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Home My WebLink About2022-06-07; City Council; ; Fiscal Year 2022-23 Annual Report of the Carlsbad Tourism Business Improvement District, and Resolution of Intention to Levy an Annual Assessment Into the Next Fiscal YeaCA Review CKM Meeting Date: June 7, 2022 To: Mayor and City Council From: Scott Chadwick, City Manager Staff Contact: Matt Sanford, Economic Development matt.sanford@carlsbadca.gov, 442-339-5987 Subject: Fiscal Year 2022-23 Annual Report of the Carlsbad Tourism Business Improvement District, and Resolution of Intention to Levy an Annual Assessment Into the Next Fiscal Year Districts: All Recommended Action Adopt a Resolution approving the fiscal year 2022-23 Annual Report of the Carlsbad Tourism Business Improvement District, declaring an intention to levy and collect annual assessments and setting a public hearing on the levying of the proposed assessments for 5 p.m. on June 21, 2022. Executive Summary The Carlsbad Tourism Business Improvement District Advisory Board is required to present an annual report for the City Council’s review and approval for each fiscal year for which assessments are to be levied and collected to pay the costs for the improvements and activities described in the report. Staff has prepared the report and it has been approved by the District’s Advisory Board. The City Council is being asked to approve the report, declare its intention to levy and collect assessments in fiscal year 2022-23, and set a public hearing on the levying of the proposed assessments. Discussion In 2005, the City Council adopted Ordinance No. NS-778 (Carlsbad Municipal Code Chapter 3.37) forming the Carlsbad Tourism Business Improvement District under the Parking and Business Improvement Law of 1989 (Cal. Streets & Highways Code, § 36500 et seq.). The ordinance initially authorized the levying of an assessment of $1 per room-night for each transient occupancy within the city. In 2020, the City Council amended the ordinance and increased the assessment to 2% of gross short-term room rental revenue for all transient occupancies within the city. The District’s Advisory Board is required to present an annual report for the City Council’s review and approval for each fiscal year for which assessments are to be levied and collected to pay the costs for the improvements and activities described in the report. This report was approved by the District’s Advisory Board at its May 18, 2022 meeting (Attachment A to Exhibit 1). June 7, 2022 Item #1 Page 1 of 7 In addition to approving the annual report, the City Council must adopt a resolution of intention to levy and collect assessments for the upcoming fiscal year. The proposed resolution (Exhibit 1) calls for a continued assessment of 2% of gross short-term room revenue for each transient occupancy within the city during fiscal year 2022-23. The City Council must also set the time and place for a public hearing on the levying of the proposed assessment. The public hearing must occur at least 10 days after the City Council adopts the resolution of intention. Staff recommends the City Council set the public hearing for 5 p.m. on June 21, 2022. At the public hearing, the City Council must consider any oral or written protests. Written protests must be submitted to the City Clerk at or before the time set for the public hearing. Written protests must contain sufficient information to identify the affected business and to show the person submitting the protest is the business owner. Following the public hearing, if there are written protests from affected business owners that will pay 50% or more of the assessments proposed to be levied, the City Council may not take any further action to levy the proposed assessments for one year. Fiscal Analysis The District will generate approximately $5,600,000 in revenue in fiscal year 2021-22. The costs incurred by the District during this same period are approximately $3,267,000. The projected fund balance at the end of fiscal year 2021-22 is $4,173,227. For fiscal year 2022-23, the District has estimated revenues of $5,700,000 and a budget of $6,778,170, with a projected fund balance of $3,095,057 on June 30, 2023. Next Steps The City Clerk’s Office will publish the resolution of intention in a newspaper of general circulation in the city at least seven days before the public hearing. The public hearing on the renewal of the assessment will be held at 5 p.m. at the City Council meeting on June 21, 2022. Environmental Evaluation (CEQA) This action does not constitute a “project” within the meaning of the California Environmental Quality Act under Public Resources Code Section 21065 in that it has no potential to cause either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment and therefore does not require environmental review. Public Notification This item was noticed in accordance with the Ralph M. Brown Act and was available for public viewing and review at least 72 hours prior to the scheduled meeting date. Exhibits 1. City Council resolution June 7, 2022 Item #1 Page 2 of 7 RESOLUTION NO. 2022-122 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, APPROVING THE CARLSBAD TOURISM BUSINESS IMPROVEMENT DISTRICT ANNUAL REPORT, DECLARING AN INTENTION TO LEVY AND COLLECT AN ANNUAL ASSESSMENT AND SETTING A PUBLIC HEARING FOR 5 P.M. ON JUNE 21, 2022 EXHIBIT 1 WHEREAS, the Carlsbad Tourism Business Improvement District (CTBID) was formed in accordance with the Parking and Business Improvement Area Law of 1989 (Cal. Streets and Highways Code, § 36500 et seq.); and WHEREAS, the CTBID boundaries are the boundaries of the City of Carlsbad; and WHEREAS, the CTBID Advisory Board must present an annual report to the City Council for approval for each fiscal year for which assessments are to be levied and collected to pay the cost for the improvements and activities described in the report; and WHEREAS, the CTBID Advisory Board submitted an annual report (Attachment A) to the City Council for fiscal year 2022-23; and WHEREAS, after the City Council approves the annual report, the City Council must adopt of resolution declaring its intention to levy and collect assessments for fiscal year 2022-23; and WHEREAS, the assessments will generally be spent to administer marketing and visitor programs to promote the City of Carlsbad as a tourism visitor destination and to fund projects, programs, and activities, including appropriate administrative charges, that benefit hotels within the CTBID boundaries; and WHEREAS, the amount of the proposed assessments and a full and detailed description of the activities to be conducted and funded in fiscal year 2022-23 are included in Attachment A. 