City council approves downtown PBID agreement, orders audit of assessment finances

The Los Banos City Council on May 7 approved a management agreement that will allow the Los Banos Downtown Association to implement the downtown Property and Business Improvement District (PBID) through Dec. 31, 2034, and directed staff to obtain a full independent financial audit of PBID revenues and expenditures from the district’s start through the present.

The audit direction followed public testimony calling for transparency in how PBID assessment funds were spent and an extended discussion during which city staff explained the limits of the city’s role as the assessment collection agent. Community and Economic Development Director Stacy Souza Elks said the PBID was renewed in August 2024 “through a Prop 218 process” and that the city acts largely as a fiscal conduit rather than the district manager: “PBID is like a homeowners association.”

Why it matters: The PBID levy is added to property tax bills for parcels inside the downtown district; property owners and downtown merchants told the council they are uncertain how assessment dollars have been spent and asked the council either to pause renewal or to require fuller financial disclosure before the city signs the agreement.

Residents and downtown property owners raised specific concerns during public comment. Elaine Corey, a downtown property owner, asked the council to pull the agenda item and “call for an audit of handling of all the monies and expenses,” saying, “The board of directors has not been forthcoming with information as to the spending of our tax assessment.” Other speakers including Sean George and Frank Elvira Jr. told the council they had just received balance sheets minutes before the meeting and remained dissatisfied with the level of detail provided.

Representatives of the downtown association defended their work and said financial records have been made available. Mary Bo Garcia, speaking for the Los Banos Downtown Association, listed recent events and improvements and said, “We have provided financials. We have provided everything that has been asked of us.” She also pointed to recent purchases such as security cameras and to ongoing programming including a farmers market and seasonal events.

Council members discussed the agreement’s oversight provisions and the Brown Act requirement for open meetings. One council member emphasized the contract language that lets the city terminate the agreement if the association “misappropriated funds, committed malfeasance, or violated any law,” and pressed staff that the council must be able to see detailed records to exercise that authority.

The council majority decided to approve the agreement to avoid interrupting the district’s ability to operate and pay bills, while simultaneously directing staff to require an independent financial audit of PBID funds (PBID-side assessments only) covering the full period of the district’s existence through the most recent fiscal year. Staff said the audit would be procured at the association’s cost, that the city would coordinate audit scope and standards with the association, and that audit deliverables would be provided to council and made public.

The motion to authorize the interim city manager to execute the agreement and to require the audit passed (voice vote: “Ayes have it”).

The city’s role and next steps: City staff and the association will work out audit scope and timing so the financial review can be completed and publicly presented. The agreement approved tonight affirms the city’s duties to collect the assessment through county tax rolls and to remit funds to the association, and it contains record-keeping and audit language the council can use to request additional financial detail going forward.

The council also noted the distinction between PBID assessments (collected via property tax roll) and private non‑profit fundraising by the association, and limited the council’s audit direction to the PBID assessment funds. The council said it will revisit any further action if the audit uncovers misuse or if the association fails to provide timely records.