Submitted by: Jordan Klein, Acting Manager, Office of Economic Development

Page 1 of 65 Office of the City Manager CONSENT CALENDAR February 28, 2017 To: From: Honorable Mayor and Members of the City Council Dee Williams-Ridley, City Manager Submitted by: Jordan Klein, Acting Manager, Office of Economic Development Subject: Re-Establishment and Expansion of the Telegraph Property and Business Improvement District RECOMMENDATION 1. Adopt a Resolution declaring the City Council s intent to modify the existing Telegraph Property and Business Improvement District (TBID) to shorten its term from ten years to nine years, setting a public hearing for May 2, 2017 on modification of the District, and directing the City Clerk to conduct all necessary proceedings for modification of the TBID; and 2. Adopt a Resolution declaring the City Council s intent to re-establish and expand the Telegraph Property and Business Improvement District for the ten-year period beginning July 1, 2017 and ending June 30, 2027, with operations to occur over the ten calendar year period beginning January 1, 2018 and ending December 31, 2027; setting a public hearing for May 2, 2017 on re-establishment of the District; and directing the City Clerk to conduct all necessary proceedings for re-establishment of the TBID. SUMMARY The TBID provides cleaning, hospitality and marketing services for Berkeley s Telegraph Avenue commercial district. The TBID is set to expire on June 30, 2018 (with services expiring on December 31, 2018), and the Telegraph Property and Business Management Corporation (TPBMC), as the District s Owners Association, has begun the legal process to renew the TBID and to expand it. TPBMC is choosing to begin the renewal process a year early, expanding the geographic area of the district to allow for more complete and consistent services for the greater Telegraph business district. The new term for the District would be for ten years beginning July 1, 2017 and ending June 30, 2027, with operations spanning the ten year period beginning January 1, 2018 and ending December 31, 2027. This Council item is the next step in the process to reestablish and expand the TBID. The TBID is proposed to be renewed pursuant to the Property and Business Improvement District Law of 1994, Streets and Highways Code section 36600 et. seq. Assessments are also subject to the requirements of California Constitution Article XIII D, also known as Proposition 218. As shown in the attached Management District Plan 2180 Milvia Street, Berkeley, CA 94704 Tel: (510) 981-7000 TDD: (510) 981-6903 Fax: (510) 981-7099 E-Mail: manager@cityofberkeley.info Website: http://www.cityofberkeley.info/manager

Page 2 of 65 Re-Establishment and Expansion of the Telegraph CONSENT CALENDAR Property and Business Improvement District February 28, 2017 and Engineer s Report (Attachment 2, Exhibit A), a professional engineer has determined that the assessed parcels will receive special benefits from the TBID s services in accordance with Prop 218. Petitions have been received from property owners representing a majority of the proposed assessment (Attachment 3); therefore Council may now begin the ballot process. By adopting the attached Resolutions, Council will be directing staff to proceed with concurrent processes to modify the existing TBID and re-establish the TBID for a new 10-year period. Ballots will be mailed to all owners of assessed parcels within the District. Property owners will have at least 45 days to return their ballots to the City. Ballots must be returned prior to the close of the public hearing to take place at the May 2, 2017 City Council meeting. At the conclusion of that public hearing, if there is no majority protest among the returned ballots, Council may renew the TBID. The City of Berkeley owns one parcel within the proposed boundaries of the TBID and is required by state law to pay the associated assessments. The initial assessment payment will be $44,706 in FY 2018 and could increase by as much as 3% per year. As a property owner, the City will be entitled to cast a ballot showing its support or opposition for the TBID. Council previously, at its November 1, 2016 meeting, authorized the City Manager to sign a ballot in favor of the assessment. The City would also pay the General Benefit portion of the TBID costs, or roughly $27,146. The City already makes an annual grant to the TBID, through the Public Commons for Everyone Initiative, which exceeds this amount, so there will be no new fiscal impacts related to funding the general benefit. FISCAL IMPACTS OF RECOMMENDATION Under the provisions of Proposition 218 in the California Constitution, government agencies must pay assessments for the special benefits they receive from Property and Business Improvement District (PBID) activities, maintenance, and improvements. Payments are collected from private property owners through property tax bills near the end of the calendar year. Payments would be due from non-property tax-paying entities such as the City at roughly the same time. The City s initial assessment payment in FY 2018 would be $44,706 (an increase of $2,377, or 5.6%, over the FY2017 assessment). The City s assessment is paid annually through the Off-Street Parking Fund (835-4942- 410-4046). In addition to assessments, the City will be asked to pay for the general benefit portion of the budget. As required by state law, the general benefits of an assessment district must be quantified so that the cost of the activities that are attributed to general benefit can be deducted from the amounts assessed against each specially benefitted parcel. In most California cities where there is a general benefit cost associated with a PBID, the municipality pays that portion of the budget. The engineer s report commissioned for the reestablishment of the TBID calculates that the general benefit for the district will be $27,146. The City already makes an annual grant to TBID which exceeds this amount, so there will be no new fiscal impacts related to funding the general benefit. Page 2

