REPORT TO COUNCIL
SUBJECT
Title
Action on the FY 2023/24 Annual Report for the Santa Clara Tourism Improvement District (SCTID) as Presented 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 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, and TownPlace Suites San Jose Santa Clara.
On May 25, 2021, at the request of the lodging businesses, City Council, pursuant to the Property and Business Improvement District Lay of 1994 (1994 Law), Streets and Highways Code Section 36600 et seq. approved Resolution No. 21-8694 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 occupied room night to 1.5% of gross short-term (30 days or less) room rentals (10 or more) for 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 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 on October 1, 2024. Staff is transmitting the SCTID’s Annual Report to the City Council for compliance with the 1994 Law. It should be noted that for added transparency for the benefit of Council and the public, the DMO Annual Report provides detailed information (including line-item detail of the FY 2024/25 Annual Budget) which are beyond the requirements of Section 36650.
The report is organized as follows:
1. Accomplishments: The FY 2023/24 accomplishments are listed.
2. Boundary: There are no proposed changes to the Santa Clara Tourism Improvement District boundary.
3. Improvement and Activities: The improvements and activities planned for FY 2024/25 are consistent with the Management District Plan.
4. FY 2023/24 Financials: As of this writing, the DMO expended 82% of the Operating Budget. The detailed financial report is included as Appendix A in the Annual Report.
5. Key Performance Indicators (KPIs): Results of the FY 2023/24 KPIs are reported.
6. Cost: Provides the budgeted cost for each DMO Program for FY 2024/25. The FY 2024/25 Operating Budget is $3.6 million which is approximately a 17% or $512,666 increase from the FY 2023/24 Operating Budget. The increase in operating costs are mostly attributed to the addition of two FTE (mid-year hiring) to support expanding sales and marketing efforts, and increases in the areas of client support services (i.e. FAM trips, client events and activations), travel and attendance (i.e. increasing visibility at industry conferences and tradeshows), contract services and marketing (i.e. the creation of a Visitors Guide and a new website design). For additional background and detail, the full line-item budget, that was approved by the DMO Board, is included as Appendix B in the Annual Report.
7. 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 particular contained in the report (e.g., addition of clarifying language, cost) and approve it as modified. Any proposed modification to the district plan itself must 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 with 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 2024/25 projected revenue of $2.6 million, the City would receive $52,000.
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 <mailto:clerk@santaclaraca.gov> or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
Approve the FY 2023/24 Annual Report for the Santa Clara Tourism Improvement District (SCTID) as presented by the SCTID Owner’s Association.
Staff
Reviewed by: Chuck Baker, Assistant City Manager
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. Santa Clara Tourism Improvement District FY 2023/24 Annual Report