REPORT TO COUNCIL
SUBJECT
Title
Action on the FY 2021/22 Annual Report and Proposed Budget for FY 2022/23 for the Santa Clara Tourism Improvement District (SCTID) as Recommended by the SCTID Owner’s Association
Report
COUNCIL PILLAR
Promote and Enhance Economic, Housing and Transportation Development
BACKGROUND
The Santa Clara Tourism Improvement District, 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, Delta Santa Clara, Element Santa Clara, Embassy Suites, Hilton Santa Clara, Hyatt Centric Silicon Valley, Hyatt House, Hyatt Regency, Marriott Santa Clara, and TownePlace Suites by Marriott.
On May 25, 2021, at the request of the lodging businesses, City Council, pursuant to the Property and Business Improvement District Law of 1994 (1994 Law), Streets and Highways Code Section 36600 et seq., approved Resolution No. 21-8964 establishing the Santa Clara Tourism Improvement District (SCTID) to fund sales and marketing efforts for convention and group business travel. The SCTID was formed for a five-year term, July 1, 2021 - June 30, 2026, and the assessment method for collections was changed from $1.00 per occupied room night to 1.5% of gross short-term (30 days or less) room rentals (10 rooms or more). After the initial year, the assessment rate may be increased by the Silicon Valley/Santa Clara DMO, Inc.’s Board an additional 0.5%, to a maximum of two percent (2%), subject to City Council approval.
Per the SCTID’s Management District Plan, the Silicon Valley/Santa Clara DMO, Inc. d.b.a. Discover Santa ClaraTM (the DMO) serves as the SCTID’s 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.
Pursuant to Section 36650 of the Streets and Highways Code, the 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 and submitted to City staff on April 28, 2022. Staff is transmitting the SCTID’s Annual Report to City Council for compliance with the 1994 Law.
DISCUSSION
The DMO Board worked with Jones Lang LaSalle to prepare and complete the FY 2021/22 Annual Report. The report is organized as follows:
1. Accomplishments: FY 2021/22 accomplishments are listed.
2. Boundary: There are no proposed changes to the Santa Clara Tourism Improvement District.
3. Improvement and Activities: The improvements and activities planned for the FY 2022/23 are consistent with the Management District Plan.
4. Cost: The proposed budget for FY 2022/23 is $1.69 million which is an increase from the current year budget. The full line-item budget is included as Attachment A to the Annual Report.
5. Surplus and Other Funding: Approximately $1.7 million will be available to carryover. This includes FY 2021/22 projected revenue of $800,000 and the FY 2021/22 operating surplus of approximately $700,000.
6. Assessment: The DMO Board voted to increase the SCTID assessment an additional 0.5% from 1.5% to 2.0% on the gross short term room rental per its previous Council-approved District Management Plan to maximize resources available to promote Santa Clara. In their deliberations, both the SCTID and the DMO determined the increase would not have a material impact on Santa Clara hospitality lodging from an overall competitive standpoint.
The City Council may approve the report as filed or may modify any particular contained in the report (i.e. addition of clarifying language, cost) and approve it as modified. Any modification shall be made pursuant to 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 of the assessment collected to cover its costs of collection and administration. Of the FY 2022/23 projected revenue of $1,174,623, the City would receive $23,492.
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 <mailto:clerk@santaclaraca.gov> or at the public information desk at any City of Santa Clara public library.
ALTERNATIVES
1. Approve the FY 2021/22 Annual Report, SCTID assessment increase from 1.5% to 2.0% per its Council-approved District Management Plan, and Proposed Budget for FY 2022/23 for the Santa Clara Tourism Improvement District (SCTID) as recommended by the SCTID Owner’s Association.
2. Any other action as determined by Council.
RECOMMENDATION
Recommendation
Alternative 1: Approve the FY 2021/22 Annual Report, SCTID assessment increase from 1.5% to 2.0% per its Council-approved District Management Plan, and Proposed Budget for FY 2022/23 for the Santa Clara Tourism Improvement District (SCTID) as recommended by the SCTID Owner’s Association
Staff
Reviewed by: Ruth Mizobe Shikada, Office of the City Manager
Approved by: Rajeev Batra, City Manager
ATTACHMENTS
1. Santa Clara Tourism Improvement District FY 2021/22 Annual Report.