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HomeMy WebLinkAbout10-01-2019 Item 11 - Renewal of SLOCTMD Department Name: Administration and IT Cost Center: 208-1006 For Agenda of: October 1, 2019 Placement: Business Estimated Time: 30 Minutes FROM: Greg Hermann, Deputy City Manager Prepared By: Molly Cano, Tourism Manager SUBJECT: CONSIDERATION OF THE PROPOSED RENEWAL OF THE SAN LUIS OBISPO COUNTY TOURISM MARKETING DISTRICT (SLOCTMD) RECOMMENDATION 1. As recommended by the City of San Luis Obispo Tourism Business Improvement District (SLO TBID) Board, authorize the San Luis Obispo County Board of Supervisors to renew the San Luis Obispo County Tourism Marketing District (SLOCTMD) inclusive of lodging properties within the City of San Luis Obispo to be funded by a 1.5% gross room rent assessment for a term of ten years and based on support from properties representing over 50% of taxable rents in the City of San Luis Obispo; and 2. Adopt Resolution granting consent to the San Luis Obispo County Board of Supervisors to renew the San Luis Obispo County Tourism Marketing District (SLOCTMD) within the City of San Luis Obispo, to be funded by a 1.5% gross room rent assessment. (Attachment A). REPORT-IN-BRIEF The purpose of this item is to forward the SLO TBID Board’s recommendation to the City Council for the consideration and for the City Council to receive a presentation from Visit SLO CAL on the details of the proposed district. The current term for the SLOCTMD will sunset at the end of the 2019-20 fiscal year and in order to maintain the marketing services and positive economic impact generated through the current assessment, a renewal of the SLOCTMD has been proposed. This renewal would increase the assessment to 1.5% on short-term room rental revenue (up from the current 1%) and extend the district for a ten-year term. The allocation of the additional half-percent funding annually, would be allocated in the following ways: increased advertising and marketing, increased sales support, investment in growing international markets and visitation, continued air service development, and implementation of the Destination Management Strategy. As a result of the 1.5% assessment, the annual budget for Visit SLO CAL - the appointed Owners Association for the district- would be $6 million dollars and would be used exclusively for destination marketing, sales and management. The item has been considered by the City’s tourism industry, specifically through the SLO TBID Board, who represent the payers in the district. The SLO TBID Board is supportive of the renewal of the SLOCTMD, and as such is recommending the authoriz ation of the renewal to City Council. Packet Page 237 Item 11 DISCUSSION Background Since 2008, the City of San Luis Obispo’s tourism marketing efforts have been served by the local SLO TBID. The SLO TBID has been successful in the mission of increasing room night sales locally, however hoteliers acknowledge there is opportunity for businesses to benefit from larger countywide marketing efforts. To address this need, in 2015 the San Luis Obispo County Board of Supervisors, under the petition from local hoteliers, established the initial SLOCTMD. This district has a five-year term at the assessment rate of 1% of gross short-term room revenue. The non-profit organization Visit SLO CAL became the Owners’ Association charged with managing the funds and implementing the programs. Visit SLO CAL Through the work of Visit SLO CAL, the countywide tourism marketing efforts allows the industry to compete regionally, nationally, and internationally by promoting San Luis Obispo County through advertising, marketing, public relations, group sales and destination management efforts. In the initial term of the district, Visit SLO CAL used the following five strategic imperatives to guide the focus of their work: 1. Optimize organizational capacity; 2. Establish brand clarity and increased awareness through unified efforts; 3. Build and expand strategic partnerships, 4. Advocate for the development of critical tourism infrastructure; and 5. Demonstrate value to stakeholders and communities. These strategic imperatives have not only provided clear foundation for the work the Visit SLO CAL is charged with performing, it also provides clarity on regional expectations and defined roles to reduce the duplication of work between the countywide district and that of the local tourism marketing organizations. Visit SLO CAL has been successful in driving economic impact and destination awareness for the county including San Luis Obispo specifically. The top three highlights of the Visit SLO CAL’s success during the initial term include: • National and international sales, marketing and advertising efforts • Air Service development to six new markets including: Seattle, Denver, Dallas, Las Vegas, San Diego, and Portland • Significant and on-going research including: The documentation outlining Visit SLO CAL’s results-to-date is attached to this report (Attachment B). Under the renewal, the work of Visit SLO CAL will continue to be a marketing, sales, destination management and advertising program that will promote San Luis Obispo County, branded as SLO CAL for this purpose, as a tourist, meeting, and event destination. In addition, the additional half-percent increase in collection annually would be allocated in the following ways: increased advertising and marketing, increased sales