POLICY REPORT

URBAN STRUCTURE

Date: October 14, 1997

Dept. File No. AMcA

C.C. File No. 8000

TO: Standing Committee on Planning and Environment

FROM:Director of City Plans in consultation with the

Director of Legal Services and the Director of Finance

SUBJECT:Business Improvement Area Program

RECOMMENDATIONS

A.THAT Council approve a simplified process, based on a Council Initiative without a petition (as outlined in Appendix B), to create or expand a Business Improvement Area.

B.THAT, should Council approve Recommendation A, Council approve the reinstatement of the BIA Coordinator as a full-time position, Planner 1, Pay Grade 28, subject to confirmation of the classification by the Director of Human Resources, that reinstatement commence January 1, 1998, and that the additional annual cost of $10,432.33 be provided in the 1998 Operating Budget without offsets.

C.THAT, should Council approve Recommendation A, Council forward, as a Council Initiative, the application of the Downtown Vancouver BIA for an expansion of its boundaries to the west, east, and south (including Granville South and Theatre Row), as noted in Appendix C, to a hearing of the Court of Revision and that the City notify the property owners and tenants in the area of the proposed BIA expansion and levy.

D.THAT Council assist BIAs wishing to fund larger projects by permitting BIAs to carry over funds from one year to the next as part of an agreed multi-year funding proposal.

E.THAT Council request an amendment to the Vancouver Charter to provide the City with the funding flexibility and renewal provisions for BIAs recently approved in Section 233 of the Municipal Act.

GENERAL MANAGER'S COMMENTS

The General Manager of Community Services recommends APPROVAL of the foregoing.

COUNCIL POLICY

Section 456 of the Vancouver Charter gives Council the authority to create a Business Improvement Area (BIA). Council may grant money to a BIA for planning and implementation of business promotion schemes provided that the money is recovered through a special property tax.

Council policies with respect to the establishment of a BIA include:

December 13, 1988: Council Initiative Process can also be used to establish a BIA provided a petition is signed by 50 percent of property owners reflecting 50 percent of the total assessed value in the area; and

July 30, 1993: Applications for the creation of a BIA must be accompanied by the results of a survey of all effected merchants. The tenant survey is to be an initiative style (objections only), with the intent being that the BIA will not proceed if one-third or more of the tenants or owners are in opposition.

Council policy is to require new expenditures be covered by offsets.

SUMMARY

The Vancouver Charter makes provision for the creation and funding of Business Improvement Areas (BIA). Taxation of properties in an area pays for a variety of programs to promote and enhance the area. There are currently five established BIAs and a number of local merchant groups wishing to form a BIA.

This report describes a dilemma:

On one hand, since the City is involved in the BIA process through the collection of taxes, it is prudent for the City to have safeguards in place with respect to establishing and managing BIAs;

On the other hand, if the safeguards become so cumbersome that legitimate groups wishing to form a BIA are discouraged from doing so, then an opportunity for areas to benefit from the BIA Program is lost.

The current process for establishing a BIA requires a Petition of Support from at least 50 percent of owners and a tenant survey before Council will consider hearing an application to form a BIA at a Court of Revision. The collection of signatures has become an apparently insurmountable task. It has recently become more difficult due to the end of a Provincial BIA Start-up Grant.

This report outlines several options for Council’s consideration:

Continuing the present petition process for BIA formation;

Continuing the present petition process and assisting groups wishing to form a BIA by establishing a City BIA Start-up Grant. The grant would be repaid if the group succeeded in establishing a BIA; or

Simplifying the BIA process to proceed by way of a Council Initiative that does not require a petition.

Staff recommend the latter, Council Initiative, process as a way to expedite the formation of Business Improvement Areas. The request from the Downtown Vancouver BIA to expand its boundaries is proposed as the first application to be considered under the new process.

PURPOSE

This report proposes a simplified process to assist merchants to create or expand Business Improvement Areas.

