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HomeMy WebLinkAboutItem 7c - Annual Public Hearing for the Tourism Business Improvement District Item 7c Department: Administration Cost Center: 208-1006 For Agenda of: 10/21/2025 Placement: Public Hearing Estimated Time: 20 Minutes FROM: Greg Hermann, Deputy City Manager Prepared By: Laura Fiedler, Economic Development & Tourism Manager SUBJECT: ANNUAL PUBLIC HEARING FOR THE TOURISM BUSINESS IMPROVEMENT DISTRICT RECOMMENDATION 1. Conduct a public hearing to receive testimony regarding the City Council’s intention to continue the San Luis Obispo Tourism Business Improvement District and determine whether a legally sufficient protest is made; and 2. If no legally sufficient protest is made, adopt a Draft Resolution entitled, “A Resolution of the City Council of the City of San Luis Obispo, California, declaring the basis for and the levy of the assessment for the San Luis Obisp o Tourism Business Improvement District and affirming the establishment of the District.” (Attachment A) POLICY CONTEXT In June 2008, the Council adopted Ordinance No. 1517 establishing a tourism business improvement district as requested by the local lodging industry. The district was formed under the State’s Parking and Business Improvement Law of 1989, sections 36500 et seq. of the Streets and Highways Code, and codified into the City’s Municipal Code under Chapter 12.42. Pursuant to Municipal Code Section 12.42.060 and Sections 36530 and 36533 of the State’s Parking and Business Improvement Law, the appointed TBID Advisory Board is to submit an annual report that outlines the past year’s efforts and how the funding was used and to what effect. Section 36534 further requires that, after the approval of the annual report, if the TBID is intended to continue, the Council shall adopt a resolution of intention to levy an annual assessment for that fiscal year. The resolution also sets a public hearing to receive any written or oral protests against the continuation of the TBID as required by the applicable statute As referenced in the City’s Municipal Code, 12.42.060 and Sections 36524 and 36525 of the California Streets and Highways Code, after approval of the annual report of the City’s Tourism Business Improvement District (TBID), the City Council shall follow the public hearing process as identified in the relevant statutes and ordinances of the TBID . At the public hearing, the City Council shall hear and consider all protests. If written protests are Page 339 of 415 Item 7c received from hotel businesses in the district paying 50% or mor e of the annual assessment, no further proceedings to continue the levy of assessments shall take place for fiscal year 2025-26. The protests shall be weighted based upon the annual assessment for the prior year by each hotel business. (Ord. 1517 § 3 (part), 2008) DISCUSSION Background As noted above, in June of 2008, the City Council adopted an ordinance establishing the Tourism Business Improvement District (TBID). The TBID allows the hotel industry to raise funds solely dedicated to tourism marketing and promotions to attract visitors to San Luis Obispo. Currently the City TBID assessment is 2%. The TBID is inclusive of all lodging properties in the City of San Luis Obispo including hotels, motels, bed and breakfasts, hostels, inns and owner-occupied homestays. According to the City’s Municipal Code 12.42.100, the Tourism Business Improvement District Board (TBID Board) is an advisory body that “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 Board consists of seven members from the San Luis Obispo lodging industry and advises the City Council in the administration and use of the TBID assessment funds. The Board recommends projects to promote tourism through their public facing brand, Visit San Luis Obispo, to the City that directly benefit its lodging industry. On October 7, 2025, Council reviewed and approved the San Luis Obispo Tourism Business Improvement District (TBID) Board’s annual report pursuant to Municipal Code Section 12.42.060. The City’s Municipal Code further requires that, after the approval of the annual report, Council may choose to adopt a resolution of intention to levy an annual assessment for that fiscal year and schedule a public hearing to receive any written or oral protests against the district. Resolution No. 11600 (2025 Series), setting such a hearing, was adopted on October 7, 2025 (Attachment A). Following the Council action on October 7, 2025, all lodging businesses within the district including hotels, motels, bed and breakfast properties and the City permitted homestays, were noticed for the public hearing scheduled for October 21, 2025. Those notices were sent on October 9, 2025, to all assessed properties. Following the Public Hearing, should a sufficient written or oral protest from hotel businesses in the district which pay fifty percent or mo re of the assessment not be received, a continuation of the assessment will be levied for the TBID which shall be used Page 340 of 415 Item 7c to promote lodging at the hotels within the district and administer marketing programs that increase overnight lodging. Previous Council Action As set forth in Sections 36524 and 36525 of the California Streets and Highways Code and San Luis Obispo Municipal Code Section 