HomeMy WebLinkAbout2005-10-11; City Council; 18308; Formation of Tourism Business Improvement DistrictAB# 18,308
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TITLE:
Report on Formation of the Carlsbad Tourism
Business Improvement District (CTBID)
RECOMMENDED ACTION:
Receive the report and accept public comment on Formation of the Carlsbad Tourism
Business Improvement District (CTBID).
ITEM EXPLANATION:
Background:
For nearly 50 years the City of Carlsbad has financially supported Community Promotion
and Visitor Services, as a way to develop tourism and assist Carlsbad visitors. From 1957
until the mid 198O’s, the City of Carlsbad provided funding to the Carlsbad Chamber of
Commerce, the entity tasked with promotion and visitor services at that time. Then in 1985,
the Chamber of Commerce created a separate entity called the Carlsbad Convention and
Visitor’s Bureau (CCVB). CCVB assumed the Chamber of Commerce’s responsibilities for
promoting Tourism and Visitor Services in Carlsbad, and funding from the City of Carlsbad
was transferred to the new CCVB. Today, the City of Carlsbad continues to fund tourism
and visitor’s activities through its General Fund. In 2004-2005, the City funded both CCVB
(approximately $409,000) and the San Diego North Convention and Visitor’s Bureau
($100,000) in the combined amount of $509,000. The City Council has held funding of
CCVB to its current level for the past two years, but has continued to encourage CCVB to
seek additional sources of funding as a way to enhance and expand their services.
In early 2004 the CCVB, approached City Staff with the idea of forming a Carlsbad Tourism
Business Improvement District (CTBID) that could generate a greater level funding for
tourism promotion activities. The Parking and Business Improvement Area Law of 1989,
Section 36500 et seq. of the Streets and Highway Code allows cities to establish parking
and business improvement areas for the purpose of promoting tourism. In March 2005
CCVB made a presentation to the City Council and requested a $33,500 loan that would be
used to fund development of a tourism marketing plan, and allow CCVB to hire a consulting
firm (Downtown Resources) specializing in formation of tourism related Business
Improvement Districts to assist them and the City with formation of a CTBID. Council
approved CCVB’s request.
CTBID Proposal:
The proposed CTBID would include all hotels within the city, and would impose a flat fee of
$1 .OO per occupied room night for all transient occupancies. The levy would be imposed on
all existing hotel businesses as well as any future hotel developments and would be
collected monthly based on revenues generated the previous month. Timeshare units
would be exempt from the levy, only when occupied by owners. All short-term, non-owner
stays in timeshare units would be subject to the levy. The City would collect the
assessment on the same form used for collection of Transient Occupancy Tax receipts and
would receive an administrative fee of 2% of the revenues collected, as reimbursement for
collection services.
approximately $874,000. These funds would be used to promote tourism within the
The CTBID annual assessment in year one is estimated at
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boundaries of the CTBID, pay for the administrative costs of the district, and to repay the
$33,500 loan advanced to CCVB by the City of Carlsbad.
On September 13, 2005, the City Council approved the Resolution of Intention (ROI), to
declare their intention of establishing the Carlsbad Tourism Business Improvement District.
CTBlD Formation Process:
Public Meeting:
In addition to adoption of the ROI, the Parking and Business Improvement Area Law of
1989, requires a Public Meeting be held to provide public information and comments on the
CTBID, and the levy of assessments. At the Public Meeting, the public will be given an
opportunity to hear a report on the CTBID and provide their comments on formation of the
CTBID. The Public Meeting is scheduled for October 11 , 2005.
Public Hearing:
Subsequent to the Public Meeting, the City Council will hold a Public Hearing on the CTBID.
The purpose of the Public Hearing is for the City Council to take the testimony of all
interested persons for or against the establishment of the CTBID, the extent of the area for
inclusion in the assessment, or the types of activities proposed for funding from the
assessment. At the conclusion of the Public Hearing, a protest vote is conducted. A
protest vote against the establishment of the CTBID, the extent of the area, or the proposed
activities must be in writing, and may only be accepted if the person signing is the business
owner of record, or an authorized representative. If at the conclusion of the Public Hearing
there are protests by the owners of businesses within the CTBID that will pay fifty percent
(50%) or more of the total assessments of the entire CTBID, no further proceedings to
create the CTBID shall occur for a period of one-year from the date of the protest vote. If a
majority of the written protests are related to a proposed activity of the CTBID, then that
activity shall not be included in the CTBID. If there are no protest votes in excess of the
50% requirement, then the City Council may create the CTBID. The date of the Public
Hearing has been scheduled for November 8,2005.
