subsequent years shall satisfy the requirements of this
subdivision.
(f) The proposed source or sources of financing, including the proposed method and basis of levying the
assessment in sufficient detail to allow each property or business owner to calculate the amount of the
assessment to be levied against his or her property or business. The plan also shall state whether bonds will
be issued to finance improvements.
(g) The time and manner of collecting the assessments.
(h) The specific number ofyears in which assessments will be levied. In a new district, the maximum number
of years shall be five. Upon renewal, a district shall have a term not to exceed 10 years. Notwithstanding
these limitations, a district created pursuant to this part to finance capital improvements with bonds may levy
assessments until the maximum maturity of the bonds. The management district plan may set forth specific
increases in assessments for each year of operation of the district.
(i) The proposed time for implementation and'completion of the management district plan.
0) Any proposed rules and regulations to be applicable to the district.
(k) (1) A list of the properties or businesses to be assessed, including the assessor's parcel numbers for
" properties to be assessed, and a statement of the method or methods by which the expenses of a
district will be imposed upon benefited real property or businesses, in proportion to the benefit
received by the property or business, to defray the cost thereof.
(2) In a property -based district, the proportionate special benefit derived by each identified parcel
shall be determined exclusively in relationship to the entirety of the capital cost of a public
improvement, the maintenance and operation expenses of a public improvement, or the cost of the
activities. An assessment shall not be imposed on any parcel that exceeds the reasonable cost of the
proportional special benefit conferred on that parcel. Only special benefits are assessable, and a
property -based district shall separate the general benefits, if any, from the special benefits conferred
on a parcel. Parcels within a property -based district that are owned or used by any city, public
agency, the State of California, or the United States shall not be exempt from assessment unless the
governmental entity can demonstrate by clear and convincing evidence that those publicly owned
parcels in fact receive no special benefit. The value of any incidental, secondary, or collateral effects
that arise from the improvements, maintenance, or activities of a property based district and that
benefit property or persons not assessed shall not be deducted from the entirety of the cost of any
special benefit or affect the proportionate special benefit derived by each identified parcel.
(1) In a property -based district, the total amount of all special benefits to be conferred upon the properties
located within the properly -based district.
(m) In a property -based district, the total amount of general benefits, if any.
(n) In a property -based district, a detailed engineer's report prepared by a registered professional engineer
certified by the State of California supporting all assessments contemplated by the management district plan.
(o) Any other item or matter required to be incorporated therein by the city council.
36623. Procedure to levy assessment
(a) If a city council proposes to levy a new or increased property assessment, the notice and protest and
hearing procedure shall comply with Section 53753 of the Government Code.
(b) If a city council proposes to levy a new or increased business assessment, the notice and protest and
hearing procedure shall comply with Section 54954.6 of the Government Code, except that notice shall be
mailed to the owners of the businesses proposed to be assessed. A protest may be made orally or in writing
by any interested person. Every written protest shall be filed with the clerk at or before the time fixed for the
public hearing. The city council may waive any irregularity in the form or content of any written protest. A
written protest may be withdrawn in writing at any time before the conclusion of the public hearing. Each
written protest shall contain a description of the business in which the person subscribing the protest is
interested sufficient to identify the business and, if a person subscribing is not shown on the official records
of the city as the owner of the business, the protest shall contain or be accompanied by written evidence that
the person subscribing is the owner of the business or the authorized representative. A written protest that
does not comply with this section shall not be counted in determining a majority protest. If written protests
are received from the owners or authorized representatives of businesses in the proposed district that will pay
PTID Management District Plan 17
September 27, 2018
50 percent or more of the assessments proposed to be levied and protests are not withdrawn so as to reduce
the protests to less than 50 percent, no further proceedings to levy the proposed assessment against such
businesses, as contained in the resolution of intention, shall be taken for a period of one year from the date
of the finding of a majority protest by the city council.
(c) If a city council proposes to conduct a single proceeding to levy both a new or increased property
assessment and a new or increased business assessment, the notice and protest and hearing procedure for the
property assessment shall comply with subdivision (a), and the notice and protest and hearing procedure for
the business assessment shall comply with subdivision (b). If a majority protest is received from either the
property or. business owners, that respective portion of the assessment shall not be levied. The remaining
portion of the assessment may be levied unless the improvement or other special benefit was proposed to be
funded by assessing both property and business owners.
36624. Changes to proposed assessments
At the conclusion of the public hearing to establish the district, the city council may adopt, revise, change, reduce, or
modify the proposed assessment or the type or types of improvements, maintenance, and activities to be funded with
the revenues from the assessments. Proposed assessments may only be revised by reducing any or all of them. At the
public hearing, the city council may only make changes in, to, or from the boundaries of the proposed property and
business improvement district that will exclude territory that will not benefit from the proposed improvements,
maintenance, and activities. Any modifications, revisions, reductions, or changes to the proposed assessment district
shall be reflected in the notice and map recorded pursuant to Section 36627.
36625. Resolution of formation
(a) If the city council, following the public hearing, decides to establish a proposed property and business
improvement district, the city council shall adopt a resolution of formation that shall include, but is not limited
to, all of the following:
(1) A brief description of the proposed improvements, maintenance, and activities, the amount of
the proposed assessment, a statement as to whether the assessment will be levied on property,
businesses, or both within the district, a statement on whether bonds will be issued, and a description
of the exterior boundaries of the proposed district, which may be made by reference to any plan or
map that is on file with the clerk. The descriptions and statements need not be detailed and shall be
sufficient if they enable an owner to generally identify the nature and extent of the improvements,
maintenance, and activities and the location and extent of the proposed district.
(2) The number, date of adoption, and title of the resolution of intention.
(3) The time and place where the public hearing was held concerning the establishment of the
district.
(4) A determination regarding any protests received. The city shall not establish the district or levy
assessments if a majority protest was received.
(5) A statement that the properties, businesses, or properties and businesses in the district established
by the resolution shall be subject to any amendments to this part.
(6) A statement that the improvements, maintenance, and activities to be conferred on businesses
and properties in the district will be funded by the levy of the assessments. The revenue from the
levy of assessments within a district shall not be used to provide improvements, maintenance, or
activities outside the district or for any purpose other than the purposes specified in the resolution
of intention, as modified by the city council at the hearing concerning establishment of the district.
Notwithstanding the foregoing, improvements and activities that must be provided outside the
district boundaries to create a special or specific benefit to the assessed parcels or businesses may
be provided, but shall be limited to marketing or signage pointing to the district.
(7) A finding that the property or businesses within the area of the property and business
improvement district will be benefited by the improvements, maintenance, and activities funded by
the proposed assessments, and, for a property -based district, that property within the district will
receive a special benefit.
(8) In a property -based district, the total amount of all special benefits to be conferred on the
properties within the property -based district.
