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CC 2013-02-26_11.b. Resolution of Intention for Tourism Business Improvement District PRROV® INCORPORATED 7 JULY 10, 1911 ,, 4/FO0P MEMORANDUM TO: CITY COUNCIL FROM: STEVEN ADAMS, CITY MANAGER (* SUBJECT: CONSIDERATION OF RESOLUTION OF INTENTION RELATED TO ESTABLISHING THE ARROYO GRANDE TOURISM BUSINESS IMPROVEMENT DISTRICT (AGTBID) AND RESOLUTION TO ESTABLISH ADVISORY BOARD DATE: FEBRUARY 26, 2013 RECOMMENDATION: It is recommended that the City Council: 1) adopt a resolution of intention to establish the Arroyo Grande Tourism Business Improvement District (AGTBID), which will levy an assessment on lodging business within such District, and fix the time and place of a public meeting and a public hearing in accordance with the provisions of Streets and Highways Code Sections 36500 et seq. and Government Code Section 54954.6; and 2) adopt a Resolution establishing the AGTBID Advisory Board. FINANCIAL IMPACT: It is estimated that the AGTBID will generate approximately $140,000 annually, which will be used for the purpose of tourism marketing and promotional efforts. It should be noted that since the assessment is directly tied to gross room rent, funds will fluctuate depending on room rates and occupancy. There will be some additional work required by Administrative Services Department staff to collect the revenue and for the City Manager to assist with administration of the AGTBID, as well as work by the City Attorney and Legislative and Information Services Department staff to administer the process of forming the district. Some of the labor costs will be reimbursed from the assessment revenue and all work can be performed with existing staff. Much of the ongoing staff support will be delegated to the Chamber of Commerce. BACKGROUND: In January 2009, in response to a request from the County of San Luis Obispo, the City Council considered the issue of participating in the County's Tourism Business Improvement District. Since most of the other cities in the County decided not to participate and instead form their own tourism business Item 11.b. - Page 1 CITY COUNCIL FEBRUARY 26, 2013 CONSIDERATION OF ADOPTION OF RESOLUTION OF INTENTION RELATED TO ESTABLISHING THE ARROYO GRANDE TOURISM BUSINESS IMPROVEMENT DISTRICT (AGTBID) AND RESOLUTION TO ESTABLISH ADVISORY BOARD PAGE 2 improvement districts, the City Council continued the matter to a date uncertain. There also did not appear to be strong support from local hoteliers for the concept at that time. Since then, the Chamber of Commerce has formed a Tourism and Marketing Committee (Committee) to develop strategies and proposals to increase business from tourism in the community. The Committee has worked on outreach efforts to the local hotel industry. As a result, representatives from three of the largest local hotels have met several times with members of the Committee and have expressed support in moving forward to establish the AGTIB. They include the Hampton Inn, Best Western Casa Grande, and Aloha Inn. The City has 10 existing lodging businesses, which represent over 400 rooms. They include the following: Business Rooms Abella Garden Inn 7 Aloha Inn 40 Arroyo Grande Motel 15 Arroyo Village Motel 18 Best Western Casa Grande 113 Grand Avenue Motel 14 Grieb Farmhouse Inn 2 Hampton Inn 103 House of Another Thyme 3 Premier Inn 100 ANALYSIS OF ISSUES: A business improvement area established under the Parking and Business Improvement Area Law of 1989 raises revenue to be used for specific purposes as defined by State law and incorporated into a city ordinance. It is a form of assessment district that is not subject to Proposition 218 voting requirements that apply to other forms of assessment districts. However, it is subject to hearing requirements and a veto by written protests from business owners representing fifty percent or more of the assessments proposed to be levied. The following procedure is necessary to create the AGTBID: The City Council will need to adopt a resolution of intention to form the district, levy the assessment and set the date for a public meeting and public Item 11.b. - Page 2 CITY COUNCIL FEBRUARY 26, 2013 CONSIDERATION OF ADOPTION OF RESOLUTION OF INTENTION RELATED TO ESTABLISHING THE ARROYO GRANDE TOURISM BUSINESS IMPROVEMENT DISTRICT (AGTBID) AND RESOLUTION TO ESTABLISH ADVISORY BOARD PAGE 3 hearing. The Streets and Highways Code specifies the contents of the resolution of intention, which is attached. The City then will have to provide notice of the public hearing to each business owner in the proposed AGTBID (Streets and Highways Code Section 36523 and Government Code Section 54954.6), which is attached for Council's reference. A copy of the resolution of intention must be mailed to each affected business owner within seven days of adoption. The resolution of intention also has to be published at least seven days before the public hearing. Government Code Section 54954.6 requires a public meeting to hear public testimony, which has to be held before the public hearing can be held. The notice that the City has to provide under Section 54954.6 is to include both notice of the public meeting and notice of the public hearing. A draft notice has been prepared and is attached for reference. Staff is proposing that the public meeting be scheduled for April 23, 2013 to consider introduction of the ordinance and that the pubic hearing take place on May 14, 2013 when adoption of the ordinance will be considered. As a result, the ordinance would take effect on June 13, 2013. It is recommended the fee take effect on