support, investment in growing international markets and visitation, continued air service development, and implementation of the Destination Management Strategy (Attachment C). Packet Page 238 Item 11 Overall, the program will have a central theme of promoting the county as a desirable place for overnight visits. Sales efforts will be designed to attract group, leisure travel, meetings and conferences and event business to the region. The program will have the goal of increasing awareness for overnight visitation and demand for room night sales at assessed businesses, and may include the following activities: • Strategic planning and message positioning to attract overnight visitors to assessed businesses; • Brand development and management to attract overnight visitors to assessed businesses; • Digital marketing, advertising and promotions to drive demand for lodging sales at assessed businesses, including blogs, e-newsletters, social media and direct response campaigns; • Website development and maintenance to drive demand for lodging sales at assessed businesses; • Media and public relations to increase destination awareness and demand for overnight stays at assessed businesses; • Radio, print and tv advertising to increase destination awareness and demand for overnight stays at assessed businesses; • Domestic and international sales missions to increase awareness and demand for overnight stays at assessed businesses; • Management of a resource library to assist assessed businesses with sales and marketing efforts; • Working with and as the Film Commission (Film SLO CAL) to increase awareness and demand for overnight stays at assessed businesses; • Attendance of conferences, events, and trade shows to showcase the destination and to increase awareness and demand for overnight stays at assessed businesses; • Research on market conditions and opportunities to increase awareness and demand for overnight stays at assessed businesses; • Destination management for the benefit of assessed businesses. Proposed Renewal of the Tourism Marketing District The renewal of the SLOCTMD proposed by Visit SLO CAL and the region’s hoteliers is a type of special assessment district pursuant to the Property and Business Improvement District Law of 1994. This type of district is designed to provide specific benefits directly to those entities being assessed by increasing room night sales. For the purpose of the SLOCTMD, the proposed payers include all lodging businesses within San Luis Obispo County (incorporated and unincorporated) that contribute to transient occupancy tax (TOT) including all lodging properties that make up the SLO TBID constituency. The proposed SLOCTMD would establish a one and half percent (1.5%) assessment of gross short-term room rental revenue and would be in place for a ten (10) year term. The SLOCTMD’s initial year annual budget is projected to be $6,000,000. The City of San Luis Obispo would collect the 1.5% SLOCTMD assessment monthly, and in the same manner as the City currently collects TOT, the TBID assessment and the existing TMD assessment. The County of San Luis Obispo would have fiduciary responsibility of the SLOCTMD funds. Packet Page 239 Item 11 The SLOCTMD Management District Plan outlines how the SLOCTMD would operate. This plan was developed by the Visit SLO CAL Board of Directors that includes management/owner representatives from San Luis Obispo County hotels. Input was provided by City leadership and staff during its development which allowed for specific areas of interest for San Luis Obispo to be included. In terms of governance, Visit SLO CAL would serve as the SLOCTMD’s Owners’ Association and as such it will be responsible for managing the funds and implementing the strategic marketing programs contained in the SLOCTMD Management District Plan (Attachment D). The SLOCTMD will continue to be managed by a Board of Directors. Directors will include appointed representatives from the County, at least one appointed representative of a lodging business in each jurisdiction and a selection of at-large lodging business representatives. The SLOCTMD Management Plan also calls for the continuation of two key committees for additional expertise and community liaison purposes: a) Marketing Committee – a Board appointed working committee consisting of destination managers and marketing professionals representing an array of sectors to guide/advise the SLOCTMD Board on marketing efforts; and b) Advisory Committee – consisting of community appointed elected officials and administrators to liaise back to the communities they represent regarding program updates and overall success metrics. By law, there are several critical steps for the SLOCTMD to be formed: a) Individual City Consent - to be included within the SLOCTMD and collect/administer the 1.5% assessment to the County; b) County Board of Supervisors Action – to form the governing framework of the SLOCTMD; and c) Hotelier Petition Majority – where a 50% + 1 majority of hoteliers within the SLOCTMD must agree to the formation and assessment. Petition voting is weighted by total taxable rents of the lodging property (e.g. $1.00 = 1 vote). The petition process is being stringently overseen by County staff. TBID Board Consideration The TBID Board supports the renewal of the SLOCTMD to establish San Luis Obispo County as a premier Central Coast tourism destination and a leader in the California tourism