(b) The adoption of the resolution of formation and, if required, recordation of the notice and map pursuant
to Section 36627 shall constitute the levy of an assessment in each of the fiscal years referred to in the
management district plan.
PTID Management District Plan 18
September 27, 2018
36626. Resolution establishing district
If the city council, following the public hearing, desires to establish the proposed property and business improvement
district, and the city council has not made changes pursuant to Section 36624, or has made changes that do not
substantially change the proposed assessment, the city council shall adopt a resolution establishing the district. The
resolution shall contain all of the information specified in Section 36625.
36627. Notice and assessment diagram
Following adoption of the resolution establishing district assessments on properties pursuant to Section 36625 or
Section 3 6626, the clerk shall record a notice and an assessment diagram pursuant to Section 3114. No other provision
of Division 4.5 (commencing with Section 3100) applies to an assessment district created pursuant to this part.
36628. Establishment of separate benefit zones within district; Categories of businesses
The city council may establish one or more separate benefit zones within the district based upon the degree of benefit
derived from the improvements or activities to be provided within the benefit zone and may impose a different
assessment within each benefit zone. If the assessment is to be levied on businesses, the city council may also define
categories of businesses based upon the degree of benefit that each will derive from the improvements or activities to
be provided within the district and may impose a different assessment or rate of assessment on each category of
business, or on'each category of business within each zone.
36628.5. Assessments on businesses or property owners
The city council may levy assessments on businesses or on property owners, or a combination of the two, pursuant to
this part. The city council shall structure the assessments in whatever manner it determines corresponds with the
distribution of benefits from the proposed improvements, maintenance, and activities, provided that any property -
based assessment conforms with the requirements set forth in paragraph (2) of subdivision (k) of Section 36622.
36629. Provisions and procedures applicable to benefit zones and business categories
All provisions ofthis part applicable to the establishment, modification, or disestablishment of a property and business
improvement district apply to the establishment, modification, or disestablishment of benefit zones or categories of
business. The city council shall, to establish, modify, or disestablish a benefit zone or category of business, follow the
procedure to establish, modify, or disestablish a property and business improvement district.
36630. Expiration of district; Creation of new district
If a property and business improvement district expires due to the time limit set pursuant to subdivision (h) of Section
36622, a new management district plan may be created and the district may be renewed pursuant to this part.
CHAPTER 3. Assessments
36631. Time and manner of collection of assessments; Delinquent payments
The collection of the assessments levied.pursuant to this part shall be made at the time and in the manner set forth by
the city council in the resolution levying the assessment. Assessments levied on real property.may be collected atthe
same time and in the same manner as for the ad valorem property tax, and may provide for the same lien priority and
penalties for delinquent payment. All delinquent payments for assessments levied pursuant to this part may be charged
interest and penalties.
36632. Assessments to be based on estimated benefit; Classification of real property and businesses; Exclusion
of residential and agricultural property
(a) The assessments levied on real property pursuant to this part shall be levied on the basis of the estimated
benefit to the real property within the property and business improvement district. The city council may
PTID Management District Plan 19
September 27, 2018
classify properties for purposes of determining the benefif to property of the improvements and activities
provided pursuant to this part.
(b) Assessments levied on businesses pursuant to this part shall be levied on the basis of the estimated benefit
to the businesses within the property and business improvement district. The city council may classify
businesses for purposes of determining the benefit to the businesses of the improvements and activities
provided pursuant to this part.
(c) Properties zoned solely for residential use, or that are zoned for agricultural use, are conclusively
presumed not to benefit fi•om the improvements and service funded through these assessments, and shall not
be subject to any assessment pursuant to this part.
36633. Time for contesting validity of assessment
The validity of an assessment levied under this part shall not be contested in any action or proceeding unless the action
or proceeding is commenced within 30 days after the resolution levying the assessment is adopted pursuant to Section
36626. Any appeal from a final judgment in an action or proceeding shall be perfected within 30 days after the entry
of judgment.
36634. Service contracts authorized to establish levels of city services
The city council may execute baseline service contracts that would establish levels of city services that would continue
after a property and business improvement district has been formed.
36635. Request to modify management district plan
The owners' association may, at any time, request that the city council modify the management district plan. Any
modification of the management district plan shall be made pursuant to this chapter.
36636. Modification of plan by resolution after public hearing; Adoption of resolution of intention
(a) Upon the written request of the owners' association, the city council may modify the management district
plan after conducting one public hearing on the proposed modifications. The city council may modify the
improvements and activities to be funded with the revenue derived from the levy of the assessments by
adopting a resolution determining to make the modifications after holding a public hearing on the proposed
modifications. If the modification includes the levy of a new or increased assessment, the city council shall
comply with Section 36623. Notice of all other public hearings pursuant to this section shall comply with
both of the following:
(1) The resolution of intention shall be published in a newspaper of general circulation in the city
once at least seven days before the public hearing.
(2) A complete copy of the resolution of intention shall be mailed by first class mail, at least 10 days
before the public hearing, to each business owner or property owner affected by the proposed
modification.
(b) The city council shall adopt a resolution of intention which states the proposed modification prior to the
public hearing required by this section. The public hearing shall be held not more than 90 days after the
adoption of the resolution of intention.
36637. Reflection of modification in notices recorded and maps
Any subsequent modification of the resolution shall be reflected in subsequent notices and maps recorded pursuant to
Division 4.5 (commencing with Section 3100), in a manner consistent with the provisions of Section 36627.
CHAPTER 3.5. Financing
36640. Bonds authorized; Procedure; Restriction on reduction or termination of assessments
(a)The city council may, by resolution, determine and declare that bonds shall be issued to finance the
estimated cost of some or all of the proposed improvements described in the resolution of formation adopted
pursuant to Section 36625, if the resolution of formation adopted pursuant to that section provides for the
issuance of bonds, under the Improvement Bond Act of 1915 (Division 10 (commencing with Section 8500))
PTID Management District Plan 20
September 27, 2018
or in conjunction with Marks -Roos Local Bond Pooling Act of 1985 (Article 4 (commencing with Section
6584) of Chapter 5 of Division 7 of Title 1 of the Government Code). Either act, as the case may be, shall
govern the proceedings relating to the issuance of bonds, although proceedings under the Bond Act of 1915
may be modified by the city council as necessary to accommodate assessments levied upon business pursuant
to this part.
(b) The resolution adopted pursuant to subdivision (a) shall generally describe the proposed improvements
specified in the resolution of formation adopted pursuant to Section 36625, set forth the estimated cost of
those improvements, specify the number of annual installments and the fiscal years during which they are to
be collected. The amount of debt service to retire the bonds shall not exceed the amount of revenue estimated
to be raised from assessments over 30 years.
