An ECM Special Report: Part I
By Walter Hall
August 19, 2011 (La Mesa)--In October, property owners in La Mesa’s downtown district will vote on an initiative with long range consequences for the city and surrounding area. At stake is the charter and character of a Property-based Business Improvement District, commonly abbreviated to PBID.
As with most civic issues, the PBID has defenders and detractors. Some see it as an unwarranted burden on businesses already juggling narrow margins in a fragile economy; others see an innovative civic tool offering a brighter future for those very businesses.
The clash of opposing viewpoints clouds public discourse, throwing it off balance with misinformation and occasionally disinformation. At its worst, it gives harbor to the toxic suggestion that the PBID is merely a smoke and mirrors cover for a hidden agenda driven by ambitious city leaders.
To clear the air, ECM is publishing a three-part series, in a question and answer format. With La Mesa’s unique village ambiance in play, it is in everyone’s interest that PBID issues be seen clearly, discussed in an informed manner and decided wisely.
Question: What is a PBID and what are the boundaries?
Answer: A PBID is a private-public partnership developed, funded, managed and controlled by the property owners in a given district. PBIDs are chartered to operate as 501(c)(6) organizations, such as Chambers of Commerce or Boards of Trade. They enjoy a distinct advantage over government entities – they can raise, or refuse to raise, funds for business development purposes as they alone see fit.
San Diegans benefit from the work of PBID-like organizations every day: in the Gas Lamp, in Little Italy, in Hillcrest, in fact in just about every notable “destination” location in the city. Next door, in El Cajon, property owners just voted to recertify their PBID for the fourth time, by a margin of 71% to 29%.
The geography of the proposed PBID runs approximately from the Civic Center and La Mesa Lumber on the north to Mario’s Restaurant on the east, and from Henry’s supermarket on the south to the commercial center adjacent to the Social Security building on the west. See boundary map on page 9 of the brief at http://www.cityoflamesa.com/DocumentView.aspx?DID=2218
Q: Is the Downtown Streetscape Project held hostage over a PBID? Why do it now?
A: No. There is no direct connection between the Streetscape Project (largely funded with Recovery Act monies) and the PBID; one is not contingent on the other. But the City Council is reluctant to proceed with full scale implementation of the Streetscape design because neither it nor the La Mesa Village Merchants Association have the means for sustained maintenance of the planned improvements. The choice facing La Mesa is to either reduce the scope of the long-anticipated Streetscape project, or find a viable funding mechanism. A PBID offers the latter solution.
The PBID is not limited to a supporting role in Streetscape. Instead, it would aim to leverage the City’s investment and boost commercial activity downtown. An interoffice memo, prepared by City Manager Dave Witt, describes the proposed PBID as a mechanism that “…could provide a stable and reliable funding source for maintenance activities as well as a range of other programs and business support services, including marketing and promotion…”
Some business owners worry that the PBID will simply allow the City to shift funds to other needs. Not true, say City officials. A PBID will not trigger a diminution of City maintenance and security activity. The PBID does not supplant City obligations – it is a mechanism for extending them.
Why now? With major projects such as Park Station moving forward and decisions on the future of Grossmont Center on the horizon, downtown La Mesa will need to speak with one voice. The PBID could be that voice.
Q: How did the La Mesa PBID proposal get started?
A: With funding approved by the Parking Commission, the City convened a focus group to explore the concept, with the La Mesa Village Merchants Association, in April 2010. The first public meeting was widely advertised and well-attended, with a diverse audience representing various community interests.
The exploratory group issued a call for volunteers to serve on a new PBID Steering Committee, to be established as a private organization, not a sub-unit of any City department. Every name on the volunteer list was added to the Committee roster. Over the summer, the Committee decided unanimously to proceed with a PBID proposal for La Mesa. The City Council voted financial assistance in September.
Those funds allowed for the retention of expert counsel as the Steering Committee morphed into a Formation Committee. Nuts and bolts deliberations began in February 2011, after a public meeting at the Community Center in January. Meetings are announced and open to the public. The agenda and minutes (though much too sparse) for each meeting are published on the City’s website at http://www.cityoflamesa.com/index.aspx?NID=1029
While occasionally contentious, the business of the Committee is transparent to anyone who cares to look. The charge that PBID discussions are veiled in secrecy is simply untrue.
Q: Who participates on the Formation Committee?
A: The 15-member Committee consists of 5 business owners, 7 business and property owners, 1 long-term ground lease holder, 1 resident at large and 1 representative of City owned property.
Each of the meetings of the Formation Committee is open to the public and each agenda allows for public comment and questions. Business owners and interested citizens regularly attend, often registering their concerns.
Q: Will the PBID elbow the Village Merchants Association aside and take over popular events, such as the Car Show and Oktoberfest?
A: No. The vision of the Formation Committee is for the PBID and the Village Merchants Association to “co-exist as complementary organizations.” As a separate entity the PBID will have its own services and programs to conduct.
Q: Is the assessment really just a new tax?
A: No. The City does not control expenditure of PBID funds, nor do these funds replenish city coffers. Assessments and rates are established by the property owners, for the purposes they assign to the organization they control. Funds are collected by the County of San Diego and remitted to the City. The City then passes through the funds to be managed by the 501(c)(6) entity identified in the PBID Management Plan.
Q: Who is assessed?
A: There are 182 parcels in the proposed PBID district, held by 133 property owners. Twenty of these are owned by the City itself. The district is divided into three zones, with the core commercial area bearing the heaviest assessments and the outlying zones lesser amounts.
All property owners, including the City, non-profits, churches and private residences in the district will be subject to assessment by a weighted formula. The same weighting applies to the property owners’ response to the initial petition to create a PBID – giving large holdings greater influence over the outcome, as well as heavier responsibility for funding should the PBID go into operation.
The City has agreed to pay 100% of its assessment. This raises eyebrows. While adding $60,000/year to the PBID budget, that figure represents 16% of the total, giving the City a substantial voice in the decision to proceed.
Churches are slated to get a 50% discount and residential property owners will only be assessed a nominal $25/year.
On the downside, small business owners and merchants rightfully worry that the assessment pass-through, in higher rents, will crush their margins. The actual per parcel figures are still being calculated. As they become known, this series will examine the impact.
What’s the upside? A successful PBID would lift the quality of life, the profitability picture and the basic property values throughout the district.
Q: What’s the status of the PBID initiative today?
A: Petitions of support or “ballots” for the La Mesa PBID are on track to be mailed to district property owners in October. If “yes” ballots representing 50+% of the proposed assessments are returned, the City Council will vote on adoption of a Resolution of Formation to create the PBID. If passed by the Council, the La Mesa PBID will appear on the tax rolls in August, 2012 and the new organization will be funded.
For all the work the volunteer committees have done, the outcome of the PBID story remains uncertain. The most contentious question today: Would a Village PBID be a business builder or a small business killer?
Part 2 in this series will look at both sides. What do you think?