community. The continued and expanded programs are expected to increase lodging business revenues countywide and assist in driving new overnight business. It is believed that an efficient and focused countywide effort has the potential to extend local room stays and expand market potential for San Luis Obispo County. An example of the initial SLOCTMD results are seen in our lodging businesses through the new direct fly markets like Seattle, Denver and Dallas. The SLO TBID Board has been involved in the renewal consideration for the SLOCTMD. They began discussing the process in August 2018 and have received regular updates on the developments from staff and the SLO TBID Board appointed representatives on the Visit SLO CAL Board since that time. Packet Page 240 Item 11 The TBID Board has ensured that they are appropriately representing their constituents’ opinions on this matter. Prior to the TBID Board forming a recommendation on the renewal, the County of San Luis Obispo and Visit SLO CAL released the petition for the renewal of the SLOCTMD to all hoteliers. Ultimately, the Board held a Special Meeting dedicated to this consideration on September 19, 2019 in order to deliberate this item for recommendation to City Council. During that meeting after receiving a presentation from Visit SLO CAL on the results of the district activities and the tally of the petition collection, the TBID Board recommended on a 5-2 vote to support the renewal of the SLOCTMD based on the support from properties representing over 50% of taxable rents in the City of San Luis Obispo (Attachment e). Petition Results As of Monday September 23, 2019, according to the official San Luis Obispo County Office petition tally: • SLO TBID constituency properties representing 75.56% of taxable rents within the SLO TBID had returned affirmative “yes” petitions indicating a majority in support of formation of the SLOCTMD. • Properties representing 57.10% of taxable rents countywide had returned affirmative “yes” petitions indicating a countywide majority in support of formation of the SLOCTMD. Concurrently, as of the time this agenda went to print all city tourism business improvement district boards including Paso Robles, Pismo Beach, Morro Bay and Atascadero had recommended support on the SLOCTMD renewal. And the City of Grover Beach City Council approved the resolution granting consent to the County for the SLOCTMD. The remaining jurisdiction specific City Council hearings are scheduled for: • September 24 – City of Arroyo Grande • October 1 – City of Paso Robles • October 8 – City of Atascadero & City of Morro Bay • October 15 – City of Pismo Beach Public Engagement Substantial public engagement was done for the consideration of the renewal of the SLOCTMD. City staff maintained the inform and educate position for all SLO TBID constituents and other interested community members. All SLO TBID Board meetings agendas are posted publicly on the City’s website and kiosk. All TBID Board meetings are electronically noticed by City staff to TBID constituency and interested community partners and members. Additionally, the City’s TBID Board discussed outreach at their August 14, 2019 Board meeting. During that time the Board had considered encouraging Visit SLO CAL to host an informational workshop for SLO TBID constituency. However, based on low interest to attend from hoteliers and the high number of already returned petitions, the workshop was not ultimately Packet Page 241 Item 11 recommended by staff as an efficient use of time. Alternatively, the SLO TBID Board served as liaisons to the assigned member properties to educate and outreach on the SLOCTMD renewal and petition process. ENVIRONMENTAL REVIEW The California Environmental Quality Act 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: No Budget Year: 2020-2030 Funding Identified: District assessment Fiscal Analysis: Funding Sources Current FY Cost Annualized On-going Cost Total Project Cost General Fund State Federal Fees Other: Total 0 There is no fiscal impact to the City as a result of the SLOCTMD. In addition, the City would retain two percent (2%) of the 1.5% assessment collected from San Luis Obispo lodging properties in the General Fund to cover administrative costs associated with collection and pass through to the County. The City’s current TOT rate is 10%; with the existing 2% assessment for the TBID and 1% for the existing SLOCTMD for a total rate of 13%. With the proposed 1.5% for the SLOCTMD, the overall rate charged to a lodging customer would be 13.5%. For comparison, based on a summary of nearby California visitor destinations San Francisco’s rate is 15.5%, Napa is 15% and Santa Barbara is 13.5%. ALTERNATIVES 1. Amend, modify or reject the Resolution. 2. Direct staff to return to the Council with more information. Packet Page 242 Item 11 Attachments: a - SLOCTMD Resolution Granting Consent b - READING FILE - TMD Results to Date c - Allocation of Funding d - READING FILE - Visit SLO CAL Management District Plan e - TBID Draft Minutes of September 19, 2019 Packet Page 243 Item 11 1 RESOLUTION NO.