HomeMy WebLinkAboutCC 2026-04-14_09d TBID Reso of IntentionItem 9.d.
MEMORANDUM
TO: City Council
FROM: Sheridan Bohlken, Director of Recreation Services
SUBJECT: Tourism Business Improvement District Annual Assessment Report,
Preliminary FY 2026-27 Budget and Resolution of Intention to Levy
DATE: April 14, 2026
RECOMMENDATION:
1) Approve Annual Assessment Report and Preliminary FY 2026-27 Budget;
2) Adopt a Resolution of Intention declaring the intention to continue the Arroyo Grande
Business Improvement District, to continue the basis for and to levy the assessments for
the District, and to set a date for the public hearing on the District and the assessment for
the 2026-27 Fiscal Year; and
3) Set the date for a public hearing for April 28, 2026, in accordance with Streets
and Highways Code Section 36534; and
4) Find that the recommended actions are not subject to the California Environmental
Quality Act (“CEQA”) because these efforts have no potential to result in either a direct,
or reasonably foreseeable indirect, physical change in the environment. (State CEQA
Guidelines, §§ 15060 (c)(2) and (3), 15378).
IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:
Based on anticipated year-end results, the assessments expected to be collected total
approximately $298,700 for FY 2025-26. The Preliminary Budget for FY 2026-27 includes
total expenditures of $504,350, exceeding projected revenues and reflecting a strategic
use of available fund balance to support continued investment in destination marketing
and authorized expanded uses approved in August 20251.
The Preliminary FY 2026-27 budget incorporates targeted adjustments and right-sizing,
including the following:
1 https://pub-arroyogrande.escribemeetings.com/filestream.ashx?DocumentId=15706
Page 29 of 406
Item 9.d.
City Council
Tourism Business Improvement District Annual Assessment Report, Preliminary
FY 2026-27 Budget and Resolution of Intention to Levy
April 14, 2026
Page 2
Table 1: Proposed Changes to AGTBID FY 2026-27 Budget
Specifically, the FY 2026-27 budget incorporates a total decrease of $17,500. This
includes: $27,500 decrease in marketing services, a $2,500 decrease in promotional
product, an increase in travel and trade show participation to support expanded
engagement in familiarization (FAM) tours, press trips, and c onvention opportunities, as
well as a $10,000 increase in influencer marketing to enhance digital reach and visibility.
Consistent with prior years, the budget also includes $50,000 for City administrative
services. The planned use of fund balance allows for the implementation of strategic
initiatives and destination improvements while aligning expenditures with program
priorities and long-term tourism development goals.
BACKGROUND:
The AGTBID was established in 2013 to promote Arroyo Grande as a visito r destination
and support the local economy through increased overnight stays. The district is funded
through a two percent (2%) assessment applied to lodging stays within the City, including
short-term vacation rentals of less than 30 days. Assessment funding, with oversight by
the AGTBID Board and City Council, may be used to support destination promotion, as
well as beautification and tourism -related infrastructure that enhance the visitor
experience per expanded uses approved by City Council on July 22, 20252.
In September 20253, the annual reporting process was refined to distinguish the Annual
Marketing Report, which focuses on performance outcomes, from the Annual
Assessment Report, which fulfills statutory requirements p ursuant to California Streets
and Highways Code §365334 Per these mandates, the City Council must adopt a
Resolution of Intention to levy the assessment (Attachment 1), with receipt of the Annual
Assessment Report (Attachment 2) recommended by the AGTBID Advisory Board
outlining improvements, activities, and estimated costs.
2 https://pub-arroyogrande.escribemeetings.com/filestream.ashx?DocumentId=15379
3 https://pub-arroyogrande.escribemeetings.com/filestream.ashx?DocumentId=16000
4https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=SHC§ionNum=36533#
:~:text=(a)%20The%20advisory%20board%20shall,business%20for%20that%20fiscal%20year
Account Description
Current
FY 2025-26
Proposed
FY 2026-27 Variance
Advertising Marketing Services 250,000$ 222,500$ (27,500)$
Advertising Promotional Product 5,000$ 2,500$ (2,500)$
Advertising Travel and Trade Shows 7,500$ 10,000$ 2,500$
Public Relations Influencers 10,000$ 20,000$ 10,000$
Total Decrease (17,500)$
Page 30 of 406
Item 9.d.