Page 3 of 65 Re-Establishment and Expansion of the Telegraph CONSENT CALENDAR Property and Business Improvement District February 28, 2017 The TPBMC Board would have the authority to raise assessment as much as three percent per year to keep pace with inflation and other program costs. CURRENT SITUATION AND ITS EFFECTS The TBID is a benefit assessment district created in 1998 for a five year term to provide needed improvements and activities to assessed property owners. Since the initial term, the TPBID has been renewed for a five year term in 2003 and for a ten year term in 2008. Property owners decided to pursue renewal of the TBID in order to maintain a revenue source devoted to providing needed activities and improvements. If renewed, the District would generate approximately $646,380 on an annual basis for the provision of Clean, Safe, and Beautification services, Communications and Economic Development, and related management and administration. The current District was established in 2008 for a ten year term, with an operational period beginning January 1, 2009 through December 31, 2018. TPBMC has requested that the current TBID s Management District Plan be modified to shorten the ten year term to nine years, ending December 31, 2017 (Attachment 1, Exhibit A). The process to modify the current TBID is set to be completed concurrently with completion of TBID renewal. BACKGROUND A PBID is a benefit assessment district formed and renewed by property owners to provide enhanced services within the established boundaries. These services are concentrated within a distinct geographic area and are paid for by means of a special assessment on property within the District. A nonprofit corporation owners association representing assessed property owners is responsible for providing these services, which are undertaken in coordination with services provided by local government. The TBID was formed in 1998, pursuant to California s Property and Business Improvement District Law of 1994, and renewed in 2003 and 2008 by property owners. The TBID will continue to deliver enhanced services throughout the Telegraph area. There are two benefit zones that make up the TBID, acknowledging the different levels of benefit and services provided to property owners. The map within the attached Management District Plan (see Attachment 2, Exhibit A, page 5) illustrates the TBID boundary and benefit zones. Through this renewal, the TBID would expand its boundaries to include additional parcels adjacent to the existing PBID. The expanded geographic coverage will allow the district to serve additional businesses (including hotels, restaurants, and retail shops) in the greater Telegraph business district that were not included within the original TBID boundaries. Assessments Property owners, merchants, and other Telegraph stakeholders have emphasized that Page 3

Page 4 of 65 Re-Establishment and Expansion of the Telegraph CONSENT CALENDAR Property and Business Improvement District February 28, 2017 an assessment formula for the District needs to be fair, balanced, and commensurate with benefits received. Each property owner will pay based on benefits received. The variables used for the annual assessment formula are based on parcel size, building size, parcel type, and benefit zone. The annual assessment on property throughout the renewed TBID is based on the benefit each property receives from the proposed services. Because of the difference in pedestrian and vehicle traffic between the zones, Zone 2 will receive fifty percent (50%) of services provided by the District of those received by Zone 1. Thus, the assessment rate for Zone 2 is fifty percent (50%) of the Zone 1 rate. In addition, properties with residential, government and tax-exempt uses will pay an adjusted rate, reflecting the fact that those uses do not benefit from a portion of the services provided by the District. The initial rates of assessment, by parcel type and zone, are listed in Table 1 below. Assessment rates may be increased by up to 3% per year to account for inflation and program cost increases, subject to the review and approval of the TPBMC Board of Directors. Residential properties with four (4) units or less will not be assessed. Table 1. Initial Assessment Rate Zone 1 Parcel Size (sq. Parcel Type ft.) + Building Size (sq. ft.) Commercial $0.20088 $0.10044 Multi-Family Residential $0.15012 $0.07506 Private Property Tax- Exempt / Public Zone 2 Parcel Size (sq. ft.) + Building Size (sq. ft.) $0.07506 $0.03753 Government-Owned Property Under The Right to Vote on Taxes Act (also known as Proposition 218) all public agencies are required to pay the same assessments for public property that apply to private property unless they can demonstrate by clear and convincing evidence that the public property does not receive a benefit. The Management District Plan provides that the City of Berkeley and other public entities will benefit from and therefore be assessed for all PBID services. The City owns one property within the district: the Telegraph Channing Garage at 2431 Channing Way. The FY18 assessment for that property under the revised formula will be $44,706, which represents an increase of $2,377 (5.6%) over the FY2017 assessment. Management District Plan and Budget The Management District Plan outlines three main areas of focus for the TBID: Clean, Safe and Beautification ; Communications and Economic Development; and Management and Administration. Page 4

