HomeMy WebLinkAbout2023-06-29; CTBID Establishment and Transition Update (Districts - All); Rocha, LauraTo the members of the:
CITY COUNCIL
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June 29, 2023
To:
From:
Via:
Re:
Council Memorandum
Honorable Mayor Blackburn and Members of the City Council
Laura Rocha, Deputy City Manager, Administrative Services .
David Graham, Chief Innovation Officer~
Geoff Patnoe, Assistant City Manager ~
CTBID Establishment and Transition Update {Districts -All)
{city of
Carlsbad
Memo ID# 2023063
This memorandum provides an update on the establishment of the Carlsbad Tourism Business
Improvement District under the Property and Business Improvement District Law of 1994.
Background
The City of Carlsbad established the Carlsbad Tourism Business Improvement District (CTBID) in
2005 to support the city's tourism businesses, a key local economic driver. The CTBID assesses
fees from all hotels, motels, resorts and short-term vacation rentals within the CTBID to pay for
tourism promotion encouraging people to visit and stay in Carlsbad.
This CTBID was created under the Parking and Business Improvement Area Law of 1989 (Streets
and Highways Code Section 36500 et. seq.) (89 Law) which requires the CTBID assessment s be
renewed each year, which can hinder long-term planning and continuity of operations.
In 2020, the CTBID, through a petition from the majority of the lodging businesses in the CTBID
and subsequent City Council action, raised the assessment from $1 per room night to 2% of the
daily room cost.
This assessment increase raised the CTBID's yearly budget from approximately $1.5 million to
approximately $6.5 million. This larger budget went into effect beginning fiscal year (FY)
2020-21 and has allowed for more robust tourism promotion.
Discussion
The statutory authority under the 89 Law for the CTBID was adequate in previous years. As the
CTBID's budget and capabilities have grown, however, the majority of the 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 statutory structure.
Administrative Services Branch
Innovation & Economic Development Department
1635 Faraday Avenue I Carlsbad, CA 92008 I 442-339-4620 t
Council Memo -CTBID Establishment and Transition Update (Districts -All)
June 29, 2023
Page 2
On April 18, 2023, the City Council formed a new Carlsbad Tourism Business Improvement
District (New CTBID) under the Property and Business Improvement District Law of 1994
(California Streets and Highways Code Section 36600 et. seq.) (94 Law). Under the New CTBID,
Visit Carlsbad will be the Owners' Association, as defined under the 94 Law. Visit Carlsbad will
implement the New CTBID's management district plan, beginning July 1, 2023, when the new
assessment will also begin.
Continuity Plan
As a result of the New CTBID's establishment, the current CTBID will wind down operations by
the end of FY 2023-24. To avoid subjecting hotel businesses to double assessments, the City
Council did not levy assessments under the current CTBID for FY 2023-24. However, the current
CTBID still has available funds from prior fiscal year assessments to fund tourism promotion and
visitor services for the benefit of hotel businesses until the New CTBID receives sufficient
assessment revenue to begin providing these services.
To ensure uninterrupted tourism promotion and visitor services for the hotel businesses and
the utilization of the current CTBID's remaining funds for the purposes for which the
assessments were collected, the current CTBID Advisory Board may extend the current
agreement with Visit Carlsbad for a period of one year or until the current CTBID is
disestablished by the City Council, whichever period is less. The CTBID Advisory Board met on
June 27, 2023, and approved this approach and an amendment to extend the existing
agreement with Visit Carlsbad.
This approach will ensure continuity of destination marketing by Visit Carlsbad while the New
CTBID ramps up operations. Visit Carlsbad can continue to provide destination marketing
consistent with the FY 2022-23 scope of work, for FY 2023-24. Once the current CTBID funds are
exhausted and the current CTBID is disestablished by the City Council, Visit Carlsbad will
conduct destination marketing services consistent with the approved management district plan
under the New CTBID. Until the current CTBID is disestablished by the City Council, it will
remain in its current capacity to verify that the services rendered by Visit Carlsbad meet its
contractual obligations.
Next Steps
Long-term operations
Under the 94 Law, a management and operating agreement between the city and the Owners'
Association -Visit Carlsbad -is necessary to ensure compliance with the law and accountability
to the services described in the management district plan. On July 11, 2023, staff will return to
the City Council for consideration of a five-year operating agreement, which would be
Council Memo -CTBID Establishment and Transition Update (Districts -All)
June 29, 2023
Page 3
consistent with the approved operating period. The agreement delineates the guiding principles
and expectations, clearly defining the roles, responsibilities, and obligations of each party
involved in the new CTBID . This agreement would be for the operations of the New CTBID and
would allow for the seamless transition of tourism promotion consistent with the previous
actions of the City Council.
Fiscal Impact
The interim agreement between the CTBID and Visit Carlsbad will exhaust the remaining
CTBID funds and allow for the eventual disestablishment of the CTBID once all funds are
expended. The new CTBID assessment will begin on July 1, 2023. As those funds are
collected, they will be distributed to Visit Carlsbad as the Owners' Association for services
described in the approved Management District Plan .
cc: Scott Chadwick, City Manager
Cindie McMahon, City Attorney
Laura Rocha, Deputy City Manager, Administrative Services
Zach Korach, Finance Director
Kristina Ray, Communication and Engagement Director
Matt Sanford, Economic Development Manager
CTBID Advisory Board Members