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Home My WebLink About2019-02-28; Business Improvement District Information; Rocha, LauraTo the members of the: Ac u.J[cc L i COUNCIL Datet 10i cM_:J_coo ✓ Council Memorandum February 28, 2019 To: From: Via: Re: Honorable Mayor Hall and Members of the City Council Laura Rocha, Administrative Services Di~fct~ Elaine Lukey, Chief Operations Officer tv Business Improvement District Information {cityof Carlsbad The purpose of this Memorandum is to provide information related to Business Improvement Districts (BID) in general and within the City of Carlsbad. Background In general, a BID is a geographically defined area within a city, in which services, activities and programs are paid for through a special assessment, which is charged to all members within the district to equitably distribute the benefits received and the costs incurred, to provide the agreed-upon services, activities or programs. The assessment money is collected by the city through a special contractual agreement between the city and the BID. Because the assessment funds collected in a given district cannot legally be spent outside of that BID, the city creates a trust fund for each BID, with funds periodically released to support operations. Some BIDs are independent of local government, having almost complete autonomy to finance, construct, and manage specific projects, while others are dependent on local government, created only to raise revenue for certain activities or projects. Cities often support BIDs to assist business owners in funding activities and improvements to promote their individual business districts. BIDs can: • Advocate and lobby on behalf "of businesses within the BID • Generate financing for capital improvements or for i-nf-=-r-a-st_r_u-ct_u_r_e_a~lt-e-ra-t--,-io_n_s-~ • Commission research and marketing services, promote businesses in the area • Provide welcoming services and extra security for public spaces and private businesses • Embark on integrated planning efforts The legalities of forming a BID vary from state to state, but the organizations are often created by the approval of a majority of local businesses and property owners, by those who control a majority of the land area, or by owners responsible for the majority of the fees assessed. Administrative Services Department 1635 Faraday Center I Carlsbad, CA 92008 I 760-602-2430 t Memo ID #2019018 Honorable Mayor Hall and Members of City Council Feb.28,2019 Page 2 Discussion The City of Carlsbad has two BIDs; the Carlsbad Tourism Business Improvement District {CTBID) and the Carlsbad Golf Lodging Business Improvement District {CGLBID). BID Formation Process 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). Both of the city's existing BIDs were formed under Section 36500 of the California Streets and Highways Code. The following is the process to form a BID under section 36500 of the California Streets and Highways Code: Resolution of Intention -City Council institutes the establishment of the BID by adoption of a Resolution of Intention {ROI) which states the area of the district, the boundaries, the name, the type of improvements and activities to be funded by the levy, the method and basis of levying the assessment. 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 BID, and levy the assessments. At the Public Meeting, the public will be given an opportunity to hear a report on the BID and provide their comments on the formation of the BID. Public Hearing: Subsequent to the Public Meeting, the City Council will hold a Public Hearing on the BID. The purpose of the Public Hearing is for the City Council to take testimony of all interested persons for or against the establishment of the BID, the extent of the areas 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 BID, 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 that time, there are protests by the owners of the businesses within the BID that will pay fifty percent {50%) or more of the total assessments of the entire BID, no further proceedings to create the BID 