CITY OF CARMEL-BY-THE-SEA

CITY COUNCIL
Staff Report

February 6, 2018
CONSENT AGENDA

TO: Honorable Mayor and City Council Members

SUBMITTED BY: Sharon Friedrichsen, Director of Budget and Contracts

APPROVED BY: Chip Rerig, City Administrator

Resolution 2018-020-1, Authorizing the Examination of Sales and Transaction and Use
Tax Records, AND
SUBJECT: Resolution 2018-020-2, Authorizing the City Administrator to negotiate and execute an
agreement with Civitas for preparing a restaurant improvement district feasibility study.

RECOMMENDATION:
1. Adopt Resolution No. 2018-020-1, Authorizing the Examination of Sales and Transaction and Use Tax
Records
2. Adopt Resolution 2018-020-2, Authorizing the City Administrator to negotiate and execute an agreement with
Civitas for preparing a restaurant improvement district feasibility study.

BACKGROUND/SUMMARY:
California law allows for local government agencies to form a business improvement district ("BID") in order to
create jobs, attract and retain businesses, and promote economic growth and revitalization. As part of a BID,
improvements, maintenance, and/or activities are funded through the levy of assessments upon the businesses
or real property that receive benefits from the funded improvements or activities. This process has been used
previously in creating the Carmel Hospitality Improvement District ("CHID"). As part of the CHID, inns and other
lodging establishments located within the City (the District's boundary) are assessed one percent of gross room
night sales to fund marketing and other programs to increase overnight stays.

More recently, the concept of a BID has been used by various restaurant groups and associations throughout
the State to form restaurant improvement districts. Under this model, restaurants and/or food and drink
establishments pay an assessment, which is collected by the local government and managed by a non-
profit organization, to fund marketing campaigns, special events and promotions to increase restaurant food and
beverage sales. The City is currently exploring the interest in, and feasibility of, forming such a district in
Carmel-by-the-Sea.

As part of this effort, it is recommended that the City Administrator be authorized to enter into an agreement with
Civitas to order to help educate the Council, stakeholders and the public about the concept of a restaurant
improvement district. Civitas is a specialized firm with experience in assisting local governments and groups in
forming various types of business improvement districts, including hospitality improvement and restaurant
improvement districts respectively. The proposed scope of work includes the production of a feasibility study
with recommendations on whether to pursue a restaurant improvement district. The scope of work will also
provide possible options pertaining to the possible formation of a Carmel restaurant improvement district, such
as the assessment rate methodology, budget, governance structure and management plan, which are required
by State laws as part of the formation process.

In order to help facilitate this work, it is recommended that Civitas be authorized to examine the City's sales and
use tax records. Given the confidential nature of this data, State law requires the governing body to adopt a
resolution of authorization prior to such a contract taking effect. The proposed resolution for Council's adoption
authorizes key City positions; HdL, the City's current sales and use tax analysis consultant with this authorization,
and Civitas to view the City's sales and transaction and use tax records.

If the formation of the restaurant improvement district is determined to be feasible, it is recommended that
Civitas be retained to assist with the process. State law requires a petition drive signed by business owners who
will pay at least 50% of the proposed assessment the creation of a district management plan, the adoption by
Council of a resolution of intent to form the district at a public meeting and public hearing. A preliminary
estimates for the cost of shepherding the proposed Carmel restaurant improvement district to fruition is not to
exceed $39,000, of which the cost may be shared among stakeholders and partner entities and/or paid back by
the district through its assessments once established. Staff will return to Council for direction and approval to
contribute toward future costs if the proposed district is deemed feasible.
FISCAL IMPACT:
The not to exceed amount of the proposed agreement with Civitas is $10,000. Although this agreement was not
budgeted, staff anticipates there to be savings in several line item accounts within the Administration budget that
together will cover this cost.
PRIOR CITY COUNCIL ACTION:
Council received a presentation on restaurant improvement districts on February 5, 2018.

ATTACHMENTS:

Resolution No. 2018-020-1

Resolution No. 2018-020-2
 Attachment 1

CITY OF CARMEL-BY-THE-SEA CITY COUNCIL

RESOLUTION NO. 2018-020-1

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA AUTHORIZING THE

EXAMINATION OF SALES AND TRANSACTIONS AND USE TAX RECORDS

WHEREAS, pursuant to Ordinance No. 2012-8 the City of Carmel-by-the-Sea entered into a contract
with the State Board of Equalization to perform all functions incident to the administration and collection of local
sales and use taxes; and
WHEREAS, pursuant to Resolution 2012-82 the City of Carmel-by-the-Sea entered into a contract with
the State Board of Equalization to perform all functions incident to the administration and collection of local
transactions and use taxes; and
WHEREAS, the City Council of the City of Carmel-by-the-Sea deems it necessary for authorized
representative of the City to examine confidential sales and transactions and use tax records of the Board
pertaining to sales and transactions and use taxes collected by the Board for the City; and
WHEREAS, Section 7056 of the California Revenue and Taxation Code sets forth certain requirements
and conditions for the disclosure of Board records and establishes criminal penalties for the unlawful disclosure
of information contained in, or derived from sales or transactions and use tax records of the Board; and
WHEREAS, Section 7056 of the California Revenue and Taxation Code requires that any person
designated by the City shall have an existing contract to examine the City’s sales and transactions and use tax
records; and
WHEREAS, the City has contracted with Hinderliter, de Lamas and Associates (HdL) to assist the City
with sales tax and economic analysis, allocation and audit recovery services, and other consulting services;
and
WHEREAS, the City has contracted with Civitas to assist the City with determining the feasibility of
forming a restaurant improvement district and the facilitation of forming such a district if warranted.