(c) Notwithstanding any other provision of this part, assessments levied to pay the principal and interest on
any bond issued pursuant to this section shall not be reduced or terminated if doing so would interfere with
the timely retirement of the debt.
CHAPTER 4. Governance
36650. Report by owners' association; Approval or modification by city council
(a) The owners' association shall cause to be prepared a report for each fiscal year, except the fust year, for
which assessments are to be levied and collected to pay the costs of the improvements, maintenance, and
activities described in the report. The owners' association's first report shall be due after the fust year of
operation of the district. The report may propose changes, including, but not limited to, the boundaries of the
property and business improvement district or any benefit zones within the district, the basis and method of
levying the assessments, and any changes in the classification of property, including any categories of
business, if a classification is used.
(b) The report shall be filed with the clerk and shall refer to the property and business improvement district
by name, specify the fiscal year to which the report applies, and, with respect to that fiscal year, shall contain
all of the following information:
(1),Any proposed changes in the boundaries of the property and business improvement district or in
any benefit zones or classification of property or businesses within the district.
(2) The improvements, maintenance, and activities to be provided for that fiscal year.
(3) An estimate of the cost of providing the improvements, maintenance, and activities for that fiscal
year.
(4) The method and basis of levying the assessment in sufficient detail to allow each real property
or business owner, as appropriate, to estimate the amount of the assessment to be levied against his
or her property or business. for. that fiscal year.
(5) The estimated amount of any surplus or deficit revenues to.be carried over from a previous fiscal
year.
(6) The estimated amount of any contributions to be made from sources other than assessments
levied pursuant to this part.
(c) The city council may approve the repoit as filed by the owners' association or may modify any particular
contained in the report and approve it as modified. Any modification shall be made pursuant to Sections
36635 and 36636.
The city council shall not approve a change in the basis and method of levying assessments that 'would impair
an authorized or executed contract to be paid from the revenues derived from the levy of assessments,
including any commitment to pay principal and interest on any bonds issued on behalf of the district.
36651. Designation of owners' association to provide improvements, maintenance, and activities
The management district plan may, but is not required to, state that an owners' association will provide the
improvements, maintenance, and activities described in the management district plan. If the management district plan
designates an owners' association, the city shall contract with the designated nonprofit corporation to provide services.
CHAPTER 5. Renewal
36660. Renewal of district; Transfer or refund of remaining revenues; District term limit
PTID Management District Plan 21
September 27, 2018
(a) Any district previously established whose term has expired, or will expire, may be renewed by following
the procedures for establishment as provided in this chapter.
(b) Upon renewal, any remaining revenues derived from the levy of assessments, or any revenues derived
from the sale of assets acquired with the revenues, shall be transferred to the renewed district. If the renewed
district includes additional parcels or businesses not included in the prior district, the remaining revenues
shall be spent to benefit only the parcels or businesses in the prior district. If the renewed district does not
include parcels or businesses included in the prior district, the remaining revenues attributable to these parcels
shall be refunded to the owners of these parcels or businesses.
(c) Upon renewal, a district shall have a term not to exceed 10 years; or, if the district is authorized to issue
bonds, until the maximum maturity of those bonds. There is no requirement that the boundaries, assessments,
improvements, or activities of a renewed district be the same as the original or prior district.
CHAPTER 6. Disestablishment
36670. Circumstances permitting disestablishment of district; Procedure
(a) Any district established or extended pursuant to the provisions of this part, where there is no indebtedness,
outstanding and unpaid, incurred to accomplish any of the purposes of the district, may be disestablished by
resolution by the city council in either of the following circumstances;
(1) If the city council finds there has been misappropriation of funds, malfeasance, or a violation of
law in connection with the management of the district, it shall notice a hearing on disestablishment.
(2) During the operation of the district, there shall be a 30 -day period each year in which assessees
may request disestablishment of the district. The first such period shall begin one year after the date
of establishment of the district and shall continue for 30 days. The next such 30 -day period shall
begin two years after the date of the establishment of the district. Each successive year of operation
of the district shall have such a 30 -day period. Upon the written petition of the owners or authorized
representatives of real property or the owners or authorized representatives of businesses in the
district who pay 50 percent or more of the assessments levied, the city council shall pass a resolution
of intention to disestablish the district. The city council shall notice a hearing on disestablishment.
(b) The city council shall adopt a resolution of intention to disestablish the district prior to the public hearing
required by this section. The resolution shall state the reason for the disestablishment, shall state the time and
place of the public hearing, and shall contain a proposal to dispose of any assets acquired with the revenues
of the assessments levied within the property and business improvement district. The notice of the hearing
on disestablishment required by this section shall be given by mail to the property owner of each parcel or to
the owner of each business subject to assessment in the district, as appropriate. The city shall conduct the
public hearing not less than 30 days after mailing the notice to the property or business owners. The public
hearing shall be held not more than 60 days after the adoption of the resolution of intention.
36671. Refund of remaining revenues upon disestablishment or expiration without renewal of district;
Calculation of refund; Use of outstanding revenue collected after disestablishment of district
(a) Upon the disestablishment or expiration without renewal of a district, any remaining revenues, after all
outstanding debts are paid, derived from the levy of assessments, or derived from the sale of assets acquired
with the revenues, or from bond reserve or construction funds, shall be refunded to the owners of the property
or businesses then located and operating within the district in which assessments were levied by applying the
same method and basis that was used to calculate the assessments levied in the fiscal year in which the district
is disestablished or expires. All outstanding assessment revenue collected after disestablishment shall be
spent on improvement's and activities specified in the management district plan.
(b) If the disestablishment occurs before an assessment is levied for the fiscal year, the method and basis that
was used to calculate the assessments levied in the immediate prior fiscal year shall be used to calculate the
amount of any refund.
PTID Management District Plan 22
September 27, 2018
APPENDIX 2 —ASSESSED BUSINESSES
Business'Name . ,,,. ;,:.• _
.Business Address .;..;
Ci , State:ZlP.
America's Best Value Inn &
Suites
5135 Montero Way
Petaluma, CA 94954
Best Western Petaluma Inn
200 S, McDowell Blvd.
Petaluma, CA 94954
Hotel Petaluma
205 Kentucky St.
Petaluma, CA 94952
Hampton Inn
450 Jefferson St:
Petaluma, CA 94952
San Francisco
North/Petaluma KOA
20 Rainsville Rd.
Petaluma, CA 94952
Metro, Hotel
508 Petaluma Blvd.. S.
Petaluma, CA 94952
Motel 6
1368 N. McDowell Blvd.
Petaluma, CA 94954
Quality Inn
5100 Montero Way
Petaluma, CA 94954
Sheraton Sonoma County —
Petaluma
745 Baywood Dr.
Petaluma, CA 94954
PTID Management District Plan .23
September 27, 2018
EXHIBIT C
Contract for Administration of PTID
(For the services to be performed under the contract, see Exhibit B to the resolution of formation. The
Management District Plan in Exhibit B to the resolution of formation will be Exhibit A to the contract
for administration of the PTID.)
