Title
Report regarding a Study Session on a proposed business improvement district in South San Francisco. (Ernesto Lucero, Economic Development Manager)
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RECOMMENDATION
Recommendation
Staff recommends City Council receive a report regarding a Study Session on a proposed business improvement district in South San Francisco and provide comments and direction on its potential formation.
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BACKGROUND
In the past decade, staff has continued to explore enhanced efforts to revitalize downtown South San Francisco. This has been increasingly important due to the unique attributes along Grand and Linden Avenues. The area has many long-term legacy small businesses that have served the community, there are a diverse group of restaurants within the corridors, and the area is within close proximity to one of the largest biotech clusters in the world with an array of transit options within walking distance. Even though downtown solely encompasses District 5, it serves as a focal point for community events, government business, and commercial activities for all residents, employees, and visitors throughout South San Francisco. In San Mateo County, it is one of the more diverse and unique downtown neighborhoods with nearly 70% of the community speaking a language other than English.
Like many downtown areas throughout the Bay Area and country, the past several years has seen an uptick in vacant storefronts, less foot traffic due to the increase in remote workers, and the increased need to keep downtowns clean and attractive. In addition, specific to downtown South San Francisco, the community has seen over 1,073 new housing units constructed with an additional 61 units entitled, a new Caltrain station and plaza developed at its entrance, and a growing and expanding biotech cluster with over 26,000 employees that will continue to bring new visitors downtown for shopping, dining, and events.
Many communities throughout the state and county have formed business improvement districts to augment revitalization efforts in commercial corridors. Specifically in San Mateo County, Redwood City, San Mateo, and Burlingame have forms of business improvement districts that support their downtowns with clean and safe streets, maintenance, and events. All are specific to the needs of the neighborhood and vary from safety ambassadors, cleanliness, or marketing and promotion, for example.
Overall, business improvement districts (BIDs) or property and business improvement districts (PBIDs) are mechanisms to allow businesses or property owners to self-assess themselves and use those funds for various improvements and programs within the specific district boundary. The most common district in California can be formed under the Parking and Business Improvement Area Law of 1989. Business improvement areas formed under the 1989 law impose a fee on the business license of the businesses operating in the area, rather than the property owners. The collected funds are used to fund improvements and activities specified in the formation documents. A similar assessment procedure was authorized by the PBID Law of 1994. The distinction is that the PBID makes the assessment on real property and not directly on the business within the PBID. These districts are governed by a Management District Plan and a steering committee comprised of those that represent the district.
The range of activities that can potentially be funded through business improvement districts are broad and includes parking improvements, sidewalk cleaning, streetscape maintenance, streetscape improvements (e.g., furniture, lighting, planting, etc.), promotional events, marketing and advertising, security patrols, public art, trash collection, landscaping improvements, and other functions. However, the purpose of the funded activities is not to supplement what the City is already funding, but rather to enhance and augment increased or additional services to the area.
A BID or PBID have been one proven mechanism to foster downtown revitalization efforts. It can help with attracting new businesses to the corridor, increase property values, stimulate additional tourism, and create a sustainable funding stream that is controlled by property owners and businesses. As property owners self-assess themselves, these types of districts are not associated with a tax collected by the City.
In February 2024, staff engaged business improvement district formation consultant, Community Strong Strategies, to assist in community engagement and the potential formation of a business improvement district for downtown. At its February 14th regular meeting, City Council received a brief presentation on the project.
DISCUSSION
Much of 2024 was spent on significant community engagement to understand the perception of downtown and what could make the area even better.
Community Engagement Efforts
In early 2024, downtown outreach began with the Leadership Council of San Mateo County Emerging Leaders Cohort (Leadership Council), which allocated a team of county-wide emerging leaders to help staff with outreach to downtown on ways to support increased downtown revitalization opportunities. The group conducted one-on-one business outreach walks along Grand, Baden, and Linden Avenues to hear directly from local merchants. The major themes they heard were related to capitalizing on new residents that recently moved downtown and ways to partner with local restaurants in need of an additional customer base. Through this engagement, the team focused on ways to activate the City-owned Breezeway property, which sits adjacent to the Miller Parking Garage and the Economic Advancement Center at 366 Grand Avenue. Ultimately, the team focused on the development of a pilot early evening event in the Breezeway with the goal of bringing biotech workers downtown after hours, supporting local restaurants, and activating the underutilized Breezeway space.