Page 5 of 65 Re-Establishment and Expansion of the Telegraph CONSENT CALENDAR Property and Business Improvement District February 28, 2017 The total anticipated assessment budget is $646,380 and the split between the three focus areas is outlined below in Table 2. Table 2. Assessment Budget Budget Category Amount % Clean, Safe and Beautification $452,466 70% Communications and Economic Development $109,885 17% Management and Administration $84,029 13% TOTAL $646,380 100% The Management District Plan provides for services above and beyond those currently provided by the City of Berkeley. TBID and its renewal consultant team conducted property owner focus groups and individual meetings with property and business owners, and developed service priorities based on the information and opinions collected via this outreach. The information from each step of this process was integrated and culminated in the development of the Management District Plan (Attachment 1, Exhibit A). The following are descriptions of District programs: 1. Clean, Safe and Beautification The Clean, Safe and Beautification program will focus on continuing to make the District a cleaner and safer place to do business. Programs will include: ambassador services, graffiti and sticker removal, manual sidewalk cleaning and sidewalk pressure washing, hazardous waste cleanup, gutter and storm drain cleaning, street sweeping, litter removal, enhanced landscaping and landscape maintenance, small infrastructure improvements, tree lights, placemaking, seasonal decorations, and other special projects as they relate to Clean, Safe and Beautification. The budget for the Clean, Safe and Beautification program is $452,466 or 70% of the total assessment budget. 2. Communications and Economic Development The communications and economic development program will work closely with property owners to identify and represent their needs and concerns, and keep them informed of the District s efforts on behalf of the assessed parcels. The District will provide a unified voice to represent the best interests of the assessed parcels. The program will represent the parcels best interests at the local government level, with the City Council, city staff, and various other public agencies whose operations impact the assessed parcels. If needed, the communication and economic development program staff will work with state and federal agencies whose Page 5

Page 6 of 65 Re-Establishment and Expansion of the Telegraph CONSENT CALENDAR Property and Business Improvement District February 28, 2017 operations impact the assessed parcels. Additional programs may include but are not limited to: stakeholder communications that support the District s agenda and attract visitors provided via email newsletters, social media, a proactive public relations strategy, and a District website. Communications and economic development funds shall not be used for lobbying efforts such as attempting to influence legislation or candidates for office. As Telegraph evolves, communication strategies will evolve to preserve and grow Telegraph s role as a destination within the region. The TPBMC will continue to be the go-to business organization, playing a strong leadership role to create a forward thinking, innovative, and business friendly environment. Marketing and hospitality efforts may be undertaken to raise awareness of the District as a place to dine, shop, and do business. All marketing services will be designed and intended to specially benefit the assessed parcels via increased commerce, occupancy rates, and lease rates. The budget for the communications and economic development program is $109,885 or 17% of the total assessment budget. 3. Management and Administration The management and administration portion of the budget will be utilized for administrative costs associated with providing the services. Those costs may include rent, telephone charges, legal fees, accounting fees, postage, administrative staff, insurance, other general office expenses, and City and County administration costs. In addition, the management and administration budget will include 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 TPBMC. Policies relating to contributions to the reserve fund, the target amount of the reserve fund, and expenditure of money from the reserve fund shall be set by the TPBMC. The reserve fund may be used for the costs of renewing the District. The budget for management and administration is $84,029 or 13% of the total assessment budget. City Services The Office of Economic Development, in consultation with a variety of City agencies, has developed a list baseline services (Attachment 1, Exhibit A, pages 49-51) that are currently provided within the TBID and will continue through the duration of the renewed District s term. Collection TBID assessments appear as a separate line item on the annual Alameda County property tax bills. The TPBMC will directly invoice property owners who are not included in the Alameda County property tax billing systems. Page 6

Page 7 of 65 Re-Establishment and Expansion of the Telegraph CONSENT CALENDAR Property and Business Improvement District February 28, 2017 Governance The TBID will continue to be managed by the Telegraph Property and Business Management Corporation Board of Directors. Duration The TBID will be re-established for the ten (10) year period beginning July 1, 2017 and ending June 30, 2027, with operations to occur over the ten calendar year period beginning January 1, 2018 and ending December 31, 2027. Near the end of the term, the petition, ballot, and City Council hearing process must be repeated for the TBID to be renewed. ENVIRONMENTAL SUSTAINABILITY By maintaining and enhancing the district, the TBID creates shopping opportunities for residents and visitors while encouraging alternative forms of transportation. The District includes the area immediately south of the University of California, Berkeley campus and therefore provides essential commercial goods and services to the student body. The District is also served by several AC Transit lines and BART, which provide access to visitors from around the region. TBID ambassadors and environmental enhancements such as median plantings all contribute to making the Telegraph district a more pleasant destination. Because the District is well served by public transportation and biking infrastructure, these services indirectly support environmental sustainability goals of encouraging alternative transportation choices. RATIONALE FOR RECOMMENDATION This private/public partnership will continue to provide significant resources for Telegraph area revitalization that have had a positive effect on the physical and economic health of the district. The City contribution will leverage substantial funds from the private sector and the University of California at a ratio of approximately 14 to 1. ALTERNATIVE ACTIONS CONSIDERED None. CONTACT PERSON Jordan Klein, Acting Manager, Office of Economic Development, (510) 981-7534 Attachments: 1: Resolution Exhibit A: Letter from TPBMC Requesting Modification of the Telegraph Property and Business Improvement District 2: Resolution Exhibit A: Telegraph Property and Business Improvement District: Management District Plan and Engineer s Report 3: Petition Certification Page 7