12.42.060, the Council has the ability to continue the San Luis Obispo TBID at the public hearing, unless oral or written protests are received from City hoteliers that will pay 50% or more of the proposed assessments. Under Municipal Code Section 12.42.060, protests are weighted based upon the annual assessment for the prior year by each hotel. Staff will have assessment information available at the meeting, but for conf identiality reasons, this information is not made public before or at the meeting. In the event that a sufficient negative protest occurs, no further proceedings to continue the levy of assessments for that fiscal year shall take place. At the conclusion of the public hearing, if insufficient protest is received, Council may then adopt a resolution affirming the continuation of the San Luis Obispo TBID, setting forth the basis for the assessment, and levying the assessment upon hotels in the district for fiscal year 2025-26 (Attachment A). Public Engagement This item is on the agenda for the October 21, 2025, Council meeting and will follow all required postings and notifications. The public will have an opportunity to comment on this item at or before the meeting. All Advisory Body meetings for the TBID were noticed in accordance with Brown Act standards. Legal notices regarding the Council’s consideration to continue the San Luis Obispo TBID were published in the New Times and mailed to TBID properties on October 9, 2025. For convenience, the notice was also distributed to TBID constituents and stakeholders via email. ENVIRONMENTAL REVIEW The California Environmental Quality Act (CEQA) does not apply to the recommended action in this report, because the action does not constitute a “project” under CEQA Guidelines sec. 15378. FISCAL IMPACT Budgeted: Yes Budget Year: 2025-26 Funding Identified: Yes Page 341 of 415 Item 7c Fiscal Analysis: Funding Sources Total Budget Available Current Funding Request Remaining Balance Annual Ongoing Cost General Fund $ $ $ $ State Federal Fees Other: TBID $2,219,941 $0 $2,219,941 N/A Total $2,219,941 $0 $2,219,941 $N/A For FY 2025-26, the TBID projected revenue is $2,219,941 and is budgeted for program costs including staffing, which is intended to be used for tourism marketing and promotion. All costs associated with TBID program expenditures are paid with TBID revenues. The City retains 2% of TBID revenues to offset administrative overhead in the General Fund which amounts to $44,399 in FY 2025-26 based on current revenue assumptions. ALTERNATIVES 1. Delay the public hearing. In addition to the legal noticing, staff provided additional constituent outreach. In the event that the City recei ves close to 50% protest, the Council could delay the public hearing in order verify protest submissions. 2. Do not adopt the resolution. If the Council were to decline to adopt the resolution due to an interest in disestablishing the TBID, it would subsequently need to adopt a resolution of intention to disestablish the TBID and thereafter adopt an ordinance at a public hearing disestablishing district. Upon disestablishment, any remaining revenues from the levy of assessments would need to be refunded to the owners of businesses within the area. If the TBID was disestablished, the major source of revenue used to promote San Luis Obispo as a tourism destination would be eliminated, which may impact visitation and ultimately the City’s revenue. The visitor economy is important source of revenue for the City: almost 70 percent of sales tax revenue comes from visitors as well as 100 percent of the Transient Occupancy Tax, which historically have combined to represent about 40 percent of the City’s general fund budget. ATTACHMENTS A – Draft Resolution to Continue the TBID in FY 2025-26 Page 342 of 415 R _____ RESOLUTION NO. _____ (2025 Series) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, DECLARING THE BASIS FOR AND THE LEVY OF THE ASSESSMENT FOR THE SAN LUIS OBISPO TOURISM BUSINESS IMPROVEMENT DISTRICT AND AFFIRMING THE ESTABLISHMENT OF THE DISTRICT WHEREAS, the Parking and Business Improvement Law of 1989, section s 36500 et seq. of the Streets and Highways Code, authorizes cities to establish business improvement districts for several purposes, one of which is promotion of tourism; and WHEREAS, the lodging businesses within the proposed City of San Luis Obispo Tourism Business Improvement District had requested the City of San Luis Obispo establish such a self-assessment improvement district in 2008; and WHEREAS, the San Luis Obispo Tourism Business Improvement District was established in July 2008, and the San Luis Obispo Tourism Business Improvement District Law was incorporated into the Municipal Code under Chapter 12.42; and WHEREAS, the City Council appointed the Tourism Business Improvement District Board to carry out the functions specified in Street and Highways Code Section 36530, and to provide oversight, guidance, and recommend ations regarding the use of the assessment funds; and WHEREAS the San Luis Obispo Tourism Business Improvement District Law and the Parking and Business Improvement Law of 1989 requires the advisory body to prepare and submit an annual report stating pro posed changes, improvements and activities for the fiscal year; and WHEREAS, such report was filed and approved by the City Council on