July 1, 2013. At the public hearing regarding the proposed AGTBID and assessment, if written protests are received from business owners representing fifty percent (50%) or more of the assessments to be levied, no further proceedings to levy the assessment may be taken for a period of one year. If an insufficient number of protests are received, the City Council then may proceed to adopt an ordinance establishing the AGTBID, and containing certain required provisions. A draft ordinance has also been prepared and is attached for reference. For purposes of determining the applicable majority protest figure for the initial formation of the district, the proposed assessment to be levied will be calculated based on the assessment rate multiplied by the most recent available data for the lodging operations' gross lodging rent as reported to the City during calendar year 2012. The statutes also require the appointment of an advisory board to make recommendations to the City Council on the expenditure of revenues derived from the assessments. Based on input from the Tourism Committee and hoteliers, staff recommends the Advisory Committee consist of three to seven members, 2/3rds of which shall be representatives of local lodging businesses. The resolution establishing the advisory committee is attached for City Council consideration. If approved, staff will return with recommended appointments concurrent with the second reading of the ordinance. Adoption of the resolution Item 11.b. - Page 3 CITY COUNCIL FEBRUARY 26, 2013 CONSIDERATION OF ADOPTION OF RESOLUTION OF INTENTION RELATED TO ESTABLISHING THE ARROYO GRANDE TOURISM BUSINESS IMPROVEMENT DISTRICT (AGTBID) AND RESOLUTION TO ESTABLISH ADVISORY BOARD PAGE 4 is recommended prior to consideration of the ordinance in order to clarify to local hoteliers how the process will work prior to the protest period. Once established, there will be a continuing requirement to adopt a resolution of intention to levy an annual assessment for each fiscal year and hold a public hearing to consider protests. The assessment will be based on a fee in the amount of two percent (2%) of the rent charged by the operator per occupied room per night in revenues for the previous quarter. The majority of jurisdictions in San Luis Obispo County currently have tourism business improvement districts established. The following is a list of existing tourism business improvement districts and the assessment amounts: County of San Luis Obispo 2% City of Morro Bay 3% City of Paso Robles 2% City of Pismo Beach 1 City of San Luis Obispo 2% Staff and the hoteliers first looked at the option of joining the San Luis Obispo County Tourism BID. However, the hoteliers expressed a preference to instead pursue a local BID. It will generate more revenue locally, would be easier to disband if hoteliers choose to do so, and provides more flexibility and control over efforts and ability to partner with neighboring jurisdiction activities. ALTERNATIVES: The following alternatives are provided for the Council's consideration: • Adopt the resolution of intention in order to initiate the process of creating the AGTBID and the resolution establishing the advisory board; • Change the fee to be 1% rather than 2%; • Direct staff and the Tourism Committee to instead pursue joining the Countywide tourism BID; • Do not adopt the resolution of intention; or • Provide direction to staff. ADVANTAGES: Creating the AGTBID will create a mechanism to generate funding to help promote tourism in the City, which will support local businesses and generate Item 11.b. - Page 4 CITY COUNCIL FEBRUARY 26, 2013 CONSIDERATION OF ADOPTION OF RESOLUTION OF INTENTION RELATED TO ESTABLISHING THE ARROYO GRANDE TOURISM BUSINESS IMPROVEMENT DISTRICT (AGTBID) AND RESOLUTION TO ESTABLISH ADVISORY BOARD PAGE 5 City revenue for that specific purpose. Hoteliers representing over 50% of total lodging revenue have expressed support for the proposal. DISADVANTAGES: Establishing a local tourism business improvement district rather than joining the Countywide BID results in increased workload for City staff. The proposal will likely be opposed by some hoteliers due to the increased cost to their customers. ENVIRONMENTAL REVIEW: No environmental review is required for this item. PUBLIC NOTIFICATION AND COMMENTS: The Agenda was posted in front of City Hall on Thursday, February 21 , 2013 and on the City's website on Friday, February 22, 2013. Two drafts were distributed and presented to hoteliers and members of the Chamber of Commerce Tourism Committee and feedback was requested. Suggestions were incorporated and questions were responded to. In an effort to involve representatives of all the hotels, each was invited to total of four meetings and activities by the Chamber of Commerce, which included by mail, phone and e-mail. Attachments: 1 . Public Hearing Notice 2. Ordinance Establishing the Arroyo Grande Tourism Business Improvement District, Fixing the Boundaries Thereof, and Providing for the Levy of a Business Assessment to be Paid by Lodging Businesses in Such District Item 11.b. - Page 5 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE DECLARING ITS INTENTION TO ESTABLISH THE ARROYO GRANDE TOURISM BUSINESS IMPROVEMENT DISTRICT , DECLARING ITS INTENTION TO LEVY AN ASSESSMENT ON LODGING BUSINESSES WITHIN SUCH DISTRICT, AND FIXING THE TIME AND PLACE OF A PUBLIC MEETING AND A PUBLIC HEARING THEREON AND GIVING NOTICE THEREOF WHEREAS, the City Council of the City of Arroyo Grande desires to establish the Arroyo Grande Tourism Business Improvement District and levy an annual assessment on lodging business, which include hotels, motels, inns, and bed and breakfasts within the proposes AGTBID; and WHEREAS, the Parking and Business Improvement Area Law of 1989 (Streets & Highways Code Sections 36500 et seq.) authorizes cities to establish business improvement area for the purpose of promoting tourism; and WHEREAS, lodging businesses within the proposed AGTBID have requested that the City Council establish such a business improvement area. