REPORT TO COUNCIL
SUBJECT
Title
Public Hearing: Adoption of a Resolution of Formation of the Santa Clara Tourism Improvement District under the Property and Business Improvement District Law of 1994
Report
COUNCIL PILLAR
Promote and Enhance Economic, Housing and Transportation Development
BACKGROUND
The existing Santa Clara Tourism Improvement District (TID) was formed in 2005 pursuant to the Parking and Business Improvement Area Law of 1989 (1989 Law). On January 11, 2005, City Council approved Ordinance No. 1797 (the “Ordinance”) amending the Santa Clara Municipal Code and establishing TID. The Ordinance established the boundaries of the TID, which currently includes 11 hotels near the Santa Clara Convention Center: AC Hotel Santa Clara, Avatar Hotel, Biltmore Hotel & Suites, Element Santa Clara, Embassy Suites, Hilton Santa Clara, Hyatt House, Hyatt Regency, Marriott Santa Clara, The Plaza Suites, and TownePlace Suites by Marriott.
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.
Petitions in favor of SCTID formation were submitted by six (6) lodging businesses, which represented 76.51% of the total TID assessment. This majority petition allowed the Council to initiate proceedings for the SCTID formation.
On April 6, 2021, Council approved Resolution No. 21-8955 declaring the City’s intent to establish the Santa Clara Tourism Improvement District (SCTID) under the 1994 Law. 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.
• 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.
On April 7, 2021, the City mailed written notices to the owners of all businesses proposed to be within the SCTID. Mailing the notice began the mandatory forty-five (45) day period in which owners may protest the SCTID formation.
On April 20, 2021, City Council conducted a public meeting to allow for public testimony on the formation of the SCTD and levy of assessments. There were no public comments and no Council action required at that time.
After the approval of the Resolution of Intention and the public meeting, Council must conduct a public hearing to receive any written or oral protests against the formation of the new district.
DISCUSSION
A public hearing is being held to allow businesses subject to the assessment an opportunity to submit comments, voice concerns, and to protest the assessment. If written protests are received from the owners of businesses in the proposed SCTID which will pay more than fifty percent (50%) of the assessments proposed to be levied and protests are not withdrawn so as to reduce the protests to less than fifty percent (50%), no further proceedings to levy the proposed assessment against such businesses shall be taken for a period of one (1) year from the date of the finding of a majority protest by the Council. At the time of this publication, no protests had been submitted to the City Clerk.
At the conclusion of the public hearing, the Council may adopt, revise, change, reduce, or modify the proposed assessment or the type or types of improvements and activities to be funded with the revenues from the assessments. Proposed assessments may only be revised by reducing them (i.e., the Council cannot increase the proposed assessment). Additionally, Council may adopt a Resolution establishing the Santa Clara Tourism Improvement District.
Included with this staff report is the TID’s Annual Report and the DMO’s FY 2021/22 Proposed Budget. Additionally, the FY 2020/21 detailed expense report ending April 28, 2021 is attached. Per the Management District Plan, as the SCTID’s Owners’ Association, Silicon Valley/Santa Clara DMO, Inc. will manage funds and implement programs and will provide annual reports to the City Council.
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 new SCTID is established, the levy will be effective July 1, 2021. The projected assessment for Fiscal Year 2021/22 is $610,936.
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>.
ALTERNATIVES
1. Adopt a Resolution of Formation to establish the Santa Clara Tourism Improvement District (SCTID) for five years starting July 1, 2021 if there is no legally sufficient protest.
2. Do not adopt a Resolution of Formation to establish the Santa Clara Tourism Improvement District (SCTID) for five years starting July 1, 2021.
RECOMMENDATION
Recommendation
Alternative 1: Adopt a Resolution of Formation to establish the Santa Clara Tourism Improvement District (SCTID) for five years starting July 1, 2021 if there is no legally sufficient protest.
Staff
Reviewed by: Ruth Mizobe Shikada, Assistant City Manager
Approved by: Deanna J. Santana, City Manager
ATTACHMENTS
1. Resolution No. 21-8955
2. Resolution of Formation
3. Management District Plan
4. TID Annual Report and FY 2021/22 Proposed Budget
5. FY 2020/21 Expense Report Ending April 28, 2021