HomeMy WebLinkAboutCC 2026-04-28_10a AGTBID Annual Assessment_BudgetItem 10.a.
MEMORANDUM
TO: City Council
FROM: Sheridan Bohlken, Director of Recreation Services
SUBJECT: Public Hearing to Consider the AGTBID Annual Assessment and FY
2026-27 Budget
DATE: April 28, 2026
RECOMMENDATION:
1) Conduct a Public Hearing to receive public comment and protests regarding the
continuation of the Arroyo Grande Tourism Business Improvement District (AGTBID),
confirm the Annual Assessment Report (the ‘Annual Report’), and levy an annual
assessment for FY 2026-27;
2) Determine if a majority protest has been received; if no majority protest has been
received, adopt a Resolution confirming the Annual Report and Assessment to be levied
within the Arroyo Grande Tourism Business Improvement District for Fiscal Year 2026-
27; and
3) 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, AGTBID assessments are expected to gene rate
approximately $298,700 for FY 2026 -27. The proposed budget includes total
expenditures of $504,350, exceeding projected annual 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 FY 2026-27 budget incorporates targeted adjustments and right-sizing, including a
total decrease of $17,500. This includes reductions in marketing services and promotional
products, balanced with increased investment in travel, trade shows, and influencer
marketing to expand reach and engagement.
1 https://pub-arroyogrande.escribemeetings.com/filestream.ashx?DocumentId=15706
Page 47 of 209
Item 10.a.
City Council
Public Hearing to Consider the AGTBID Annual Assessment and FY 2026-27
Budget
April 28, 2026
Page 2
Consistent with prior years, the budget includes $50,000 for City administrative services.
The planned use of fund balance allows for implementation of strategic initiatives 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 visitor destination
and to support the local economy by increasing overnight stays. The district is funded
through a 2% assessment applied to lodging stays within the City, including short -term
vacation rentals of less than 30 days.
Assessment revenues support destination marketing, event promotion, and beautification
and tourism-related infrastructure improvements that enhance the visitor experience. On
April 14, 20262, the Council initiated the process to continue the assessment and adopt
the operating budget by confirming the Annual Report (Attachment 1) and by adopting a
Resolution of Intention (Attachment 2) to levy the FY 2026-27 assessment, and set this
public hearing in accordance with Streets and Highways Code §365343.
The Annual Report, including the Preliminary FY 2026-27 Budget as recommended by
the AGTBID Advisory Board on March 25, 2026,4 and slightly modified by Council to
reflect emphasis on larger-scale beautification and infrastructure projects, outlines the
proposed improvements, activities, and associated costs for the upcoming fiscal year,
and fulfills statutory requirements pursuant to Streets and Highways Code §365335.
ANALYSIS OF ISSUES:
The Annual Report presents the proposed program of activities and expenditures for FY
2026-27. Consistent with the California Streets and Highways Code, the public hearing
provides the opportunity to receive input, consider any protests, and take final action to
confirm the assessment and budget.
Additional marketing outcomes over the past year include increased digital engagement,
more than 100,000 website visits, approximately 2,000 booking conversions, and nearly
2,700 incremental visits, additional physical visits attributed to marketing measured by
Location Visitation Reporting, to Arroyo Grande. The City’s marketing agency, Commune
Communication, also received an honorable mention for “Integrated Campaign” at the
California ADDY Awards6 alongside national brands, reflecting performance relative to
2 https://pub-arroyogrande.escribemeetings.com/filestream.ashx?DocumentId=18693
3https://codes.findlaw.com/ca/streets-and-highways-code/shc-sect-
36534/#:~:text=(5)%20Refer%20to%20the%20report,/shc%2Dsect%2D36534/
4 https://pub-arroyogrande.escribemeetings.com/filestream.ashx?DocumentId=18170
5
https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=SHC§ionNum=36533#:
~:text=(a)%20The%20advisory%20board%20shall,business%20for%20that%20fiscal%20year.
6 https://www.aaflosangeles.org/2026-addy-winners-list
Page 48 of 209
Item 10.a.
City Council
Public Hearing to Consider the AGTBID Annual Assessment and FY 2026-27
Budget
April 28, 2026
Page 3
budget scale. These results are presented to demonstrate continued marketing
performance and to inform consideration of future investment strategies.
The proposed budget maintains funding for marketing efforts while incorporating
dedicated allocations for destination improvements, providing opportunities to advance
infrastructure and placemaking investments alongside ongoing promotional activities.
The current funding structure reflects a planned drawdown of prior-year fund balance to
support strategic initiatives and expanded program delivery. While this approach has
enabled near-term investment, future budgets will need to align more closely with annual
revenues as available fund balance is reduced.
ALTERNATIVES:
The following alternatives are provided for the Council’s consideration:
1. a. Conduct the public hearing to receive public comment and protests regarding
the City Council’s intention to continue the AGTBID, confirm the Annual Report,
and levy an annual assessment for FY 2026–27; and
b. Determine whether a majority protest has been received:
If a majority protest is not received:
i. Adopt a Resolution confirming the Annual Report and levy an annual
assessment for the AGTBID for FY 2026-27; and
ii. Determine that conducting a public hearing to adopt a resolution to levy
and collect assessments is not subject to the California Environmental
Quality Act (“CEQA”) because it has 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);
If a majority protest is achieved:
i. Do not adopt the Resolution levying an annual assessment for the
AGTBID for FY 2026-27; snd
ii. Direct staff to return next year with an item to consider whether to levy
the assessment in FY 2027-28; or
c. Provide other direction to staff.