CTBlD Advisory Board:
The Parking and Business Improvement Area Law of 1989, requires an Advisory Board be
appointed by the City Council. The Council may act as its own Advisory Board, appoint an
existing board, or select other individuals to serve in that capacity. The CTBID Advisory
Board advises the City Council on all issues related to the CTBID. The CTBID Advisory
Board isrequired to submit an annual report, which would include any proposed changes in
the boundaries, assessment formula, estimated cost of conducting activities, amount of
surplus/deficit revenues to be carried over, contributions, and other items of interest to the
CTBID for the upcoming year. The report may be approved as presented or amended by
the City Council. Once the report has been approved for the upcoming year, the City
Council adopts a resolution of intention to levy an annual assessment for the upcoming
year. The City Council will then schedule and conduct a public hearing to set the
assessment, take public comment, make modifications as necessary, and adopt the new
resolution of intention.
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ENVIRONMENTAL REVIEW:
The process leading to the potential formation of a Business Improvement District and the
actual formation of the Business Improvement District is not a project within the meaning of
the California Environmental Quality Act (CEQA). For CEQA purposes, a project does not
include the creation of government funding mechanisms or other governmental fiscal
activities that do not involve any commitment to any specific project that may result in
potentially significant physical impact on the environment. No such specific projects are
proposed and there is no known or foreseeable potentially significant physical impact on the
environment. (CEQA Regulations, Regulation No. 15378(b)(4)).
FISCAL IMPACT:
The fiscal condition of the CTBID would depend upon the availability of revenues and the
activities undertaken by the District. At present there are 35 hotels with approximately 3600
hotel rooms. While the City does not have access to the specific data on the number of
occupied room-nights at each hotel throughout the year, we do know that Carlsbad hotels
experience an occupancy rate of approximately 66%. This would equate to an estimated
$874,000 in annual revenue each year based on $1.00 per occupied room night. If
occupancy were higher, or if additional hotel rooms are added, the annual revenue figures
could be higher. As proposed the CTBID would pay the City an administrative fee of 2% of
the assessments collected for reimbursement of collection costs. If assessments in year
one total $874,000, the administrative fee to the City would be $17,480.
EXH IBlTS :
1. Agenda Bill #I 8,274, dated 911 3/05, Carlsbad Tourism Business Improvement
District (CTBI D).
DEPARTMENT CONTACT: Ron Ball, (760) 434-2891. email: rball@ci.carlsbad.ca.us, Jim
Elliott, (760) 602-2408 email: jelli@ci.carlsbad.ca.us, and Cynthia Haas, (760) 602-2732
email: chaas@ci.carlsbad.ca.us
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EXHIBIT 1
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CITY OF CARLSBAD
AGENDA BILL
AB# 18,274 I TITLE:
CARLSBAD TOURISM BUSINESS IMPROVEMENT
DISTRICT (CTBID) I MTG. 9/13/05
I DEPT. clr( ATTORNEY
CITY ATTY.
CITYMGR
RECOMMENDED ACTION:
Adopt Resolution No. 2005281 a resolution of intention of the City Council of the City of
Carlsbad, California, declaring the intention of the City Council to establish the Carlsbad
Tourism Business Improvement District (CTBID), fixing the time and place of a public
meeting and public hearing thereon and giving notice thereof.
ITEM EXPLANATION:
In early 2005 the Carlsbad Convention and Visitors Bureau (CCVB) approached the City
with a proposal to form a Business Improvement District (BID) to support tourism related
activities in the City. BIDS have been successfully used throughout California for many
years to provide support for a wide range of activities including marketing and tourism
promotion. Across the state, cities such as Monterey, San Luis Obispo, Santa Barbara,
Napa, and many more have established BIDS to support tourism.
The creation of a BID is allowed under two sections of the California Streets and Highways
Code. Section 36500 (known as the Parking and Business Improvement Area Law of 1989)
and Section 36600 (the Property and Business Improvement District Law of 1994) describe
processes that may be used to establish BIDS. For purposes of the CTBID, CCVB has
asked the City to follow the processes and procedures outlined in the 1989 statutes.
In summary, the proposal from CCVB is, with the approval of the City Council, to form a BID
that will use assessments collected from hotel operators within the City to support tourism
promotion activities. The plan calls for hotels to be assessed $1 .OO per occupied room
night. This assessment would be passed through to the hotel guest as opposed to being
paid directly from the hotel operating revenues. Assessments would be collected by the
City through the current Transient Occupancy Tax collection process, and passed on to the
CTBlD to support the operations of the district.
