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Home My WebLink About2025-05-20; City Council; 10; Public Hearing to Close Out the Former Carlsbad Tourism Business Improvement District Formed Under the Parking and Business Improvement Area Law of 1989, which was ReplacCA Review AZ Meeting Date: May 20, 2025 To: Mayor and City Council From: Geoff Patnoe, City Manager Staff Contact: Matt Sanford, Economic Development Manager matt.sanford@carlsbadca.gov, 442-339-5987 Subject: Public Hearing to Close Out the Former Carlsbad Tourism Business Improvement District Formed Under the Parking and Business Improvement Area Law of 1989, which was Replaced by a New District in 2023 Districts: All Recommended Action 1. Hold a public hearing 2. Introduce an ordinance repealing Chapter 3.37 of the Carlsbad Municipal Code and disestablishing the former Carlsbad Tourism Business Improvement District. 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, which was formed under an older state law that limited 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. On April 22, 2025, the City Council adopted Resolution No. 2025-084 (Exhibit 2) declaring its intention to repeal Carlsbad Municipal Code Chapter 3.37, disestablishing the old district and setting a public hearing on May 20, 2025. 1 Et seq, or et sequentes, means all of the codes in the section, not just the single one cited. May 20, 2025 Item #10 Page 1 of 7 Staff are now recommending that the City Council hold a public hearing and then adopt an ordinance repealing Carlsbad Municipal Code Chapter 3.37 at the same time as disestablishing the old district, in keeping with California Streets and Highways Code Section 36550 (Exhibit 1). 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, a new operating model was needed. Additionally, 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 old district’s 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 were 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 under the Property and Business Improvement District Law of 1994 (California Streets and Highways Code Sections 36600 et seq.). Visit Carlsbad was selected as what is known 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 were 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 old district’s 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 May 20, 2025 Item #10 Page 2 of 7 expended, and, as of October 2024, all services paid for by those funds had been rendered by Visit Carlsbad. The old district’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 old district’s services and operations were replaced by a similar program under the new Carlsbad Tourism Business Improvement District, there is no immediate fiscal impact on the city from approving the disestablishment of the no-longer-needed district. Next Steps With the City Council’s approval, staff will return to the City Council at its next regular meeting for the second reading of the ordinance repealing Carlsbad Municipal Code Chapter 3.37 and disestablishing the old and now replaced district. Environmental Evaluation The adoption of an ordinance repealing Carlsbad Municipal Code Chapter 3.37 and disestablishing the Carlsbad Tourism Business Improvement District established in 2005 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 ordinance 2.City Council Resolution No. 2025-084 (on file in the Office of the City Clerk) May 20, 2025 Item #10 Page 3 of 7 Exhibit 1 ORDINANCE NO. CS-494 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, REPEALING CHAPTER 3.37 OF THE CARLSBAD MUNICIPAL CODE AND DISESTABLISHING THE FORMER CARLSBAD TOURISM BUSINESS IMPROVEMENT DISTRICT WHEREAS, the City of Carlsbad established the Carlsbad Tourism Business Improvement District on Nov. 15, 2005 (Old CTBID) under the Parking and Business Improvement Area Law of 1989 (California Streets and Highways Code Section 36500 et seq.) (“89 Law”); and WHEREAS, Ordinance No. NS-778 enacted the Carlsbad Municipal Code Chapter 3.37 – Carlsbad Tourism Business Improvement District, which codified the Old CTBID; and WHEREAS, as the Old CTBID’s budget and capabilities grew, it needed a modern statutory structure to allow for enhanced long-term planning and continuity of operations; 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 CTIBID wound down operations and exhausted its remaining funds as of October 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; and WHEREAS, on April 22, 2025, the City Council adopted Resolution No. 2025-084 (“Resolution of Intention”) declaring its intention to disestablish the Old CTBID, repeal Chapter 3.37 of the Carlsbad Municipal Code, and set a public hearing 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, California, 92008; and WHEREAS, in accordance with California Streets and Highways Code Section 36523, city staff caused a complete copy of the Resolution of Intention to be published in a newspaper of general circulation in the city, and within seven (7) days following the adoption of the Resolution of Intention May 20, 2025 Item #10 Page 4 of 7 furnished a complete copy via first-class mail to each business owner assessed within the Old CTBID; and WHEREAS, on May 20, 2025, a public hearing was held at Carlsbad City Hall, 1200 Carlsbad Village Drive, Carlsbad, California, 92008, where evidence, both written and oral, was presented to, and considered by, the City Council during the public hearing. NOW, THEREFORE, the City Council of the City of Carlsbad, California, ordains as follows that: 1. The above recitations are true and correct. 2.That the adoption of an ordinance repealing Carlsbad Municipal Code Chapter 3.37 and disestablishing the Carlsbad Tourism Business Improvement District established in 2005 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. 3.Carlsbad Municipal Code Chapter 3.37, Carlsbad Tourism Business Improvement District, is repealed in its entirety. 4.Pursuant to California Streets and Highways Code Section 36550, the City Council disestablishes the Carlsbad Tourism Business Improvement District. EFFECTIVE DATE: This ordinance shall be effective thirty days after its adoption; and the City Clerk shall certify the adoption of this ordinance and cause the full text of the ordinance or a summary of the ordinance prepared by the City Attorney to be published at least once in a newspaper of general circulation in the City of Carlsbad within fifteen days after its adoption. May 20, 2025 Item #10 Page 5 of 7 INTRODUCED AND FIRST READ at a Regular Meeting of the Carlsbad City Council on the 20th day of May, 2025, and thereafter PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of Carlsbad on the __ day of ________, 2025, by the following vote, to wit: AYES: NAYS: ABSTAIN: ABSENT: APPROVED AS TO FORM AND LEGALITY: _________________________________ CINDIE K. McMAHON, City Attorney _______________________________________ KEITH BLACKBURN, Mayor _______________________________________ SHERRY FREISINGER, City Clerk (SEAL) May 20, 2025 Item #10 Page 6 of 7 Exhibit 2 City Council Resolution No. 2025-084 (on file in the Office of the City Clerk) May 20, 2025 Item #10 Page 7 of 7