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CC 2014-05-13_11.a. AGTBID Annual ReportMEMORANDUM TO: CITY COUNCIL FROM: STEVEN ADAMS, CITY MANAGER BY: DAVID HIRSCH, ASSISTANT CITY ATTORNEY SUBJECT: CONSIDERATION OF ANNUAL REPORT AND ADOPTION OF RESOLUTION OF INTENTION FOR LEVY OF ANNUAL ASSESSMENT FOR ARROYO GRANDE TOURISM BUSINESS IMPROVEMENT DISTRICT DATE: MAY 13, 2014 RECOMMENDATION: It is recommended the City Council: 1) receive and approve the annual report of the Arroyo Grande Tourism Business Improvement District (AGTBID) Advisory Board; 2) adopt a Resolution of Intention to levy and collect assessments within the AGTBID area for Fiscal Year 2014-15 at the same rate as in Fiscal Year 2013-14; and 3) set the date for the public hearing for June 10, 2014. FINANCIAL IMPACT: Based on the anticipated year-end results for 2013-14, the total assessment expected to be collected totals approximately $164,000. In 2014-15, the AGTBID projected revenue is $170,000. Of the projected revenue, $3,000 is budgeted to cover the City's administrative costs associated with collecting and disbursing the assessment. The City has also budgeted $5,000 to contribute toward the tourism efforts. Therefore, it results in a net cost of $2,000 to the City. BACKGROUND: In May, 2013 the City Council adopted an Ordinance establishing the Arroyo Grande Tourism Business Improvement District. The District was formed under the Parking and Business Improvement Law of 1989, Sections 36500 et seq. of the Streets and Highways Code and incorporated into the Arroyo Grande Municipal Code (AGMC) in Title 3, Chapter 3.46. In accordance with the provisions in the Streets and Highways Code and AGMC Section 3.46.1 00, the City Council appointed an Advisory Board. Pursuant to Streets and Highways Code Section 36533 the Advisory Board is required to prepare an annual report, which is to be submitted to the City Council for its Item 11.a. - Page 1 CITY COUNCIL CONSIDERATION OF ANNUAL REPORT AND ADOPTION OF RESOLUTION OF INTENTION FOR LEVY OF ANNUAL ASSESSMENT FOR ARROYO GRANDE TOURISM BUSINESS IMPROVEMENT DISTRICT MAY 13,2014 PAGE2 review and approval. Accordingly, the AGTBID Advisory Board has submitted the attached annual report. AGMC Section 3.46.060 also provides that the assessments for the AGTBID are to be reviewed annually by the City Council based upon the annual report of the Advisory Board, and after approval of the annual report, the City Council is to follow the hearing process outlined in Streets and Highways Code Section 36534 for the annual assessment for the upcoming fiscal year. Section 36534 provides for the adoption of a Resolution of Intention to levy an annual assessment for that fiscal year. The Resolution also sets a public hearing in order to receive any written or oral protests against the continuation of the District as required by the applicable statute. ANALYSIS OF ISSUES: The AGTBID has been in effect for almost one year and has been very successful. A tourism website and other marketing efforts have been developed and implemented. The efforts are coordinated by a Chamber of Commerce Tourism Committee and approved by the AGTBID Advisory Board. The Chamber of Commerce has administered the program so minimal staff time has been required by the City. The AGTBID Advisory Board has voted to recommend extending the assessment and continuing the program. The Chamber of Commerce Executive Director will be attending the Council Meeting to present the annual report. After the City Council approves the AGTBID Advisory Board's annual report and adopts the Resolution of Intention, a public hearing will be noticed for June 10, 2014. The public hearing will allow lodging businesses subject to the assessment to submit comments, voice concerns, and protest the assessment. As set forth in Sections 36524 and 36525 of the California Streets and Highways Code, the City Council has the ability to continue the proposed citywide AGTBID at this public hearing, unless oral or written protests are received from lodging businesses that pay 50% or more of the proposed assessments. In that event, the Council cannot consider continuation of the AGTBID for at least one year. There are two additional changes that are being assessed by staff that would potentially be made to AGMC Chapter 3.46 in the future. First, the provisions in the Arroyo Grande Municipal Code relating to the AGTBID assessments do not include exemptions for governmental officials that are in place for the Transient Occupancy Tax. The intent when the AGTBID was established was to maintain consistent regulations and procedures to minimize the effort of compliance by lodging businesses. However, this discrepancy was brought to the City's attention after it had taken effect. Item 11.a. - Page 2 CITY COUNCIL CONSIDERATION OF ANNUAL REPORT AND ADOPTION OF RESOLUTION OF INTENTION FOR LEVY OF ANNUAL ASSESSMENT FOR ARROYO GRANDE TOURISM BUSINESS IMPROVEMENT DISTRICT MAY 13,2014 PAGE 3 Secondly, the City is in the process of developing regulations for vacation rentals and homestays, which are proposed to be subject to the assessment. Changes to the AGTBID Ordinance may be necessary to clarify this extension. However, it is proposed to present a separate ordinance to City Council for consideration with these changes once decisions are made regarding vacation rentals and homestays. ALTERNATIVES: The following alternatives are provided for the Council's consideration: 1. Approve staff's recommendations; 2. Request changes or clarification to the annual report; 3. Do not approve staff's recommendations; or 4. Provide staff other direction. ADVANTAGES: The recommendations will enable the City to extend the AGTBID, which provides a mechanism to generate funding to promote hotel stays and tourism in the City, which increases transient occupancy tax revenue and supports local businesses. DISADVANTAGES: No disadvantages with the recommended action are identified. 