The project concept was received by staff with the goal of implementing it when funds became available. Staff applied to the Genentech South San Francisco Civic Fund and has since been awarded $10,000 to implement the South San Francisco Lunar New Year Night Market which will take place on February 7, 2025, in the Breezeway. More information about this event can be found at www.ssf.net <http://www.ssf.net> as details develop.
With the support and engagement findings from the Leadership Council, the PBID consultant team Community Strong Strategies, met with the Leadership Council team and expanded outreach to property owners, visitors, local merchants, and city-wide outreach methods to broaden the scope of downtown revitalization as it relates to what a PBID could potentially fund. Outreach consisted of one-on-one business walks, a city-wide residential text survey, the Mayor’s newsletter to all residents, as well as business stakeholders and property owners. Outreach was conducted in English, Spanish, Tagalog, and Cantonese and generated 352 responses.
The most common themes included a need for more restaurants, activation of downtown spaces with new events to attract more customers and families, general beautification and cleanliness on sidewalks, and ways to deal with the increase of parking challenges downtown through increased availability and enforcement.
Staff also met with the Parking Place Commission on November 12, 2024, to discuss the project. The Commission requested an additional presentation once services were more clearly identified and wanted to be kept apprised of how the district would be developed.
Formation of Steering Committee
With the outreach findings and discussions with key stakeholders, staff and the consultant team began to meet with interested stakeholders interested in the progress of outreach efforts and the next steps to form a potential district. To date, the steering committee has consisted of a small group of stakeholders who largely represent property owners along the Grand Avenue corridor. The group has been meeting informally monthly since the Summer of 2024 and staff and the consultant team have presented a potential district boundary map, findings from the outreach conducted, and ways the district could fund specific needs presented from the data.
Draft District Boundary
Directed by the outreach data and discussions with the group of preliminary stakeholders from the steering committee, the proposed boundary map focused on Grand Avenue between South Airport Boulevard and Spruce Avenue, and Baden Avenue between South Airport Boulevard and Maple Avenue. Further discussion has raised the need to expand the proposed district boundary along the Linden Avenue corridor north to Aspen Avenue due to the future development potential of Linden Avenue, the future housing development at Linden and Lux Avenues, and the future park that will be developed at Linden and Pine Avenues. The proposed district map is Attachment 1.
Potential Services and Direction
Based on all the community engagement as well as discussions with the steering committee, the following services have been discussed:
Beautification and Cleanliness
As with most districts, a portion of the budget is commonly identified for general beautification and cleanliness. This may include more frequent pressure washing conducted along the major corridors such as Linden, Grand, and Baden Avenues, as well as the entrance to downtown along South Airport Boulevard. In addition, there is a need for more frequent trash collection of public waste containers which can unintentionally overflow due to residential units using them for household trash removal.
This item was discussed with the Public Works Department (Public Works), as a business improvement district could only fund beyond what the City is already doing. Public Works said that within this category, staff manage general cleanliness, graffiti removal, trash collection, and pressure washing conducted by a clean team that focuses on Grand and Linden Avenues. Trash collection is daily, and pressure washing is once per quarter.
Public Works staff also mentioned they had conducted some research on downtown ambassador programs that are typically funded with business improvement districts, and not funded by the City. These included:
Downtown Berkeley which operates an ambassador cleaning team through its PBID for enhanced cleaning of litter removal, detail cleaning of public amenities, graffiti removal, weed removal, and power washing and spot cleaning. The district has two zones consisting of a premium and standard zone and property owners pay different assessments with more frequent services in the premium zone.
Downtown Santa Cruz operates an ambassador program through its PBID focused on an attractive downtown for its tourism industry with similar services around clean streets.
