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Home My WebLink About2022-05-18; Carlsbad Tourism Business Improvement District; ; Governance UpdateCARLSBAD TOURISM BUSINESS IMPROVEMENT DISTRICT Staff Report Meeting Date: May 18, 2022 Subject: Governance Update Recommended Action • Receive an informational update on the TBID governance structure and potential options, discuss, and provide recommendations • Adopt a resolution approving the proposed TBID Service Plan Item Explanation At the January 12 CTBID Advisory Board recommended the exploration of options to update the governance structure of the Carlsbad Tourism Business Improvement District (CTBID) to operate under the Property and Business Improvement District Law of 1994 ("94 Act"). It appropriated $50,000 to be used to analyze options and bring back a recommendation for co nsideration. Staff have retained outside legal counsel and a consultant, Civitas Advisors, to assist with the analysis and propose options for the CTBID Advisory Board to consider. Staff have been working with the consultant to analyze options and considerations as part of the due diligence, prior to making a recommendation to the CTBID Advisory Board. To better understand the desired outcome, the consultant has created a draft "Service Plan" (Attachment A to Exhibit 1) for consideration. The service plan set s the paramet ers t hrough which any new TBID would operate. Should the CTBID Advisory Board approve the proposed service plan, it will allow staff and the consultant to take the next steps in analyzing options. Fiscal Impact There is no fiscal impact at this time. Should the CTBID Advisory Board choose to recommend moving forward to a new governance structure, there may be a fiscal impact , which would be brought to the CTBID Advisory Board prior to consideration. Environmental Impact This action 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 in the environment, or a reasonably foreseeable indirect physical change in the environment. Exhibits 1. Resolution RESOLUTION NOT APPROVED RESOLUTION NO. A RESOLUTION OF THE CARLSBAD TOURISM BUSINESS IMPROVEMENT DISTRICT ADVISORY BOARD APPROVING A TBID SERVICE PLAN EXHIBIT 1 WHEREAS, the Carlsbad Tourism Business Improvement District (CTBID) was formed in accordance with the California Parking and Business Improvement Area Law of 1989 (California Streets and Highways Code Section 36500 et. seq.); and WHEREAS, on January 12, 2022, the CTBID Advisory Board recommended the exploration of options to update the CTBID governance structure; and WHEREAS, consultant Civitas Advisors prepared a proposed service plan (Attachment A) setting the parameter through which any new TBID would operate; and WHEREAS, approval of the service plan will aid staff and the consultant in analyzing governance options. NOW, THEREFORE, BE IT RESOLVED by the Carlsbad Tourism Business Improvement District Advisory Board as follows: 1. That the above recitations are true and correct. 2. That the proposed service plan (Attachment A) is approved. EXHIBIT 1 PASSED, APPROVED, AND ADOPTED at a regular meeting of the Advisory Board of the Carlsbad Tourism Business Improvement District on this 18th day of May 2022, by the following vote to wit: AYES: NAYS: ABSENT: ABSTAIN: TIM STRIPE, Chair FAVIOLA MEDINA, City Clerk Services Manager ••• • • CIVITAS ATTACHMENT A Carlsbad Tourism Business Improvement District Proposed Service Plan May 11, 2022 ASSESSMENT RA TE The annual assessment rate is two percent (2%) of gross short-term room rental revenue. ESTIMATED BUDGET Services % $ Sales & Marketing 80% $4,560,000 Grants Program 6% $342,000 Contingency/ Reserve 5% $285,000 Administration & Operations 7% $399,000 City Admin Fee 2% $114,000 TOTAL 100% $5,700,000 Although actual revenues will fluctuate due to market conditions, the proportional allocations of the budget shall remain the same. However, the CTBID Committee shall have the authority to adjust budget allocations between the categories by no more than fifteen percent (15%) of the tot albudgetperyea~ Each budget category includes all costs relat ed to providing that service. For example, the sales & marketing budget includes the cost of staff time dedicated to overseeing and implementing the sales &marketing program. Staff time dedicated purely to administrative tasks is allocated t o t he administrative portion of the budget. Th e costs of an individual staff member may be allocated to multiple budget categories. The st affing levels necessary to provide the services below will be determined by the CTBID Committee on an as-needed basis. PROPOSED SERVICES Sales & Marketing A sa les and marketing program will promot e assessed businesses as t ourist, meeting, and event destinations. The sales and marketing program will have a cent ral theme of promoting Carlsbad as a desirable place to visit overnight. The program will have the goal of increasing overnight visitation and room night sales at assessed businesses, and may include the following activit ies: • Intern et marketing efforts to increase awareness and optimize internet presence; • Print ads in magazines and newspa pers targeted at pot ent ial visitors; • Television ads targeted at potential visitors; ••• • • CIVITAS • Radio ads targeted at potential visitors; • Operation of a visitor's ce nter; • Development and implementation of a public relations and communications strategy, inclusive of social media outlets and press release distribution designed to increase overnight visitation at assessed businesses; • Attendance of trade shows; • Sales blitzes; • Familiarization tours; • Preparation and production of collateral promotional materials such as brochures, flyers and maps; • Attendance of professional industry conferences and affiliation events; • Lead generation activities designed to attract group events to Carlsbad; • Director of Sales and Sales Manager meetings to plan and coordinate group direct promotion efforts; and • Director of Marketing and Marketing Manage r meetings to plan and coordinate leisure promotion efforts. Grants Program The Grants programs will fund projects and events that increase overnight visitation to assessed businesses, as well as fund programs that alleviate challenges to maximizing occupancy rates . The objectives of the grant program are to: encourage the development of innovative tourism products; promote collaboration within and across sectors of the tourism industry; reach important travel segments such as multicultural, family and senior markets; strengthen the marketing capacity of partnering organizations; and