REPORT TO COUNCIL
SUBJECT
Title
Action on the FY 2024/25 Annual Report for the Santa Clara Tourism Improvement District (SCTID) as Presented by the SCTID Owner’s Association (the DMO)
Report
BACKGROUND
The Santa Clara Tourism Improvement District (SCTID), initially formed in 2005 pursuant to the Parking and Business Improvement Law of 1989, includes 11 hotels near the Santa Clara Convention Center: AC Hotel Santa Clara, Avatar Hotel Santa Clara, Delta Hotels Santa Clara Silicon Valley, Embassy Suites by Hilton Santa Clara Silicon Valley, Hilton Santa Clara, Hyatt Centric Santa Clara Silicon Valley, Hyatt House Santa Clara, Hyatt Regency Santa Clara, Santa Clara Marriott, Element Santa Clara, and TownePlace Suites San Jose Santa Clara.
On May 25, 2021, at the request of the lodging businesses, pursuant to the Property and Business Improvement District Law of 1994 (1994 Law), Streets and Highways Code Section 36600 et seq. the City Council approved Resolution No. 21-8694 establishing the Santa Clara Tourism Improvement District to fund sales and marketing efforts supporting convention and group business travel.
The SCTID was formed for a five-year term (July 1, 2021 - June 30, 2026), and the assessment method was changed from a flat $1.00 per occupied room night to 1.5% of gross short-term (30 days or less) room rentals for 10 or more rooms, effective beginning in FY 2021/22. On June 6, 2022, City Council actions included support for the Silicon Valley/Santa Clara DMO, Inc.'s proposed SCTID assessment increase from 1.5% to 2.0% which went into effect July 1, 2022.
Per the SCTID's Management District Plan, the Silicon Valley/Santa Clara DMO, Inc. dba Discover Santa Clara® (the DMO) serves as the SCTID Owner's Association and is responsible for managing the affairs of the SCTID as well as implementing activities and programs as outlined in the Management District Plan. The DMO has an active contract with the City to provide destination marketing services through June 30, 2026.
DISCUSSION
Pursuant to Section 36650 of the Streets and Highways Code, the SCTID Owner’s Association is required to file an Annual Report to the clerk that includes the following:
• Any proposed changes in the boundaries of the property and business improvement district or in any benefit zones or classification of property or businesses within the district;
• The improvements, maintenance, and activities to be provided for that fiscal year;
• An estimate of the cost of providing the improvements, maintenance, and activities for that fiscal year;
• The method and basis of levying the assessment in sufficient detail to allow each real property or business owner, as appropriate, to estimate the amount of the assessment to be levied against his or her property or business for that fiscal year;
• The estimated amount of any surplus or deficit revenues to be carried over from a previous fiscal year; and
• The estimated amount of any contributions to be made from sources other than assessments levied pursuant to this part.
The Annual Report was approved by the DMO Board of Directors on September 18, 2025. Staff is transmitting the SCTID’s Annual Report to the City Council for compliance with the 1994 Law. It should be noted that for additional transparency for the benefit of City Council and the public, the DMO Annual Report provides detailed information (including line-item detail of the FY 2025/26 Annual Budget) that is beyond the requirements of Section 36650.
The annual report is organized as follows:
1. Team Achievements & Industry Accolades.
2. Community Stakeholder Engagement Highlights.
3. FY 2024/25 Accomplishments listed for Sales, Marketing and Administration & Operations.
4. Boundary: In FY 2024/25, two new lodging businesses - Placemkr Santa Clara and AVE Santa Clara - opened within the SCTID boundary and became subject to the assessment. Unlike the existing 11 hotels, these properties operate as apartments with units available for short-term stays. The City formally notified management of their inclusion on May 6, 2025.
5. Enhancements, Initiatives & Future Focus: The improvements and activities planned for FY 2025/26 consistent with the Management District Plan.
6. FY 2024/25 Financials: As of this writing, the DMO expended 83% of the Operating Budget. The detailed financial report is included as Appendix A in the Annual Report.
7. Key Performance Indicators (KPIs): Results of the FY 2024/25 KPIs are reported.
8. Cost: Provides the budgeted cost for each DMO Program for FY 2025/26. The FY 2025/26 Operating Budget is $4.0 million which is approximately a 14% or $482,516 increase from the FY 2024/25 Operating Budget.
The rise in operating costs is primarily driven by increased expenditures in the Marketing and Administration & Operations programs.
In Marketing, contract services are increasing with the addition of a Marketing Agency of Record (AOR) to provide strategically aligned public relations, digital advertising, photography, and videography support to build destination awareness and drive business. Advertising costs are also rising with planned campaigns, including a CBS partnership to promote SCTID hotels and the City of Santa Clara through the San Francisco 49ers Experience, and an Expedia Weekend Campaign designed to drive overnight stays during a critical need period.
In Administration & Operations, the Administrative Services Manager role was elevated to Director of Business Operations to attract top talent, with the position filled in January 2025 at an increased salary to reflect the elevated role. Contract services are also rising due to two agreements with Civitas Advisors for ongoing consulting and support of the DMO’s renewal process.
9. Surplus and Other Funding: The surplus includes SCTID collections that have been carried over from previous years.
The City Council may approve the report as filed or may modify any portion of the report (e.g., addition of clarifying language, cost) and approve it as modified. Any proposed modification to the Management District Plan itself can only be made after a noticed public hearing on such proposed changes pursuant to the procedures set forth in Sections 36635 and 36636 of the CA Streets and Highways Code.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(4) in that it is a fiscal activity that does not involve any commitment to any specific project which may result in a potential significant impact on the environment.
FISCAL IMPACT
The City receives 2% of the amount from the assessment collected to cover its costs of collection and administration. Of the FY 2025/26 projected revenue of $3.5 million, the City is projected to receive approximately $70,000.
COORDINATION
This report has been coordinated with the City Attorney’s Office and the Finance Department.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
Approve the FY 2024/25 Annual Report for the Santa Clara Tourism Improvement District (SCTID) as presented by the SCTID Owner’s Association (the DMO).
Staff
Reviewed by: Chuck Baker, Assistant City Manager
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. Santa Clara Tourism Improvement District FY 2024/25 Annual Report
2. Santa Clara Tourism Improvement District PPT Presentation