City Council
Tourism Business Improvement District Annual Assessment Report, Preliminary
FY 2026-27 Budget and Resolution of Intention to Levy
April 14, 2026
Page 3
ANALYSIS OF ISSUES:
The Annual Assessment Report provides the required framework to continue the Arroyo
Grande Tourism Business Improvement District (AGTBID) and levy annual assessments
in accordance with the California Streets and Highways Code. The AGTBID Advisory
Board reviewed and recommended approval of the Annual Assess ment Report and
Preliminary FY 2026–27 Budget to the City Council on March 25, 20265.
The report confirms:
• No changes to district boundaries
• Authorized uses of funds
• Proposed FY 2026–27 budget
• Assessment methodology
• Surplus and deficit projections
• Contributions other than assessments
The report outlines authorized uses, including tourism promotion, event sponsorships,
and destination-enhancing infrastructure improvements, and incorporates the Preliminary
FY 2026–27 budget to support these activities. Total proposed expenditures are
$504,350, reflecting a $17,500 decrease from the prior year. With anticipated revenues
of $298,700, the remaining balance will be funded through available fund balance,
resulting in an estimated ending balance of $36,913. The use of fund balance reflects a
strategic approach to deploying accumulated resources while maintaining near -term
fiscal stability; however, continued expenditures at this level will require corresponding
revenue growth or future budget adjustments to maintain fiscal sustainability.
ALTERNATIVES:
The following alternatives are provided for the Council’s consideration:
1. Approve the Annual Assessment Report, Preliminary FY 2026-27 Budget and
adopt the Resolution of Intention to levy the FY 2026-27 AGTBID Assessment; or
2. Approve the Annual Assessment Report with modifications to the Preliminary FY
2026-27 Budget, and Adopt the Resolution of Intention to levy the FY 2026-27
AGTBID assessment; or
3. Provide other direction to staff.
ADVANTAGES:
The AGTBID provides a stable and reliable funding source that supports ongoing
destination marketing efforts, helping to strengthen local economic activity. It also ensures
continuity of programs while maintaining compliance with applicable statutory
requirements.
5 https://pub-arroyogrande.escribemeetings.com/filestream.ashx?DocumentId=18170
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Item 9.d.
City Council
Tourism Business Improvement District Annual Assessment Report, Preliminary
FY 2026-27 Budget and Resolution of Intention to Levy
April 14, 2026
Page 4
DISADVANTAGES:
The required assessment may be perceived by businesses as an added financial
obligation, despite being visitor-generated, and may also be viewed by visitors as a fee
imposed by the business rather than collected for AGTBID purposes. Additio nally,
continuation of the district requires ongoing administrative coordination and staff
resources from the City.
ENVIRONMENTAL REVIEW:
No environmental review is required for this item.
PUBLIC NOTIFICATION AND COMMENTS:
The Agenda was posted at City Hall and on the City’s website in accordance with
Government Code Section 54954.2.
ATTACHMENTS:
1. Resolution of Intention to Levy Assessment
2. Annual Assessment Report and Preliminary FY 2026-27 Budget
Page 32 of 406
ATTACHMENT 1
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
ARROYO GRANDE DECLARING ITS INTENTION TO
CONTINUE THE ARROYO GRANDE TOURISM BUSINESS
IMPROVEMENT DISTRICT, TO CONTINUE THE BASIS
FOR AND TO LEVY THE ASSESSMENTS FOR THE
DISTRICT, AND TO SET A DATE FOR THE PUBLIC
HEARING ON THE DISTRICT AND THE ASSESSMENT
FOR THE 2026-27 FISCAL YEAR
WHEREAS, the Parking and Business Improvement Area Law of 1989 (“PBIAL”),
sections 36500 et seq. of the Streets and Highway Code, authorizes cities to establish
business improvement districts for several purposes, one of which is promotion of
tourism; and
WHEREAS, the Arroyo Grande Tourism Business Improvement District was established
in May 2013 and incorporated into the Arroyo Grande Municip al Code (“AGMC”) under
Chapter 3.46; and
WHEREAS, in accordance with the requirements of Streets and Highways Code Section
36530 and AGMC Section 3.46.100, the City Council appointed an Advisory Board to
provide oversight, guidance, and recommendations regarding the use of the assessment
funds; and
WHEREAS, the AGMC and the PBIAL require the Advisory Board to prepare and submit
an annual report (“Annual Report”) stating proposed changes, improvements and
activities for the fiscal year; and
WHEREAS, this Resolution is not subject to the California Environmental Quality Act
(CEQA) because it will not result in a direct, or reasonably foreseeable indirect, physical
change in the environment (State CEQA Guidelines, §§ 15060 (c)(2) and (3), 15378); and
WHEREAS, on March 25, 2026, the Advisory Board approved the Annual Assessment
Report; and
WHEREAS, the Advisory Board Annual Assessment Report was filed and approved by
the Arroyo Grande City Council on April 14, 2026.