0 1 P a g e
OWNERS' ASSOCIATION AGREEMENT
BETWEEN THE CITY OF PETALUMA AND THE PETALUMA LODGING
ASSOCIATION
AGREEMENT
THIS PROFESSIONAL SERVICES AGREEMENT ("Agreement") is entered into and effective
as of , 20 ("Effective Date"), by and between the City of Petaluma, a
(city use only)
municipal corporation and a charter city ("City") and the Petaluma Lodging Association, a
California 501(c)6 non-profit corporation ("the Association") (collectively, the "Parties").
RECITALS
WHEREAS, on October 15, 2018, nine (9) lodging operators in the City of Petaluma submitted
petitions and a draft management plan to the City Council requesting the establishment of a
tourism improvement assessment district pursuant to the Property and Business Improvement
District Law of 1994 (Cal. Streets and Highways Code §§ 36600 et. seq.) (the 1994 Act); and
WHEREAS, those nine (9) lodging operators' petitions represented 100 percent of the total
assessment proposed to be collected within the proposed district; and
WHEREAS, on December 3, 2018, after considering the petitions and draft management plan
and complying with all procedural requirements, the City Council adopted a resolution
establishing the Petaluma Tourism Improvement District (PTID) and approved a final
management plan entitled the "Petaluma Tourism District Management District Plan" (the Plan);
and
WHEREAS, the Plan designates the Petaluma Lodging Association (the Association) as the
"owners' association" responsible for implementing the programs, services, and activities
described in the Plan; and
WHEREAS, pursuant to Section 36651 Of the 1994 Act, the City must contract with the owners'
association designated by the Plan; and
WHEREAS, the City Council desires to delegate the authority to collect PTID assessments to the
Association, so that the Association will be responsible under this Agreement for collecting
monthly PTID assessments and any associated delinquencies; and
WHEREAS, the Association represents and warrants it is fully' qualified to implement the
programs, services, and activities detailed in the Plan by virtue of specialized experience and
training, education and expertise of its principals, employees, and subcontractors. The
Association further accepts responsibility for implementing the programs, services and activities
in accordance with the terms and conditions of the Plan as set forth in this agreement; and
PROFESSIONAL SERVICES AGREEMENT
Nov 19 2018
WHEREAS, on December 3, 2018 the Petaluma City Council authorized execution of this
Agreement by Resolution No. , and further conditioned that the Petaluma Tourism
Improvement District shall not be fully established nor shall its assessments be valid until such
time as an Agreement with the Association is executed.
NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, the
Parties agree as follows:
1. Services. The Association shall provide general administrative support for the PTID and
implement and oversee the programs, services and activities identified in the Plan. These
programs, services, and activities are further set forth in the Plan, which is attached
hereto and incorporated herein as Exhibit "A" ("Services").
2. Assessment
A. The annual assessment rate that shall be charged to the assessed lodging
businesses within the PTID, pursuant to the Plan, is two percent (2%) of gross short-term
room rental revenue. Assessments shall not be collected on stays of more than thirty (30)
consecutive days; stays by any officer or employee of a Federal, state, or foreign
government who is exempt by reason of express provision of federal or state law or
international treaty; and stays pursuant to contracts executed prior to January 1, 2019.
B. The term "gross room rental revenue" as used herein means the consideration
charged, whether or not received, for the occupancy of a space in a lodging business,
valued in money, whether to be received in money, goods, labor or otherwise, including
all receipts, cash, credits and property and services of any kind or nature, without any
deduction therefrom whatsoever. Gross room rental revenue shall not include any federal,
state or local taxes collected, including but not limited to transient occupancy taxes.
3. Delellation of Authority to Collect Assessments/Delinquent Assessments; Business
Tax Certificate
A. City hereby delegates its authority to the Association to collect PTID assessments
as defined by Section 2A of this Agreement and the Plan, and any penalties and interest
associated with delinquent assessments. The Association shall subcontract with a
qualified third -party collections agent to collect monthly assessments and any related
delinquencies.
1. Collection agent shall conduct all activities in a professional manner that is
consistent with the standards of performance for that industry.
2. Collection agent shall develop and utilize a collection form similar to the
City's authorized Transient Occupancy Tax (TOT) form, so that assessments
collected pursuant to this agreement shall be separate of and segregated from any
monies collected from lodging establishments for City TOT or the Sonoma
County Tourism Improvement District. Any form developed for the purpose of
PROFESSIONAL SERVICES AGREEMENT
Nov 19 2018
collections shall receive the approval of the City, in writing, prior to use.
3. Collection agent shall be required to keep all business revenue information
confidential from any third party, excluding the City of Petaluma.
B. Transient Occupancy Tax. Nothing in this Agreement supersedes or otherwise
alters the primary obligation of lodging businesses subject to the PTID to submit to the
City all amounts required of them as by the City's TOT ordinance.
C. Notwithstanding any provision herein, the Association shall not bill for or collect
any assessments until such time as the Association has on file with the City Finance
Department a current W-9 form available from the IRS website (www.irs.gov) and has
obtained a currently valid Petaluma business tax certificate.
4. Operations
A. Delinquency Retention Fund. The Association shall beresponsible for any and
all costs of collecting delinquent assessments.
1. The Association shall establish a retention fund to pay for the costs of
collecting delinquencies and any Enforcement Costs that may be due the City. The
Retention Fund shall be funded solely from PTID assessments collected by the
Association under the delegation granted in this Section. The Association shall deposit
into the Retention Fund the initial $5,000 (Five Thousand Dollars) collected from PTID
assessments and shall draw upon the Fund as necessary to pay the City for its
Enforcement Costs. Each month the Association shall deposit into the Retention Fund
assessments equal to any amounts withdrawn the previous month for Enforcement Costs
so as to maintain a balance in the Fund equal to $5,000. Upon disestablishment of the
PTID, amounts remaining in the Retention Fund shall be distributed as provided by
Section 36670 of the 1994 Act.
B. Reimbursement for City Administration, The Association shall forward to the
City, on a monthly basis, by the 10th working day of the month, three percent (3%) of all
assessments collected for the previous month, including any collection of delinquent
assessments, to reimburse the City for its costs for administration and oversight of the
PTID.
1. In addition to the amounts to be forwarded to the City pursuant to Section
413, the Association shall reimburse, during the first year of the PTID's operation,
the City's costs incurred in the establishment of the PTID. Such amounts shall be
calculated using an accounting of City staff time based on total compensation,
including salaries and benefits, but shall be limited to a maximum reimbursement
of $19,000. The City shall invoice the Association for said reimbursement, which
shall be paid in equal monthly payments by the tenth working day of the month
ending with the payment in January for December 2019 collections. Distribution
of these costs shall be consistent with that dictated in the Plan.