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Arroyo Grande as follows: 1 . The recitals set forth herein are true and correct. 2. The City Council hereby declares its intention to establish the Arroyo Grande Tourism Business Improvement District ("AGTBID") and to levy and collect annual assessments against lodging businesses within the AGTBID boundaries, pursuant to the Parking and Business Improvement Area Law of 1989, Streets & Highways Code Sections 36500 et seq. (hereinafter referred to as the "Law"), commencing thirty (30) days after adoption of the ordinance required by Streets and Highways Code Section 36527. 3. The boundaries of the AGTBID shall be the boundaries of the City of Arroyo Grande. 4. The name of the business improvement area shall be the "Arroyo Grande Tourism Business Improvement District". 5. The City Council hereby declares that the types of improvements and activities to be funded by the levy of assessments against lodging businesses within the AGTBID are tourism and marketing programs to promote Arroyo Grande as a tourism destination and projects, programs, and activities that benefit lodging Item 11.b. - Page 6 RESOLUTION NO. PAGE 2 businesses located and operating within the boundaries of the District. The proposed improvements and activities shall be targeted at increasing transient stays. 6. Except where funds are otherwise available, an assessment will be levied annually against lodging businesses to pay for the improvements and activities within the AGTBID commencing thirty (30) days after adoption of the ordinance establishing the AGTBID. Assessments will be collected in quarterly installments or such other installments as determined by the City Council. The proposed assessment is to be levied on all lodging businesses, which include hotels, motels, inns and bed and breakfasts within the AGTBID boundaries, based upon two percent (2%) of the rent charged by the operator, per occupied room per night for all transient occupancies. Federal government employees on government business will be exempt from the levy of the assessment. Extended stays, defined as more than thirty (30) consecutive calendar days, shall be exempt from the levy of assessment. New lodging businesses within the boundaries of the AGTBID shall not be exempt from the levy of assessment. Assessments levied pursuant to the AGTBID shall not be included in gross room rent revenue for the purpose of determining the amount of the assessment. 7. The City Council hereby sets April 23, 2013 as the date for a public meeting on the establishment of the AGTBID and the levy of assessments and May 14, 2013 as the date for a public hearing on the establishment of the AGTBID and the levy of assessments. Both the pubic meeting and the public hearing will be held at 6:00 p.m., or as soon thereafter as practicable, in the City Council Chambers, located at 215 East Branch Street, Arroyo Grande. 8. At the public meeting and public hearing the testimony of all interested persons for or against the establishment of the AGTBID, the extent of the AGTBID, or the furnishing of specific types of improvements or activities 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. Any protest pertaining to the regularity or sufficiency of the proceedings shall be in writing and clearly state the irregularity or defect to which objection is made. To count in the determination of a majority protest against the AGTBID, a protest must be in writing. 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 be 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. Item 11.b. - Page 7 RESOLUTION NO. PAGE 3 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 the official records of the City of Arroyo Grande as the owner of the business, then the protest shall contain or be accompanied by written evidence that the person is the owner of the business. A written protest which does not comply with this section shall not be counted in determining a majority protest. 9. If, at the conclusion of the public hearing, written protests are received from owners of businesses in the proposed AGTBID which will pay fifty percent (50%) or more of the assessments proposed to be levied and protests are not withdrawn so as to reduce the protest to less than fifty percent (50%) (i.e., there is a majority protest), no further proceedings to create the AGTBID, as contained in this Resolution of Intention, shall be taken for a period of one year from the date of the finding of a majority protest by the City Council. If the majority protest is only against the furnishing of a specified type or types of improvement or activity within the AGTBID, those types of improvements or activities shall be eliminated. For purposes of determining the applicable majority protest figure for the initial formation of the district, the proposed assessment to be levied will be calculated based on the assessment rate multiplied by the most recent available data for the lodging operations' gross lodging rent as reported to the City during calendar year 2012. 10. Further information regarding the proposed AGTBID may be obtained from the City Clerk, City of Arroyo Grande, 300 East Branch Street, Arroyo Grande, CA 93420. 