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 ofthe BID, then that activity shall not be included in the BID. If there are no protest votes in excess of the 50% requirement, then the City Council may create the BID. BID Advisory Committee: The Parking and Business Improvement Area Law of 1989, requires an Advisory Board to 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 BID Advisory Board would be required to submit an annual report, which would include any Honorable Mayor Hall and Members of City Council Feb. 28, 2019 Page 3 proposed changes in the boundaries, assessment formula, estimated cost of conducting activities, the amount of surplus/deficit revenues to be carried over, contributions and other items of interest to the BID 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 ROI 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 ROI. History of CTBID For almost 50 years the City of Carlsbad financially supported community promotion and visitor services as a way to develop tourism and assist Carlsbad visitors. Then in 2005, the city was approached by the Carlsbad Convention and Visitor's Bureau and Carlsbad hoteliers to form a Carlsbad Tourism Business Improvement District (CTBID). The proposal to form the CTBID was based on the concept of collecting a flat fee of $1.00 per occupied room per night for all transient occupancies as defined in section 3.12.020(7) of the Carlsbad Municipal Code. The assessment is 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 levy is imposed on all existing and future hotels. On Nov. 15, 2005, the City Council adopted Ordinance No. NS-778, establishing the CTBID, and setting the boundaries, levy, and establishing an advisory board to provide oversight and recommendations to the City Council. The effective date for the CTBID was Jan. 1, 2006. History of CGLBID In April 2012, Grand Pacific Palisades Hotel and the Carlsbad Sheraton which are both part of Grand Pacific Resorts (GPR), proposed formation of a new voluntary BID for Carlsbad, to be called the Carlsbad Golf Lodging Business Improvement District (CGLBID). The purpose of the CGLBID is to promote golf-related tourism within the boundaries of the CGLBID, as well as marketing related capital improvements such as golf-related signage, golf related equipment and to pay for related administrative costs. This district is separate from the existing CTBID. The CGLBID includes all hotel businesses in the City of Carlsbad that have elected to participate in the district. These properties have until May 1 of each year to opt in to the district for the following fiscal year. Members that opt in are assessed a flat fee of $2.00 per occupied room for all transient occupancies as defined in section 3.12.020(7) of the Carlsbad Municipal Code. The assessment is separately stated from the amount of rent and other taxes charged, and each transient shall receive a receipt for payment from the operator. Each assessed business determines how to spend the funds collected by their respective property provided the expenditures are for an approved golf related expense. Reimbursement of these expenses are made quarterly upon approval from the advisory board up to the amount collected per property minus a 4 percent administrative fee. On Nov. 15, 2012, the City Council adopted Ordinance No. CS-194, establishing the CGLBID, and setting the boundaries, levy, and establishing an advisory board to provide oversight and recommendations to the City Council. The effective date for the CGLBID was Jan. 1, 2013. Currently there are six hotels that have Honorable Mayor Hall and Members of City Council Feb.28,2019 Page 4 opted into the CGLBID: the Sheraton Carlsbad, Grand Pacific Palisades, Park Hyatt Aviara, Carlsbad by the Sea, Omni La Costa and the Westin Carlsbad. It should be noted that patrons who stay at one of the six hotels listed above will pay both the CGLBID and the CTBID fee assessment for a total of $3.00, separately listed as such. Attached to this memo are the fiscal year 2018-19 annual reports for the CGLBID and the CTBID. These reports, in addition to meeting agendas and minutes, can be found on the city's website located here: http://www.carlsbadca.gov/cityhall/clerk/meetings/boards/default.asp. cc: Celia Brewer, City Attorney Scott Chadwick, City Manager Elaine Lu key, Chief Operations Officer Sheila Cobian, City Clerk . . Carlsbad Golf Lo~ging Business irnproyement Oistrkt (CGLBIP) A11n.