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PROFESSIONAL SERVICES AGREEMENT
Nov 192018
C. Destination Development. The Association shall forward to the City, on a
monthly basis, by the Ioth working day of the month, seventeen percent (17%) of all
assessments collected for the previous ' month, including any collection of delinquent
assessments, to pay for the cost of Destination Development projects within the
boundaries of the PTID.
1. Destination Development projects will be designed to improve the visitor
experience in an effort to increase overnight visitation at assessed lodging
businesses, and shall include but not be limited to services designed to improve
the experience of visitors to the City of Petaluma; capital projects that improve
the visitor experience and/or improve visitor safety, security, or access; or other
activities that increase the profile and notoriety of Petaluma as an overnight travel
destination and promote greater room night sales for assessed businesses.
2. The City will work collaboratively with the Association to develop and
select Destination Development projects that are, designed to improve the visitor
experience in an effort to increase overnight visitation at assessed lodging
businesses. Each year during the term of this agreement, as part of the City's
budget development process and not later than April 1St, City and Association
representatives will discuss, with the intention of reaching consensus on, the
Destination Development projects to be recommended in the proposed budget for
the following fiscal year. Such projects shall be discretely accounted for in the
City budget. If Association and City representatives fail to reach consensus on
the recommended projects, determination shall be made by the City Council and
shall be final. Any Destination Development monies unspent at the end of the
fiscal year in which they were programmed shall be retained in a designated fund,
and shall be allocated for use the following year subject to collaboration between
the City and the Association.
D. Distribution Priority. Each month, assessments collected by the Association shall
first be used to reimburse the Retention Fund, if necessary, then to forward funds to the
City to support the costs of Destination Development, then to pay the City its
administrative costs, with the remainder distributed to the Association for the costs of
implementing the Services.
E. Audits. The Association must maintain adequate records to permit inspection and
audit of Association's records under this Agreement. The Association will make such
records available to the City and its representatives during normal business hours, under
reasonable notice. At the City's election, the City may, in conjunction with its own
Annual audit, audit the Association's financial records, including but not limited to
collections and disbursements under the Plan, the 1994 Act, and this Agreement. In
accordance with California Government Code Section 8546.7, this Agreement and the
Association's books and .records related to this Agreement, shall be subject to the
examination of the State Auditor at the request of the City or as part of any audit of the
City for a period of three years after final payment under the Agreement. The costs of
any audit pursuant to this Agreement shall be paid for by the City from funds forwarded
by the Association under Section 4 B of this Agreement.
PROFESSIONAL SERVICES AGREEMENT
Nov 19 2018
F. Governance. Within thirty (30) days following execution of this Agreement by
the parties, the Association's Board of Directors shall appoint a subcommittee consisting
of the majority of the owners of lodging businesses in the City (PTID Subcommittee).
The City Council shall also be per to make one appointment to the PTID
Subcommittee. The Board of Directors shall maintain the PTID Subcommittee
throughout the term of this Agreement. The PTID Subcommittee shall be responsible for
making recommendations to the Board of Directors regarding the Association's
implementation of the Services under this Agreement. As required by Section 36614.5 of
the 1994 Act, the Association and the PTID Subcommittee shall comply with the Ralph
M. Brown Act at all times when matters within the subject matter of the PTID are heard,
discussed, or deliberated and with the California Public Records Act, for all documents
relating to the activities of the PTID.
5. Term. The term of this Agreement commences on January 1, 2019 and expires on
December 31, 2023 unless the Agreement is amended or the Agreement is terminated in
accordance with its terms.
6. Termination.
A. This Agreement shall terminate upon the earlier of (i) the City Council's
approval of a request by the Association to terminate the Agreement pursuant to a
modification of the Plan under Section 36635 of the 1994 Act; (ii) disestablishment of the
PTID pursuant to the 1994 Act; or (iii) December 31, 2023. The City may terminate or
suspend this Agreement for cause. Cause for termination or suspension. shall include, but
not be limited to, any breach of this Agreement by the Association or its subcontractors,
or the Association's bankruptcy or insolvency.
B. If City terminates or suspends the Agreement for cause, in addition to any other
remedies the City may have at law or equity, the City may:
1. Terminate the Agreement by notice to the Association specifying the
termination or suspension date. Upon receipt of notice of termination or suspension for
cause, the Association shall immediately stop all work in progress under this Agreement.
2. Recover from the Association at no additional cost to the City any and all of
City's documents or materials provided to the Association and any and all plans,
specifications, drawings, reports and other documents and work products prepared by the
Association whether or not completed, relating to the performance of the Services.
3. Complete the unfinished Services itself or contract to have the unfinished.
Services completed, and/or
4. Charge the Association the cost of completing the unfinished Services pursuant
to this Agreement.
C. The Association shall be entitled to payment for all Services performed to the
date of termination to the extent such Services were performed to the satisfaction of City
in accordance with the terms and conditions of this Agreement.
5
PROFESSIONAL SERVICES AGREEIMENT
Nov 19 2018
7. The Association's Representation; Independent Contractor. The Association
represents it possesses distinct professional skills in performing the Services. City has
relied upon said representation as a material inducement to enter into this Agreement.
The Association shall, therefore, provide properly skilled professional and technical
personnel to perform all Services under this Agreement. It is expressly understood the
Association and its agents, employees, and subcontractors shall act in an independent
capacity and as an independent contractor and not as officers, employees or agents of the
City. This Agreement shall not be construed as an agreement for employment.
8. Facilities and Equipment. The Association shall, at its sole cost and expense, furnish
all facilities and equipment that may be required for furnishing Services pursuant to this
Agreement. City shall furnish to the Association no facilities or equipment, unless the
City otherwise agrees in writing to provide the same.
9. Licenses, Permits, Etc. The Association shall, at the Association's sole cost and
expense, keep in effect at all times during the term of this Agreement any licenses,
permits or other such approvals which are legally required for performing the Services.
10. Time. The Association shall devote such time to the performance of the Services as may
be reasonably necessary for satisfactory performance of the Association's obligations
pursuant to this Agreement.
11. Inspection. The Association shall provide the City every reasonable opportunity to
ascertain that the Services are being performed in accordance with the requirements and
intentions of this Agreement. The inspection of such work shall not relieve the
Ass6ciation of any of its obligations pursuant to this Agreement.
12. Reporting. The Association shall prepare, pursuant to Streets and Highways Code
Section 36659, a report for each fiscal year for which assessments are levied and
collected to pay the costs of the improvements and activities described in the Plan. The
first report shall be due after the first year of operation. Such reports shall be submitted
to the City Council, in a form acceptable to City. The Association shall also provide
written reports of all oral and written observations, opinions, recommendations, analyses,
progress and conclusions related to the Association's performance of the Services, as
may be requested by the City.
