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The Downtown Association won their independence from the city of San Luis Obispo earlier this year, and with it, they won the legal right to lobby, campaign, promote, and petition in favor of or against any cause they choose.

click to enlarge MEET ME DOWNTOWN :  Members of the board of directors for the Downtown Association. The former city advisory body recently split from the city to become an independent non-profit business. - PHOTO BY STEVE E MILLER
  • PHOTO BY STEVE E MILLER
  • MEET ME DOWNTOWN : Members of the board of directors for the Downtown Association. The former city advisory body recently split from the city to become an independent non-profit business.

  Their split from the city to become a nonprofit group—which was supported by a 5-0 vote from the often-divided City Council—was directly related to questionable political actions the group had taken in recent years, and openly endorsed as a way for the Downtown Association to become more politically active without any conflicts of interest.

But having recently received bills from the city for services provided by the Downtown Association, many downtown business owners are wondering why they also have automatically and unwittingly become members of this political organization. Some are even wondering if mandatory membership is legal.

Close to a third of the 659 businesses located within the Downtown Association’s erratic boundaries have not responded to a July collection notice from the city, which also included their business license renewal. While the Downtown Association is considered independent of the city as of July, it’s the city that collects the membership dues.

The Downtown Association, formerly a quasi-city organization, split from the city to clear up any confusion about its role. Now, though, it’s the city’s role that seems murky.

San Luis Obispo Finance Director, Bill Statler, said that given the association’s new nonprofit status, “The concept of membership in the Downtown Association is ambiguous.”

What is certain is the concept of a downtown improvement district, and for businesses in that district, the associated tax—or assessment as it has been re-named.

“The process and structure of who’s required to pay,” Statler said, “that hasn’t changed since 1975.” The way in which that tax is administered, however has changed.

The Downtown Association was formed in 1975 to advise the City Council on managing SLO’s downtown, which was accordingly recognized as a sort of business improvement district—the so-called Downtown Parking and Business Improvement Area.

A city ordinance established the boundaries of an improvement district, and allowed a tax to support the area’s activities. The only uses for that tax, according to the ordinance, are creating and maintaining parking, decorating public places, promoting public events, putting on concerts, and general promotion of the area. Historically, the Downtown Association has been responsible for such events as the summer Concerts in the Plaza, the Thursday night market, Santa’s House, and various promotional efforts, as well as providing a number of services downtown, including daily street cleaning, frequent tree trimming, trash pick-up, and private security patrols.

They received a number of perks as a city organization, including free use of such grand public resources as Mission Plaza for events, and such simple things as street barricades for the market. Under the new agreement, they will perform the same activities, and expand into new areas of promotion, according to the new city agreement. They will also receive the same perks from the city, even though they are virtually an independent contractor.

The city municipal code, which was revised in May and adopted in June, allows for a tax on businesses within the Downtown Parking and Business Improvement Area, but it does not spell out that a business in this district, merely because of location, automatically becomes part of the Downtown Association.

Deborah Cash, Executive Director of the Downtown Association, said that businesses in the district are helped in more ways than are expressed in the contractual agreement with the city. For example, she said, the Downtown Association’s work in the district keeps property values high for landowners.

“Membership is not an option,” Cash said, when asked how to become a member. “No one becomes a member. Businesses located in the district are subject to an assessment.”

“All the businesses are members, by virtue of being in the district,” Cash went on. “By paying the assessment, you are part of the Downtown Association.”

Under the old ordinance, the money was directly funneled to the advisory body to “fund the activities of the Downtown Association for the benefit of those members. …” The new ordinance allows the city to contract with nonprofits or promotional groups to provide the same services the Downtown Association formerly provided. Somehow, this resulted in the city awarding a no-bid contract worth $210,000 a year. When the year is up, according to the contract, the city has the option of contracting with someone else.

In October 2007, according to Downtown Association literature, the group began discussions about a restructuring from a city-supported advisory body to a fully independent nonprofit group with the right to lobby. This move came after public concern that the group had campaigned against measures A, B, and C—the citywide Dalidio Ranch initiative.

The city supported the restructuring, and in May the City Council increased the assessments on businesses to allow the new, independent Downtown Association to function without city funds. In June, the membership assessment jumped from $25 as a base fee to $150—a modest increase, the Downtown Association said, considering that the assessment remained the same for 33 years. Beyond that, the dues went up $5 for every $100,000 a business makes in gross receipts. These fees are requested from 659 businesses in the district.

A no-bid contract means there were no Requests For Proposals (RFP). The agreement between the city and Downtown Association has no clear definition of services provided; it is essentially an agreement that the Downtown Association will continue to do what it has always done. The association is not required to spend all of the monies it receives, and it receives money from the city only to the extent that the city is able to collect it. Quarterly financial reports to be filed by the association will account for expenditures in detail.

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