BACKGROUND

A BIA is a non-profit association of property owners and business tenants who join together to promote and improve the commercial vitality of their business district. BIAs obtain funding through a special property tax, much like a Local Improvement. Current policy is for each property owner’s share of the annual BIA budget to be proportionate to their share of the total taxable value within the BIA boundaries. In other words, if an owner owns one percent of the total taxable assessed value, their share will be one percent of the BIA budget. In most lease agreements, property owners pass on this cost -- typically from one to three dollars per day per business -- to the business tenants.

BIAs provide an opportunity for businesses to use their own funds to promote and improvethe area. The City assists by helping merchants to form BIAs. Once a BIA is formed, it is managed by a volunteer board comprised of property owners and tenants. BIA funds are used to hire staff and implement BIA activities. The City’s continuing role is to assist with contacts between the BIA and City departments, facilitate the annual funding process, and monitor BIA budgets.

Between 1989 and 1991 Council approved five Business Improvement Areas -- Gastown, Mount Pleasant, Downtown, Robson Street, and Kerrisdale. In the nine years since the first BIAs were formed, the five BIAs have played an important role in business and tourism development, safety and security, and street enhancement for their areas. Example activities include funding entertainment and public art to make the area more attractive to employees, residents, and tourists, security patrols and business facsimile alerts to warn of criminal activities, and anti-graffiti and panhandling measures to improve the look and feel of the area.

Since 1991 no new BIAs have been formed. Other areas which have, at various times, indicated an interest in forming a BIA include Yaletown, Chinatown, South Granville, the Entertainment District of Granville, Collingwood, 10th Avenue, Davie Street, Denman Street, Fraser Street, Hastings Street, Marpole, and Victoria Drive.

DISCUSSION: CONCERNS WITH THE PRESENT BIA FORMATION PROCESS

The process by which BIAs are formed is not overly welcoming to new groups wishing to establish or expand a BIA. The process to establish a BIA is described in Appendix A. In summary it requires:

Merchants initiate the BIA process by collecting signatures of at least 50 percent of the property owners on a petition in support of forming a BIA;

Based on evidence of support provided by the petition, staff request a "Council Initiative" for BIA funding be considered at a Court of Revision;

Staff mail information about the proposed BIA and expected taxation implications to all property owners and tenants;

An initiative style, objections only, Tenant Survey is distributed; and

The BIA proposal is considered at a Court of Revision.

Experience suggests several problems with the existing BIA process are discouraging new BIAs.

Typically the BIA formation process takes at least a year to complete. Among the more difficult tasks is the requirement for a BIA sponsor to collect signatures from at least 50%of the property owners in support of establishing a BIA. This is a major deterrent in larger areas or where there are many out-of-area owners. For example, in the Downtown there are over 3,000 businesses. Smaller "neighbourhood centre" BIAs, can include between 300 and 500 businesses.

The loss of Provincial Start-up funding to pay for distributing information, meeting space, and collecting petition signatures means that interested merchants must use significant amounts of their own time and funds (which are typically in the order of $10,000) to encourage others to support a BIA.

Consequently, it is not surprising that there are few BIAs and no new ones have been established since 1991.

PROPOSAL -- A SIMPLIFIED BIA PROCESS

The existing BIA process was established when the idea was new and there was no experience with BIAs. Consequently a number of safe guards, such as petitions and tenant surveys, were put in place:

The requirement for a petition signed by at least half of the property owners ensures that a majority are in support before Council considers the BIA levy at a Court of Revision; and

In 1990 several tenants raised concerns at a Court of Revision that they had not been notified of the proposed levy. In response, a Tenant Survey of support for the BIA was instituted in 1991.

These safeguards have had the desired effect of minimizing surprises at the Court of Revision. Unfortunately, the safeguards have also had the unintended consequence of discouraging the formation of BIAs.

There are several options for the future management of BIAs:

OPTION I.Continue the present process:

Continue the present Petition, Council Initiative, and Tenant Survey process to ensure adequate safeguards are in place to protect the rights of owners and tenants who do not wish to pay an increased property tax to cover BIA costs. Should Council prefer this option, Recommendations A through B would not be approved. Council may still wish to approve Recommendations D and E to assist existing BIAs.

