TO: Mayor and Members of City Council
THRU: Kelly Olivera - Assistant City Manager
FROM: Christopher Cauley, MPA - Economic & Community Development Director
Taurus L. Freeman, MPA - Assistant Economic & Community Development Director
Kim Toon, CLPGO - Purchasing Manager, Asst. Chief Financial Officer
DATE: June 12, 2023
RE:
Title
Contract Award for Downtown District Management 2023 - 2028
end
COUNCIL DISTRICT(S):
Council District(s)
District 2
b
Relationship To Strategic Plan:
Goal 2: Responsive City Government Supporting a Diverse and Viable Economy.
• Strategic Objective 2.1: Ensure a diverse City tax base.
• Strategic Objective 2.2: Invest in community places to ensure revitalization and increase the quality of life.
• Strategic Objective 2.4: Sustain a favorable development climate to encourage business growth.
Goal IV: Desirable Place to Live, Work, and Recreate
• Strategic Objective 4.5: Ensure a place for people to live in great neighborhoods.
Goal VI: Collaborative Citizen and Business Engagement.
• Strategic Objective 6.2: Ensure trust and confidence in City government through transparency & high-quality customer service.
• Strategic Objective 6.3: Inform and educate about local government by enhancing public outreach and increasing community dialog, collaboration, and empowerment.
Executive Summary:
North Carolina General Statute 160A-536 allows for the City to enter into a contract with a private agency to provide services, facilities, functions, or promotional and developmental activities in a Municipal Service District (MSD). The same law requires that the property owners' input be considered, a formal bid process is followed, and a public hearing is required before entering into a contract. City Council is asked to conduct a public hearing and, upon closing the public hearing, consider approval of the Cool Spring Downtown District, Inc. (CSDD) as the awardee of the downtown management contract.
Background:
On June 22, 2020, City Council authorized a three-year contract with CSDD for downtown management services. Staff is proposing a five-year contract to coincide with the reauthorization of the MSD tax rate.
Services included: Economic Vitality and Development; Art and Design Enhancements; Promotion and Marketing; Special Events and Programming; and Partnership, Organizational Support, and Conflict Resolution.
Each year, the City establishes the tax rate for the district and identifies the proposed expenditures. The tax rate has remained at .10 cents per $100 value for several years. The North Carolina General Statutes do not set a time limit on how long a municipal service district may exist. The Fayetteville City Council chose to limit the period for the Downtown MSD to five years. Since 1983 the City Council has continued the district every five years. The current period of the District expires June 30, 2023.
Issues/Analysis:
A 15-question survey was conducted to gauge community satisfaction and priorities for the downtown district. The survey was online, and notification was mailed to all property owners and businesses located within the district. A total of 411 survey responses were collected, and the responses were used to inform the Request for Proposals.
The Finance Department posted a Request for Proposals (RFP) from March 15th to April 14th, 2023. They received one response from the Cool Spring Downtown District, Inc. The RFP was also posted as a public notice in the Fayetteville Observer on March 16th, 2023, and ran online that same week. A second posting was advertised on April 17th to the 25th, 2023, and no other responses were received.
Based upon Staff review of the respondents to the Request for Proposals for Enhanced Services for an “Arts and Entertainment Focused” Downtown Municipal Service District, Cool Spring Downtown District, Inc. is being recommended.
Budget Impact:
For Fiscal Year 2023, the total cost of the contract is $220,000 and is funded from revenues generated by the Municipal Service District property tax rate and a transfer from the General Fund. The CSDD response to the RFP includes a change of terms from prior years and two options:
Option A: Fund the CSDD at a rate of $220,000 and includes an annual inflation adjustment estimated to be 6% per year. This results in a fifth-year cost of $294,680.
Option B: Fund the CSDD at a rate of $220,000 and includes an annual inflation adjustment estimated to be 6% per year. Additionally, fund the Ambassador program at $50,000 annually and fund special events (New Years, Juneteenth, July 4th) at $380,000 annually with an annual inflation adjustment estimated to be 6% per year. This results in a fifth-year cost of $837,545.
Both options present an impact to the General Fund as the MSD revenues do not fully cover the cost of the contract. For Fiscal Year 2024, the Budget currently includes $220,000 for MSD Contracted services, of that amount, $100,000 is transferred from the General Fund. The Ambassador program was funded in Fiscal Year 2023 by a one-time fund balance appropriation of $50,000. The Fiscal Year 2023 Parks, Recreation, and Maintenance (PRM) Budget included $330,000 for special events and the Fiscal Year 2024 Budget currently includes $276,000 for special events.
Due to these impacts, staff is recommending that the contract be awarded for $220,000 with an annual adjustment for estimated property tax growth at 3%. Staff is also recommending that the PRM Department return to Council after budget adoption to present a contract for the three events requested by City Council that fall within the budget parameters adopted by City Council for Fiscal Year 2024.
Options:
• Approve contract award to Cool Spring Downtown District, Inc. for Enhanced Services for the Arts and Entertainment-Focused Downtown Municipal Service District for a five-year term, adjusted annually by estimated property tax growth;
• Approve contract award to Cool Spring Downtown District, Inc. for Enhanced Services for the Arts and Entertainment-Focused Downtown Municipal Service District for a five-year term, adjusted annually by estimated inflation;
• Approve contract award to Cool Spring Downtown District, Inc. for Enhanced Services for the Arts and Entertainment-Focused Downtown Municipal Service District for a five-year term, that funds the Ambassador program at $50,000 annually and fund special events (New Years, Juneteenth, July 4th) at $380,000 annually with an annual inflation;
• Do not approve the contract award to Cool Spring Downtown District, Inc. for a five-year term for Enhanced Services for the Arts and Entertainment-Focused Downtown Municipal Service District; or
• Provide additional direction to Staff.
Recommended Action:
Following the Public Hearing, staff recommends that the City Council motion to approve the contract award to Cool Spring Downtown District, Inc. for Enhanced Services for the Arts and Entertainment-Focused Downtown Municipal Service District for a five-year term, adjusted annually by estimated property tax growth.
Attachments:
• Municipal Service District (MSD) Contract Award Presentation
• RFP for Enhanced Services for Arts & Entertainment-Focused Downtown Municipal Service District
• Cool Spring Downtown District RFP Response
• Municipal Service District (MSD) Management (Draft) Agreement