REPORT TO COUNCIL
SUBJECT
Title
Public Meeting on the Formation of the Santa Clara Tourism Improvement District and the Levy of Assessments on Affected Lodging Businesses
Report
COUNCIL PILLAR
Promote and Enhance Economic, Housing and Transportation Development
Report
BACKGROUND
On January 26, 2021, Council consented to the Santa Clara Tourism Improvement District’s request to pursue the formation of the District under the 1994 Law. Additionally, Council concurred with the TID’s requested approach to change the TID assessment method from $1.00 per occupied room night to 1.5% of gross short-term room rentals, with the option to increase the assessment to 2% in year two. (RTC 21-3589).
On April 6, 2021, Council approved a Resolution of Intention establishing the Santa Clara Tourism Improvement District (SCTID) under the 1994 Law (RTC 21-153) and a summary of the key provisions of the SCTID are as follows:
• Location: The proposed Santa Clara Tourism Improvement District (SCTID) includes all lodging businesses with ten (10) rooms or more located within the District boundaries.
• Services: The SCTID is designed to provide specific benefits directly to payors by increasing room night sales. Convention sales, incentives, and services and marketing and communication programs will increase overnight tourism and market payors as tourist, meeting and event destinations, thereby increasing room night sales.
• Budget: The total SCTID annual budget for the initial year is anticipated to be approximately $610,936.
• Cost: The annual assessment rate is one and one-half of one percent (1.5%) of gross short-term room rental revenue. After the initial year of the SCTID’s five (5) year term the assessment rate may be increased in any year by the Owners’ Association’s Board to a maximum of two percent (2%) of gross short-term room rental revenue. Based on the benefit received, assessments will not be collected on stays by any officer or employee of a foreign government who is exempt by reason of express provision of Federal law or international treaty. Additionally, assessments will not be collected on stays by any Federal or State of California officer or employee on official business who shall provide one of the following; a warrant or check drawn on the Treasury of the United States; a copy of the official travel orders indicating the issuing governmental agency and the employee’s full name; or, a copy of a letter on the official letterhead of an exempt governmental agency requesting exemption and listing the employee’s name and stating that the stay is for official government business. The dates of occupancy must also be included. These requirements must be demonstrated by the guest at the time of registration. Failure to satisfy these requirements will result in no assessment exemption. Copies of the documentation for each exemption claimed must be submitted to the Director of Finance with each remittance of assessments.
• Collection: Each lodging business located in the boundaries of the SCTID shall be responsible for remitting the assessments to the City in accordance with the Management District Plan (MDP). The City will be responsible for collecting the assessment on a quarterly basis or at the close of any shorter reporting period as established by the Director of Finance (including any delinquencies, penalties and interest) from each lodging business located in the boundaries of the SCTID. The City shall take all reasonable efforts to collect the assessments from each lodging business.
• Duration: The proposed SCTID will have a five (5) year life, beginning July 1, 2021 through June 30, 2026. Once per year, beginning on the anniversary of SCTID formation, there is a thirty (30) day period in which owners paying fifty percent (50%) or more of the assessment may protest and initiate a City Council hearing on SCTID termination.
• Management: Silicon Valley/Santa Clara DMO, Inc. (DMO) will serve as the SCTID’s Owners’ Association. The Owners’ Association is charged with managing funds and implementing programs in accordance with this Plan and must provide annual reports to the City Council.
DISCUSSION
Pursuant to the 1994 Law and CA Government Code section 54954.6, following Council’s approval of the Resolution of Intention to establish the Santa Clara Tourism Improvement District (SCTID), notices of this public meeting and the public hearing on May 25, 2021 were mailed to the lodging businesses on April 7, 2021. This public meeting is to allow for public testimony on the formation of the SCTID and the levy of assessments. There is no action required by Council at this public meeting.
At the public hearing on May 25, 2021, lodging businesses may protest the formation of the SCTID and if more than 50% of the lodging businesses protest the District’s formation, the formation cannot move forward. If less than 50% of the lodging businesses protest, the Council would move forward and adopt a new resolution which forms the District.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental 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
There is no fiscal impact.
COORDINATION
This report has been coordinated with the City Attorney’s Office.
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>.
RECOMMENDATION
Recommendation
Open public testimony to allow members of the public to provide comments on the formation of the Santa Clara Tourism Improvement District and the levy of assessments on affected lodging businesses.
Staff
Reviewed by: Ruth Mizobe Shikada, Assistant City Manager
Approved by: Deanna J. Santana, City Manager
ATTACHMENTS
1. Resolution No. 21-8955