REPORT TO COUNCIL
SUBJECT
Title
Discussion and Direction to City Manager on a Governance Model for a Convention-Visitors Bureau (CVB)
Report
BACKGROUND
The Convention-Visitors Bureau Agreement (Chamber CVB Agreement) was an annual agreement with the Santa Clara Chamber of Commerce (Chamber) that provided convention and visitor services through the Chamber’s Convention-Visitors Bureau operation. These services included marketing and scheduling of the Convention Center and Santa Clara to large groups and citywide events; visitor destination marketing and communication; and, operation of a City Store.
Shortly following the Council’s June 26, 2018 decision not authorize a new one-year agreement with the Chamber for convention and visitor services, the Chamber released its CVB employees and closed the CVB. Because the Santa Clara Convention Center Management Agreement with the Chamber contained a marketing responsibility as part its contracted scope of services, a portion of this work effort was moved from the CVB to Chamber staff at the Convention Center.
In October 2018, City Council approved a procurement strategy for Convention Center management services with the possibility of including convention and requested proposers to consider including the addition of convention and visitor services through a CVB.
On February 5, 2019, City Council authorized the City Manager to negotiate and execute an agreement with Global Spectrum L.P dba Spectra Venue Management (Spectra) for the management and operation of the Santa Clara Convention Center. The scope of the Management Agreement did not include the provision of convention and visitor services. Understanding that Spectra would not provide the CVB services through its agreement, concurrently the Council approved an Amendment No. 2 to an Agreement with Jones Lang LaSalle (JLL), to interface with the Tourism Improvement District (TID) to discuss potential governance and operating models of a possible new destination marketing organization (DMO or CVB) that would work closely with the Convention Center and TID to provide convention and visitor services in Santa Clara.
The purpose of this report is to provide the Council with a report on potential governance models for a new DMO for policy direction.
DISCUSSION
The services provided by a destination marketing organization such as a Convention and Visitors Bureau, allow for the long term marketing of convention centers and cities to attract meetings and visitors to its hotels and venues. With the closure of the CVB in July 2018, the City of Santa Clara has not had an organization dedicated to attracting meetings, shows and other events to the Convention Center or Santa Clara.
The future financial projections for the Convention Center under the new management agreement with Spectra presumes that there is a continuous active effort to secure a balance of meetings and citywide events that will support convention center operations and local hotels. Given the recent issues that surfaced with Council oversight and the interest on the part of the Tourism Improvement District to modernize its approach to this effort, a conversation of governance and structure is warranted.
Staff and JLL will provide an oral presentation to Council regarding:
• Potential organizational/governance models and oversight responsibilities;
• Governance structure and development; and
• Possible funding strategies
Governance Models
Two of the most common organizational models were explored. The first model would establish the City as the authority having direct oversight of Spectra (as the convention center operator); the CVB (as the official destination marketing organization); and, the Tourism Improvement District (as the principal funding source of the CVB). The City would establish and enter into an agreement with each entity allowing the City to directly monitor each contractor’s performance and compliance with the requirements of the agreement. This is the preferred mode, in light of recent oversight issues, and the TID has also expressed preference for this model.
The second model contemplates the establishment of a non-profit Authority that would a contract with the City to oversee the convention center management contract and the CVB. The non-profit Authority would establish its own Board of Directors and report to the City. This model contains multiple levels of governance and is not the preferred model given the desire to ensure direct oversight by the City Council. However, it is a model used and worth presenting to the City Council for consideration.
Further discussion of each model, including advantages and challenges will be discussed at the April 9 Council meeting.
Following Council policy direction, staff and JLL can begin working with key stakeholders on the on articles of incorporation and bylaws. Staff is also requesting feedback on the proposed composition of the initial board of directors. The initial Board of Directors is anticipated to be a working board with expertise in the convention, tourism, hospitality and/or entertainment sectors to provide leadership in the formation of a new CVB. The final composition of the Board would be subject to Council approval.
Funding
It is currently contemplated that the CVB would be (initially) solely funded by the Tourism Improvement District (TID). A request for consideration of the TID Annual Report and a Resolution of Intention is also on the April 9, 2019 Council agenda.
Currently, the nine participating TID hotels collect a public assessment of $1 per occupied room night to fund marketing and promotional activities for the benefit of the TID as allowed by California law and City Code. The use of these public funds is subject to Council approval through the annual budget process and must be used in accordance with State and City law.
TID Advisory Board and City staff have been discussing modifying how funds are collected and used for the benefit of the TID and new CVB. A report will be brought before the Council when that work is completed and proposed changes to the TID fee.
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(a) as it has no potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.
FISCAL IMPACT
There is no additional cost to the City other than staff time and expense.
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
Recognizing the importance of re-establishing an entity to provide convention and visitor services, there are several alternatives available for Council consideration:
1. Direct City Manager to proceed with the formation of a new destination marketing organization and return to Council for actions as necessary to approve and implement the formation.
2. Direct the City Manager to return to Council with additional information prior to proceeding with the formation of a new destination marketing organization.
3. Any other action determined by the City Council.
RECOMMENDATION
Recommendation
Alternative #1:
Direct City Manager to proceed with the formation of a new destination marketing organization and return to Council for actions as necessary to approve and implement the formation.
Staff
Reviewed by: Ruth Shikada, Assistant City Manager
Approved by: Deanna J. Santana, City Manager