___________ RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, GRANTING CONSENT TO THE COUNTY OF SAN LUIS OBISPO TO RENEW THE SAN LUIS OBISPO COUNTY TOURISM MARKETING DISTRICT WHEREAS, the County of San Luis Obispo is beginning the process to renew the San Luis Obispo County Tourism Marketing District (SLOCTMD) pursuant to the Property and Business Improvement District Law of 1994, Streets and Highways Code section 36600 et seq., to promote lodging businesses in San Luis Obispo County; including the cities of Arroyo Grande, Atascadero, Grover Beach, Morro Bay, Paso Robles, Pismo Beach and San Luis Obispo; and WHEREAS, Streets and Highways Code section 36620.5 requires the City of San Luis Obispo to grant consent to the County of San Luis Obispo for the City of San Luis Obispo to be included in the renewed SLOCTMD. NOW, THEREFORE, BE IT RESOLVED, by the Council of the City of San Luis Obispo, that: SECTION 1: The above recitals are true and correct. SECTION 2: The City Council consents to the County of San Luis Obispo renewing, operating, and modifying the SLOCTMD, which shall include the City of San Luis Obispo. SECTION 3: The City Clerk is hereby directed to transmit a certified copy of this Resolution to the Clerk of the Board of the County of San Luis Obispo. SECTION 4: This Resolution is effective upon its adoption. Upon motion of __________________, seconded by ____________________, and on the following roll call vote: AYES: NOES: ABSENT: The foregoing resolution was adopted this _____ day of _____________________ 2019. ____________________________________ Mayor Heidi Harmon Packet Page 244 Item 11 2 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 ______________, _________. ____________________________________ Teresa Purrington City Clerk Packet Page 245 Item 11 ALLOCATION of ADDITIONAL FUNDING ADVERTISING & MARKETING Increased campaign investment in key feeder markets (Los Angeles, San Francisco, Phoenix, Seattle, Denver, Dallas-Fort Worth and Las Vegas) to drive demand during need times and increase length of stay through highly-targeted brand marketing and co-ops, in order to offset a 20% increase in countywide lodging inventory over the next four years STR is forecasting a 3.5% decrease in occupancy and a 1.7% decrease in RevPAR in 2020 The countywide Tourism Marketing District will expire in June 2020 and the lodging community, in partnership with Visit SLO CAL, is seeking the renewal of the District. Visit SLO CAL has worked with lodging investors to identify and plan for priority investment needs and growth opportunities over the coming decade. Through a ten-year renewal and increase in assessment from 1% to 1.5%, additional funding would be allocated in the following ways: SALES SUPPORT Help communities manage the unprecedented 20% increase in countywide lodging inventory over the next four years through the growth of travel trade initiatives AIR SERVICE DEVELOPMENT Grow economic impact of tourism through continued development of additional flights and new air service markets DESTINATION MANAGEMENT STRATEGY (DMS) RECOMMENDATIONS Implement Visit SLO CAL owned tourism-related recommendations coming out of the DMS Cultivate Awareness INTERNATIONAL MARKETS Investment in top inbound international markets and key new growth markets TOGETHER WE CAN SECURE SLO CAL’S SUCCESS Establish New Markets Drive More Demand Advocate for Our Future Foster International Visitation Packet Page 246 Item 11 Packet Page 247 Item 11 DRAFT Minutes – Tourism Business Improvement District Board Special Meeting 9/19/2019 Pg. 1 Minutes - DRAFT TOURISM BUSINESS IMPROVEMENT DISTRICT BOARD Thursday, September 19, 2019 Special Meeting of the Tourism Business Improvement District Board CALL TO ORDER The regular meeting of the San Luis Obispo Tourism Business Improvement District Board was called to order on Thursday, September 19, 2019 at 1:00 p.m. in City Hall, located at 990 Palm Street, San Luis Obispo, California, by Chair Bruce Skidmore. ROLL CALL Present: Chair Bruce Skidmore, Vice Chair Nipool Patel and Board Members Dean Hutton, LeBren Young-Harris, Pragna Patel-Mueller, Kristen Battaglia, John Conner Absent: None Staff: Tourism Manager Molly Cano and Economic Development Manager Charlene Rosales PUBLIC COMMENT ON ITEMS NOT ON THE AGENDA None. BUSINESS ITEMS 1. VISIT SLO CAL – COUNTYWIDE TMD RENEWAL The Board met for the consideration of the proposed renewal of the countywide Tourism Marketing District. Visit SLO CAL presented the district results to date and provided information on the proposed renewal as described in the Management District Plan. The Board discussed action in the form of a recommendation to City Council on the consideration of granting consent to the County Board of Supervisors to authorize the assessment in the City of SLO. Public Comments: None. After the motion was made and seconded, the Board held additional discussion on the item before Chair Skidmore called for the vote. ACTION: MOTION BY BOARD MEMBER PATEL, SECOND BY BOARD MEMBER HARRIS CARRIED 5-2-0 (DISSENTING VOTES FROM PATEL-MUELLER & CONNER), the recommendation to City Council for the approval of the resolution granting consent to the County Board of Supervisors to authorize the Tourism Marketing District (TMD) assessment renewal in the City of SLO. Packet Page 248 Item 11 DRAFT Minutes – Tourism Business Improvement District Board Meeting of 06/12/2019 Pg. 2 ADJOURNMENT The special meeting was adjourned at 1:41 p.m. The next Tourism Business Improvement District Board meeting is scheduled for Wednesday, October 9, 2019 at 10:00 a.m., at City Hall, 990 Palm Street, San Luis Obispo, CA. APPROVED BY THE TOURISM BUSINESS IMPROVEMENT DISTRICT BOARD: XX/XX/2019 Packet Page 249 Item 11 Page intentionally left blank. Packet Page 250 Item 11