Downtown San Leandro operates an ambassador program through its Community Benefit District (CBD) that focuses on clean and safe streets. Their ambassador program is contracted out under an Environmental Maintenance Services agreement with a third party, and a separate pilot Safety Ambassador Program is contracted with the City of San Leandro. Under district maintenance, services include litter and debris removal, sticker/poster removal, increased power washing, landscape maintenance, graffiti removal, weed abatement, illegal dumping, and small business assistance impacted by unsheltered individuals. Its pilot Safety Ambassador Program provides services for hospitality information for visitors, reporting suspicious vehicles and individuals, reporting safety hazards, de-escalation of non-emergency situations, addressing public nuisances such as public drinking and smoking, wellness checks, and distribution of donated food to unsheltered neighbors.
City and County of San Francisco operates a Community Ambassadors Program for clean and safe streets in districts including Bayview, Chinatown, Mid-Market/Tenderloin/Union Square, Mission, Visitacion Valley/Portola, and Castro. Services range depending on the priority needs but include safety escorts, reporting emergencies and hazards, and conducting wellness checks.
Throughout the outreach conducted in South San Francisco in 2024, safety concerns were not a common theme, nor did they represent a large concern heard from the community. There have been some rare safety incidents that have occurred along Grand Avenue in recent years, however, staff will continue to ask about safety through continued outreach to stakeholders.
Recently, in January 2023, there was a strong-armed robbery at a local merchant on the 300 block of Grand Avenue, as well as an assault with a hammer which caused several broken windows at six merchants along the same block in November 2024. Both incidents were followed by downtown merchant outreach and assistance from the City, and overall, there have been very positive comments about the responsiveness and professionalism from the Police Department, as all suspects were quickly apprehended.
Capitalizing on the growing workforce east of 101 to bring them downtown to dine and visit
Overall, much of the discussion and data collected suggests that many local small businesses have survived many challenges over the past several years and want to bring in more business to grow. Since at least 2020, most small businesses have been faced with temporary and intermittent closures due to the pandemic. This also caused a large customer base for local restaurants to drop off as remote work became the norm, and less people came downtown for lunch or after work. Several restaurants that had a large customer base for catering also struggled to maintain operations, as large events and work meetings have not returned to pre-COVID levels. In addition, many local small businesses within downtown faced legal challenges with complying with the Americans with Disabilities Act (ADA). Many see the continued growth of the 26,000-biotech workforce, separated only by the 101 freeway, as a prime asset for continued success and sustainability.
One potential service that the steering committee discussed was a service related to transportation since parking constraints continue to limit additional visitors downtown. Genentech operates the Genentech Goes to Town promotion in September with increased bus drop off points in the downtown around the lunch hour during the promotion. In its 32nd year this year, the program provides Genentech employees with a small stipend to dine and shop specifically downtown for two weeks every September.
Ways to support the challenges of parking downtown
Concerns about parking downtown were heard from most engagement efforts, specifically around the perception of the lack of enforcement and lack of availability. Overall, the landscape of downtown has significantly changed with improvements of accessing transit options such as Caltrain, and the construction of new high-density housing developments. Many have voiced the increased time to locate a parking spot and the longer distance to park a vehicle if dining or visiting downtown. Some suggest this to be a decision maker and sometimes decide to eat elsewhere in other downtown areas for ease of parking availability. Staff will continue to keep the Public Works Department and the Parking Place Commission apprised.
In general, a business improvement district is not the appropriate funding mechanism to assist with parking, as a parking structure for example, would only fund an extremely small portion of the total cost out of the district annual budget. Some ideas that have been discussed include wayfinding signage to available parking such as the Miller Parking Garage or other downtown surface parking lots, as well as valet parking in designated locations for special events when parking becomes very limited, such as the holiday season or special event.
More events downtown and activating spaces for events
Annual events and opportunities for the community to gather downtown have consistently been expressed throughout the outreach. As discussed with the Leadership Council project, many local businesses can benefit from the uptick in business activity when events occur downtown. Although many local merchants are weary of street closures along Grand Avenue currently, open spaces such as City Hall and the Grand Library, breezeways along Grand Avenue, and the Karyl Matsumoto Plaza seem the most feasible in the short-term for events. However, street closures surrounding City Hall seemed to be the most feasible for larger events.
In the Summer of 2024, staff also began partnering with the Bay Area Entrepreneur Center (BAEC) through Skyline College on a student cohort to help South San Francisco further develop special events in downtown. To date, the student cohort has proposed new event ideas to staff based on regional analysis and impact and will be assisting staff with ideas for the Lunar New Year Night Market, Santa Comes to Town, and new events around art and culture.