October 7, 2025. WHEREAS, on October 7, 2025 the City Council adopted Resolution No. 11600 (2025 Series) declaring its intention to continue the San Luis Obispo Tourism Business Improvement District in 2025-26; and WHEREAS, notices regarding the approval of the public hearing were sent on October 9, 2025 to all assessed properties; and WHEREAS, the City Council held a duly noticed Public Hearing on October 21, 2025 to allow for protests, as contemplated by Streets and Highway Code Section 36524; and WHEREAS, sufficient written or oral protest was not received from hotel businesses in the district which pay fifty percent or more of the assessment; Page 343 of 415 Resolution No. XXXX (2025 Series) Page 2 R ______ NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: a) The establishment of Tourism Business Improvement District in the City of San Luis Obispo in accordance with the San Luis Obispo Tourism Business Improvement District Law, San Luis Obispo Municipal Code Chapter 12.42, and the California Streets and Highways Code, section 36500 et seq. (Parking and Business Improvement Law of 1989) is affirmed. b) The assessment levied by the Tourism Business Improvement District shall be used to promote lodging at the hotels within the district and administer marketing programs that increase overnight lodging. c) The assessment shall be levied and allocated by the City of San Luis Obispo. d) The assessment shall to be levied on all “hotels”, as that term is defined in San Luis Obispo Municipal Code section 3.04.020, to wit: 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, inn, tourist home or house, motel, studio hotel, bachelor hotel, lodging house, rooming house, apartment house, dormitory, public or private club, mobile home or hou se trailer at a fixed location, or other similar structure or portion thereof. e) The assessment shall be based on two percent (2%) of gross room rent. f) New hotels shall not be exempt from immediate assessment. Upon motion of _______________________, seconded by _______________________, and on the following roll call vote: AYES: NOES: ABSENT: The foregoing resolution was adopted this _____ day of _____________________, 2025. ________________________________ Mayor Erica A. Stewart ATTEST: ____________________________________ Teresa Purrington, City Clerk APPROVED AS TO FORM: Page 344 of 415 Resolution No. XXXX (2025 Series) Page 3 R ______ ____________________________________ J. Christine Dietrick, City Attorney IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, this ______ day of ______________, 2025. ____________________________________ Teresa Purrington, City Clerk Page 345 of 415 Page 346 of 415 SLO TBID ANNUAL PUBLIC HEARING October 21, 2025 Recommendation As recommended by the Tourism Business Improvement District (TBID) Board, 1)Conduct a public hearing to receive testimony regarding the City Council’s intention to continue the San Luis Obispo Tourism Business Improvement District and determine whether a legally sufficient protest is made; and 2)If no legally sufficient protest is made, adopt a Resolution entitled, “A Resolution of the City Council of the City of San Luis Obispo, California, declaring the Basis for and the Levy of the Assessment for the San Luis Obispo Tourism Business Improvement District and Affirming the Establishment of the District.” 3 ●Established in 2008 ●7-member Advisory Board ●2% assessment on lodging properties “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 hotels in the district through the promotion of scenic, recreational, cultural and other attractions in the district as a tourist destination.” Background on the SLO TBID 4 ●Collected a record-breaking $11.4 million in transient occupancy tax (TOT) revenue ●Adopted a new 5-year strategic plan ●Launched the SLO Life Coach brand campaign ●Declared SLO the “MidWeekend Vacation Capital of the World” ●Achieved a 25% increase in traffic to VisitSLO.com and 26% increase in hotel partner referrals ●Continued Keys for Trees, with 1% of TBID revenue directed to planting trees in SLO ●Served 74,000 guests in the Visitor Center downtown FY 2024-25 TBID Accomplishments 5 1. Conduct a public hearing to receive testimony regarding the intention to continue the San Luis Obispo Tourism Business Improvement District. 2. Determine whether a legally sufficient protest is made. 3. If no legally sufficient protest is made, adopt a resolution affirming the continuation of the San Luis Obispo Tourism Business Improvement District, setting forth the basis for the assessment, and levying the assessment upon hotels in the district for fiscal year 2025-26. Public Hearing 6 TOURISM BUSINESS IMPROVEMENT DISTRICT PUBLIC HEARING Recommendation As recommended by the Tourism Business Improvement District (TBID) Board, 1)Conduct a public hearing to receive testimony regarding the City Council’s intention to continue the San Luis Obispo Tourism Business Improvement District and determine whether a legally sufficient protest is made; and 2)If no legally sufficient protest is made, adopt a Resolution entitled, “A Resolution of the City Council of the City of San Luis Obispo, California, declaring the Basis for and the Levy of the Assessment for the San Luis Obispo Tourism Business Improvement District and Affirming the Establishment of the District.” Thank YouThank You!