11. The City Clerk is instructed to provide notice of the public meeting and public hearing in accordance with law. 12. This Resolution shall take effect immediately upon its adoption by the City Council, and the City Clerk shall certify to the vote adopting the Resolution. On motion of Council Member , seconded by Council Member , and by the following roll call vote, to wit: AYES: NOES: ABSENT: the foregoing Resolution was passed and adopted this day of 2013. Item 11.b. - Page 8 RESOLUTION NO. PAGE 4 TONY FERRARA, MAYOR ATTEST: KELLY WETMORE, CITY CLERK APPROVED AS TO CONTENT: STEVEN ADAMS, CITY MANAGER APPROVED AS TO FORM: TIMOTHY J. CARMEL, CITY ATTORNEY Item 11.b. - Page 9 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARROYO ESTABLISHING THE ARROYO GRANDE TOURISM BUSINESS IMPROVEMENT DISTRICT ADVISORY BOARD WHEREAS, the City Council of the City of Arroyo Grande intends to adopt Resolution No. entitled "A Resolution of the City Council of the City of Arroyo Grande Declaring its Intention to Establish the Arroyo Grande Tourism Business Improvement District, Declaring Its Intention to Levy an Assessment on Lodging Businesses Within Such District, and Fixing the Time and Place of a Public Meeting and a Public Hearing Thereon and Giving Notice Thereof" in order to initiate the process of creating a tourism business improvement district in accordance with the authority and procedures contained in Streets and Highways Code Sections 36500 et seq. ; and WHEREAS, Streets and Highways Code Section 36530 provides that the City Council shall appoint an advisory board for the business improvement district, which shall make a recommendation to the city council on the expenditure of revenues derived from the levy of assessments and on the method and basis of levying the assessments; and NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Arroyo Grande as follow: 1. The foregoing recitals are approved and incorporated herein by reference. 2. The Arroyo Grande Tourism Business Improvement District Advisory Board ("AGTBID Advisory Board") is hereby created pursuant to Streets and Highways Code Section 36530 to make recommendations and reports to the City Council as provided by law. 3. The City Council shall appoint the AGTBID Advisory Board, which shall consist of a minimum of three (3) but not more than seven (7) members, 2/3rds of which shall be owners of lodging businesses and/or appointed representatives of the owners of lodging businesses from within the Arroyo Grande Tourism Business Improvement District. 4. The AGTBID Advisory Board shall exist for the duration of the existence of the Arroyo Grande Tourism Business Improvement District. If the Arroyo Grande Tourism Business Improvement District is disestablished for any reason, the AGTBID Advisory Board shall also be dissolved unless the City Council directs otherwise. 5. The AGTBID Advisory Board shall serve without compensation. Item 11.b. - Page 10 RESOLUTION NO. PAGE 2 6. The AGTBID Advisory Board shall meet no less than quarterly. It shall submit an annual report to the City Council pursuant to Section 36533 of the Streets and Highways Code, which shall detail expenditures for the prior year and include a budget for operations and identification of marketing efforts and other activities to be undertaken by the Arroyo Grande Tourism Business Improvement District for the ensuing fiscal year. 7. The AGTBID Advisory Board shall have the following duties: a. To study, investigate and determine the need for the Arroyo Grande Tourism Business Improvement District on an annual basis; b. To advise the City Council regarding the expenditure of assessment funds on an annual and ongoing basis; c. To prepare and file the annual report as described in Streets and Highways Code Section 36533. Such report shall be submitted to the City Council no later than April 30 of each year; d. To study, investigate and make proposals regarding the need for any changes to the Arroyo Grande Tourism Business Improvement District on an annual basis be included in the annual report; and e. To perform any other functions as directed by the City Council fro time to time. 8. This Resolution shall be deemed effective upon its adoption. On motion of Council Member , seconded by Council Member and by the following roll call vote, to wit: AYES: NOES: ABSENT: the foregoing Resolution was passed and adopted this day of 2013. Item 11.b. - Page 11 RESOLUTION NO. PAGE 3 TONY FERRARA, MAYOR ATTEST: KELLY WETMORE, CITY CLERK APPROVED AS TO CONTENT: STEVEN ADAMS, CITY MANAGER APPROVED AS TO FORM: TIMOTHY J. CARMEL, CITY ATTORNEY Item 11.b. - Page 12 ATTACHMENT 1 NOTICE OF PUBLIC MEETING AND PUBLIC HEARING CITY OF ARROYO GRANDE CITY COUNCIL ESTABLISHMENT OF A TOURISM BUSINESS IMPROVEMENT DISTRICT The purpose of the NOTICE is to provide you with information about a proceeding that will include a public meeting and public hearing to be conducted by the City Council of the City of Arroyo Grande regarding the establishment of a Tourism Business Improvement District and its effect on the business that you own. This Notice is being sent to you in accordance with Resolution No. passed by the City Council on February 26, 2013 (a copy of which is enclosed), The Parking and Business Improvement Area Law of 1989 (California Streets and Highways Code Sections 36500 et. seq.), and Government Code Section 54954.6. The purpose of the public meeting and public hearing is to consider an Ordinance establishing the Arroyo Grande Tourism Business Improvement District, to provide