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 annual report (Attachment A) is approved as submitted by CTBID Advisory Board. 3.That for fiscal year 2022-23, the City Council intends to levy and collect an assessment of 2% of gross short-term room revenue for each transient occupancy in the city. June 7, 2022 Item #1 Page 3 of 7 ' 4.Notice is hereby given that a public hearing is scheduled for 5 p.m. at the City Council Chambers located at 1200 Carlsbad Village Drive in Carlsbad, California on the following date: Tuesday, June 21, 2022 5.That at the public hearing, the City Council will consider any oral or written protests to the levying of the assessments. Written protests must be submitted to the City Clerk's Office at or before the time set for the public hearing. Written protests must contain sufficient information to identify the affected business and to show the person submitting the protest is the business owner or is speaking on behalf of the business owner. Following the public hearing, if there are written protests from affected business owners that will pay 50 percent or more of the proposed assessments, the City Council will not take any further action to levy the proposed assessment for one year. 6.That the City Clerk's Office is directed to give notice of the public hearing by causing this resolution of intention to be published once in a newspaper of general circulation in the city not less than seven days before the public hearing. PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of Carlsbad on the 7th day of June, 2022, by the following vote, to wit: AYES: NAYS: ABSENT: Hall, Blackburn, Bhat-Patel, Acosta, Norby. None. None. MA� FAVIOLA �rk sei::: Manager (SEAL) June 7, 2022 Item #1 Page 4 of 7 ATTACHMENT A Carlsbad Tourism and Business Improvement District (CTBID) 2022-2023 Annual Report Method of Assessment: The CTBID includes all hotel businesses located within the CTBID boundaries. The assessment shall be levied on all hotel businesses, existing and future, within the City of Carlsbad based upon a rate of 2% of gross short-term room revenue for all transient occupancies as defined in section 3.12.020(7) of the Carlsbad Municipal Code. The amount of assessment shall be separately stated from the amount of the rent and other taxes charged, and each transient shall receive a receipt for payment from the operator. The assessment will be remitted monthly, based on 2% of gross short-term room revenues for the previous month. Assessment Funding Purpose: To administer marketing and visitor programs to promote the City of Carlsbad as a tourism visitor destination and to fund projects, programs, and activities, including appropriate administrative charges that benefit hotels within the boundaries of the District. 2021-22 Work Plan: Last fiscal year, the CTBID assessment generated approximately $5,600,000 in revenue. The CTBID contracted with Carlsbad Convention and Visitors Bureau (dba Visit Carlsbad) to provide tourism marketing services for Carlsbad. In addition, $80,000 in grants were awarded to fund events to increase the overnight stays in Carlsbad hotels. The CTBID 2022-23 budget includes a funding level of $5,114,000 for Visit Carlsbad. This increased funding level is the result of the increase in assessment revenue due to the modification of the assessment rate from $1 per room night to 2% of gross short-term room revenue as well as a post pandemic rebound in the tourism economy. The services provided by Visit Carlsbad will focus on marketing efforts. The majority of this will be done by through promotional programs and group sales. Visit Carlsbad also has plans to hire a Finance and Administration Manager, Business Development Coordinator, Marketing/ Communications Coordinator, and an administrative assistant during Fiscal Year 2022-23. The CEO will help develop a business plan for Visit Carlsbad’s future. The Visit Carlsbad Board will also review the CTBID grant applicants, for which there is $1,500,000 allocated this year, and make the funding recommendations to the CTBID Board. Detail of the 2022-23 budget is shown on the following page. June 7, 2022 Item #1 Page 5 of 7 2022-23 Recommended CTBID Budget 2019-20 2020-21 2021-22 2021-22 Actuals Projected Recommended Program Areas Description Actual Actual Budget as of 2/28/22 2021-22 Actuals 2022-23 Budget Carryover Fund Balance Fund Balance $640,318 $617,139 $1,840,227 1,840,227 1,840,227 4,173,227 Revenues: CTBID Assessment 2% of Room Revenue (was $1 per room night prior to 11/1/20)1,088,860 1,867,248 3,600,000 3,938,526 5,600,000 5,700,000 Interest Earnings 21,384 17,327 Total Estimated Revenues 1,110,244 1,884,575 3,600,000 3,938,526 5,600,000 5,700,000 Expenditures: 2% Admin. Fee - City 2% of CTBID assessment revenue, for collection of CTBID assessment and accounting for CTBID 21,045 37,344 72,000 72,401 112,000 114,000 CCVB Payment To operate visitor center, market and promote Carlsbad 1,040,326 576,425 3,000,000 1,222,080 3,000,000 5,114,170 Staff support Staff support to the CTBID 20,438 17,718 50,000 10,996 25,000 50,000 Professional Services Civitas Contract 32,960 50,000 50,000 CTBID Grants Grant program established by CTBID Board 18,654 30,000 100,000 80,000 1,500,000 Total Expenses 1,133,423 661,487 3,272,000 1,305,477 3,267,000 6,778,170 Ending Fund Balance Contingency for Revenue shortfall $617,139 $1,840,227 $2,168,227 $4,473,276 4,173,227 3,095,057June 7, 2022Item #1 Page 6 of 7 Visit Carlsbad Expenses 2016-17 Actuals 2017-18 Actuals 2018-19 Budget 2019-20 Request Labor 348,088 406,478 422,051 434,324 Advertising Campaign 7,095 7,923 156,000 156,000 Digital MKtg 247,764 235,610 250,000 250,000 Group 184,259 198,967 301,100 194,500 PR Contract 95,099 224,353 185,000 190,000 G&A 27,911 29,323 35,649 30,676 Other promotion 35,725 39,929 41,800 42,500 945,941 1,142,583 1,391,600 1,298,000 37% Reserves 722332 June 7, 2022 Item #1 Page 7 of 7