REPORT TO COUNCIL
SUBJECT
Title
Public Meeting for the Renewal of the Santa Clara Tourism Improvement District (SCTID)
Report
BACKGROUND
On May 5, 2026, the City Council adopted a resolution of the City’s intent to renew the Santa Clara Tourism Improvement District (SCTID) for five years starting July 1, 2026.
TOURISM IMPROVEMENT DISTRICTS
Tourism Improvement Districts (TIDs) utilize the efficiencies of private sector operation in the market-based promotion of tourism. These special assessment districts allow assessed business owners to organize their efforts to increase tourism. Business owners within the TID fund the TID, and those funds are used to provide services that are desired by and benefit the assessed businesses within the TID.
In California, TIDs are primarily formed pursuant to the Property and Business Improvement District Law of 1994 (94 Law). This law allows for the creation of special benefit assessment districts to raise funds within a specific geographic area. The key difference between TIDs and other special benefit assessment districts is that funds raised are returned to the private non-profit corporation governing the TID.
The SCTID was originally formed in 2005 under the 1989 Parking and Business Improvement Area Law, covering eleven lodging businesses near the Convention Center with a $1.00 per occupied room night assessment. Beginning in FY 2019/20, lodging businesses pursued reconstitution under the 1994 Law to transition to a percentage-based assessment, though COVID-19 prompted Council to temporarily postpone conversion and renew the district under the 1989 Law in April 2020. Following renewed Council direction in January 2021 and petitions representing 76.51% of the total assessment, Council adopted a Resolution of Formation on May 25, 2021, establishing the current SCTID under the 1994 Law for a five-year term (July 1, 2021 through June 30, 2026) with an initial assessment of 1.5% of gross short-term room rental revenue and the option to increase to 2% in year two.
The Silicon Valley/Santa Clara DMO, Inc. (dba Discover Santa Clara) serves as the SCTID’s Owners’ Association and implements the programs in accordance with the Council approved Management District Plan (Plan). As part of the May 5, 2026 item to adopt a resolution of the City’s intent to renew the SCTID, the proposed renewed 5-year Plan was included with the report (Attachment 1).
DISCUSSION
A summary of the key provisions of the SCTID Plan are as follows:
• Location: The renewed SCTID includes all lodging businesses with ten (10) rooms or more, existing or in the future, available for public occupancy, located within the boundaries of a portion of the City of Santa Clara (City). Lodging businesses do not include short-term rentals, including units within a multi-family building permitted to operate as short-term rentals.
• Services: The SCTID is designed to provide specific benefits directly to payors by increasing room night sales. Marketing, communications programs, convention center and partner sales, and other activities will increase overnight tourism and market payors as tourist, meeting and event destimations.
• Budget: The total SCTID annual budget for the first year is anticipated to be approximately $4.05M.
• Cost: The annual assessment rate is two percent (2%) of gross short-term sleeping room rental revenue. During the SCTID term, the assessment rate may be increased to a maximum rate of three percent (3%) of gross short-term sleeping room rental revenue for assessed lodging businesses. The Silicon Valley / Santa Clara DMO, Inc. dba Discover Santa Clara Board of Directors (the “Board”) shall have the authority to increase the rate to a maximum assessment rate of three percent (3%). If the assessment rate is increased, it may subsequently be decreased, subject to Board approval as described in Section V of the Plan, but shall not be decreased below a minimum of two percent (2%) of gross short-term sleeping room rental revenue. The maximum assessment increase or decrease permitted in any year shall be one-half percent (0.5%). Increases to the assessment rate shall be subject to the approval of the Board and assessed lodging business owners, as described in Section V of the Plan.
• Collection: The City will be responsible for collecting the assessment on a monthly basis (including any interest and overdue charges) from each assessed lodging business. The City will take all reasonable efforts to collect the assessments from each assessed lodging business. The City will forward the assessments collected to Discover Santa Clara each month.
• Duration: The renewed SCTID will have a five (5) year life, beginning July 1, 2026 through June 30, 2031.
• Management: Discover Santa Clara will serve as the SCTID’s Owners’ Association. The Owners’ Association is charged with managing the funds and implementing programs in accordance with the Plan and must provide annual reports to the City Council.
SCTID Renewal Process
The SCTID Renewal Process requires several hearing and notices, prior to City Council adoption as outlined below. The City’s adoption of a Resolution of Intention (Resolution) containing the details of the SCTID, date and time for a public hearing, and other statutorily required information. The City subsequently mailed a copy of the Resolution and notices of public meeting and public hearing to the owners of all businesses proposed to be assessed within the SCTID have been completed.
May 5, 2026 - Resolution of Intention (COMPLETED)
Upon the submission of a written petition, signed by the business owners in the renewed SCTID who will pay more than fifty percent (50%) of the assessments proposed to be levied, the City Council (Council) may initiate proceedings to renew the SCTID by the adoption of a resolution expressing its intention to renew the SCTID.
As of May 27, 2026, petitions in favor of SCTID formation were submitted by ten (10) lodging businesses, which represented 93.09% of the total TID assessment. This majority petition allowed the Council to initiate proceedings for the SCTID renewal.
No later than May 9, 2026 - Mailing Resolution and Notice (COMPLETED)
The 94 Law requires the City to mail a copy of the Resolution and written notice of both the public meeting and public hearing to the owners of all businesses proposed to be assessed within the SCTID. Mailing the notice begins a mandatory forty-five (45) day period in which assessed business owners may protest SCTID renewal.
June 9, 2026 - Public Meeting
Allow public testimony on the renewal of the SCTID and levy of assessments. There is no action required by the City Council at this public meeting.
June 23, 2026 - Final Public Hearing
If written protests are received from the owners of businesses in the renewed SCTID which will pay fifty percent (50%) or more of the assessments proposed to be levied, and protests are not withdrawn so as to reduce the protests to less than fifty percent (50%), no further proceedings to levy the proposed assessment against such businesses shall be taken for a period of one (1) year from the date of the finding of a majority protest by the Council.
If the Council, following the public hearing, decides to establish the renewed SCTID, the Council shall adopt a resolution of formation.
ENVIRONMENTAL REVIEW
The proposed action does not constitute a “project” within the meaning of the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15378(a), as it has no potential to result in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment.
FISCAL IMPACT
None immediately. The City will receive a fee of two percent (2%) of the amount collected to cover its cost of administration. The amount is approximately $80,958.24 based on the annual SCTID revenue estimate of $4,047,912. Because the SCTID programs are intended to increase visitation to the City, there may be an increase in transient occupancy tax and sales tax collections.
COORDINATION
This report has been coordinated with the City Attorney’s Office and 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
Hold Public Meeting to allow public testimony regarding the Renewal of the Santa Clara Tourism Improvement District (SCTID) and related assessments.
Staff
Reviewed by: Aracely Azevedo, Assistant City Manager
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. SCTID Management District Plan