NOW, THEREFORE BE IT RESOLVED by the City Council of the City of Arroyo Grande
as follows:
1. All recitals set forth above, are true, correct and incorporated herein.
2. The City Council hereby declares its intention to continue the Arroyo Grande
Tourism Business Improvement District (“District”) in accordance with AGMC
Chapter 3.46 and Streets and Highways Code Sections 36500 et seq. and to levy
assessments for fiscal year 2026-27.
Page 33 of 406
RESOLUTION NO.
PAGE 2
3. The Annual Assessment Report is on file with the City Clerk and contains a full
and detailed description of the improvements and activities to be provided for FY
2026-27. No changes to the District boundaries are proposed, and the report
includes the estimated cost of providing improvements and activities for fiscal year
2026- 27. The assessment is not proposed to be increased.
4. The boundaries of the District are the boundaries of the City of Arroyo Grande.
5. The assessment levied by the District shall be used for activities and programs
promoting lodging businesses in the District through the promotion and tourism
infrastructure with a useful life of 5 years or more of scenic, recreational, cultural,
and other attractions in the District which promote Arroyo Grande as a tourist
destination, and as further set forth in ACMG Section 3.46.030.
6. The assessment is proposed to be levied on all “lodging” businesses in the District,
as that term is defined in AGMC section 3.46.020, and allocated by the City of
Arroyo Grande.
7. The assessment shall be based upon two percent (2%) of the rent charged by the
operator per occupied room per night for all transient occupancies and shall be
collected quarterly.
8. New lodging businesses shall not be exempt from immediate assessment.
9. A public hearing, held pursuant to AGMC Chapter 3.46 and Streets and Highways
Code Section 36535, to allow for comments and to receive written and oral protests
on the District and proposed assessment, is hereby set for 6:00 p.m., Tuesday
April 28, 2026, before the City Council of the City of Arroyo Grande at the City
Council Chambers at 215 E. Branch St., Arroyo Grande, CA.
10. At the public hearing, the testimony of all interested persons for or against the
continuation of the District, and the levy of the proposed assessment for fiscal year
2026-27 will be heard. A protest may be made orally or in writing by any interested
person. However, only written protests will be considered in determining if
there is a majority protest. The form and manner of protests shall comply
with Streets and Highways Code Sections 36524 and 36525.
11. Any protest pertaining to the regularity or sufficiency of the proceedings shall be in
writing and clearly state the irregularity of defect to which objection is made. Written
protests must be received by the City Clerk of the City of Arroyo Grande before the
close of the public hearing scheduled herein and may delivered or mailed to the
City Clerk, City of Arroyo Grande, 300 East Branch Street, Arroyo Grande, CA
93420. A written protest may be withdrawn in writing at any time before
Page 34 of 406
RESOLUTION NO.
PAGE 3
the conclusion of the public hearing. Each written protest shall contain a written
description of the business in which the person s igning the protest is interested
sufficient to identify the business. If the person signing the protest is not shown on
the official records of the City of Arroyo Grande as the owner of a business, then
the protest shall contain or be accompanied by written evidence that the person is
the owner of the business.
12. If at the conclusion of the public hearing, there are of record written protests by the
owners of lodging businesses within the District that will pay fifty percent (50%) or
more of the total assessments of the entire District, no further proceedings to
impose the fiscal year 2026-27 assessment shall occur. New proceedings to
continue the District and to impose the annual assessment shall not be undertaken
again for a period of at least one (1) year from the date of the finding of a majority
protest by the City Council.
13. The City Clerk is instructed to provide notice as required by AGMC Chapter 3.46
and Streets and Highways Code Section 36534. The City Clerk shall 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 no less than seven (7) days before the
public hearing.
On motion of Council Member , seconded by Council Member , and
on the following roll call vote, to wit:
AYES:
NOES:
ABSENT:
the foregoing Resolution was passed and adopted this 14th day of April, 2026.
Page 35 of 406
RESOLUTION NO.
PAGE 4
CAREN RAY RUSSOM, MAYOR
ATTEST:
JESSICA MATSON, CITY CLERK
APPROVED AS TO CONTENT:
MATTHEW DOWNING, CITY MANAGER
APPROVED AS TO FORM:
ISAAC ROSEN, CITY ATTORNEY
Page 36 of 406
ATTACHMENT 2
CITY OF ARROYO GRANDE
FISCAL YEAR 2026-27
ANNUAL ASSESSMENT REPORT
FOR
ARROYO GRANDE TOURISM BUSINESS IMPROVEMENT DISTRICT
This report is prepared in compliance with California Streets and Highways Code section 36533
for the Arroyo Grande Tourism Business Improvement District (the “District”) for Fiscal Year
2026-27.