~'1l Report . 2013:.~019 Method of Assessment: TheCGLBID ioch.ides all hotel busiriessesjnthe <;itYof Carlsbad that haye . elect~d to ~artidpiite in the district. The assessment shall be levi'ed on all hotel businesse·s, that have elected to participate ihthedistrict,Vi/ithin the City of Carlsbad based upon aflaHee of $2.00 per occupied room per night fqr ail tr~iisl~ht occupancies <;1s defined in section 3.12JJ20{7) of the Carlsbad Municipal Code. Tnearnouritof assessment shall be separately stated from the amount of the rent and other taxes charged> an.ct ~achtr;;1ri5ient shall receive a receipt for payment from the operator. The assessment will be remitted monthly, based on $2.00 per occupied room per riightin revenues for the previous month. Assessment Funding Purpose; The proceeds ofthe CGLBID assessment shall be spent to promote goifoteiated tourism within the boundaries of the CGLB.!D, c!S well as marketing, related cl;ipital imprqvements such as golf-related signage, golf related equipment and to pay for relc!ted adctiinjstrative costs. · · ·· · · · · 2017-18 Work Plan: The CGlJtlP was established in January 1; 201,3. Fc,r the initial period the district, Fiscal Year2.012i-'201.3 {1/1/13-6/30/13) and the next fiscal yej;ir2013~14,. three hotels;. the Sheraton Carlsbad; the Park fly~ftAviara and the Grand Pacifrc Palisades Hotel, opted ftifo the district. In 2014-lSthe Carlsbad by the Sea Resort opted into the district, and ih 2017-18 QJJ1ni La Costa Resort Opted info the djstrict. these five hotels are et(pected to collect a total qf $700~Q0Q in CGLB_IO Assessments in Fiscal Yea,r 2017-18. Each assessed busirress determine$ how to speod the funds collected by their respective property p:rovic:led the expendftures are for an approved golf ~elated expense. Reimbursement of these exp'=!J1ses a:re made quarterly upon approllal from toe <!dvisory board up to the amount collected per property minus administrative fees. The administrative fees pay for the collection bf assessments a.nd administration of the district. M<;>nies not spent by th'= end of the fiscal year will carry forward to the ,,:ext fiscal year. For Fisc.al Year 2018~ 19, theWest1n Carlsbi!d R.esort & Spa has elected to participate in the district so the districtwill have six hotels as Fiscc;1JYear 2_01s:.:1g. It is estimated that these sfx hotelsWill collecta tqfal of $826,000 in CGLBID assessments, Based oh this revenue estitnate, the btJcigeted amo1.:mt forreimbursement to the hotels is $793,000. · This amount plus any c~rry forwards-from the previous fiscal year will be available to the assessed hotels for reii:nburseinent. Admini~trative fees for Fiscal Year 2018~l,9 are budgeted at $33,000, which is4% of the revenues. Detail of the 2.01.8-19 budget i$ shown on the following.page. . . 2018-19CGL8ID Budget 2016-16 2016-17 2017-18 Actuals as of Projected Recommended .;Program Areas Description Actuals Actuals: Budget 4/30/2017 2017-18 Actuals 2018-19 Budget CarryoverF1md Balanc.e $149,264 ·$1.69,707 $136,587 . 136,587 136,587 361,247 , .. Revenues: CGLBID-Assessment • $2 per room ri19hl 428,675 428;949 700,000 566,074 700,000 826,000 Interest Earnings 2,263 786 0 3,441 4,000 0 Total EstimatedRevenues 430,958 429,735 700,00Q 5.69,515 704,000 826,000 Exgeaditure!;i: . 2%AdmJn0Fee -City For collectio.n 9fCGL!;l!P ~ssiassmenland' accounting for. CGLBI.O -2%-of CGLBiO assessment revenue· 8;574 8,579 . 14,000 8,5i'6 14,000 16,500 · Reimbursemer;its Reimbursementtomember hotels for golf related 4<1s;s1s · 672;000 . exp.et1ditures 392354 451 ,340 451,340 793,000 .1, . '$taffsupporf Staffsµpport 1◊ the CGl::BID-'2% of CG I.Bid assessment revenue 95137 ·. 8;759 .. 14 000 . 6,965 14 000 16,500 Total;Expenses 410;1i15 462;854 . 100;000 .. .466,861 . 