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, May 8, 2014 and on the City's website on Friday, May 9, 2014. No public comments were received. Attachments: 1. Annual Report Item 11.a. - Page 3 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 ASSESSMENT FOR THE DISTRICT, AND TO SET A DATE FOR THE PUBLIC HEARING ON THE DISTRICT AND THE ASSESSMENT FOR FISCAL YEAR 2014-15 WHEREAS, the Parking and Business Improvement Area Law of 1989 ("PBIAL"), sections 36500 et seq. of the Streets and Highways Code, authorizes cities to establish business improvement districts for several purposes, one of which is the 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 3.46.1 00, the City Council appointed an Advisory Board to provide oversight, guidance, and recommendations regarding the use of the assessment funds; and WHEREAS, the Municipal Code and the PBIAL requires the Advisory Board to prepare and submit an annual report ("Annual Report") stating proposed changes, improvements and activities for the fiscal year; and WHEREAS, on April 28, 2014, the Advisory Board approved the Annual Report; and WHEREAS, the Advisory Board report was filed and approved by the Arroyo Grande City Council on May 13, 2014. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Arroyo Grande as follows: Sectfon 1. The City Council proposes 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 levy assessments for fiscal year 2014-15. Section 2. The Annual Report is on file with the City Clerk and contains a full and detailed description of the improvements and activities to be provided for fiscal year 2014-15. No changes to the District boundaries are proposed, and the Annual Report includes the estimated cost of providing Item 11.a. - Page 4 RESOLUTION NO. PAGE2 improvements and activities for fiscal year 2014-15. The assessment is not proposed to be increased. Section 3. The boundaries of the District are the boundaries of the City of Arroyo Grande. Section 4. The assessment levied by the District shall be used for 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 AGMC Section 3.46.030. Section 5. 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. Section 6. The assessment shall be based upon two percent of the rent charged by the operator per occupied room per night for all transient occupancies and shall be collected quarterly. Section 7. New lodging businesses shall not be exempt from immediate assessment. Section 8. 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, and is hereby set for 6:00 p.m., Tuesday June 10, 2014, before the City Council of the City of Arroyo Grande at the City Council Chambers at 215 E. Branch St., Arroyo Grande, CA. Section 9. At the public hearing, the testimony of all interested persons for or against the continuation of the District, the boundaries of the District, or the furnishing of specified 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. The form and manner of protests shall comply with Streets and Highways Code Sections 36524 and 36525. Section 10. 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. 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 Item 11.a. - Page 5 RESOLUTION NO. PAGE 3 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. Each written protest shall contain a 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. Section 11. 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 continue the District shall occur. New proceedings to continue the District shall not be undertaken again for a period of at least one (1) year from the date of the finding. If the majority of written protests are only as to an improvement or activity proposed, then that type of improvement or activity shall not be included in the District. Section 12. 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 days before the public hearing. 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 2014. Item 11.a. - Page 6 RESOLUTION NO. PAGE4 TONYFERRARA,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.a. - Page 7 ATTACHMENT 1 ARROYO GRANDE TOURISM BUSINESS IMPROVEMENT DISTRICT ANNUAL REPORT FY 2013-2014 BACKGROUND The Arroyo Grande Tourism Business Improvement District Advisory Board met for the first time, Monday, June 24, 2013. Board Members appointed: Kevin Thornton, Best Western Casa Grande; Andrew Jenest, Hampton Inn; and Mike Panchal, Aloha Inn. Jenest was elected chairman. It was agreed that the Chamber of Commerce would: • coordinate committee and sub-committee meetings, • manage marketing contractors, •monitor and provide data gathered through digital marketing, then fulfill inquiries and contracts, •coordinate payments, and • attend tourism industry meetings as Arroyo Grande's representative. Additionally, the Chamber agreed to: • respond to requests from other organizations • develop a specific marketing plan aided by the