December 13, 2005

SUBJECT: Request of Sunnyvale Downtown Association for City Financing of Property and/or Business Improvement District Feasibility Study, Reconsideration of Cleaning Schedule for Murphy Avenue, and Budget Modification No. 17.

REPORT IN BRIEF

The purpose of this report is for Council to review and act on two requests from the Sunnyvale Downtown Association (SDA).  The first request is for $6,400 to hire a consultant to conduct a Property and/or Business Improvement District (P/BID) feasibility study and hire a part-time executive director to assist the consultant during the feasibility study.  The feasibility study would determine if the SDA can move forward in establishing an assessment district, the proceeds from which would be used for promotion and improvements for the Downtown Sunnyvale business community. 

The second SDA request is that City  Council reconsider the cleaning schedule for Murphy Avenue. The SDA is requesting that the sidewalk garbage cans (including the public ashtrays) on Murphy Avenue be serviced on Sunday, Wednesday, Friday, and Saturday instead of the current schedule of Monday, Wednesday, Thursday, and Friday.  The SDA is also requesting that the Murphy Avenue sidewalk be pressure washed once a week and steam cleaned once a month.  Public Works estimates that this request will cost about $22,645 per fiscal year.

Staff is recommending that Council approve the SDA’s request of $6,400 to hire a consultant to conduct a P/BID feasibility study and to hire a part-time executive director to assist the consultant during the feasibility study.  Funds are available in the Downtown Public Improvements Project.  Staff is also recommending that the cleaning schedule for Murphy Avenue be considered as a Budget Issue for FY 06/07.  

BACKGROUND

The SDA sent a letter dated September 9, 2005, requesting $6,400 to hire a consultant to conduct a P/BID feasibility study and to hire a part-time executive director to assist the consultant; the letter is also requesting that Council reconsider the cleaning schedule for Murphy Avenue.

The SDA is requesting that the sidewalk garbage cans (including the public ashtrays) on Murphy Avenue be serviced on Sunday, Wednesday, Friday, and Saturday instead of the current schedule of Monday, Wednesday, Thursday, and Friday.  The SDA is also requesting that the Murphy Avenue sidewalk be pressure washed once a week and steam cleaned once a month.

The following provides background on the P/BID and Murphy Avenue cleaning issues.

P/BID:  P/BIDs are a type of assessment district in which business and/or property owners choose to be assessed a fee, which is collected on their behalf by the City, for use in promoting and improving the business area.   Downtown Sunnyvale is an area that has a large concentration of independent stores that are not part of a shopping center and must promote themselves as individuals instead of as part of a shopping center.  P/BIDs have been established in over 200 business areas in California including Mountain View, Santa Clara, Palo Alto, and San Jose.  

Activities that can be supported with P/BID funds include, but are not limited to:

• Enhanced maintenance
• Promotional events to draw customers to the downtown
• Banners
• Promotion and marketing of downtown businesses

A P/BID can only be developed by the businesses and/or property owners and must have their majority support for implementation.  The City’s primary role is to support the businesses leading the P/BID formation effort.  The City cannot impose formation of a P/BID on businesses and/or property owners.

History of Maintenance Services and Costs for Murphy Avenue: Historical data reflects a budget of approximately $40,000 per year up to FY 2001/02 for maintenance of Murphy Avenue.  In FY 1997/98 the funding of this service was moved from the operating budget to a capital project entitled “Downtown Area Maintenance Project (820610)” with the intention that the downtown businesses would self-fund this enhanced level of service in the future.  This level of service is provided only on the 100 block of South Murphy Avenue.   

Below is a list of the maintenance services and costs for Murphy Avenue for FY 1987/88 through FY 2000/01:

• Litter removal ––five days per week (landscaped areas only--$13,540)
• Removal of weeds––every two weeks (landscaped areas only--$1,354)
• Fountain maintenance—once a month ($624)
• Shrub and groundcover maintenance—as needed ($7,812)
• Removal and replacement of flowers—three times per year ($3,124)
• Sidewalk washing—once a week (half the street on Monday and the other half on Friday--$13,540)

Budget for the above services averaged approximately $40,000 per year. 

In FY 2001/02 the budget for the Downtown Area Maintenance Project (820610) was increased to $90,000 to address the concerns of the downtown businesses about the condition of Murphy Avenue.  The increased funding provided for the additional services listed below: 

• Litter removal—five days a week (all areas) ($6,621)
• Sidewalk maintenance—three days per week ($37,072)
• Removal of weeds—twice per week ($3,972)
• Shrub and groundcover maintenance—three times per year ($2,335)

In FY 2002/03 the budget for the Downtown Area Maintenance Project (820610) was increased to address further concerns by Council and downtown businesses, specifically cigarette butts and litter issues.  The increased funding provided for the additional services listed below:

• Litter removal—seven days a week (all areas--$5,803)
• Sidewalk steam cleaning–once a week ($16,070)
• Sidewalk power vacuuming on weekends ($4,836)

The total budget for all of the above maintenance for FY 02/03 was $116,711.