for tourism and marketing programs to promote Arroyo Grande as a tourism destination and projects, programs and activities that benefit lodging businesses located and operating within the boundaries of the City of Arroyo Grande. Please be advised of the following: -- The City Council will hold a Public Meeting on the proposed assessment and Tourism Business Improvement District on April 23, 2013.The City Council meeting will begin at 6:00 p.m., in the City Council Chambers located at 215 East Branch Street, Arroyo Grande. -- The City Council will hold a Public Hearing on the proposed assessment and Tourism Business Improvement District on May 14, 2013.The City Council meeting will begin at 6:00 p.m. in the City Council Chambers located at 215 East Branch Street, Arroyo Grande. GEOGRAPHIC BOUNDARIES: The boundaries of the proposed Arroyo Grande Tourism Business Improvement District are the boundaries of the City of Arroyo Grande. PROPOSED ASSESSMENT: The Arroyo Grande Tourism Business Improvement District is proposed to include all lodging businesses located within the proposed District's boundaries. "Lodging" is defined to be any structure, or any portion of any structure, which is occupied or intended or designed for occupancy by transients for dwelling, lodging or sleeping purposes, and includes any hotel, motel, inn, or bed and Item 11.b. - Page 13 breakfast that pays transient occupancy tax, but excludes RV parks and vacation rentals. As further set forth in Resolution No. , the assessment that would be levied on all lodging businesses within the boundaries would be based upon two percent (2%) of the rent charged by the operator per occupied room per night for all transient occupancies. Assessments would not be included in gross rent revenue for purposes of determining the amount of the assessment. The value of extended stays of more than thirty (30) consecutive calendar days would be exempt from the levy of assessment. PROTEST PROCEDURES: Pursuant to Streets and Highways Code Section 36524, at the public hearing the City Council will hear and consider all protests against the establishment of the proposed Arroyo Grande Tourism Business Improvement District, the extent of the area or the furnishing of specified types of improvements or activities within the District. Pursuant to law, protests may be made orally or in writing by any interested person, however, as noted below, only certain written protests will count in the determination of a "majority protest" related to the creation of the District. Any protest pertaining to the regularity or sufficiency of the proceedings shall be in writing and clearly state the irregularity or defect to which objection is made. In order to count as a protest as part of the determination of a majority protest against the Arroyo Grande Tourism Business Improvement District, a protest must be in writing. Written protests must be received by the City Clerk before the close of the public hearing and may be delivered or mailed to the City Clerk at City Hall, 300 East Branch Street, Arroyo Grande, CA 93420. Written protests shall contain a written description of the lodging 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 the official records of the City as the owner of the business, then the protest shall contain or be accompanied by written evidence that the person is the owner of the business. If, at the conclusion of the public hearing, written protests are received from owners of businesses in the proposed AGTBID which will pay fifty percent (50%) or more of the assessments proposed to be levied and protests are not withdrawn so as to reduce the protest to less than fifty percent (50%) (i.e., there is a majority protest), no further proceedings to create the AGTBID, as contained in the resolution of intention, shall be taken for a period of one year from the date of the finding of a majority protest by the City Council. If the majority protest is only against the furnishing of a specified type or types of improvement or activity within the AGTBID, those types of improvements or activities shall be eliminated. Item 11.b. - Page 14 DOCUMENTS AVAILABLE FOR REVIEW: The staff report and other supporting documents regarding this matter will be available for public review at City Hall by February 21, 2013. Documents will also be available on the City's website www.arroyogrande.orq once the Agenda for the February 26, 2013 City Council meeting has been posted, which will be by Friday, February 22, 2013. COMMENT ON THIS PUBLIC HEARING: Response to this Notice can be made orally at the Public Hearing and/or in writing before the hearing. Written comments can be made to the City Council by mail or hand delivery to: City Clerk, 300 East, Branch Street, Arroyo Grande, CA 93420. ADDITIONAL INFORMATION: The telephone number and address of the individual that interested persons may contact to receive additional information about the assessment is the City Clerk, 300 East, Branch Street, Arroyo Grande, CA 93420, (805) 473-5414. Item 11.b. - Page 15 ATTACHMENT 2 ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE ESTABLISHING THE ARROYO GRANDE TOURISM BUSINESS IMPROVEMENT DISTRICT, FIXING THE BOUNDARIES THEREOF, AND PROVIDING FOR THE LEVY OF A BUSINESS ASSESSMENT TO BE PAID BY LODGING BUSINESSES IN SUCH DISTRICT BE IT ORDAINED by the City Council of the City of Arroyo Grande as follows: SECTION 1. (a) On February 26, 2013, the City Council of the City of Arroyo Grande adopted Resolution No. entitled "A Resolution of the City Council of the City of Arroyo Grande Declaring its Intention to Establish the