OPTION II. Provide a City Start-up Grant

Continue the present process and assist groups to form a BIA by establishing a City BIAStart-up Grant. The grant would be available to groups who have formed a Non-Profit Society for the purpose of establishing a BIA. The group could apply for the grant at Step 1 of the present process (See Appendix A). The grant would likely need to be in the order of $10,000. If the Group is successful in forming a BIA then the grant could be repaid over several years. The City Grant would replace the previous Provincial Start-up funding.

Should Council prefer this option, Council should note that:

If the group is not successful in forming a BIA, the City would likely not recover the funds; and

The grant may not be sufficient to generate new BIAs. The Provincial Grants were in effect from 1991 to 1995, and yet no new BIAs were formed.

To implement the Start-up Grant Program, Recommendations A, B, and C should be replaced with a Recommendation for the Director of Planning in consultation with the Director of Finance to report back on a BIA Start-up Grant Program.

OPTION III. Simplify the BIA Process.

Adopt a simplified process for the formation and expansion of BIAs. This is the option recommended by staff. There are several reasons why the City might wish to support BIAs:

BIAs are self financing, offering services which benefit the local neighbourhood and broader city. BIAs provide a way for merchants to improve both the shopping experience and the safety of their area;

BIAs offer one means of implementing CityPlan Neighbourhood Centres. Improving shopping near where people live reduces travel by providing services close to home; and

In the nine years of experience with BIAs there have been no problems of concern to the City associated with the implementation and management of BIA funds.

A proposed process for the formation and expansion of a BIA is attached as Appendix B. The proposed process is similar to the process currently used by other B.C. municipalities to establish BIAs. It is also the process currently used in Vancouver when an established BIA is required to do a five year renewal.

The proposed process is simpler and therefore, one hopes, will encourage merchant groups to form BIAs. The main change is the removal of the responsibility for the BIA sponsor group to collect signatures from 50% of property owners prior to requesting consideration of a BIA Levy at the Court of Revision.

The proposed process places initial responsibility on the BIA sponsor to form a non-profit society and to discuss the proposed BIA and the anticipated tax implications with property owners and tenants. The response to the notification and meetings will be used by the sponsor group to assess whether the application will likely be supported at a Court of Revision. If so, the sponsor group passes a motion of the Non-Profit Society (or in the case of an established BIA seeking to expand, at the Annual General Meeting of the BIA) asking Council to support the BIA formation/expansion as a Council Initiative.

The City continues to be responsible for notifying owners and tenants of the proposed BIA levy and the details for filing an objection. As with existing policy, if one-third of owners or tenants disagree, the BIA proposal is defeated.

The revised process presents two concerns:

The City continues to be responsible for notification.

City will continue to be responsible for the cost of notifying owners and tenants of the proposed BIA.

The proposed process raises the issue of negative billing.

The proposed process places the responsibility on property owners and tenants who disagree with the BIA proposal to respond in writing or speak to the initiative at the Court of Revision. In the past, Council has raised concerns that the "Council Initiative" process for Local Improvements is a form of "negative billing". That is Section 506 of the Vancouver Charter requires owners to defeat a proposed levy. By contrast, the Petition Process requires those who wish an action to happen to gather signatures in support.

The existing BIA process minimizes the "negative billing" issue by requiring signatures of at least half of the property owners prior to undertaking a Council Initiative. If Council supports the simplified BIA process, which removes the requirement for a petition, then the issues of negative billing re-emerge.

While there are concerns associated with negative billing, staff support the revised process because of the potential benefits to local shopping areas through the BIA Program.

If Council approves Recommendation A, then staff also recommend "B", to reinstate the BIA Coordinator as a full-time position. When the Economic Development Office closed, the BIA Coordinator position was reduced to a .75 (3/4 time) three days a week.