13. Confidentiality. In the course of the Association's employment, the Association may
have access to trade secrets and confidential information, disclosure of which is protected
or limited by law. The Association shall not directly or indirectly disclose or use any
such confidential information, except as required for the performance of the Services.
14. Conflict of Interest. The Association represents that it presently has no interest, and
covenants that it shall not acquire any interest, direct or indirect, financial or otherwise,
which would conflict in any manner or degree with the performance of the Services
hereunder. The Association further covenants that, in the performance of this
Agreement, it shall not employ any subcontractor or person having such a conflict of
interest. The Association represents that no one who has or will have any financial
6
PROFF_'SSIONAL SERVICES AGREEMENT
Nov 19 2018
interest under the Agreement is an officer or employee of City. If such conflict of
interest arises during this Agreement or any extension, the Association will immediately
advise City and City may, at its sole discretion, immediately terminate this Agreement.
Certain contractors are subject to the requirements, including the disclosure and reporting
requirements, of the City's Conflict of Interest Code adopted pursuant to the Political
Reform Act. Such contractors subject to the City's Conflict of Interest Code include
those whose work may involve making government decisions regarding approval or
adoption of rates, rules, or regulations; action on permits or other applications;
authorization to enter into or modify contracts; or approval of plans, designs, reports, or
studies. The Association agrees to comply fully with all such requirements to the extent
they apply to the Association's performance of the Services.
15. The Association No Agent. Except as City may specify in writing, the Association shall
have no authority, express or implied, to act on behalf of City in any capacity whatsoever
as an agent. The Association shall have no authority, express or implied, pursuant to this
Agreement to bind City to any obligation whatsoever.
16. Standard of Performance. The Association shall perform all the Services in a
professional manner. All instruments of service of whatsoever nature, which the
Association delivers to City pursuant to this Agreement, shall be prepared in a
substantial, workmanlike, manner. All such instruments of service shall become the sole
and exclusive property of City upon delivery of the same.
17. Assignment/Transfer. No assignment or transfer in whole or in part of this Agreement
shall be made without the prior written consent of City.
18. Subcontractors. The Association shall not subcontract any portion of performance of
the Services without the prior written consent of City. Any such subcontractors shall be
required to comply with the terms and conditions of this Agreement, including but not
limited to, procuring and maintaining insurance coverage as required herein and which
shall name City as an additional insured. No contractual relationship shall exist between
any such subcontractors of the Association and the City.
19. Compliance With All Laws. The Association shall fully comply with all applicable
local, state and federal rules, laws, regulations and ordinances pertaining to the
performance of the Services required hereunder, including but not limited to, the 1994
Act, the Ralph M. Brown Act, the California Public Records Act, the California Building
Standards Code as in effect in the City, the Americans with Disabilities Act, and any laws
and regulations related to any copyright, patent, trademark or other intellectual property
right involved in performance of the Services. The Association's failure to comply with
any law(s) or regulation(s) applicable to the performance of the Services hereunder shall
constitute a material breach of this Agreement. To the extent any other government
agency or entity provides compensation for any Services, the Association shall comply
with all rules and regulations applicable to such fiscal assistance.
20. Discrimination. During the performance of this Agreement, the Association shall not
discriminate against any employee or applicant for employment because of race, religion,
7
PROFESSIONAL SERVICES AGREEMENT
Nov 19 2018
creed, color, national origin, ancestry, gender, sexual orientation, age or physical or
mental disability in violation of any applicable law.
21. Notice. Except as otherwise specified in this Agreement, all notices to be sent pursuant
to this Agreement shall be made in writing and sent to the Parties at their respective
addresses specified below or to such other address as a Party may designate by written
notice delivered to the other Party in accordance with this Section. All such notices shall
be sent by:
(i) personal delivery, in which case notice is effective upon delivery;
(ii) certified or registered mail, return receipt requested, in which case notice shall be
deemed delivered on receipt if delivery is confirmed by a return receipt;
(iii) nationally recognized overnight courier, with charges prepaid or charged to the
sender's account, in which case notice is effective on delivery if delivery is
confirmed by the delivery service; or
(iv) facsimile transmission, in which case notice shall be deemed delivered upon
transmittal, provided that (a) a duplicate copy of the notice is promptly delivered
by first-class or certified mail or by overnight delivery, or (b) a transmission
report is generated reflecting the accurate transmission thereof. Any notice given
by facsimile shall be considered to have been received on the next business day if
it is received after 5:00 p.m. recipient's time or on a nonbusiness day.
City: City Clerk
City of Petaluma
Post Office Box 61
Petaluma, California 94953
Phone: (707) 778-4360
Fax: (707) 778-4554
Email: cityclerk@ci.petaluma.ca.us
The Association:
Phone:
Fax:
Email
22. Ownership of Documents. All original papers, documents or computer material on disk
or microfilm, and copies thereof, produced as a result of this Agreement, shall be subject
to review of the City at any time, given reasonable notice, and shall become the property
of City upon the termination of this Agreement.
23. Indemnification. To the maximum extent permitted by law, the Association shall, at its
oNvn expense, indemnify, defend with counsel acceptable to the City, (which acceptance
8
PROFESSIONAL SERVICES AGREEINIENT
Nov 19 2018
will not be unreasonably withheld), and hold harmless City and its officers, officials,
employees, agents and volunteers ("Indemnitees") from and against any and all liability,
loss, damage, claims, suits, actions, arbitration proceedings, administrative proceedings,
regulatory proceedings, civil penalties and fines, expenses and costs (including, without
limitation, claims expenses, attorney's fees and costs and fees of litigation) (collectively,
"Liability") of every nature, whether actual, alleged or threatened, arising out of or in
connection with the Services or The Association's failure to comply with any of the terms
of this Agreement, regardless of any fault or alleged fault of the Indemnitees.
The Association's obligation to indemnify, defend and hold harmless under this provision
shall not be excused because of the Association's ;inability to evaluate Liability, or
because the Association evaluates Liability and determines that the Association is not or
may not be liable. The Association must respond within 30 calendar days to any tender
for defense and indemnity by the City, unless the time for responding has been extended
by an authorized representative of the City in writing. If the Association fails to accept
tender of defense and indemnity within 30 calendar days, the City may exercise any
remedies authorized by law to provide for its defense or until the Association accepts
tender, in the matter subject to tender. In the event that the City must file responsive
documents in a matter tendered to the Association prior to the Association's acceptance
of tender, the Association agrees to fully reimburse all costs, including but not limited to
attorney's fees and costs and fees of litigation, incurred by the City in filing such
responsive documents.
The Association waives any and all rights to express or implied indemnity against the
Indemnitees concerning any Liability of the Association arising out of or in connection
with the Services or the Association's failure to comply with terms of this Agreement.