ADVANTAGES:
The AGTBID provides a stable and dedicated funding source to support destination
marketing and visitor-serving initiatives that contribute to local economic activity. Recent
performance data indicate continued growth in visitation and lodging performance,
reflecting the effectiveness of these efforts. The proposed budget also advances a more
balanced investment approach by incorporating funding for destination improvements,
including beautification and infrastructure, which enhance the overall visitor experience
and support long-term place-based value.
Page 49 of 209
Item 10.a.
City Council
Public Hearing to Consider the AGTBID Annual Assessment and FY 2026-27
Budget
April 28, 2026
Page 4
DISADVANTAGES:
The 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 associated
with lodging stays. Additionally, the current funding structure reflects a reliance on prior -
year fund balance to support service levels, and future budgets will need to align more
closely with annual revenues. Continuation of the district also requires ongoing
administrative coordination and staff resources from the City.
ENVIRONMENTAL REVIEW:
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).
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. The Resolution of Intention to Levy was published in
the newspaper on April 16, 2026 and mailed to lodging owners.
ATTACHMENTS:
1. Resolution Confirming the FY 2026-27 Annual Report and Adopting FY 2026-27
Budget and Assessment to be Levied for the Arroyo Grande Tourism Business
Improvement District
2. Adopted Resolution of Intention
Page 50 of 209
ATTACHMENT 1
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
ARROYO GRANDE CONFIRMING THE ANNUAL REPORT
AND ASSESSMENT TO BE LEVIED WITHIN THE ARROYO
GRANDE TOURISM BUSINESS IMPROVEMENT DISTRICT
FOR THE FISCAL YEAR 2026-27
WHEREAS, on April 14, 2026, the City of Arroyo Grande (the “City”) City Council (the
“City Council”) adopted Resolution 2026-016 initiating proceedings for the continued
collection of assessments for Fiscal Year 2026-2027 for the Arroyo Grande Tourism
Business Improvement District (the “District”) pursuant to the Parking and Business
Improvement Area Law of 1989 (“PBIAL”), commencing with section 36500 et seq. of the
Streets and Highway Code; and
WHEREAS, the District was established in May 2013 and incorporated into the Arroyo
Grande Municipal Code (“AGMC”) under Chapter 3.46; and
WHEREAS, the AGMC and the PBIAL require the Advisory Board to prepare and submit
an annual report (“Annual Report”) stating improvements, activities, and assessments for
the fiscal year; and
WHEREAS, on March 25, 2026, the Advisory Board approved the Annual Report; and
WHEREAS, the Annual Report, attached hereto as Exhibit “A” was posted online and
received by the Arroyo Grande City Council on March 27, 2026; 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).
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. Following notice duly given by publication, the City Council has held a public hearing
regarding the approval of the Annual Report and levy of the proposed assessment
within the District for the fiscal year commencing July 1, 2026, and ending June 30,
2027, to pay for the costs and expenses of activities and programs promoting lodging
businesses in the District through the promotion of scenic, recreational, cultural, and
other attractions in the District as a tourist destination, and as further set forth in
ACMG Section 3.46.030 (the “Activities”). All interested persons were afforded the
opportunity to hear and be heard regarding protests, and objections have been
considered by the City Council.
Page 51 of 209
RESOLUTION NO.
PAGE 2
3. The City Council hereby confirms the Annual Report and assessment for Fiscal Year
2026-27 and orders the continued provision of the Activities within the District.
4. 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.
5. 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 and is hereby approved.
6. The adoption of this Resolution constitutes the levy of the assessment for fiscal year
2026-27.
7. This Resolution shall become effective immediately upon its adoption.
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 28th day of April, 2026.
Page 52 of 209
RESOLUTION NO.
PAGE 3
________________________________________
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 53 of 209
RESOLUTION NO.
PAGE 5
EXHIBIT A
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 54 of 209
RESOLUTION NO.
PAGE 5
EXHIBIT “A”
FISCAL YEAR 2026-27 BUDGET
Beginning Fund Balance $ 436,489 $ 438,184 $ 383,013 $ 383,013 $ 241,813
Revenue
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
Page 55 of 209
RESOLUTION NO. 2026-016
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 Municipal 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.
ATTACHMENT 2
Page 56 of 209
RESOLUTION NO. 2026-016
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 the
conclusion of the public hearing. Each written protest shall contain a written
description of the business in which the person signing the protest is interested
sufficient to identify the business. If the person signing the protest is not shown on
Page 57 of 209
RESOLUTION NO. 2026-016
PAGE 3
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 Guthrie, seconded by Council Member Maraviglia, and on
the following roll call vote, to wit:
AYES: Council Members Guthrie, Maraviglia, Secrest, and Loe
NOES: None
ABSENT: Mayor Ray Russom
the foregoing Resolution was passed and adopted this 14th day of April, 2026.
Page 58 of 209
1LIA,MYORPRO TEM
ATTEST:
JESSICA MATSON, CITY CLERK
APPROVED AS TO CONTENT:
MATTHEW DOWNING, CITY MANAGER
APPROVED AS TO FORM:
ISAAC ROSEN, CITY ATTORNEY
RESOLUTION NO. 2026-016
PAGE 4
Page 59 of 209
OFFICIAL CERTIFICATION
I, JESSICA MATSON, City Clerk of the City of Arroyo Grande, County of San Luis
Obispo, State of California, do hereby certify under penalty of perjury, that the attached
Resolution No. 2026-016 was passed and adopted at a regular meeting of the
City Council of the City of Arroyo Grande on the 14th day of April, 2026.
WITNESS my hand and the Seal of the City of Arroyo Grande affixed this 16th day
of April, 2026.
JESSICA MATSON, CITY CLERK
Page 60 of 209