The BID creation process includes the establishment of an Advisory Board that is
responsible for the preparation of an annual budget and report on operations. The budget
and report are used each year by the City Council to levy the assessment for successive fiscal years.
The 1989 law states that the City Council is responsible for the appointment of the Advisory
Board. The Mayor has suggested that the board be made up of three permanent members
representing the three largest hoteliers, and four at-large members appointed to fixed terms
selected from the remaining hoteliers. This board may be appointed at any time prior to the
completion of the public hearing.
In June 2005, the City Council added $33,500 to the 2005-06 operating budget to provide
funding to CCVB for legal documents and marketing studies related to the BID. The funds
advanced to CCVB to support the BID formation efforts will be repaid to the City from CTBID funds when they become available.
Various members of the City Council have raised the question of how the creation of the
CTBID affects the ongoing funding of tourism promotion programs by the City. The action
before the Council does not address this question. If the CTBID is successfully formed,
Council should provide additional direction to staff on how to adjust the tourism promotion
programs currently supported by the City's general fund. Funding for existing promotion
programs will expire on October 31 , 2005, unless amended by the City Council.
ENVIRONMENTAL REVIEW:
The process leading to the potential formation of a Business Improvement District and the
actual formation of the Business Improvement District is not a project within the meaning of
the California Environmental Quality Act (CEQA). For CEQA purposes, a project does not
include the creation of government funding mechanisms or other government fiscal
activities which do not involve any commitment to any specific project which may result in a
potentially significant physical impact on the environment. No such specific projects are
proposed and there is no known or foreseeable potentially significant physical impact on the
environment. (CEQA Regulations, Regulation No. 15378(b)(4)).
FISCAL IMPACT:
The fiscal health of the BID will depend on a balance of available revenues and the
proposed improvements and activities undertaken. The revenue side of the equation is tied
to the number of occupied room-nights within the City.
Carlsbad has 35 hotels with approximately 3,600 hotel rooms within the city limits. Although
the City does not have data on the number of occupied room-nights throughout the year,
applying a rough approximation provides the City Council with an idea of the magnitude of
the revenue the BID may be capable of generating.
If it is assumed that Carlsbad hoteliers experience a 66% occupancy rate, there would be a
total of approximately 874,000 occupied room nights each year. If the BID assesses $1 .OO
per occupied room night to each hotelier, the BID could raise in excess of $874,000 in
revenue to be dedicated to tourism promotion activities.
An additional consideration is that during 2004-05 the City of Carlsbad provided $508,000 in
funding for tourism promotion through the CCVB and the San Diego North Convention and
Visitors Bureau. In addition, the City Council has authorized continuation of funding for
both bureaus at 2004-05 levels during the first two months of 2005-06.
The City Council should consider direction to staff regarding the level of funding, if any, that
should be provided to CCVB and San Diego North Convention and Visitor's Bureau from
the general fund following the creation of the CTBID.
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EXHIBITS:
1. Resolution No. 2005281 a resolution of intention of the City Council of the City of
Carlsbad, California, declaring the intention of the City Council to establish the
Carlsbad Tourism Business Improvement District (CTBID), fixing the time and place
of a public meeting and public hearing thereon and giving notice thereof.
DEPARTMENT CONTACT: Ron Ball, (760) 434-2891 , e-mail: rball@ci.carlsbad.ca.us and
Cynthia Haas, (760) 602-2732, e-mail: chaas@ci.carlsbad.c.us
b
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RESOLUTION NO. 2005-281
A RESOLUTION OF INTENTION OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD, CALIFORNIA, DECLARING THE INTENTION OF THE CITY COUNCIL
TO ESTABllSH THE CARLSBAD TOURISM BUSINESS IMPROVEMENT DISTRICT
(CTBID), FIXING THE TIME AND PLACE OF A PUBLIC MEETING AND PUBLIC
HEARING THEREON AND GIVING NOTICE THEREOF
WHEREAS, the City of Carlsbad is interested in establishing a Business
Improvement District (“BIDn) which shall be called the Carlsbad Tourism Business
Improvement District (CTBID) and levying an assessment on hotels within the Carlsbad
Tourism Business Improvement District boundaries, and
WHEREAS, the Parking and Business Improvement Area Law of 1989 Section
36500 et seq. of the Streets and Highways Code authorizes cities to establish parking
and business improvement areas for the purpose of promoting tourism, and
WHEREAS, hotel owners within the Carlsbad Tourism Business Improvement
District (CTBID) have requested the Carlsbad City Council to establish such an
improvement area, and
WHEREAS, the Carlsbad Convention and Visitors Bureau (CCVB) has facilitated
the request to form the CTBlD and the Clty of Carlsbad desires to establish an Advisory
Board to make reports and recommendations to the City Council regarding the activities
provided by the proposed CTBID;
NOW THEREFORE BE IT RESOLVED the City Council of the City of Carlsbad
does hereby resolve, determine and find as follows:
1.