The defense and indemnification obligations of this Agreement shall no way be limited
by, the insurance obligations that apply to this Agreement pursuant to Section 23.
Notwithstanding the foregoing, to the extent that the Services include design professional
services subject to California Civil Code Section 2782.8, as may be amended from time
to time, the Association's duty to indemnify shall only be to the maximum extent
permitted by California Civil Code Section 2782.8.
24. Insurance. The Association shall comply with the "Insurance Requirements" in Exhibit
B, attached hereto and incorporated herein by reference.
City reserves the right to review any and all of the required insurance policies and/or
endorsements, but has no obligation to do so. City's failure to demand evidence of full
compliance with the insurance requirements set forth in this Agreement or City's failure
to identify any insurance deficiency shall not relieve the Association from, nor be
construed or deemed a waiver of, its obligation to maintain the required insurance at all
times during the performance of this Agreement.
25. Amendment. This Agreement may be amended only by a written instrument executed
by both Parties.
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PROFESSIONAL SERVICES AGREEMENT
Nov 19 2018
26. Litigation. If litigation ensues which pertains to the subject matter of the Association's
services hereunder, the Association, upon request from City, agrees to testify therein at a
reasonable and customary fee.
27. Construction. This Agreement is the product of negotiation and compromise on the part
of both Parties and the Parties agree that, notwithstanding Civil Code Section 1654, any
uncertainty in the Agreement shall not be construed against the drafter of the Agreement.
28. Governin a Law, Venue. This Agreement shall be enforced and interpreted under the
laws of the State of California and the City of Petaluma. Any action arising from or
brought in connection with this Agreement shall be venued in a court of competent
jurisdiction in the County of Sonoma, State of California.
29. Non -Waiver. The City's failure to enforce any provision of this Agreement or the
waiver thereof in a particular instance shall not be construed as a general waiver of any
part of such provision. The provision shall remain in full force and effect.
30. Severability. If any tenn or portion of this Agreement is held to be invalid, illegal, or
otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of
this Agreement shall continue in full force and effect.
31. No Third -Party Beneficiaries. The Parties do not intend to create, and nothing in this
Agreement shall be construed to create, any benefit or right in any third party.
32. Mediation. The Parties agree to make a good faith attempt to resolve any dispute arising
out of this Agreement through mediation prior to commencing litigation. The Parties
shall mutually agree upon the mediator and shall divide the costs of mediation equally.
33. The Association's Books and Records.
A. The Association shall maintain any and all ledgers, books of accounts, invoices,
vouchers, canceled checks, and other records or documents evidencing or relating
to charges for services, or expenditures and disbursements charged to the City for
a minimum period of three (3) years or for any longer period required by law,
from the date of final payment to The Association pursuant to this Agreement.
B. The Association shall maintain all documents and records which demonstrate
performance under this Agreement for a minimum period of three (3) years or for
any longer period required by law, from the date of termination or completion of
this Agreement.
C. Any records or documents required to be maintained pursuant to this Agreement
shall be made available for inspection or audit, at any time during regular business
hours, upon written request by the City Manager, City Attorney, City Finance
Director, or a designated. representative of these officers. Copies of such
documents shall be provided to the City for inspection at Petaluma City Hall
when it is practical to do so. Otherwise, unless an alternative is mutually agreed
10
PROFESSIONAL SERVICES AGREENIENT
Nov 192018
upon, the records shall be available at the Association's address indicated for
receipt of notices in this Agreement.
D. Where City has reason to believe that such records or documents may be lost or
discarded due to dissolution, disbandment or termination of the Association's
business, City may, by written request by any of the above-named officers,
require that custody of the records be given to the City and that the records and
documents be maintained in Petaluma City Hall. Access to such records and
documents shall be granted to any party authorized by the Association, the
Association's representatives, or the Association's successor in interest.
34. Headinjzs. The headings used in this Agreement are for convenience only and are not
intended to affect the interpretation or construction of any provisions herein.
35. Survival. All obligations arising prior to the termination or expiration of this Agreement
and all provisions of this Agreement allocating liability between the City and the
Association shall survive the termination or expiration of this Agreement.
36. Entire A14reement. This Agreement, including the exhibits attached hereto and
incorporated herein, constitutes the entire agreement between the Parties with respect to
the Services, and supersedes all prior agreements or understandings; oral or written,
between the Parties in this regard.
IN WITNESS WHEREOF, the parties hereto have executed this document the day, month and
year first above written.
CITY OF PETALUMA
City Manager
ATTEST:
City Clerk
APPROVED AS TO FORM:
City Attorney
THE ASSOCIATION
By
Name
Title
Address
City State Zip
Taxpayer I.D. Number
Petaluma Business Tax Certificate Number
PROFESSIONAL SERVICES AGRLEME'N(
Nov 19 2018
EXHIBIT B
INSURANCE REQUIREMENTS
FOR ALL AGREEMENTS
Contractor's performance of the Services under this Agreement shall not commence until
Contractor shall have obtained all insurance required under this paragraph and such insurance shall
have been approved by the City Attorney as to form and the Risk Manager as to carrier and
sufficiency. All requirements herein provided shall appear either in the body of the insurance
policies or as endorsements and shall specifically bind the insurance carrier.
Contractor shall procure and maintain for the duration of the contract all necessary insurance
against claims now and in the future for injuries to persons or damages to property which may
arise from or in connection with the performance of the Services by the Contractor, the
Contractor's agents, representatives, employees and subcontractors.
A. Required Minimum Scope of Insurance
Coverage shall be at least as broad as:
❑ Insurance Services Office Commercial General Liability coverage:
a. Personal injury;
b. Contractual liability.
❑ Insurance Services Office form covering Automobile Liability (any auto).
❑ Workers' Compensation insurance as required by the State of California and
Employer's Liability Insurance.
❑ Professional Liability/Errors and Omissions
❑ Property Insurance against all risks of loss to any tenant improvements or betterments.
❑ Pollution Liability Insurance
❑ Garage Liability
❑ Garagekeepers Insurance
❑ Technology Professional Liability Errors and Omissions Insurance (IT
Consultant)/Cyber Liability
❑ Abuse or Molestation Liability Coverage
B. Minimum Limits of Insurance
Consultant shall maintain limits no less than:
❑ General Liability: $1,000,000 per occurrence for bodily injury, personal injury and
property damage. If Commercial General Liability Insurance or other form with a general
aggregate liability is used, either the general aggregate limit shall apply separately to this
Agreement or the general aggregate limit shall be twice the required occurrence limit.
❑ Products/Completed Operations: $1,000,000 per occurrence/aggregate.
❑ Automobile Liability: $1,000,000 per accident for bodily injury and property damage.
❑ Employer's Liability: Bodily Injury by Accident - $1,000,000 each accident.
