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Home My WebLink About2025-04-22; City Council; 02; Schedule a Public Hearing for May 20, 2025, to Close Out the Former Carlsbad Tourism Business Improvement District, which was Replaced by a New District in 2023CA Review CKM Meeting Date: April 22, 2025 To: Mayor and City Council From: Geoff Patnoe, City Manager Staff Contact: Matt Sanford, Economic Development Director matt.sanford@carlsbadca.gov, 442-339-5987 Subject: Schedule a Public Hearing for May 20, 2025, to Close Out the Former Carlsbad Tourism Business Improvement District, which was Replaced by a New District in 2023 Districts: All Recommended Action Adopt a resolution declaring its intention to repeal Carlsbad Municipal Code Chapter 3.37 and disestablish the Carlsbad Tourism Business Improvement District established in 2005 and fixing the time and place of a public hearing. Executive Summary On April 18, 2023, the City Council formed a new Carlsbad Tourism Business Improvement District under the Property and Business Improvement District Law of 1994. (California Streets and Highways Code Section 36600 et seq.1). This district replaced the former Carlsbad Tourism Business Improvement District that was formed under an older state law which had limitations to efficiency and effectiveness. The new district began operating on July 1, 2023, assuming similar operations and with an assessment consistent with the former district. The new district created greater efficiencies in how Carlsbad is marketed for tourism. With a replacement program in place, the former district’s assessment was discontinued on June 30, 2023. However, before formally disestablishing the district, all remaining funds in the former district’s account had to be exhausted. All remaining funds have now been exhausted and the former district’s Advisory Board approved a recommendation to the City Council to disestablish the district. The City Council is being asked to approve a resolution declaring its intention to repeal Carlsbad Municipal Code Chapter 3.37, disestablishing the previous Carlsbad Tourism Business Improvement District and set a public hearing on May 20, 2025, to finalize the action. 1 Et seq, or et sequentes, means all of the codes in the section, not just the single one cited. April 22, 2025 Item #2 Page 1 of 5 Docusign Envelope ID: 3A86340D-57D8-4AF1-8797-58C69E5E05BC Explanation & Analysis The old Carlsbad Tourism Business Improvement District was established in 2005 under the state’s Parking and Business Improvement Area Law of 1989. In 2020, the district, through a petition from the majority of the lodging businesses in Carlsbad, as measured by the revenue they contributed, and subsequent City Council action, raised the assessment from $1 per room night to 2% of the daily room night cost. The increase in the assessment rate increased the district’s budget from approximately $1.5 million to approximately $6.5 million. This larger budget went into effect beginning fiscal year 2020-21 and has allowed for more robust tourism promotion. The statutory authority for the existing district was adequate in previous years, but with the district’s increased assessment, budget and capabilities grew, and a majority of Carlsbad lodging businesses – which both pay and benefit from the assessment – expressed their support to form a new Carlsbad Tourism Business Improvement District with a more modern authorization structure. • On Jan.12, 2022, the CTBID Advisory Board, made up of representatives of local hotels and resorts, voted to explore options to modernize the district’s operations, including possibly reestablishing the district under the Property and Business Improvement District Law of 1994. • Information about the potential changes and a copy of the petition was sent to all lodging businesses in October 2022. The city received enough petitions in support of the change to allow the City Council to establish a new district. • On April 18, 2023, the City Council formed a new Carlsbad Tourism Business Improvement District (new district) under the Property and Business Improvement District Law of 1994 (California Streets and Highways Code Sections 36600 et seq.). Visit Carlsbad was selected as the Owners’ Association under the new district to implement the new district’s management district plan. • The new district and corresponding assessment began on July 1, 2023, and was authorized for a five-year period. Because of the formation of the new district, the former district’s assessment was not levied in fiscal years 2023-24 and 2024-25. However, the former district could not be disestablished at the time because a balance of approximately $7 million remained from previous years’ assessments. Those funds had to be expended on programs and services consistent with the former district’s guidelines. On June 27, 2023, to expend the former district’s funds collected in fiscal year 2022-23, the CTBID Advisory Board approved an amendment to extend the contract with Visit Carlsbad to execute the same program of work until the remaining former district funds were fully expended. As of June 30, 2024, all funds collected under the former district had been expended and, as of October 2024, all services paid for by those funds had been rendered by Visit