PBID vs. BID
As discussed, a PBID or property-based improvement district, is funded by property owners within the district boundary. Assessments are calculated based on a five-year annual budget and are paid by the property owner when property taxes are annually due. The City, as a property owner downtown, would also be self-assessed and help fund the services property owners agreed upon. Formation can occur annually by July, must be approved by more than 50% of property owners, and would be assessed on property taxes due by the month of January after formation.
A BID, or business improvement district, is funded by the specific businesses operating on the property within the district boundary map. In November 2024, voters approved Measure W, the Business License Tax Measure, to help modernize the City of South San Francisco Business License Tax. While the business license tax covers all businesses that require a South San Francisco Business License, a BID is solely an assessment paid by businesses within the specific boundary map, and not city-wide. Assessments are also calculated based on a five-year annual budget and are paid by the business annually when a business license is renewed and collected by the City. Formation can occur at any time by Council approval and would be assessed when businesses renew their annual business license. BID assessments can be unpredictable and can fluctuate on the number of businesses that continue to renew and/or apply for a business license within the district boundary.
With either a PBID or BID, a non-profit organization with a Board of Directors would manage the district, and the City would have representation on the Board of Directors.
Staff and the steering committee recommend to the Council the direction of forming a PBID. A PBID would have the ability to generate more revenue for district services, in addition to generating a more sustainable level of services over the life of the district. It would also put the ability of property owners to dictate how they want their properties to be revitalized, with the goal of attracting new businesses and visitors downtown.
Assessments
Assessment categories have been identified by land use type including:
• Commercial: representing properties with local merchants and small businesses;
• Government (enterprise): representing governmental-owned properties that generate revenue, such as paid City lots;
• Government (traditional): representing government-owned properties such as City Hall or public spaces;
• Non-profit: representing properties that operate non-profits, such as the Economic Advancement Center;
• Residential: representing all housing developments, except single-family homes; and
• Residential (affordable): representing housing development and units that are deeded as low income
To date, assessment analysis has only been performed with the smaller boundary map identified in Attachment 1 as the blue area concentrated around Grand and Baden Avenues. This estimated an annual budget between $195,000 to $292,500 with 262 properties, depending on the level of services. Staff would like to perform additional analysis to include the additional boundary area to understand the full potential of a larger district boundary. So far, the steering committee has had some consensus on a lower range budget, however, it may limit the level of services that could be implemented.
Formation Process and Next Steps
After further comments and direction from Council, staff will continue to proceed with the formation process of:
1. Proceeding with the PBID formation process; and
2. Expanding the district boundary to include Linden Avenue beyond the Grand and Baden blocks to include northern blocks to Aspen Avenue which would incorporate additional housing developments and the new park development; and
3. Continuing to engage with property owners within the added areas; and
4. Gaining consensus on services identified; and
5. Growing the steering committee to meet monthly in 2025; and
6. Returning to the Council later in the year on an update, as needed.
To date, outreach to property owners has been concentrated on the smaller district boundary of Grand Avenue predominately. Outreach in 2025 will expand to include the additional property owners north along the Linden Avenue blocks. If Council agrees with the next steps, a Management District Plan would be drafted by the Fall of 2025, over 50% of property owners within the district boundary would need to approve its formation through a mailed petition drive by May 2026, Council will need to approve the formation process with two actions by July 2026, and services would begin by January 2027.
FISCAL IMPACT
There is no impact to the General Fund associated with this Study Session item.
CONCLUSION
A business improvement district is one mechanism that would support revitalization downtown. However, staff are not waiting for revitalization until a district is formed and services are provided. Many resources have already flowed through downtown and will continue to be a part of the effort. Through the past several years, many grant programs have been offered to downtown merchants to support challenges faced within the community. A new slurry seal was recently improved within downtown corridor streets, and staff and stakeholders continue to bring events downtown, such as Santa Comes to Town and the upcoming Lunar New Year Night Market.
Staff recommends City Council receive a report regarding a Study Session for a proposed business improvement district in South San Francisco and provide comments and direction on its potential formation. This item serves as an opportunity to check in with Council on the direction of the project.
Attachments:
1. Proposed district boundary map