Arroyo Grande Tourism Business Improvement District, Declaring Its Intention to Levy an Assessment on Lodging Businesses Within Such District, and Fixing the Time and Place of a Public Meeting and a Public Hearing Thereon and Giving Notice Thereof". (b) As specified in such Resolution, the boundaries of the District encompass the City of Arroyo Grande, and there are no separate benefit zones within the District. (c) Said Resolution was published and copies thereof were duly mailed and posted, all as provided by State law and specified in the Resolution. (d) Pursuant to Resolution No. , and as provided in State law, a public meeting concerning the formation of said District was held at 6:00 p.m. on April 23, 2013, and a public hearing concerning the formation of said District was held before the City Council at 6:00 p.m. on May 14, 2013, in the City Council Chambers located at 215 East Branch Street, Arroyo Grande. (e) All written and oral protests made or filed were duly heard, and evidence and testimony for and against the proposed action was received and considered, and a full, fair and complete hearing was granted and held. (f) The City Council determined that there was not a majority protest within the meaning of Streets and Highways Code Section 36525. A majority protest is defined as written protests received from owners of lodging businesses in the proposed area which would pay fifty percent (50%) or more of the assessments proposed to be levied. Protests are weighted based on the assessment proposed to be levied on each lodging business. Item 11.b. - Page 16 ORDINANCE NO. PAGE 2 (g) Following the public hearing, the City Council hereby finds that the lodging businesses lying within the District herein created, in the opinion of the City Council, will be benefited by the expenditures of funds raised by the assessment proposed to be levied hereunder. (h) Pursuant to the provisions of the Parking and Business Improvement Area Law of 1989, California Streets and Highways Code Sections 36500 et seq., the Arroyo Grande Tourism Business Improvement District (AGTBID) is hereby established as herein set forth and all lodging businesses in the District established by this Ordinance shall be subject to any amendments made hereafter to said law or to other applicable laws. SECTION 2. Chapter 3.46 is hereby added to Title 3 of the Arroyo Grande Municipal Code to read as follows: 3.46.010 - Title. This chapter shall be known as the "City of Arroyo Grande tourism business improvement district law." 3.46.020 - Definitions. "City council" means the city council of the city of Arroyo Grande. "City advisory board" means the advisory body appointed by the city council, pursuant to this chapter. "District" means the city of Arroyo Grande tourism business improvement district (or "AGTBID") created by this chapter and as delineated in Section 3.44.040. "Law" means the Parking and Business Improvement Area Law of 1989, California Streets and Highways Code Sections 36500 et seq., as amended. "Lodging" means any structure, or any portion of any structure, which is occupied or intended or designed for occupancy by transients for dwelling, lodging or sleeping purposes, and includes any hotel, motel, inn, or bed and breakfast that pays transient occupancy tax. For purposes of this chapter the definition of "lodging" shall not include RV parks and vacation rentals. Item 11.b. - Page 17 ORDINANCE NO. PAGE 3 "Operator" means the person who is the proprietor of the lodging business, whether in the capacity of owner, lessee, sublessee, mortgagee in possession, licensee or any other capacity. Where the operator performs his/her functions through a managing agent of any type or character other than an employee, the managing agent shall also be deemed an operator for the purposes of this chapter and shall have the same duties and liabilities as his/her principal. Compliance with the provisions of this chapter by either the principal or the managing agent shall, however, be considered to be compliance by both. "Rent" means the consideration charged, whether or not received, for the occupancy of space in a lodging business, valued in money, whether to be received in money, goods, labor, or otherwise, including all receipts, cash, credits, property and services of any kind or nature, without any deduction therefrom whatsoever. "Transient" means any person who exercises occupancy or who is entitled to occupancy, by reason of concession, permit, right of access, license, or other agreement for a period of thirty consecutive calendar days or less, counting portions of calendar days as full days. 3.46.030 - Authorized uses. This chapter is made and enacted pursuant to the provisions of the Parking and Business Improvement Area Law of 1989 (Sections 36500, et seq., of the Streets and Highways Code) (the "law"). The purpose of forming the district as a business improvement area under the Parking and Business Improvement Area Law of 1989 is to provide revenue to defray the costs of services, activities and programs promoting tourism which will benefit the operators of lodging businesses in the district through the promotion of scenic, recreational, cultural and other attractions in the district as a tourist destination. It is the intent of this chapter to provide a supplemental source of funding for the promotion of tourism in the district. The specific services, activities and programs to be provided by the district are as follows: A. The general promotion of tourism within the district is to include costs as specified in the business plan to be adopted annually. B. The marketing of conference, group, and film business that benefits local tourism and the local lodging industry in the district. C. The marketing of the district to the travel industry in order to benefit local tourism and the local lodging industry in the district. Item 11.b. - Page 18 ORDINANCE NO. PAGE 4 D. Administration of the AGTBID, including collection and enforcement of assessments and administration of any contracts that the city enters into related to the AGTBID. 