As part of the FY 2003/04 Budget reduction process, Council provided direction to fund the project for two more years (FY 2003/04 and FY 2004/05) with future costs to be funded through a business improvement district.  The elimination of funding for this project in FY 2005/06 did away with the following services:

• Litter removal—seven days a week
• Sidewalk maintenance (power vacuuming on Saturdays and Sundays, water washing of all sidewalk areas on Mondays and Fridays, and steam cleaning section of sidewalks on Tuesdays, Wednesdays, and Thursdays so that all sidewalk areas were steamed cleaned once a week).
• Removal of weeds-twice a week
• Shrub and groundcover maintenance—three times per year
• Removal and replacement of annual flowers—three times per year
• Fountain Maintenance—once a month
• Daily manual removal of tree leaves during the fall season

Because a business improvement district had not been formed, Council, as part of the budget process for FY 05/06, approved a limited maintenance schedule for Murphy Avenue for one year.  The limited schedule includes:

• Removal of weeds—once a week
• Litter Removal (landscaped areas only)—twice a week
• Shrub and groundcover maintenance—as needed
• Fountain maintenance—once a month
• Removal and replacement of annual flowers—three times per year with smaller flowers and the flowers are not replaced if vandalized.  

The budget for the maintenance listed above is $12,421 for FY 2005/06.  In addition, Specialty Solid waste began servicing the garbage cans on Murphy Avenue four days per week.

EXISTING POLICY

Socio-Economic Element: Economy and Employment

Policy 5.1B.2 Participate in partnerships with local industry/businesses in order to facilitate communication and address mutual concerns.

Policy 5.1C.1 Support efforts to establish Sunnyvale's downtown area as a strong commercial center for the City.

Land Use and Transportation Element

Policy 5.1C.3 Maintain an attractive business community.

Policy N1.13 Promote an attractive and functional commercial environment.

Policy 2.5D.2 Maintain beautiful and comfortable outdoor public places which provide a shared sense of ownership and belonging for Sunnyvale residents, businesses, and visitors.

Policy 2.5D2k Continue to encourage pedestrian and commercial activity on the sidewalks of the historic 100 block of Murphy Avenue. 

Community Design Sub element

Action Statement 2.5A.3f. Strengthen the downtown as the visual as well as functional focus of Sunnyvale.

DISCUSSION

P/BID: The SDA has been exploring the possibility of forming a P/BID for at least five years.  The timing has been tied to the development of the mall and was put on hold until the mall project moved forward.  Seeing that the mall project was moving forward, the SDA sent “Requests for Proposals” to companies specializing in formation of P/BIDs. Two companies submitted proposals.  After reviewing the proposals and interviewing the representatives, the SDA decided that the best first step is to do a feasibility study to determine if downtown business/property owners want to move forward with formation of a P/BID.  The feasibility study will include public education and outreach to determine the level of support from the downtown businesses for a P/BID.  The feasibility study will take about 60 days to complete.  

Many cities have provided seed funding for a P/BID formation process.  This funding has been provided with the goal of decreasing the City’s costs (marketing, special events, and maintenance) for a particular geographic area.  In 2004, the City of Palo Alto provided $35,000 and many hours of staff time to assist the businesses in forming a BID.  The City of Santa Clara has a BID that was created in 1999 and most recently approved a BID for hotels near the Santa Clara Convention Center.  Santa Clara’s RDA contributed about $27,000 towards the hotel BID formation process and allocated about $10,000 in additional CDBG funds for planning and program administration costs associated with implementing the hotel BID.  The City of San Mateo has a BID that was created in 1986.  The City of San Mateo had some financial involvement in the BID’s formation, but there is no documentation that specifically spells out the dollar amount spent by the City.  In FY 04/05 the San Mateo BID requested and was granted $40,000 from the RDA to begin the process of forming a PBID.  The PBID would be in addition to the current BID. 

If the outcome of the feasibility study is to move forward with formation of a P/BID, the SDA will most likely approach the City for additional funds to complete the P/BID formation process.  The SDA expects that about $60,000 will be needed to complete the P/BID formation process.  Staff will return to City Council for consideration of an additional Budget Modification if such a request is received from the SDA.  

P/BIDs could be formed in other parts of the City as long as a group of interested businesses approach the City to begin the formation process.  The Community Development Strategy identified El Camino Real and the Downtown as potential areas for a P/BID.  Many businesses on El Camino Real are part of shopping centers and rely on Common Area Maintenance (CAM) charges to fund promotion and maintenance of the shopping center common areas and therefore may not be interested in forming a P/BID. 

Cleaning Schedule for Murphy Avenue: Businesses and residents have commented that the substantial reduction in the maintenance budget for Murphy Avenue has had a noticeable effect on the appearance of the street.  