Carlsbad. April 22, 2025 Item #2 Page 2 of 5 Docusign Envelope ID: 3A86340D-57D8-4AF1-8797-58C69E5E05BC The old CTBID’s Advisory Board met for the final time on Nov. 13, 2024, to hear a report on services rendered and confirm that all funds had been expended. At that meeting, the advisory board adopted a resolution providing a recommendation to the City Council to disestablish that district. Because there are no remaining funds and the assessment has already been discontinued, the former district can now be disestablished. Fiscal Analysis Since the former district operations were replaced by a similar program under the new district, there is no immediate fiscal impact on the city from approving the disestablishment of the no- longer-needed district. Next Steps Should the City Council adopt the resolution, staff will schedule a public hearing for May 20, 2025, at 5 p.m. and provide the appropriate notice to the public and interested parties. After the public hearing, the City Council may introduce an ordinance repealing Carlsbad Municipal Code Chapter 3.37 contemporaneously with disestablishing the previous Carlsbad Tourism Business Improvement District. If the City Council introduces the ordinance, it will be brought back to the City Council at a subsequent meeting for adoption. Environmental Evaluation The proposed action to adopt a resolution declaring an intention to repeal Carlsbad Municipal Code Chapter 3.37 and disestablish the Carlsbad Tourism Business Improvement District established in 2005 and fixing the time and place of a public hearing is exempt from environmental review under CEQA Guidelines Sections 15061(b)(3) and 15378(b)(5) as it can be seen with certainty that there is no possibility the proposed action may have a significant effect on the environment. Exhibits 1. City Council resolution April 22, 2025 Item #2 Page 3 of 5 Docusign Envelope ID: 3A86340D-57D8-4AF1-8797-58C69E5E05BC Exhibit 1 RESOLUTION NO. 2025-084 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, DECLARING ITS INTENTION TO REPEAL CARLSBAD MUNICIPAL CODE CHAPTER 3.37 AND DISESTABLISH THE CARLSBAD TOURISM BUSINESS IMPROVEMENT DISTRICT ESTABLISHED IN 2005 AND FIXING THE TIME AND PLACE OF A PUBLIC HEARING WHEREAS, on Nov. 15, 2005, the City Council of the City of Carlsbad approved Ordinance No. NS-778 enacting Chapter 3.37 of the Carlsbad Municipal Code establishing the Carlsbad Tourism Business Improvement District (“Old CTBID”) under the Parking and Business Improvement Area Law of 1989 (California Streets and Highways Code Section 36500 et seq.); and WHEREAS, the City Council formed a new Carlsbad Tourism Business Improvement District on April 18, 2023 (“New CTBID”) under the Property and Business Improvement District Law of 1994 (California Streets and Highways Code Section 36600 et seq.) (“94 Law”) as effectuated in City Council Resolution No. 2023-118; and WHEREAS, the New CTBID will continue to promote tourism and visitor services with Visit Carlsbad as the contracted Owners’ Association as defined under the 94 Law; and WHEREAS, as a result of the New CTBID’s establishment, the Old CTBID has wound down operations and exhausted its remaining funds as of November 13, 2024; and WHEREAS, as a result of disestablishing the Old CTBID, Chapter 3.37 of the Carlsbad Municipal Code will become obsolete; and WHEREAS, the City Council has the authority to disestablish the Old CTBID under California Streets and Highways Code Section 36550. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows: 1.That the above recitations are true and correct. 2.That the proposed action to adopt a resolution declaring an intention to repeal Carlsbad Municipal Code Chapter 3.37 and disestablish the Carlsbad Tourism Business Improvement District established in 2005 and fixing the time and place of a public hearing is exempt from environmental review under CEQA Guidelines Sections 15061(b)(3) and 15378(b)(5) as it can be seen with certainty that there is no possibility April 22, 2025 Item #2 Page 4 of 5 Docusign Envelope ID: 3A86340D-57D8-4AF1-8797-58C69E5E05BC the proposed action may have a significant effect on the environment. That the City Council declares its intention to disestablish the Old CTBID. 3.That there are no remaining assets to dispose of acquired with the revenues of the assessments levied and collected for the Old CTBID’s projects, programs, activities, and administration. 4.That the time and place for the public hearing to hear testimony on disestablishing the Old CTBID is set for May 20, 2025, at 5:00 p.m., or as soon thereafter as the matter can be heard, at Carlsbad City Hall, 1200 Carlsbad Village Drive, Carlsbad, CA 92008. 5.That the City Council declares its intention to introduce an ordinance repealing Carlsbad Municipal Code Chapter 3.37 contemporaneously with the disestablishment of the Old CTBID. PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of Carlsbad on the 22nd day of April, 2025, by the following vote, to wit: AYES: Blackburn, Bhat-Patel, Acosta, Burkholder, Shin. NAYS: ABSTAIN: ABSENT: None. None. None. ______________________________________ KEITH BLACKBURN, Mayor ______________________________________ SHERRY FREISINGER, City Clerk (SEAL) April 22, 2025 Item #2 Page 5 of 5 Docusign Envelope ID: 3A86340D-57D8-4AF1-8797-58C69E5E05BC