3.46.040 - Boundaries. The boundaries of the AGTBID shall be the boundaries of the city of Arroyo Grande. 3.46.050 - Levy of assessment, reporting and exemptions. The AGTBID shall include all lodging businesses located within the AGTBID boundaries. The assessment to be levied on all lodging businesses within the AGTBID boundaries shall be based upon two percent (2%) of the rent charged by the operator per occupied room per night for all transient occupancies. The assessment shall be collected quarterly, based on two percent (2%) of the rent charged by the operator per occupied room per night in revenues for the previous quarter. New lodging businesses within the boundaries shall not be exempt from the levy of assessment authorized by Section 36531 of the law. Assessments pursuant to the AGTBID shall not be included in rent revenue for purpose of determining the amount of the assessment. The value of extended stays of more than thirty (30) consecutive calendar days shall be exempt from the levy of assessment. Each operator shall, on or before the last day of the month following the close of each calendar quarter, or at the close of any shorter reporting period which may be established by the director of administrative services, make a return to the director of administrative services, on forms provided by him or her, of the total rents charged and received and the amount of assessment collected for transient occupancies. At the time the return is filed, the full amount of the assessment collected shall be remitted to the director of administrative services. The director of administrative services may establish shorter reporting periods for any operator if he or she deems it necessary in order to insure collection of the assessment, and he or she may require further information in the return. 3.46.060 - Annual review of assessment. All of the assessments imposed pursuant to this chapter shall be reviewed by the Arroyo Grande city council annually, based upon the annual report prepared by the advisory board appointed pursuant to this chapter and Sections 36530 and 36533 of the law. After approval of the annual report, the Arroyo Grande city council shall follow the hearing process as outlined in Section 36534 of the law. At the public hearing the Arroyo Grande city council shall hear and Item 11.b. - Page 19 ORDINANCE NO. PAGE 5 consider all protests. If written protests are received from lodging businesses in the district paying fifty percent (50%) or more of the annual assessment, no further proceedings to continue the levy of assessments shall take place. The protests shall be weighted based upon the annual assessment for the prior year by each lodging business. 3.46.070 - Imposition of assessment. The Arroyo Grande city council hereby levies and imposes and orders the collection of an initial assessment to be imposed upon lodging businesses in the district described above, which shall be calculated based upon two percent (2%) of the rent charged by operators as described in Section 3.44.050 above. Such levy shall begin on the effective date of the ordinance adopting the AGTBID. 3.46.080 - Use of revenue. The activities to be provided by the AGTBID will be funded by the levy of the assessments and any voluntary contributions. The total revenue from the levy of assessments within the AGTBID shall not be used to provide improvements or activities outside the AGTBID or for any purpose other than the purposes specified in Section 3.44.030. The proceeds of the lodging business assessment and any other voluntary contributions shall be spent to administer marketing and visitor programs to promote the city of Arroyo Grande as a tourism visitor destination and to promote the local lodging operations within the City of Arroyo Grande. All funds shall be expended consistent with the purposes of this section. Funds remaining at the end of any AGTBID term may be used in subsequent years in which AGTBID assessments are levied as long as they are used consistent with the requirements of this section. The Arroyo Grande city council shall consider recommendations made by the advisory board created by Section 3.44.100 of this chapter as to the use of assessment revenue. 3.46.090 - Delinquency, penalty and interest. Any lodging business that fails to remit any assessment imposed by this chapter within the time required shall be subject to the following: A. Original Delinquency. Any operator who shall fail to remit any assessment imposed by the provisions of this chapter within the time required shall pay a penalty in the amount of ten percent (10%) of the assessment in addition to the amount of the assessment. B. Continued Delinquency. Any operator who shall fail to remit any. delinquent remittance on or before a period of thirty (30) days following the Item 11.b. - Page 20 ORDINANCE NO. PAGE 6 date on which the remittance first became delinquent shall pay a second delinquency penalty in the amount of ten percent (10%) of the assessment in addition to the amount of the assessment and the ten percent (10%) first imposed. C. Fraud. If it is determined that the nonpayment of any