Page 8 of 65 RESOLUTION NO. ##,###-N.S. DECLARING CITY COUNCIL S INTENTION TO MODIFY THE TELEGRAPH PROPERTY AND BUSINESS IMPROVEMENT DISTRICT AND DIRECTING THE CITY CLERK TO SCHEDULE A PUBLIC HEARING FOR MAY 2, 2017 REGARDING MODIFICATION OF THE DISTRICT WHEREAS, on June 17, 2008 the City Council of the City of Berkeley ( City Council ) adopted Resolution No. 64,102-N.S. establishing the Telegraph Property and Business Improvement District ( TBID ); and WHEREAS, the Property and Business Improvement District Law of 1994, Streets and Highways Code 36600 et seq., allows cities to modify the Management District Plan ( MDP ) of a District at the request of the Owners Association; and WHEREAS, the TPBID Owners Association, the Telegraph Property and Business Management Corporation, has requested modification of the MDP (Exhibit A). NOW THEREFORE, BE IT RESOLVED by the Council of the City of Berkeley that: 1. The recitals set forth herein are true and correct. 2. The City Council declares its intention to modify the TBID MDP. 3. The proposed modification of the TBID MDP will reduce the operational term of the TBID from ten years to nine years, with a modified ending date of December 31, 2017. 4. The time and place for a public hearing on modification of the TBID MDP is set for 7:00 PM or as soon thereafter as the matter may be heard on May 2, 2017 at City Council Chambers, 2134 Martin Luther King Jr. Way, Berkeley, California 94704. 5. This resolution shall take effect immediately upon its adoption by the City Council. Exhibits A: Letter from TPBMC Requesting Modification of the Telegraph Property and Business Improvement District

Page 9 of 65 Telegraph Business Improvement District 2437 Durant Street Suite 206 Berkeley, CA 94704 January 23, 2017 Honorable Mayor and Councilmembers City of Berkeley 2134 Martin Luther King Jr. Way Berkeley, CA 94704 Re: Telegraph Property and Business Improvement District Honorable Mayor and Councilmembers: As the Telegraph Property and Business Improvement District (TBID) Owners Association, the Telegraph Property and Business Management Corporation hereby requests modification of the TBID Management District Plan enacted in 2008. Specifically, we request that the term of the TBID be modified. The current term of the TBID is ten years, with operations effective through December 31, 2018. We request shortening the TBID s term so that it ends on December 31, 2017. We are concurrently seeking to re-establish the TBID, covering a larger geographic area, for the ten-year period beginning July 1, 2017 and ending June 30, 2027, with operations to occur over the ten calendar year period beginning January 1, 2018 and ending December 31, 2027. The modification of the existing district will allow for continuous provision of services as we transition to the new district. We ask that you consider this item at your February 28, 2017 meeting. If you have any questions or comments please contact me at (510) 486-2366. Thank you, Stuart Baker, Executive Director Telegraph Property and Business Management Corporation Cc: Jordan Klein, Acting Economic Development Manager

Page 10 of 65 Attachment 2 RESOLUTION NO. ##,###-N.S. RESOLUTION OF INTENTION TO ESTABLISH THE TELEGRAPH PROPERTY AND BUSINESS IMPROVEMENT DISTRICT WHEREAS, the Property and Business Improvement District Law of 1994 (California Streets and Highways Code section 36600 et Seq., hereafter the Act ) authorizes cities to fund property related improvements, maintenance and activities through the levy of assessments upon the real property that benefits from those assessments; and WHEREAS, in accordance with the Act and City of Berkeley legislation to implement it (Berkeley Municipal Code Chapter 7.94), property owners in the Telegraph Avenue commercial district have presented petitions asking the City of Berkeley to initiate special assessments proceedings to establish a new Telegraph Property and Business Improvement District for the ten-year period beginning July 1, 2017 and ending June 30, 2027, with operations to occur over the ten calendar year period beginning January 1, 2018 and ending December 31, 2027, for the purpose of undertaking and implementing the services described in Exhibit A; and WHEREAS, the activities managed by the TPBMC and funded by the TBID are essential to maintaining and promoting the cleanliness and economic vitality of the Telegraph area commercial district. NOW THEREFORE, BE IT RESOLVED by the Council of the City of Berkeley as follows: Section 1. Pursuant to Streets and Highways Code Section 36600 et seq. and Berkeley Municipal Code Chapter 7.94, the City Council declares its intent to consider the establishment of a property and business improvement district to be named the Telegraph Property and Business Improvement District for the ten-year period beginning July 1, 2017 and ending June 30, 2027, with operations to occur over the ten calendar year period beginning January 1, 2018 and ending December 31, 2027. Section 2. The proposed boundaries of the District be established and as set forth in the description and map that are included in Exhibit A. Section 3. The improvements and activities proposed are as provided in the summary included in Exhibit A, and as are available in the complete Management District Plan that is available to all property owners at the address specified in Exhibit A. Section 4. Council intends to levy assessments on property within the boundaries of the District according to the method and basis described in Exhibit A. Section 5. A public hearing shall be held before the City Council on May 2, 2017 at 7:00pm at City Council Chambers, 2134 Martin Luther King, Jr. Way, Berkeley, California in compliance with Resolution 66,576-N.S. Following the hearing, the Council will consider adoption of a resolution reestablishing the District. At this hearing the Council will hear all