2.
The recitals set forth herein are true and correct.
The City Council declares its intention to establish the Carlsbad Tourism
Business Improvement District and to levy and collect assessments within the CTBID
boundaries pursuant to the Parking and Business Improvement Area Law of 1989,
Streets and Highways Code Section 36500 et seq. The boundaries of the CTBID shall
be the boundaries of the City of Carlsbad.
Improvement District.
The City Council intends to form a BID to administer marketing and visitor
programs to promote the City of Carlsbad as a tourism visitor destination and to fund
programs and activities that benefit hotels within the boundaries of the district.
3. The name of the area shall be the Carlsbad Tourism Business
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5. The proposed CTBID will include all hotels within the boundaries of the
CTBlD boundaries. The assessment is proposed to be levied on all hotel businesses,
existing and future, within the City of Carlsbad based upon a flat fee of $1 .OO per
occupied room per night for all transient occupancies as defined in section 3.12.020(7)
of the Carlsbad Municipal Code. Except where funds are otherwise available, an
assessment will be levied annually to pay for the projects, programs and activities within
the district. The assessment wilt be collected monthly based on $1 .OO per occupied
room per night in revenues for the previous month. New hotel businesses within the
boundaries will not be exempt from the levy of assessment as authorized by Section
36531. Pursuant to the City of Carlsbad's transient occupancy tax ordinance,
assessments pursuant to the CTBID shall not be included in gross room rental revenue
for purpose of determining the amount of the transient occupancy tax. As used in this
Resolution, "hotel" shall have the meaning defined in section 3.12.020(1) of the
Carlsbad Municipal Code. The proposed CTBID shall not include occupancies by any
federal or state officer or employee when on official business. The proposed CTBID
shall not include occupancies by owners in timeshare units, but shall include short-term
stays in timeshare units.
The CTBID proposed annual assessment in year one totals approximately
$874,000. The funds raised shall be spent to promote tourism within the boundaries of
the CTBID, pay for related administrative costs of the corporation, and to repay the loan
of $33,500 advanced to CCVB by the City Council pursuant to Resolution No. 2005-
094. Funds remaining at the end of any CTBlD term may be used in subsequent years
in which CTlBlD assessments are levied as long as they are used consistent with the
requirements of this Resolution.
The City of Carlsbad will collect the assessments monthly from the hotels
within the boundaries of the CTBID and receive an administrative fee of 2% of the
revenues collected, to reimburse it for those services. The City of Carlsbad will collect
the assessment on the same form as that used for the collection of Transient
Occupancy Tax receipts. The City of Carisbad Finance Director shall establish
accounting, auditing and receipting standards for the CTBID.
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8. The City Council shall make all appointments to the CTBID Advisory
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9. The CTBID Advisory Board shall submit an annual report, which shall
include a budget for operations and an identification of the marketing efforts to be
undertaken by the CTBID for the ensuing calendar year, to the Carlsbad City Council
pursuant to Section 36533.
10. The time and place for the public meeting for comments on the proposed
CTBID and the levy of the assessments is set for October 11 , 2005 at 6:OO p.m. at the
City of Carlsbad, City Council Chambers, City Hall, 1200 Carlsbad Village Drive,
Carlsbad, California.
The time and place for the public hearing to establish the CTBID and the
levy of the assessments is set for November 8, 2005 at 6:OO p.m. at the City of
Carlsbad, City Council Chambers, City Hall, 1200 Carlsbad Village Drive, Carlsbad,
California.
12. At the public hearing the testimony of all interested persons for or against
the establishment of the area, the extent of the area, or the furnishing of specified types
of improvements or activities will be heard.
A protest against the establishment of the CTBID, the extent of the CTBID,
and the furnishing of a specified type of improvement or activity, as provided in Section
36524, may be made in writing. To count in the majority protest against the CTBID, a
protest must be in writing. A written protest may be withdrawn from writing at any time
before the conclusion of the public hearing. Each written protest shall contain a written
description of the business in which the person signing the protest is interested,
sufficient to identify the business and its address. If the person signing the protest is not
shown on the official records of the City of Carlsbad as the owner of the business, then
the protest shall contain or be accompanied by written evidence that the person is the
owner of the business. If the owner of the business is a corporation, LLC, partnership
or other legal entity, the authorized representative for the entity shall be authorized to
sign the protest. Any written protest as to the regularity or evidence of the proceedings
shall be in writing and clearly state the irregularity or defect to which objection is made.
