REPORT TO COUNCIL
SUBJECT
Title
Action on the Annual Report and Resolution of Intention for Levy of Annual Assessment for the Santa Clara Tourism Improvement District (TID)
Report
BACKGROUND
In 1989, the State Legislature passed the Parking and Business Improvement Area Law, which added Sections 36500, et seq., to the California Streets and Highways Code (“Code”). The Code was created to “promote the economic revitalization and physical maintenance of the business districts of its cities in order to create jobs, attract new businesses, and prevent erosion of the business districts.” The Code had the further goal of promoting tourism. To achieve this goal, the Code allowed cities to fund property related improvements and activities through the levy of assessments upon the businesses which benefit from those improvements and activities.
Pursuant to the authority granted under the Code, on January 11, 2005, City Council adopted Ordinance No. 1797 (the “Ordinance”) amending the Santa Clara Municipal Code to add Article IX entitled “Santa Clara Tourism Improvement District” to Chapter 16.10 (“Local Improvements - Acquisition and Improvement Procedure”), establishing the Tourism Improvement District (“TID”) and its boundaries. The TID currently includes the following nine hotels near the Santa Clara Convention Center: Avatar Hotel, Biltmore Hotel & Suites, Embassy Suites, Hilton Santa Clara, Hyatt House, Hyatt Regency, Marriott Santa Clara, The Plaza Suites, and TownePlace Suites by Marriott. The Ordinance also established a District Advisory Board (the “Advisory Board”) to administer the affairs of the TID. The Advisory Board is constituted of representatives of businesses within the TID. All hotel properties located within the District boundaries currently collect a $1.00 fee from hotel guests on each occupied hotel/motel room night.
Pursuant to Section 36533 of the Code and Santa Clara City Code (“SCCC”) 16.10.1220, the Advisory Board is required to file with the City Clerk and submit to the City by April 1st of each year an Annual Report that includes improvements and activities during the current fiscal year, the amount of any surplus or deficit to be carried over from a previous fiscal year, and a TID budget for the following fiscal year. After the approval of the Annual Report, to levy the annual assessment for the upcoming fiscal year, the City Council must consider a resolution of intention followed by a notice and hearing process as outlined in Sections 36534-36535 of the Code.
DISCUSSION
The TID has been in effect for fourteen years and was established to fund activities such as marketing campaigns to attract additional travelers, tourists, cultural groups, and conventions; print ads in travel publications; outdoor advertising campaign; and fund administrative costs of the program.
As mentioned previously, the City’s Municipal Code requires that the TID Annual Report be submitted by April 1st of each year. This allows City staff a reasonable amount of time to comply with the two-step process for levying the assessment, which includes City Council consideration of the Annual Report and a Resolution of Intention to levy and collect assessments within the district during the upcoming fiscal year, and setting a date for the Public Hearing and then holding the Public Hearing itself. The Advisory Board has prepared and submitted to staff the Annual Report dated March 26, 2019. Following approval of the Advisory Board Annual Report and adoption of the Resolution of Intention, a Public Hearing will be noticed for May 21, 2019 and if the levy is approved by Council at the May 21st meeting the levy will become effective July 1, 2019.
In accordance with Sections 36524-36525 of the Code, the Public Hearing will allow businesses subject to the assessment to submit comments, voice concerns, and protest the assessment. The City Council can approve the continuation of the TID assessment at the Public Hearing; unless oral or written protests are received from the businesses located within the TID that pay 50% or more of the proposed assessments. In that event, the City Council cannot consider continuation of the TID assessment for a period of at least one year from the date of the finding of the majority written protest.
The TID Annual Report notes some challenges the organization faced over the past year with the transition from the Santa Clara Chamber of Commerce as its fiscal agent and responsible for carrying out the activities outlined in the TID budget. Currently, several unknowns exist within the proposed 2019/2020 annual budget, including some outstanding TID payables to the Santa Clara Chamber of Commerce and Destination Advantage, and a proposed new organizational structure dedicated to the promotion of Santa Clara as a convention, entertainment and/or meeting destination. The City is currently working with our external auditors to verify the payables from Santa Clara Chamber of Commerce, and staff have been in contact with Destination Advantage to review the invoices. The topic of a new destination marketing organization (DMO) and its governance structure is also on the April 9, 2019 Council agenda.
If plans to establish a new DMO are implemented during FY19/20, the TID Advisory Board is also interested in requesting Council consideration for an alternate method of funding the TID, which would in turn fund the new DMO and its activities. Staff will be working with the TID Advisory Board in the coming months to prepare the appropriate analysis for future Council discussion and review.
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
If the increased TID assessment is approved at the May 21st Public Hearing, the projected TID assessment for Fiscal Year 2019/20 will be $794,059. The total projected budget for the TID is $818,242, which includes the use of $184,918 from the $977,028 Reserve Balance.
Of the projected revenue, $3,000 is budgeted to cover the City’s administrative costs associated with collecting and disbursing the assessment. This cost will be included in the City’s upcoming User Fee Study to determine if the current reimbursement is sufficient to cover the City’s costs.
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
Alternatives
1. Approve the Annual Report for the Santa Clara Tourism Improvement District;
2. Adopt a Resolution of Intention to levy and collect assessments with the Santa Clara Tourism Improvement District area for Fiscal Year 2019/20 from hotel guests at the rate of $1.00 per occupied hotel/motel room night;
3. Set the date for the Public Hearing for May 21, 2019.
4. Any other action the Council deems appropriate.
RECOMMENDATION
Recommendation
1. Approve the Annual Report for the Santa Clara Tourism Improvement District;
2. Adopt a Resolution of Intention to levy and collect assessments with the Santa Clara Tourism Improvement District area for Fiscal Year 2019/20 from hotel guests at the rate of $1.00 per occupied hotel/motel room night;
3. Set the date for the Public Hearing for May 21, 2019.
Staff
Reviewed by: Angela Kraetsch, Director of Finance and Ruth Shikada, Assistant City
Manager
Approved by: Deanna J. Santana, City Manager
ATTACHMENTS
1. TID Annual Report
2. TID Fiscal Year 2019/20 Budget
3. Resolution of Intention for Levy of Annual Assessment for the Santa Clara Tourism Improvement District