Page 11 of 65 interested persons for or against the reestablishment of the District, the extent of the District, and the furnishing of specified types of improvements and activities. If written protests are received from the owners of properties in the proposed District that constitute a majority (50%+1) of weighted ballots cast, no further proceedings to establish the District shall be taken for a period of one year from the date of the finding of a majority protest by the City Council. If the majority protest is only against the furnishing of a specified type or types of improvements or activities within the District, those types of improvements or activities shall be eliminated. Any person having a question regarding the hearing proceedings may telephone (510) 981-6900. Any person having a question regarding the establishment and operation of the proposed District may telephone (510) 981-7530. Section 6. The City Clerk is directed to give notice of said hearings as provided in section 36623 of the Act and section 53753 of the Government Code, which requires that the agency shall give notice by mail to the record owner of each identified parcel. The public hearing shall be held not less than 45 days after the adoption of this Resolution. Exhibits A: Telegraph Property and Business Improvement District: Management District Plan and Engineer s Report

Page 12 of 65 Exhibit A 2018-2027 TELEGRAPH PROPERTY AND BUSINESS IMPROVEMENT DISTRICT MANAGEMENT DISTRICT PLAN AND ENGINEER S REPORT Prepared pursuant to the Property and Business Improvement District Law of 1994, Streets and Highways Code section 36600 et seq. September 21, 2016

Page 13 of 65 CONTENTS I. Executive Summary... 1 II. Background... 2 III. Accomplishments... 3 IV. Boundaries... 4 V. Service Plan & Budget... 6 A. Improvements, Maintenance, and Activities 6 B. Annual Budget 7 C. Year One Total Budget 7 D. Year One Assessment Budget 7 E. Zone Assessment Budgets 8 F. Annual Maximum Assessment Budget 8 VI. Governance... 9 A. Owners Association 9 B. Brown Act & Public Records Act Compliance 9 C. Annual Report 9 VII. Engineer s Report... 10 A. Separation of General and Special Benefits 10 B. Assessment Methodology 16 C. Assessment Notice 19 D. Time and Manner for Collecting Assessments 19 E. Engineer s Certification 20 Appendix 1 Maximum Annual Assessment Rates... 21 Appendix 2 PBID Law... 22 Appendix 3 Boundary Map... 32 Appendix 4 Parcel Assessment Calculations... 33 Appendix 5 Budget by Zone... 48 Appendix 6 Baseline Services... 49 Prepared by Civitas (800)999-7781 www.civitasadvisors.com i

Page 14 of 65 I. EXECUTIVE SUMMARY The Telegraph Property and Business Improvement District (TPBID) is a benefit assessment district whose goal is to provide improvements, maintenance, and activities that constitute and convey a special benefit to assessed parcels. The TPBID was formed in 1998 and renewed in 2003 and 2008. As required by state law, this Management District Plan (Plan) has been created to again renew the TPBID. Location: Purpose: Budget: Cost: The TPBID generally includes parcels in the Telegraph area of the City of Berkeley, as detailed on the map in Section V. The purpose of the TPBID is to provide improvements, maintenance, and activities which constitute and convey a special benefit to assessed parcels. The TPBID will provide clean, safe, and beautification services, Communications and Economic Development; and related management directly and only to assessed parcels within its boundaries. The TPBID annual assessment budget for the initial year of its ten (10) year operation is anticipated to be $646,380.08. The annual budget may be subject to an increase in assessment rates of no more than three percent (3%) per year. The assessment funds will be supplemented by non-assessment funds (such as grants and event income), so that the total budget for the initial year is estimated at $673,526.11. The assessment rate (cost to the parcel owner) is based on parcel size, building size, parcel type and benefit zone. The initial annual rate applied to each parcel is shown in the table below. Assessment rates may be subject to an increase of no more than three percent (3%) per year. Initial Assessment Rate Parcel Type Zone 1 Parcel Size (sq. ft.) + Building Size (sq. ft.) Commercial $0.20088 $0.10044 Multi-Family Residential $0.15012 $0.07506 Private Property Tax- Exempt / Public Zone 2 Parcel Size (sq. ft.) + Building Size (sq. ft.) $0.07506 $0.03753 Renewal: Duration: TPBID renewal requires submittal of petitions from property owners representing more than 50% of the total assessment. The California Constitution requires a ballot vote in which more than 50% of the ballots received, weighted by assessment, be in support of the TPBID. The TPBID will have a ten (10) year life beginning January 1, 2018 through December 31, 2027. Near the end of the term, the petition, ballot, and City Council hearing process must be repeated for the TPBID to be renewed. Management: It is anticipated that the Telegraph Property and Business Management Corporation (TPBMC) will continue to serve as the Owners Association for the TPBID. September 21, 2016 Page 1