Chamber's tourism marketing committee • provide recommendations to the TBID Advisory board • coordinate outside presentations, and • supply "visitarroyogrande" uris to the TBID. Barnett Cox & Associates was hired to create the website and associated marketing and advertising. The following is a list of activities from July 2013 through March 2014: • VisitArroyoGrande.org website was created and went online September 2013 Item 11.a. - Page 8 • Social media sites including Facebook, Twitter and Pinterest were activated. Members of the Chamber's tourism marketing committee provided content • The TBID sponsored the "SAVOR the Central Coast" even in October. The TBID sponsored the "farm to school" garden and staffed a booth • The Chamber created a travel package and Barnett Cox provided graphics for an online contest coordinated and advertised by Visit San Luis Obispo County • Sponsorship page for Trip Advisor went live November 15, 2013 • A photo challenge was launched in December 2013 • A mobile advertising campaign was created • Display ads were run with the Bay Area News Group and Los Angeles Times. • Memberships with Visit San Luis Obispo and the Central Coast Tourism Council were activated • A second photo challenge was launched in March 2014 with a prize of a $50 Rooster Creek Restaurant gift certificate • A Stay & Play campaign was launched through online and mobile ads encouraging people to click to enter in order to qualify. The TBID is gathering emails for a tourism database with their entry information. The prize for the winner will be two nights at the Hampton Inn plus a $50 Comfort Market gift certificate. Regarding the requirements for the Annual Report as stated in Section 36533 of the Streets and Highway Code: 1. The Arroyo Grande Tourism Business Improvement District (TBID) Advisory Board does not propose any changes in the boundaries of the TBID, which were established as the boundaries of the City of Arroyo Grande. 2. With the renewal of the TBID, continuing initiatives proposed for FY 2014-15 include: a. Increasing signage on the 101 corridor. The TBID is exploring a partnership with the Village Improvement Association to enlarge existing signage. The TBID is exploring adding billboard signage on Highway 101 at least 60 miles away from Arroyo Grande. Currently there are no sites available, but the TBID is on a watch list. b. Continue to develop marketing strategies and creative campaigns that leverage the strength of traditional and non-traditional media. As more travelers access Item 11.a. - Page 9 information on mobile devices, marketing will continue to migrate toward the online experience. Expanding the use of integrated marketing and utilizing targeted advertising strategies on social channels will reflect this shift to mobile devices. Traditional advertising that includes print and electronic media will continue to be a part of the integrated marketing approach. c. Participate in special events that specifically target hotel stays in Arroyo Grande. d. Market Arroyo Grande through participation with Destination Marketing Organizations (DMOs) including but not limited to the Central Coast Tourism Council, the SLO Wine Association and Visit San Luis Obispo County. 3. Estimated costs for FY 2013-14 City of Arroyo Grande 7/1/2013 through 6/30/2014 Tourism Business Improvement District Adjusted Year-to-Date Year -to-Date Account Appropriation Expenditures Expenditures Encumbrances Balance Advertising 72,500.00 42,489.22 42,489.22 0 30,010.78 Contract Services 18,500.00 10,059.99 10,059.99 0 8,440.01 Total Services 91,000.00 52,549.21 52,549.21 0 38.450.79 Memberships 15,599.00 12,599.00 12,599.00 0 3,000.00 Public Relations 40,000.00 14,246.10 14,246.10 0 25,753.90 Total Mise Exp. 55,599.00 26,845.10 26,845.10 0 28.753.90 Grand Total 146,599.00 79,394.31 79,394.31 0 67,204.69 % Used 58.61 54.38 57.75 80.77 35.62 48.28 54.16 Item 11.a. - Page 10 4. FY 2013-2014 Budget Details Revenues Revenue Source Amount Total TBID Fee $152,000.00 City $ 5,000.00 Chamber $5,000.00 Total: $162,000.00 Expenditures Line Item Expenditure Total City $,3000.00 Chamber $13,000.00 Supplies $2,500.00 $18,500.00 Advertising/Marketing Advertising $30,000.00 Consultant Services $30,000.00 Mise $7,500.00 $67,500.00 Website Website design $5,000.00 $5,000.00 Visit SLO Memberships County $12,599.00 CCTC $500.00 Misc. $2,500.00 $15,599.00 Sponsorships SAVOR $15,000.00 Misc. $15,000.00 $30,000.00 Events Misc. $10,000.00 $10,000.00 Expenditure Total $146,599.00 Projected fund balance $15,401.00 Item 11.a. - Page 11 5. FY 2014-2015 Budget Detail Revenues Revenue Source Amount Total TBID Fee $170,000.00 City $ 5,000.00 Chamber $5,000.00 Total: $180,000.00 Expenditures Line Item Expenditure Total City $3,000.00 Chamber $17,000.00 Supplies $2,500.00 $22,500.00 Advertising/Marketing Advertising $42,000.00 Consultant Services $32,000.00 Mise $10,000.00 84,000.00 Website Website maintenance $7,000.00 $7,000.00 Memberships Visit SLO County $14,880.00 CCTC $500.00 Misc. $3,000.00 $18,380.00 Sponsorships SAVOR $15,000.00 Misc. $15,000.00 $30,000.00 Events Misc. $10,000.00 $10,000.00 Expenditure Total $171,880.00 Projected fund balance $8,120.00 Item 11.a. - Page 12 It e m 1 1 . a . - P a g e 1 3 It e m 1 1 . a . - P a g e 1 4 It e m 1 1 . a . - P a g e 1 5 It e m 1 1 . a . - P a g e 1 6 It e m 1 1 . a . - P a g e 1 7 It e m 1 1 . a . - P a g e 1 8