NOW, THEREFORE BE IT RESOLVED AND ORDERED THAT THE CITY COUNCIL OF THE CITY OF
CARMEL-BY-THE-SEA DOES AS FOLLOWS:
Section 1. That the City Administrator, Director of Budget and Contracts, Finance Manager or other
officer or employee of the City designated in writing by the City Administrator to the State Board of
Equalization (hereafter referred to as Board) is hereby appointed to represent the City with authority to
examine all of the sales or transactions and use tax records of the Board pertaining to sales or
transactions and use taxes collected for the City by the Board of Equalization pursuant to the contract
between the City and the Board under the Bradley-Burns Uniform Local Sales and Use Tax Law or the
Transactions and Use Tax Law. The information obtained by examination of Board records shall be used
only for purposes related to the collection of City sales or transactions and use taxes by the Board
pursuant to the contract.
Section 2. That Hinderliter, de Lamas and Associates (HdL) is hereby designated to examine the sales
and transactions and use tax records of the Board pertaining to sales and transactions and use taxes
collected for the City by the Board. The person or entity designated by this section meets all of the
following conditions:
 Attachment 1

a) has an existing contract with the City to examine sales and transactions and use tax records;
b) is required by that contract to disclose information contained in, or derived from those sales and
transactions and use tax records only to the officer or employee authorized under Section 1 of this
resolution to examine the information;
c) is prohibited by that contract from performing consulting services for a retailer during the term of
that contract;
d) is prohibited by that contract from retaining the information contained in, or derived from those
sales and transactions and use tax records after that contract has expired.

Section 3. That Civitas is hereby designated to examine the sales and transactions and use tax records of
the Board pertaining to sales and transactions and use taxes collected for the City by the Board. The
person or entity designated by this section meets all of the following conditions:
a) has an existing contract with the City to examine sales and transactions and use tax records;
b) is required by that contract to disclose information contained in, or derived from those sales and
transactions and use tax records only to the officer or employee authorized under Section 1 of this
resolution to examine the information;
c) is prohibited by that contract from performing consulting services for a retailer during the term of
that contract;
d) is prohibited by that contract from retaining the information contained in, or derived from those
sales and transactions and use tax records after that contract has expired.

BE IT FURTHER RESOLVED that the information obtained by examination of Board records shall be used only
for purposes related to the collection of City’s sales and transactions and use taxes by the Board pursuant
to the contracts between the City and the Board of Equalization.

PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA this 6th
day of February 2018, by the following roll call vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

ABSTAIN: COUNCILMEMBERS:

SIGNED: ATTEST:

_______________________ __________________________
Steve G. Dallas, Mayor Thomas A. Graves, MMC
City Clerk
 Attachment 2

CITY OF CARMEL-BY-THE-SEA CITY COUNCIL

RESOLUTION NO. 2018-020-2

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA AUTHORIZING THE

CITY ADMINISTRATOR TO NEGOTIATE AND EXECUTE AN AGREEMENT WITH CIVITAS FOR A
RESTAURANT IMPROVEMENT DISTRICT FEASIBILITY STUDY
WHEREAS, State law authorizes the formation of business improvement districts to create jobs, attract
and retain businesses, and promote economic growth and revitalization; and
WHEREAS, there are a variety of options for dining within the City and restaurants and other food a
drink establishments are available to residents and visitors alike; and
WHEREAS, this sector is part of the City’s overall promotion of tourism and contributes to the City’s
sales and use tax revenues; and
WHEREAS, the City and the hospitality industry have successfully formed a hospitality improvement
district to increase room sales within the City; and
WHEREAS, the City seeks to continue such public-private partnerships by exploring the interest in
forming a restaurant improvement district within the City boundaries; and
WHEREAS, Civitas has technical expertise and experience with State law regarding business
improvement districts and City Municipal Code Section 3.12.140D allows for dispensation with the bidding
procedures when the service involves specialized knowledge.
NOW THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF CARMEL-
BYTHE-SEA DOES HEREBY:
Authorize the City Administrator to negotiate and execute an agreement with Civitas in an amount
not to exceed $10,000 for assistance in determining the feasibility of forming a restaurant
improvement district within Carmel-by-the-Sea.
PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA this 6th
day of February 2018, by the following roll call vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

ABSTAIN: COUNCILMEMBERS:

SIGNED: ATTEST:

_______________________ __________________________
Steve G. Dallas, Mayor Thomas A. Graves, MMC
City Clerk