combine the resources of the CTBID and its tourism partners to leverage their collective marketing efforts. Proj ects and events funded and approved by the CTBID must include a detailed plan for the return on investment (ROI), including but not limited to, the generation of room nights and general co mmerce for Carlsbad, and must also include a follow-up analysis. Administration and Operations The administration and operations portion of the budget shall be utilized for administrative staffing costs, office costs, advocacy and other general administrative costs such as insurance, legal, and accounting fees. Contingency /Reserve The budget includes a contingency line item to account for unco llected assessments, if any. If there are contingency funds collected, they may be held in a reserve fund or utilized for other program, administration or renewal costs at the discretion of the TBID Committee. Policies relating to contributions to the reserve fund, the target amount of t he reserve fund, and expenditure of monies from the reserve fund shall be set by the TBID Committee. The reserve fund may be used for the cost s of renewing the District. ••• • • CIVITAS TERM The CTBID will be formed for a five (S) year period, beginning January 1, 2023 through December 31, 2027. After five (5) years, the CTBID may be renewed if business owners support continuing the CTBID programs. GOVERNANCE Visit Carlsbad will serve as the Owners' Association for the CTBID. After formation of the CTBID, the Bureau's Board will create a "TBID Committee". The Committee will have full authority over the management of the CTBID funds and full decision-making authority regarding CTBID programs. The Committee will be comprised solely of the owners or representatives of assessed lodging businesses. BOUNDARY The CTBID will include all lodging businesses, existing and in the future, available for public occupancy within the boundaries of the City of Carlsbad. !Carlsbad, CA I 0 1$10 de Enclnllas \' I; .--------, C1f:J~~ _A_ ••• I O cal1SbadTBIOBoondal1e1 I ·y • civiTAS Governance Update Matt Sanford, Economic Development May 9, 2021 BACKGROUND •January 12: TBID Advisory Board approved exploration of conversion to ‘94 Act governance model •February 22: Governance Subcommittee met to provide initial input on process •March 25: Civitas Advisors was hired as consultant to support transition •April 25: Staff met with Civitas to create a timeline and review Draft Service Plan (Attachment A) •May 18: TBID Advisory Board to consider draft service plan DRAFT SERVICE PLAN •To better understand the desired outcome, the consultant has created a draft “Service Plan” for consideration. •The service plan sets the parameters through which any new TBID would operate. •Should the CTBID Advisory Board approve the proposed service plan, it will allow staff and the consultant to take the next steps in analyzing options. DRAFT SERVICE PLAN -BUDGET ASSESSMENT RATE The annual assessment rate is two percent (2%) of gross short-term room rental revenue. ESTIMATED BUDGET Services % $ Sales & Marketing 80% $4,560,000 Grants Program 6% $342,000 Contingency / Reserve 5% $285,000 Administration & Operations 7% $399,000 City Admin Fee 2% $114,000 TOTAL 100% $5,700,000 DRAFT SERVICE PLAN -SERVICES PROPOSED SERVICES Sales & Marketing A sales and marketing program will promote assessed businesses as tourist, meeting, and event destinations. The sales and marketing program will have a central theme of promoting Carlsbad as a desirable place to visit overnight. The program will have the goal of increasing overnight visitation and room night sales at assessed businesses. DRAFT SERVICE PLAN -SERVICES PROPOSED SERVICES Grants Program The Grants programs will fund projects and events that increase overnight visitation to assessed businesses, as well as fund programs that alleviate challenges to maximizing occupancy rates. The objectives of the grant program are to: encourage the development of innovative tourism products; promote collaboration within and across sectors of the tourism industry; reach important travel segments such as multicultural, family and senior markets; strengthen the marketing capacity of partnering organizations; and combine the resources of the CTBID and its tourism partners to leverage their collective marketing efforts. Projects and events funded and approved by the CTBID must include a detailed plan for the return on investment (ROI), including but not limited to, the generation of room nights and general commerce for Carlsbad, and must also include a follow-up analysis. DRAFT SERVICE PLAN -SERVICES PROPOSED SERVICES Administration and Operations The administration and operations portion of the budget shall be utilized for administrative staffing costs, office costs, advocacy and other general administrative costs such as insurance, legal, and accounting fees. DRAFT SERVICE PLAN -SERVICES PROPOSED SERVICES Contingency/Reserve The budget includes a contingency line item to account for uncollected assessments, if any. If there are contingency funds collected, they may be held in a reserve fund or utilized for other program, administration or renewal costs at the discretion of the TBID Committee. Policies relating to contributions to the reserve fund, the target amount of the reserve fund, and expenditure of monies from the reserve fund shall be set by the TBID Committee. The reserve fund may be used for the costs of renewing the District. DRAFT SERVICE PLAN -SERVICES TERM The CTBID will be formed for a five (5) year period, beginning January 1, 2023 through December 31, 2027. After five (5) years, the CTBID may be renewed if business owners support continuing the CTBID programs. DRAFT SERVICE PLAN -SERVICES BOUNDARY The CTBID will include all lodging businesses, existing and in the future, available for public occupancy within the boundaries of the City of Carlsbad. NEXT STEPS •Should the CTBID Agree on the factors discussed, staff would work with Civitas Advisors to ensure the appropriate considerations are factored into the final service plan •Once the draft service plan is approved, staff will work with the Governance Subcommittee to provide updates and solicit input and feedback throughout the development of the plan GOVERNANCE SUBCOMMITTEE CONSIDERATIONS •With a full 7-members participating, the TBID Advisory Board may choose to add an additional member to the Governance Subcommittee •Staff would propose that the subcommittee meet on a monthly basis RECOMMENDED ACTION •Adopt a resolution (Exhibit 1) approving the proposed TBID Service Plan