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HomeMy WebLinkAboutItem 7a - Annual Public Hearing for TBID FY 2026-27 Item 7a Department: 3 Cost Center: 208-1006 For Agenda of: 10/20/2026 Placement: Public Hearing Estimated Time: 20 minutes FROM: Greg Hermann, Deputy City Manager Prepared By: Jacqui Clark-Charlesworth, Tourism & Community Promotions Manager Laura Fiedler, Economic Development & Tourism Manager SUBJECT: ANNUAL PUBLIC HEARING FOR THE TOURISM BUSINESS IMPROVEMENT DISTRICT FY 2026-27 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 Obispo Tourism Business Improvement District and affirming the establishment of the District. POLICY CONTEXT In June 2008, the Council adopted Ordinance No. 1517 establishing a Tourism Business Improvement District (TBID) 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 Counc il 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 the City Council shall follow the public hearing process. At the hearing, the City Council shall hear and consider all protests. If written protests are received from lodging businesses in the district paying 50% or more of the annual assessment, no further proceedings to continue the levy of assessments shall take place for FY 2026 -27. The protests shall be weighted Page 205 of 210 Item 6a based upon the annual assessment for the prior year by each lodging 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. 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% of gross receipts. 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 permitted homestays. According to the City’s Municipal Code 12.42.100, the Tourism Business Improvement District 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, that directly benefit the city’s lodging industry. On October 6, 2026, Council reviewed and approved the San Luis Obispo Tourism Business Improvement District 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 p rotests against the district. Resolution No. 11691 (2026 Series), setting such a hearing, was adopted on October 6, 2026. Following the Council action on October 6, 2026, 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 20, 2026. Those notices were sent on October 8, 2026, to all assessed properties. Following the Public Hearing, should a sufficient number of written or oral protest from hotel businesses in the district which pay fifty percent or more of the assessment not be received, a continuation of the assessment will be levied for the TBID which shall be used to promote lodging at the hotels within the district and administer marketing programs that increase overnight lodging. Previous Council or Advisory Body Action Page 206 of 210 Item 6a 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 confidentiality reasons, this information is not made public before or at the meeting. If 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 sufficient protest is not 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 lodging properties in the district for FY 2026-27 (Attachment A). Public Engagement This item is on the agenda for the October 20, 2026, Council meeting and will follow all required postings and notifications. The public may 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 8, 2026. For convenience, the link to the agenda 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: 2026-27 Funding Identified: Yes Fiscal Analysis: Funding Sources Total Budget Available Current Funding Request Remaining Balance Annual Ongoing Cost General Fund $ $ $ $ Fees Other: TBID $2,299,130 $0 $2,299,130 N/A Total $2,299,130 $0 $2,299,130* N/A Page 207 of 210 Item 6a *For FY 2026-27, the TBID projected revenue is $2,299,130 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 revenue s. The City retains 2% of TBID revenues to offset administrative overhead in the General Fund which amounts to $45,983 in FY 2026-27 based on current revenue assumptions. ALTERNATIVES 1. Delay the public hearing. In addition to the legal noticing, staff provided additional constituent outreach. If the City receives 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 revenue from the levy of assessments would need to be refunded to the owners of businesses within the area. If the TBID was disestablished, no further proceedings to reestablish the TBID or levy the assessment shall be taken for one year, and 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. ATTACHMENTS A – Draft Resolution to Continue the TBID in FY 2026-27 Page 208 of 210 R ______ RESOLUTION NO. _____ (2026 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 an advisory board to carry out the functions specified in Street and Highways Code Section 36530, and to provide oversight, guidance, and recommendations 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 proposed changes, improvements and activities for the fiscal year; and WHEREAS, such report was filed and approved by the City Council on October 6, 2026. WHEREAS, on October 6, 2026 the City Council adopted Resolution No. 11691 (2026 Series) declaring its intention to continue the San Luis Obispo Tourism Business Improvement District in 2026-27; and WHEREAS, notices regarding the approval of the public hearing were sent on October 8, 2026 to all assessed properties; and WHEREAS, the City Council held a duly noticed Public Hearing on October 20, 2026 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; 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 Page 209 of 210 R ______ 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 house 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 _____________________, 2026. ____________________________________ Mayor Erica A. Stewart ATTEST: ____________________________________ Teresa Purrington, City Clerk APPROVED AS TO FORM: ____________________________________ 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 ______________, 2026. ____________________________________ Teresa Purrington, City Clerk Page 210 of 210 SLO TBID ANNUAL PUBLIC HEARING October 20, 2026 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 record-breaking transient occupancy tax (TOT) totaling more than $12.28 million ●Six $1 million revenue-collection months for the first time ever ●Launched a new constituent newsletter ●Occupancy at 71.4%, above pre-pandemic levels, even with 200 new rooms ●Continued to promote SLO as a MidWeekend destination, contributing to Keys for Trees ●SLO Life Coach completed its first full year. Brand sentiment is rising and “pit stop” perceptions are falling ●Joined the "Million Club"and increased in 17.7K followers across Meta & TikTok ●Three Visit California Poppy Award finalist nods and an eTourism Campaign of the Year finalist FY 2025-26 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 2026-27. 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!