There are two benefits to a full-time BIA position:

The revised process should generate new initiatives by merchants who have already expressed interest in forming a BIA (e.g. Denman and Davie Streets, South Granville, Fraser Street, Marpole, Hastings Street, 10th Avenue) or expanding (e.g. Mount Pleasant). A full-time position will expedite the formation of new BIAs; and

Neighbourhood Centres are a cornerstone of CityPlan. Actions are needed to implement Centres. The first steps are underway in Dunbar and Kensington-Cedar Cottage where residents are identifying improvements to local centres. The "C" zoning schedules need to be updated and pedestrian priority improvements made. The BIA Program is a way for merchants to fund improvements. The recommendation to reinstate the BIA Coordinator to a full-time position could facilitate BIA activities and undertake a broader role in land use and retail policy development.

The BIA position is currently classified as an "Economic Development Officer" at pay grade 29. The level of work and responsibility will be similar to that of a Planner I which is pay grade 28. The annual cost difference between a three-quarter time pay grade 29, Step 1, position and a full-time pay grade 28, Step 1, position is $10,432.33. There are no offsetting savings. This means that the additional funds would need to be added to the Planning Department’s 1998 budget. If Council approves reinstatement of the full-time position, this would be subject to review by the Director of Human Resources as to the appropriate pay grade. Since the BIA Coordinator position is currently vacant, there is not an incumbent to be affected by a change to the work week or pay grade. The full-time position would start on January 1, 1998.

Application for BIA Expansion

The DVBIA is seeking to expand its services to adjacent areas which form part of the broader downtown. These areas already indirectly benefit from DVBIA Programs, though without contributing financially. In support of the expansion, the DVBIA has mailed letters to building owners, managers, and tenants in the proposed expansion area and has held two information meetings at Robson Square to answer questions from owners and tenants. (For information, costs for mailings, meetings, and staff time, even without a petition, already exceed $10,000.) On September 30, 1997, the Annual Meeting of the DVBIA approved a resolution to request the City expand the DVBIA boundaries.

If Council approves Recommendation "A", then staff recommend "C" that the request by the Downtown Vancouver BIA for a expanded area (see Appendix C) be considered as the first BIA under the new process.

OTHER ISSUES

In the course of reviewing the BIA process, two other issues emerged.

a.Funding for Larger Projects: Current practice is to encourage BIAs to spend all monies collected during the fiscal year. This has led to concerns by BIAs who wish to undertake larger projects, which could be paid for by saving money over several years. Staff see no reason to discourage the BIAs from undertaking larger projects and therefore recommend "D", that BIAs be permitted to carry-over funds. Proposed longer term, multi-year fund raising projects should be identified in the annual BIA budget submission.

b.Amendments to BIA Operating Procedures: Recently Section 233 of the Municipal Act, dealing with BIAs, was amended to provide increased flexibility. The changes include:

Added 4 (d), a provision so that a BIA can collect funds "at a rate based on any factor set out in the bylaw". This means that a BIA can, for example, collect dollars per square foot or so many dollars per bed (e.g. in a hotel area) or any other measure appropriate the local circumstances;

Added 4.1, the ability to set different rates or charges on different classes of businesses. This increases local flexibility; and

Amended the requirement for renewal of a BIA mandate from 5 years to 20 years. This means that the time spent confirming whether owners and tenants wish the BIA to continue can now occur on a less frequent basis. To respond to the longer time period, new BIA By-laws will need to include provisions for recalculating the levy amount over time (e.g. cost-of-living provision).

Recommendation "E" proposes the City seek amendments to the Vancouver Charter to provide increased flexibility for BIAs in Vancouver.

CONCLUSIONS

A revised BIA process is proposed to encourage more groups to form BIAs. The request by the Downtown Vancouver BIA to expand its boundaries is proposed as the first test of the new process. Among the hopes for the simplified process is for the BIA Program to contribute to enhancing Neighbourhood Centres in support of CityPlan Directions.

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(c) 1997 City of Vancouver