Page 15 of 65 II. BACKGROUND The International Downtown Association estimates that more than 2,500 Property and Business Improvement Districts (PBIDs) currently operate throughout the United States and Canada. PBIDs are a time-tested tool for property owners who wish to come together and obtain collective services which benefit their properties. PBIDs provide supplemental services in addition to those provided by local government. They may also finance physical and capital improvements. These improvements, maintenance, and activities are concentrated within a distinct geographic area and are funded by a special parcel assessment. Services and improvements are only provided to those who pay the assessment. Although funds are collected by the local government, they are then directed to a private nonprofit via a contract for services. The nonprofit implements services and provides day-to-day oversight. The nonprofit is managed by a Board of Directors representing those who pay the assessment, with oversight by the local government, to help ensure the services meet the needs of property owners and are responsive to changing conditions within the PBID. PBIDs all over the globe have been proven to work by providing services that improve the overall viability of commercial districts, resulting in higher property values, lease rates, occupancy rates, and sales volumes. The TPBID was formed and will be renewed pursuant to a state law that took effect in January of 1995. The Property and Business Improvement District Law of 1994, which was signed into law by Governor Pete Wilson, ushered in a new generation of Property and Business Improvement Districts in California. Key provisions of the law include: Allows a wide variety of services which are tailored to meet specific needs of assessed properties in each individual PBID; Requires property owner input and support throughout the renewal process; Requires written support on both a petition and ballot from property owners; Allows for a designated, private nonprofit corporation to manage funds and implement programs, with oversight from property owners and the City; Requires limits for assessment rates to ensure that they do not exceed the amount owners are willing to pay; and Requires the PBID be renewed after a certain time period, making it accountable to property owners. The Property and Business Improvement Business District Law of 1994 is provided in Appendix 1 of this document. September 21, 2016 Page 2

Page 16 of 65 III. ACCOMPLISHMENTS Things are looking up for Telegraph! Retail vacancies are down significantly and the District is experiencing an unprecedented wave of investment in housing and commercial development. The Telegraph Property and Business Improvement District has played a crucial role in the District s turnaround. TPBID s Ambassadors clean miles of sidewalks and greet thousands of visitors each year. District staff works hard every day, coordinating cleaning, safety, and hospitality services; marketing the district; assisting small businesses and other stakeholders; providing a voice for the District through partnership with the City of Berkeley and University of California; and providing other crucial services that would not otherwise exist. In 2015, the District achieved many accomplishments, including: 46,741 pounds of trash picked up 4,878 hospitality contacts 4,490 business contacts 4,272 pieces of graffiti removed 1,193 tree wells and black faces weeded 331 fixtures painted 142 requests for police/fire/ems/311 assistance 140 safety escorts 138 hazardous waste cleanups 83 black faces power washed Additionally, the District program include: Developing our first Strategic Plan Creating a District map Developing a Welcome Packet for new District merchants Completing both the Telegraph Public Realm Plan and the Telegraph Avenue Art Plan Advocating for Big Bellies waste disposal systems Advocating for a two-way protected bike lane on Bancroft connecting to Downtown and angled parking on Durant Instituting a weekly walk-through of the District with the lead Ambassador to identify graffiti and other cleaning issues Placing three murals in the District Successfully advocating for increased density (increased FARs and higher height limits) north of Dwight Way Supporting two developments through their entitlement process and one development through its permitting process September 21, 2016 Page 3

Page 17 of 65 IV. BOUNDARIES The TPBID generally includes parcels in the Telegraph area of the City of Berkeley. The service area includes approximately 251 properties with 185 property owners. The TPBID boundary is illustrated by the map below. A larger map is provided in Appendix 3 and is available on request by calling (916)437-4300 or (800)999-7781. Entire District Beginning at the northwest corner of APN -187-001-000. South along the east side of Bancroft Way to the southwest corner of APN -188-602-501, then east along Fulton Street to the east property line of the same parcel. Then north along the east property line of all parcels fronting on Durant Avenue to the south property line of APN -188-501-000. East along the north side of Ellsworth Street to the east property line of APN -188-401-200. Then, north along the east property line of all parcels fronting on Durant Avenue to the south property line of APN -188-400-100. Then east along the south property line of all properties fronting on Dana Street to the southeast corner of APN -188-200-200. Then north along the west side of Dwight way to the southeast corner of APN -188-101-200. Then east along the north side of Dana St to the east property line of a parcel containing the following APNs: -183-802-200, -183-802-300, -183-802-400, -183-802-500, -183-802-600, -183-802- 700, -183-802-800, -183-802-900, -183-803-000, -183-803-100. Then north along the east property line of all parcels fronting on Dwight Way to the south property line of APN -183-800-201. Then east along the south property line of all parcels fronting on Telegraph Avenue to the east property line of APN -183-500-901. Then north along the west side of Derby Street to the northeast corner of APN -184-002-401. Then west along the north property line of all properties fronting on Telegraph Avenue to the northwest corner of APN 183-900-303. Then north across Regent Street to the south property line of APN -184-200-100. Then north along the east property line of all properties fronting on Dwight Way to the northeast corner of APN -184-600-500. Then west across Dwight Way to the northeast corner of APN -187-402-301. Then north across College Avenue to the northeast corner of APN -186-701-200. Then west along the north property line of all properties fronting on College Avenue to the point of beginning at the northwest corner of APN -187-001-000. Zone 1 Beginning at the northwest corner of APN -187-700-100, south along the east side of Bancroft Way to the south property line of APN -187-801-700. Then north along the east property line of those parcels fronting on Bancroft Way to the south property line of APN -187-500-501. Then east across Durant Avenue to the south property line of APN -187-900-601. Then east across Channing Way to the South property line of APN -188-002-201 and continuing east along the south property line of APN -187-802-700. Then east across Haste Street to the south boundary of APN -188-101-800 and continuing east along the south property line APN -188-100-500. Then southeast across Dwight Way to the southwest corner of APN -183-800-201 and continuing east along the south property line of the parcels fronting on Telegraph Avenue to the southeast corner of APN -183-700-300. Then north across Telegraph Avenue to the northwest corner of APN -183-902-100. Then west along the north property line of those parcels fronting on Telegraph Avenue to the northwest corner of APN - 183-901-502. Then north along the east property line of APN -183-900-303 to its northeast corner, then west along the north property lines of APN -183-900-400 and -183-900-303. Then west across Dwight Way to the northeast corner of APN -187-502-400 and continuing west to the northwest corner of APN -187-503-001. Then west across Haste Street to the northeast corner of APN -187-500-300 and continuing west across the north property lines of APN -187-500-500, September 21, 2016 Page 4