Section 1. Changes. There are no proposed changes to the boundaries of the District.
Section 2. Authorized Uses. The improvements and activities (the “Authorized Uses”) to be
provided in Fiscal Year 2026-27 include:
Improvements, including the acquisition, construction, installation, or maintenance
of any tangible property with an estimated useful life of five years or more including,
but not limited to, the following:
o Parking facilities, benches, trash receptacle, street lighting, decorations
including public art and cultural enhancements and decorations, parks, and
fountains; and
o Activities which benefit businesses located and operating within the District.
Promotion and furnishing of, but not limited to, the following activities:
o Promotion of public events which benefit businesses within the District and
which take place on or in public spaces within the District; and
o Furnishing of music in any public place within the District; and
o Promotion of tourism within the District.
Section 3. Budget. The estimated costs of providing the Authorized Uses for Fiscal Year 2026-
27 is included in the budget attached as Exhibit “A” hereto and incorporated herein by this
reference.
Section 4. Method and Basis of the Assessment. The assessment is two percent (2%) of the
rent charged by the operator per occupied room per night for all transient occupancies.
Assessments are collected quarterly.
Section 5. Surplus/Deficit Revenues. The amounts or any surplus or deficit revenues to be
carried over from the previous fiscal year are included in Exhibit “A” attached hereto.
Section 6. Contributions. There are no contributions from any other sources to be made other
than the assessments of the District.
Page 37 of 406
EXHIBIT “A”
FISCAL YEAR 2026-27 BUDGET
Beginning Fund Balance 436,489$ 438,184$ 383,013$ 383,013$ 241,813$
FY 2023-24
Actuals
FY 2024-25
Actuals
FY 2025-26
Budget
FY 2025-26
Expected to
Complete
FY 2026-27
Proposed
Budget
TBID Assessments 281,764$ 288,366$ 327,848$ 288,400$ 298,700$
Interest 17,990 19,366 750 750 750
Total Revenue 299,754$ 307,731$ 328,598$ 289,150$ 299,450$
Expenditures
FY 2023-24
Actuals
FY 2024-25
Adopted
Budget
FY 2025-26
Proposed
Budget
FY 2025-26
Expected to
Complete
FY 2026-27
Proposed
Budget
Advertising
Marketing Services 218,340$ 248,056$ 250,000$ 250,000$ 222,500$
Photo/Video Assets 1,890 7,750 25,000 25,000 25,000
Promotional Product 600 - 5,000 5,000 2,500
Website - - - - -
Travel and Trade Shows - 2,469 7,500 7,500 10,000
Coop Advertising 14,400 33,000 50,000 50,000 50,000
Sub-total Advertising 235,230$ 291,275$ 337,500$ 337,500$ 310,000$
Contractual Services
Short-term compliance 11,350$ 11,350$ 11,350$ 11,350$ 11,350$
Chamber - Contract admin. - - - - -
Sub-total Contractual Services 11,350$ 11,350$ 11,350$ 11,350$ 11,350$
Membership & Subscriptions
CCTC 475$ 475$ 500$ 500$ 500$
Sub-total Membership & Subs.475$ 475$ 500$ 500$ 500$
Public Relations
Event Sponsorships 1,000 9,799 50,000 1,000 50,000
Influencers - - 10,000 10,000 20,000
Sub-total Public Relations 1,000$ 9,799$ 60,000$ 11,000$ 70,000$
Services & Supplies
City - administrative 45,000$ 45,000$ 45,000$ 45,000$ 50,000$
Supplies/Domains - - 2,500 - 2,500
Vacation rental code compliance 5,004 5,004 5,000 5,000 -
Sub-total Services & Supplies 50,004$ 50,004$ 52,500$ 50,000$ 52,500$
Destination Improvements & Activities
Public art and beautification -$ -$ 25,000$ -$ 25,000$
Infrastructure improvements - - 20,000 20,000 20,000
Special event-supporting infrastructure - - 15,000 - 15,000
Sub-total Destination Improvements & Activities -$ -$ 60,000$ 20,000$ 60,000$
Total Expenditures 298,059$ 362,903$ 521,850$ 430,350$ 504,350$
Ending Fund Balance 438,184$ 383,013$ 189,761$ 241,813$ 36,913$
Revenue
Page 38 of 406