Bodily Injury by Disease - $1,000,000 policy limit.
Bodily Injury by Disease - $1,000,000 each employee.
❑ Professional Liability/Errors and Omissions: $1,000,000 per occurrence or claim. If the
policy provides coverage on a claims -made basis, the retroactive date must be shown and
must be before the date of the Agreement or the beginning of the contract work.
❑ All Risk Property Insurance: Full replacement cost.
INSURANCE REQUIREMENTS (City)
Sept 2018
❑ Pollution legal liability with limits no less than $1,000,000 per occurrence or claim and
$2,000,000 policy aggregate. If the policy provides coverage on a claims -made basis, the
retroactive date must be shown and must be before the date of the Agreement or the
beginning of the contract work.
❑ Garage Liability: $1,000,000 per occurrence.
❑ Garagekeepers Insurance: $1,000,000 per occurrence.
❑ Technology Professional Liability Errors and Omissions Insurance appropriate to the
Consultant's profession and work hereunder, with limits not less than $1,000,000 per
occurrence. Coverage shall be sufficiently broad to respond to the duties and obligations as
is undertaken by the Vendor in this agreement and shall include, but not be limited to,
claims involving infringement of intellectual property, copyright, trademark, invasion of
privacy violations, information theft, release of private information, extortion and network
security. The policy shall provide coverage for breach response costs as well as regulatory
fines and penalties as well as credit monitoring expenses with limits sufficient to respond to
these obligations.
1. The Policy shall include, or be endorsed to include, property damage liability
coverage for damage to, alteration of, loss of, or destruction of electronic data and/or
information "property" of the City in the care, custody, or control of the Consultant.
If not covered under the Consultant's liability policy, such "property" coverage of the
City may be endorsed onto the Consultant's Cyber Liability as covered property as
follows:
2. Cyber Liability coverage in an amount sufficient to cover the full replacement value
of damage to, alteration of, loss of, or destruction of electronic data and/or
information "property" of the City that will be in the care, custody, or control of the
Consultant.
3. The Insurance obligations under this agreement shall be the greater of 1) all the
Insurance coverage and limits carried by or available to the Consultant; or 2) the
minimum Insurance requirements shown in this Agreement. Any insurance proceeds
in excess of the specified limits and coverage required, which are applicable to a
given loss, shall be available to the City. No representation is made that the minimum
Insurance requirements of this Agreement are sufficient to cover the indemnity or
other obligations of the Consultant under this agreement.
❑ Abuse or Molestation Liability Coverage: $1,000,000 per occurrence; $2,000,000
aggregate.
C. Deductibles and Self -Insured Retentions
Any deductibles or self-insured retentions must be declared to and approved by the City.
At the option of the City, either: the insurer shall reduce or eliminate such deductibles or
self-insured retentions as respects the City, its officers, officials, employees, and
volunteers; or the Consultant shall procure a bond guaranteeing payment of losses and
related investigations, claim administration and defense expenses. Policies containing any
self-insured retention (SIR) provision shall provide or be endorsed to provide that the SIR
may be satisfied by either the named insured (Contractor) or the City.
City reserves the right to review any and all of the required insurance policies, declaration
pages, and/or endorsements, but has no obligation to do so. City's failure to demand
evidence of full compliance with the insurance requirements set forth in this Agreement or
INSURANCE REQUIREMENT'S (City)
Sept 2018
City's failure to identify any insurance deficiency shall not relieve Contractor from, nor be
construed or deemed a waiver of, its obligation to maintain the required insurance at all
times during the performance of this Agreement.
D. Other Insurance Provisions
The required general liability and automobile policies are to contain, or be endorsed to
contain the following provisions:
I. Additional Insured: The City, its officers, officials, employees, agents and
volunteers are to be covered as Additional Insureds as respects: liability arising out
of activities performed by or on behalf of the Consultant; products and completed
operations of the Consultant; premises owned, occupied or used by the Consultant;
or automobiles owned, leased, hired or borrowed by the Consultant. The coverage
shall contain no special limitations on the scope of protection afforded to the City,
its officers, officials, employees, agents or volunteers.
2. Primary and Non -Contributory: For any claims related to this project, the
Consultant's insurance coverage shall be primary insurance as respects the City, its
officers, officials, employees; agents and volunteers. Any insurance or self-
insurance maintained by the City, its officers, officials, employees, agents or
volunteers shall be excess of the Consultant's insurance and shall not contribute
with it.
3. Any failure to comply with reporting or other provisions of the policies including
breaches of warranties shall not affect coverage provided to the City, its officers,
officials, employees, agents or volunteers.
4. The Consultant's insurance shall apply separately to each insured against whom
claim is made or suit is brought except, with respect to the limits of the insurer's
liability.
5. Each insurance policy required by this clause shall be endorsed to state that
coverage shall not be suspended, voided, canceled by either party, reduced in
coverage or in limits except after thirty (30) days' prior written notice by certified
mail, return receipt requested, has been given to the City.
6. Waiver of Subrogation: Consultant agrees to waive subrogation rights for
commercial general liability, automobile liability and worker's compensation
against City regardless of the applicability of any insurance proceeds, and to require
all contractors, subcontractors or others involved in any way with the Services to do
likewise.
7. It shall be a requirement under this Agreement that any available insurance
proceeds broader than or in excess of the specified minimum insurance coverage
requirement and/or limits shall be available to the additional insured. Furthermore,
the requirement for coverage and limits shall be (1) the minimum coverage and
limits specified in this Agreement, or (2) the broader coverage and maximum limits
of coverage of any insurance policy or proceeds available to the named insured;
whichever is greater.
8. The limits of insurance required in this Agreement may be satisfied by a
combination of primary and umbrella or excess insurance. Any umbrella or excess
insurance shall contain or be endorsed to contain a provision that such coverage
shall also apply on a primary and non-contributory basis for the benefit of the City
of Petaluma before the City of Petaluma's own insurance or self-insurance shall be
called upon to protect it as a named insured.
INSURANCE REQUIREMENTS (City)
Sept 2018
E. Acceptability of Insurers
Insurance is to be placed with insurers with a current A.M. Best's rating of no less than
A: VII.
F. Verification of Coverage
NOTE: The City of Petaluma is now using an online insurance program, PINS
Advantage. Once you have been awarded a contract with the City of Petaluma, you
will receive an e-mail from PINS Advantage/City of Petaluma requesting that you
forward the e-mail to your insurance agent(s). Consultant shall furnish the City with
Certificate of Insurance along with Declarations and Endorsements effecting coverage
required by this clause. The endorsements are to be signed by a person authorized by that
insurer to bind coverage on its behalf. All endorsements are to be received and approved
by the City before the Services commence.
INSURANCE REQUIRENIENTS (City)
Sept ?OI S