479,340 826,000 · J:nding.Fund Balance . Contingency'for gf;!venue .. shortfall .$169;707 . $136,567 $136;587: . -$239,222 . 361.,247 361,247 * Member hotels for FY2014~-1:5tnr4 .. P( 2016~17includa Sheraton Carlsbad, Park Hyatt;t\lliafa,. Grand.Pacific-Palisades, and Carlsbad liiythe Sea Resort. • Member hotels.forFY2Q17-1B inc:lude Stieraton Carlsbad, Parl< Hyatt Avlara, Grand Pac;jficf!alisad~s. Ca.rlsbad·bythe Sea Resort; and Omni La Costa Resort: • Member hotels for FY~W1lh19 indud1:1 Sheraton Carlsbad, Patk Hya:ttAiliara, Gtand;P-adfic Palisades, Carlsbad by the S.ea Resort, Omni La Costa:Res.ort andWestin Carlsbad. Carlsb.ad Tourism and Business hnprovement District(CTBID) Annual Report · 2()18-2019 MethodofAssessment: Th$ CTBID includes all hotel businesses located within the OTSID l:iounct~ties. The assessment shall be levied ori allhqtel businesses, exisJing and future, within the City of Carlsbad based upon a flat fee of$1 .. OQ per occupied room per night for a.II transient occupancies as defined in sectlon 3.12.020(7) of the Carlsbad Municipal Code. The amount ofassessmerits.h$1Fbe separately stated from the amount of the rent and other taxes charged, and each tri1nsient shall receive a receipt for payment from the operator. The assessment wm he remitted monthly, based on $1.00 per occupied room per night ;n revenues for the previous month. Assessment Funding Purpose: To· admihister marketing and visitor programs to ptomotethe CityofCarlsbacfas a tourisrnvisitordestination and to fund projects, programs, arid activities, including appropriate administrative charges that benefit hotels within the boundaries of the District. 2017'-18 Work Plan: Last fiscal yecir, the CTBID contracted with Carlsbad Cqr,vention and Visitors Bureau (dba Visit Carl$:ba,d) to provide tourism marketing services for Carlsb~o; In addition; $110,000 in grants were awarded to fund projects and events io increase the overnight stays in Carlsbad hotels. The CTBIO 201 E3,.t9 budgetincludes $1 ;266,600 ln fllriding for Visit Carl$bad. The s.enlices provided will focus primarily on driving d.ernand in the [eisute market dqring tne off peak season. The majority of this will be done by interactive marketing and.group sales. For the first time; VisitCarlsbad will also be conducting a Spring integrated advertising campaign. Visit Carlsbad will conJractwith a public relations firm to continue branding Carlsbad. Funding also includes 111~r;iagirig the visitor center and publications. The Visit Carlsbad Board will review the CTBID grant ai:>plicants and make the funding recommendations, for which there is $200;00() allocated this Year, to the CTBID Board. Detail of the 2018,.19 budget is shown on the fblloWing page. .. ~01'8-19Recori"imended-CTBID Budget. 2014~15 2015~16 2016-17 . 2017~f8 2011-18 Actuais Projected Recommended Program Areas• ·Descr.lotton -Actuals Actuals Actuals Budget as of 4/30/18 ·· 2017-18 Actuals 2018-19 Budget c.anyover Fund: Balimce $280;435 . $537,435 $655,774 $722,331 122:331 722,331 1347,676 Revenues: CT:Blt:>.Asse~smerit $.t perrnom nlg_l\t 1,1.0.4,6811 . 1,167,716 . 1,205,851 ·1,200,000 838;274 1,228,000 1,320,000 Interest Earnlhg_s 3,718 · 10,442 1,658 9iOt2: 9,000 Jo.tal Estimated'f~evenues, 1,108,466 1,178,158 1,207,509 1,200,000 ' 847,286 1,237,000 1,320,000 Ex_Qendliores: · .2% Adrrilo; Fee -City 2%-of,CTBID assessment revemie, for co!le,ctlQn of:CTEil.D 22;093 23-,336 24,QOO • 24,560 26,400 assessment and accounting forCTBID .24,116 16,479 COVB Payment To operate vis.lier center, market and promote Carl$bild 766;538 893,463 978,6.12 1, 152,5~5 • 13~0;077 1;152,535 1,266,600 • Staff support Staff suppo[i fo the CTBID -2o/a ·of rever,Ueso 22,,835 33,523 · · ·19,224. 21,ocici • 11;a10 24,560 26,400 CTBID Grants Graniprogram esiablished by CTBID Board 40,000 109,497 119;000 150 000 33;011 110 000 200,000 Total. 'Expenses 851,466 1.,059,81,~ . 1;140,952 1,350,535 · 896;885 1,311,655 1,519,400 Endhig Fund Bc1l,mce •C.ontlngency for Revenue shoit(all· · . $iiat,435 · · .$6'55,774 $722;331 $571,71:)6 . · $672;732 -647,676 448,276