Page 18 of 65 APN -187-500-600, and APN -187-500-800. Then west across Channing way to the northwest corner of APN -187-602-200 and continuing west to the east property line of APN -187-601-500. Then north along the east property lines of all those properties fronting on Durant Avenue to APN - 187-600-100. Then northeast across Bowditch Street to the southeast corner of APN -187-201-300. Then north to the northeast corner of APN -187-201-400, and west across its north property line to Durant Avenue, then South along its west property line to the north side of Bowditch Street. Then southwest across Bowditch Street to the northeast corner of APN -187-700-300 and continuing west along the north property line of those parcels fronting on Bowditch Street to the point of beginning at the northwest corner of APN -187-700-100. Zone 2 Includes all those properties outlined in the entire district, less those included in the Zone 1 description above. September 21, 2016 Page 5

Page 19 of 65 V. SERVICE PLAN & BUDGET A. Improvements, Maintenance, and Activities The renewed TPBID will provide supplemental improvements, maintenance, and activities that are above and beyond those provided by the City and other government agencies. None of the improvements, maintenance, and activities to be provided by the TPBID are provided by the City or other government agencies. The improvements, maintenance, and activities will be provided directly and only to assessed parcels; they will not be provided to parcels that are not assessed. Each and every improvement, maintenance, and activity is unique to the TPBID, thus the benefits provided are particular and distinct to each assessed parcel. Both Zone 1 and 2 will receive the same categories of TPBID services. Zone 2 parcels will receive a reduced level and frequency of Zone 1 services. All TPBID services provided to assessed parcels are above and beyond the baseline services provided by the City of Berkeley as shown in Appendix 6. 1. Clean, Safe & Beautification During this term, the District will use a multi-faceted approach to planning, design and management of public spaces to maintain a clean, safe, and beautiful district. The clean, safe, and beautification program will focus on continuing to make the District a cleaner and safer place to do business. Programs will include: ambassador services, graffiti and sticker removal, manual sidewalk cleaning and sidewalk pressure washing, hazardous waste cleanup, gutter and storm drain cleaning, street sweeping, litter removal, enhanced landscaping and landscape maintenance, small infrastructure improvements, tree lights, placemaking, seasonal decorations, and other special projects as they relate to clean, safe, and beautification. 2. Communications & Economic Development The Communications and Economic Development program will work closely with property owners to identify and represent their needs and concerns, and keep them informed of the District s efforts on behalf of the assessed parcels. The District will provide a unified voice to represent the best interests of the assessed parcels. The program will represent the parcels best interests at the local government level, with the City Council, city staff, and various other public agencies whose operations impact the assessed parcels. If needed, the communication and economic development program staff will work with state and federal agencies whose operations impact the assessed parcels. Additional programs may include but are not limited to: stakeholder communications that support the District s agenda and attract visitors provided via email newsletters, social media, a proactive public relations strategy, and a District website. As Telegraph evolves, communication strategies will evolve to preserve and grow Telegraph s role as a destination in the region. The TPBMC will continue to be the go-to business organization, playing a strong leadership role to create a forward thinking, innovative, and business friendly environment. Marketing and hospitality efforts may be undertaken to raise awareness of the District as a place to dine, shop, and do business. All marketing services will be designed and intended to specially benefit the assessed parcels via increased commerce, occupancy rates, and lease rates. Communications and Economic Development funds shall not be used for lobbying efforts such as attempting to influence legislation or candidates for office. 3. Management & Administration The management and administration portion of the budget will be utilized for administrative costs associated with providing the services. Those costs may include rent, telephone charges, September 21, 2016 Page 6