Staff has determined that on the days  or times when additional cleanup is needed, Specialty Solid Waste does not have access to the street or does not have employees available (Saturday and Sunday mornings).  By contract with Specialty Solid Waste, the driver's regular scope of work does not include collection of debris that overflows from cans onto the sidewalk, cleaning of ashtrays, and cleanup of general litter in the area.

Some businesses have, at times, utilized the public garbage cans for disposal of trash from their businesses. Staff has spoken with a couple of business owners and explained that they need to provide and use their own containers for waste disposal.

The cost estimate for the SDA’s request regarding Murphy Avenue is as follows:

The current maintenance budget for cleaning Murphy Avenue is $12,421 per fiscal year.  The total cost to the City, including current services, would be $35,066 per fiscal year if the service level is increased as requested.   

It should be noted that, garbage cans on Murphy Avenue are currently serviced by Specialty Solid Waste on Monday, Wednesday, Thursday, and Friday.  If there were a customer to bill, the monthly charge would be $777 to service 14 garbage cans four times per week ($9,324/year).  However, since part of Specialty Solid Waste’s agreement with the City is to service public garbage cans, there is no additional charge to the City for this service.

FISCAL IMPACT

It is difficult to estimate the increase in sales tax due to the formation of a P/BID.  However, FY 2004/05 sales tax revenue from the area that will most likely be included in the P/BID boundary was about $742,600.  Of this amount, about $129,500 was generated by businesses on the 100 Block of South Murphy Avenue.  If the focus of a P/BID is on promotion, marketing, and special events to attract more people to the downtown, businesses could increase their sales and generate higher sales tax revenue for the City. 

Staff is offering Council a Budget Modification No.17 to fund the SDA’s request of $6,400 for the P/BID feasibility study.  Approval of Budget Modification No. 17 would establish a special project for the P/BID feasibility study.  There are funds in the Downtown Public Improvements Project to cover the cost of the request.

BUDGET MODIFICATION No. 17

FY 2005/2006

Conclusion

The SDA sent a letter requesting financial assistance from the City to conduct a feasibility study for creation of a P/BID.  Cities like Palo Alto, Mountain View, and Morgan Hill have provided financial assistance to organizations leading a P/BID formation effort. 

The SDA’s letter also requested a revised schedule for sidewalk garbage cans pick up and a partial renewal of sidewalk pressure washing and steam cleaning.  Council could review the cleaning schedule for Murphy Avenue as a Budget Issue to be prioritized with other budget issues when Council considers the budget for FY 06/07.   

PUBLIC CONTACT

Public contact was made through posting of the Council agenda in Public places, on the City’s web page, and the publication of the general business/ public hearing items in the San Jose Mercury News. This item was also discussed with representatives of the SDA. 

ALTERNATIVES

1. Approve the SDA’s request of $6,400 to hire a consultant and a part-time executive director to do a P/BID feasibility study and approve Budget Modification No. 17.

2. Review the cleaning schedule for Murphy Avenue as a Budget Issue to be prioritized with other budget issues when Council considers the budget for FY 06/07.

3. Do not approve the SDA’s request of $6,400 to hire a consultant and a part-time executive director to do a P/BID feasibility study.

4. Do not consider further the SDA’s request for additional cleaning of Murphy Avenue.

RECOMMENDATION

Staff recommends approval of Alternatives 1 and 2.

Staff recommends approval of the SDA’s request of $6,400 to hire a consultant and a part-time executive director to do a P/BID feasibility study.   Downtown Sunnyvale functions as an important gathering place for Sunnyvale residents.  The local independent businesses located in the downtown provide the area with a distinct character and unique flavor.  The 100 Block of South Murphy Avenue provides the stage for many community events such as the Farmer’s Market, the Summer Music and Market Series, and the Art and Wine Festival. 

Much of the success of the downtown events has been through the efforts of volunteers.  While the efforts of these volunteers have made a positive impact on the area, it is clear that many opportunities to increase the viability of the area are missed, because business owners are unable to successfully run their businesses and provide the marketing and other services needed to strengthen the downtown area.  A P/BID could be the mechanism to capitalize on successful events while looking for additional opportunities to make downtown Sunnyvale a successful business area; in addition it could be a means for the businesses and property owners to take responsibility for the higher level of maintenance which the street requires, thereby alleviating the City of this responsibility.  

A request to restore a service level is appropriately considered by Council as a Budget Issue.  Council could review the cleaning schedule for Murphy Avenue as a Budget Issue to be prioritized with other budget issues when Council considers the budget for FY 06/07.

Reviewed by:

Robert Paternoster Director, Community Development

Marvin Rose Director, Public Works 
Mary Bradley Director, Finance

Prepared by: Connie Verceles, Business Development Manager

Approved by:

Amy Chan

City Manager

Attachment (pdf)

Letter from the Sunnyvale Downtown Association