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HomeMy WebLinkAbout2023-03-07; City Council; ; Reestablishing the Carlsbad Tourism Business Improvement District Under the Property and Business Improvement District Law of 1994CA Review GH Meeting Date: March 7, 2023 To: Mayor and City Council From: Scott Chadwick, City Manager Staff Contact: David Graham, Chief Innovation Officer david.graham@carlsbadca.gov, 442-339-5992 Matt Sanford, Economic Development Manager matt.sanford@carlsbadca.gov, 442-339-5987 Subject: Reestablishing the Carlsbad Tourism Business Improvement District Under the Property and Business Improvement District Law of 1994 Districts: All Recommended Action Allow public testimony on the formation of the Carlsbad Tourism Business Improvement District under the Property and Business Improvement District Law of 1994 and the proposed levy of assessments on lodging businesses. Executive Summary The proposed Carlsbad Tourism Business Improvement District would assess fees from all of the hotels, motels, resorts and short-term vacation rentals in the city to pay for tourism promotion encouraging people to visit and stay in Carlsbad. On Feb. 7, 2023, City Council adopted Resolution No. [2023-049] declaring its intent to establish a new Tourism Business Improvement District under the Property and Business Improvement District Law of 1994. As part of the establishment process, a public meeting was scheduled for March 7 to allow for public testimony on the proposed assessments. Explanation & Analysis Background The current 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 in fiscal year 2020-2021 and has allowed for more robust tourism promotion. March 7, 2023 Item #8 Page 1 of 4 The statutory authority for the existing district was adequate in previous years, but now the district’s assessment, budget and capabilities have grown, and a majority of Carlsbad lodging businesses – which both pay and benefit from the assessment – have expressed their support to form a new Tourism Business Improvement District, with a more modern authorization structure. At its Jan. 12, 2022, meeting, the existing 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 establishing a new district under the Property and Business Improvement District Law of 1994, and disestablishing the existing district. Civitas Advisors, a business improvement district consulting firm was retained to assist with the process and worked with the Advisory Board and city staff to draft a Management District Plan, which was approved by the Advisory Board in July 2022. Information about the potential changes, including a summary of 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 begin the process of establishing a new district. At least 50% of the businesses that are assessed, as measured by revenue generated to the district, must submit petitions to form a new district under the 1994 law, and as of Jan. 31, 2023, the city received petitions in support of the change from 69% of the district’s assessment base. At its Feb. 7, 2023, meeting, the City Council adopted a resolution of intention to establish a new district under the 1994 law, setting the public meeting for March 7 and a public hearing for April 18, 2023. The full analysis of the benefits of transitioning from the statutory authority granted under the state’s Parking and Business Improvement Area Law of 1989 to the authority granted under the Property and Business Improvement District Law of 1994 can be found in the Feb. 7, 2023, staff report provided as Exhibit 1. Fiscal Analysis There is no immediate fiscal impact to the city from approving the establishment of the proposed Tourism Business Improvement District. The city will receive a fee of 2% of the amount collected to cover its costs of administration, consistent with its current practice. Because the district’s programs are intended to increase tourism and visits to Carlsbad, there may be a resulting increase in transient occupancy tax and sales tax collections. Next Steps Based on direction received, staff will proceed according to the following timeline. April 18, 2023 PUBLIC HEARING If written protests are received from the owners of businesses in the proposed Tourism Business Improvement District that will pay more than 50% of the assessments proposed to be levied, and protests are not withdrawn so as to reduce the protests to less than 50%, no further proceedings to form the district and levy the proposed assessment March 7, 2023 Item #8 Page 2 of 4 against such businesses may be taken for one year from the date of the finding of a majority protest by the City Council. If the City Council, following the public hearing, decides to establish the proposed Tourism Business Improvement District, the City Council may adopt a resolution of formation. July 1, 2023 DISTRICT ESTABLISHED If the resolution of formation is adopted, the five-year term of the proposed new Tourism Business Improvement District is to begin operations If the new Carlsbad Tourism Business Improvement District is formed, future City Council action will be necessary to disestablish the existing district, at which point staff will return to City Council to begin that process. In the interim, the existing Carlsbad Tourism Business Improvement District will continue to operate as authorized by the City Council. Environmental Evaluation This action does not require environmental review because it does not constitute a project within the meaning of the California Environmental Quality Act under California Public Resources Code Section 21065 in that it has no potential to cause either a direct physical change or a reasonably foreseeable indirect physical change in the environment. Exhibits 1. Feb. 7, 2023, City Council staff report (on file in the Office of the City Clerk) March 7, 2023 Item #8 Page 3 of 4 Exhibit 1 Feb. 7, 2023, City Council staff report (on file in the Office of the City Clerk) March 7, 2023 Item #8 Page 4 of 4