Page 20 of 65 legal fees, accounting fees, postage, administrative staff, insurance, other general office expenses, and City and County administration costs. In addition, the management and administration budget will include 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 TPBMC. Policies relating to contributions to the reserve fund, the target amount of the reserve fund, and expenditure of money from the reserve fund shall be set by the TPBMC. The reserve fund may be used for the costs of renewing the District. B. Annual Budget A projected ten (10) year budget for the TPBID follows. The overall budget shall remain consistent with this Plan. In the event of a legal challenge, any and all assessment funds may be used to defend the TPBID. The annual budget is based on the following assumptions and guidelines: 1. The cost of providing improvements, maintenance, and activities may vary depending upon the market cost for those improvements, maintenance, and activities. Expenditures may require adjustment up or down to continue the intended level of improvements, maintenance, and activities. The TPBMC Board shall annually have the ability to re-allocate up to twenty percent (20%) of the budget by line item within the budgeted categories. Any change will be submitted with the Annual Report. 2. Funds not spent in any given year may be rolled over to the next year. 3. The assessment rate may be subject to annual increases that will not exceed three percent (3%) per year. Increases will be determined by the TPBMC Board and will vary each year. The projections below illustrate the maximum annual three percent (3%) increase for all budget items. C. Year One Total Budget The estimated total budget for the initial year of operation is $673,526.11, of which $646,380.08 will be funded by property assessments. In addition to the assessment revenue, the programs will be supplemented by non-assessment funds. The total of non-assessment and assessment funds, and the determination of special and general benefit, are included in the Engineer s Report. Non-assessment funds may be shifted between budget categories as needed by the TPBMC Board. D. Year One Assessment Budget The portion of the budget funded by assessments is shown on the following graph. These allocations shall remain generally the same, except that the TPBMC Board has the authority to adjust allocations between categories by up to twenty percent (20%) of the total assessment budget each year. September 21, 2016 Page 7

Page 21 of 65 Year One Assessment Budget - $646,380.08 Management & Administration, $84,029.41, 13% Communications & Economic Development, $109,884.61, 17% Clean, Safe & Beautification, $452,466.06, 70% E. Zone Assessment Budgets Other than funds spent on district-wide services that cannot be allocated to a specific zone, funds may only be spent on improvements, maintenance, and activities provided in the zone from which the funds were derived. The assessment budget for year one, broken down by zone, is below. Further detail on the service budget by Zone can be found in Appendix 5. Year One Zone 1 Year One Zone 2 Year One Total District Assessment Budget Assessment Budget Assessment Budget $382,051.82 $264,328.26 $646,380.08 F. Annual Maximum Assessment Budget The budget below assumes the maximum annual increase of three percent (3%) is enacted and that there are no changes to the categorical budget allocations. Year Clean, Safe, & Beautification Communications & Economic Development Management & Administration Total 2018 $452,466.06 $109,884.61 $84,029.41 $646,380.08 2019 $466,040.04 $113,181.15 $86,550.29 $665,771.48 2020 $480,021.24 $116,576.58 $89,146.80 $685,744.63 2021 $494,421.88 $120,073.88 $91,821.21 $706,316.97 2022 $509,254.54 $123,676.10 $94,575.84 $727,506.47 2023 $524,532.17 $127,386.38 $97,413.12 $749,331.67 2024 $540,268.14 $131,207.97 $100,335.51 $771,811.62 2025 $556,476.18 $135,144.21 $103,345.58 $794,965.97 2026 $573,170.47 $139,198.54 $106,445.94 $818,814.95 2027 $590,365.58 $143,374.49 $109,639.32 $843,379.39 Total $5,187,016.30 $1,259,703.91 $963,303.01 $7,410,023.23 September 21, 2016 Page 8

Page 22 of 65 VI. GOVERNANCE A. Owners Association The District shall be governed by the Telegraph Property and Business Management Corporation (TPBMC), with oversight from the Berkeley City Council. TPBMC shall serve as the Owners Association described in the Streets and Highways Code 36651. The TPBMC Board of Directors is fiscally accountable for the budget and operationally responsible for the overall planning, implementation, and management of the Corporation. The Board hires an Executive Director to maintain operations of the Corporation and oversee the day-to-day provision of services. B. Brown Act & 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 must act as a legislative body under the Ralph M. Brown Act (Government Code 54950 et seq.). Thus, meetings of the TPBMC Board of Directors 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 requirements of the California Public Records Act. C. Annual Report The TPBMC 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 is a prospective report for the upcoming year and must include: 1. Any proposed changes in the boundaries of the TPBID or in any benefit zones or classification of property within the district; 2. The improvements, maintenance, and activities to be provided for that fiscal year; 3. The estimated cost of providing the improvements, maintenance, and activities to be provided for that fiscal year; 4. The method and basis of levying the assessment in sufficient detail to allow each real property owner to estimate the amount of the assessment to be levied against his or her property for that fiscal year; 5. The estimated amount of any surplus or deficit revenues to be carried over from a previous fiscal year; and 6. The estimated amount of any contributions to be made from sources other than assessments levied pursuant to this Plan. September 21, 2016 Page 9