remittance due pursuant to the provisions of this chapter is due to fraud, a penalty in the amount of twenty-five percent (25%) of the amount of the assessment shall be added thereto in addition to the penalties set forth in subsections A and B of this section. D. Interest. In addition to the penalties imposed, any operator who shall fail to remit any assessment imposed by the provisions of this chapter shall pay interest at the rate of one-half of one percent per month, or fraction thereof, on the amount of the assessment, exclusive of penalties, from the date on which the remittance first became delinquent until paid. E. Penalties Merged with Assessment. Every penalty imposed, and such interest as accrues, pursuant to the provisions of this section shall become a part of the assessment required to be paid by the provisions of this chapter. Any and all remedies available to the city of Arroyo Grande for non-payment of assessments or taxes shall be applicable in the event of non-payment of an assessment under this chapter. Any penalty and interest fees collected from a lodging business due to delinquency shall go to the city of Arroyo Grande and be used for any lawful purpose. 3.46.100 - Advisory board. The city council shall appoint an advisory board pursuant to Section 36530 of the California Streets and Highways Code. The city council may, by resolution, adopt bylaws governing the membership and operations of the advisory board. The advisory board shall review the implementation of this chapter, the implementation of programs and activities funded through this chapter, and advise the city council on the amount of the district's assessments and on the services, programs, and activities to be funded by the assessments, and shall perform such other duties as required by the Law, including preparing the annual report required by Section 36533 of the Law. The annual report shall be submitted to the City Council no later than the last day of March each year. The city council shall ensure that the advisory board has timely access to all Item 11.b. - Page 21 ORDINANCE NO. PAGE 7 public information regarding collection, disbursement, and uses of the funds collected under the terms of this ordinance. 3.46.110 - Modification or disestablishment. The City of Arroyo Grande by ordinance may modify the provisions of this chapter and may disestablish the district or parts of the district, after adopting a resolution of intention to such effect. Such resolution shall describe the proposed change or changes, or indicate that it is proposed to disestablish the district, and shall state the time and place of a hearing to be held by the Arroyo Grande city council to consider the proposed action. If the operators of lodging businesses which pay fifty percent (50%) or more of the assessments in the district file a petition with the city clerk of the city of Arroyo Grande requesting the Arroyo Grande city council to adopt a resolution of intention to modify or disestablish the district, the Arroyo Grande city council shall adopt such resolution and act upon it as required by law. Signatures on such petition shall be those of a duly authorized representative of the operators of lodging businesses in the district. In the event the resolution proposes to modify any of the provisions of this chapter, including changes in the existing assessments or in the existing boundaries of the district, such proceedings shall terminate if protest is made by the operators of lodging businesses which pay fifty percent (50%) or more of the assessments in the district, or in the district as it is proposed to be enlarged. In the event the resolution proposes disestablishment of the district, the Arroyo Grande city council shall disestablish the district, unless at such hearing protest against disestablishment is made by the operators of lodging businesses paying fifty percent (50%) or more of the assessments in the district. SECTION 3. If any section, subsection, subdivision, paragraph, sentence, or clause of this Ordinance or any part thereof is for any reason held to be unlawful, such decision shall not affect the validity of the remaining portion of this Ordinance or any part thereof. The City Council hereby declares that it would have passed each section, subsection, subdivision, paragraph, sentence, or clause thereof, irrespective of the fact that any one or more section, subsection, subdivision, paragraph, sentence, or clause be declared unconstitutional. SECTION 4. A summary of this Ordinance shall be published in a newspaper published and circulated in the City of Arroyo Grande at least five (5) days prior to the City Council meeting at which the proposed Ordinance is to be adopted. A certified copy of the full text of the proposed Ordinance shall be posted in the office of the City Clerk. Within fifteen (15) days after adoption of the Ordinance, the summary with the names of those City Council Members voting for and against the Ordinance shall be Item 11.b. - Page 22 ORDINANCE NO. PAGE 8 published again, and the City Clerk shall post a certified copy of the full text of such adopted Ordinance. SECTION 5. This Ordinance shall take effect thirty (30) days after its adoption. On motion by Council Member , seconded by Council Member , and by the following roll call vote to wit: AYES: NOES: ABSENT: the foregoing Ordinance was adopted this day of , 2013. Item 11.b. - Page 23 ORDINANCE NO. PAGE 9 TONY FERRARA, MAYOR ATTEST: KELLY WETMORE, CITY CLERK APPROVED AS TO CONTENT: STEVEN ADAMS, CITY MANAGER APPROVED AS TO FORM: TIMOTHY J. CARMEL, CITY ATTORNEY Item 11.b. - Page 24