Written protests must be received by the City Clerk of the City of Carfsbad before the
close of the hearing scheduled herein and may be delivered or mailed to the City Clerk,
City of Carlsbad, 1200 Carlsbad Village Drive, Carlsbad, California, 92008.
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14. If at the conclusion of the public hearing, there are of record, written
protests by the owners of the businesses within the CTBID that will pay fifty percent
(50%) or more of the total assessments of the entire CTBID, no further proceedings to
create the CTBID shall occur for a period of one year from the date of the finding of a
majority protest. New proceedings to form the CTBID shall not be undertaken again for
a period of at least one (1) year from the date of the finding of the majority written
protest by the City Council. If the majority of written protests is only as to an
improvement or activity proposed, then that type of improvement or activity shall not be
included in the CTBID.
Further information regarding the proposed Carlsbad Tourism Business
Improvement District may be obtained from the City Clerk, City of Carlsbad, 1200
Carlsbad Village Drive, Carlsbad, California, 92008.
The City Clerk is instructed to provide notice of the public hearing as
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follows:
a. Publish this Resolution of Intention in a newspaper of
general circulation in the City of Carlsbad once, at least seven (7) days
before the hearing.
b. Mail complete copy of this Resolution of Intention to each
and every business owner proposed to be assessed in the CTBID within
seven (7) days of the adoption of this Resolution by the City Council.
This resolution shall take effect immediately upon its adoption by the City
Council, and the City Clerk shall certii to the vote adopting this resolution.
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PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council
held on the 13th day of September 2005 by the following roll Call
vote, to wit:
AYES: Council Members Lewis, Hall, Kulchin, Packard
NOES: None
ABSENT: Council Member Sigafoose
CLAUDE A. LEWIS, Mayor
ATTEST:
LORRAINE M. WOOr);-eity Clerk
Karen R. Kundtz, Assistant City Cle (SEAL)
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Carlsbad TourismCarlsbad TourismBusiness Improvement DistrictBusiness Improvement District(CTBID)(CTBID)101
CTBID CTBID Key ComponentsKey ComponentsParking and Business Improvement Area Law of 1989.Defined Assessment Area.Annual Assessment AmountFunding for specific activitiesPublic Hearing ProcessAdvisory Board
CTBID Assessment AreaCTBID Assessment AreaExisting Hotel BusinessesNew Hotel BusinessesShort-term non-owner occupied Time Share Units.
CTBID AssessmentCTBID AssessmentProposed rate of $1.00 per Room Night Occupied for all transient occupancies.City to receive 2% of assessment revenues collected for reimbursement of administrative expenses.Annual Assessment (re) established each year by City Council.Unused CTBID assessment revenues may be carried over to following year.
Funding of Specific ActivitiesFunding of Specific ActivitiesLaw permits the funding of activities related to tourism within the boundaries of the District.Budget Recommendation from Advisory Board.Subject to approval of the City Council.
CTBID HearingCTBID HearingProcessProcessResolution of Intention –Sept 13, 2005Public Meeting -Oct 11, 2005Public Hearing –Nov 8, 2005 (Introduce ordinance)Adoption of Ordinance –Nov 15, 2005Effective date of CTBID –Jan 1, 2006
CTBID Advisory BoardCTBID Advisory BoardAppointed by the City CouncilCouncil may act as its own Advisory BoardCouncil may appoint a existing BoardCouncil may appoint a new BoardAdvises Council on all issues related to the CTBIDSubmits Annual Report to City Council.Submits Annual Budget to City Council.Proposes any changes to the boundaries, assessment formulae, activities, etc…General oversight of the BID Operations
CTBID (Under 1989 Law)CTBID (Under 1989 Law)City City CouncilCouncilBID BID Advisory Advisory BoardBoardCouncil ApprovesAnnual BudgetSets Annual Assessment•Submit Annual Budget •Submit Annual Report to Council•General oversight of the BID operationsDutiesDesignated SeatsRecommended Composition of BoardRecommended Composition of BoardCouncil Appoints BID Board Recommendations to Council Submit Annual Report •1 La Costa –Permanent•1 Four Seasons –Permanent•1 Grand Pacific –Permanent•4 Other TOT Generators:•2 Rotates every 4 years (2 year initial term)•2 Rotates every 4 years