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PUBLIC MEETING: STOCKTON TOURISM BUSINESS IMPROVEMENT DISTRICT RENEWAL
recommended action
RECOMMENDATION
It is recommended that the City Council adopt two Resolutions:
1. Modifying the Management District Plan of the Stockton Tourism Improvement District to end early on December 31, 2024; and
2. Renewing the Stockton Tourism Business Improvement District for a ten-year period effective January 1, 2025, declaring the results of the protest proceedings, levying an assessment on lodging businesses within the district, approving the Management District Plan and designating the Stockton Convention and Visitors Bureau, Inc. as managing entity, approving an amendment to agreement 2014-11-04-1601-01 NP with the Stockton Convention and Visitors Bureau, Inc., to manage the district funds, (Attachment A); and
3. Authorizing the City Manager to take all necessary and appropriate actions to execute the agreement and carry out the purpose of these resolutions.
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Summary
A Tourism Business Improvement District is a flexible financing tool for creating private-sector, self-governed management districts. The Stockton Tourism Business Improvement District (STBID), is one such district, formed by the City Council in 2010, Reso 10-0406 (Attachment B) to support the marketing and attraction efforts of hospitality and tourism business within the City of Stockton. The district was reestablished (renewed) for an additional ten years in 2014 by Reso. 2014-11-04-1601-01 (Attachment C).
The Stockton Convention and Visitors Bureau (Visit Stockton) is contracted to manage the STBID and delivers tourism marketing and attraction programs in alignment with the STBID Management District Plan. The hoteliers paying the STBID, through signed petitions and communications from the Visit Stockton Board (Board), have requested that the City of Stockton consider reestablishing the District for a term of ten (10) years beginning January 1, 2025. Additionally, it is requested that the contract with Visit Stockton for management of the STBID be extended through the renewed STBID term ending December 31, 2034.
DISCUSSION
Background
The STBID is a benefit assessment district proposed to continue a revenue source to help fund marketing and sales promotion efforts for Stockton lodging businesses. This approach has been used successfully in other destination areas throughout the state to improve tourism and drive additional room nights to assessed lodging businesses. The renewed STBID includes all lodging businesses, existing and future, available for public occupancy located within the boundaries of the City of Stockton. The Stockton Convention and Visitors Bureau (Visit Stockton) was contracted to manage the STBID originally through Resolution 10-0407 (Attachment D) and again in 2014 through Resolution 2014-11-04-1601-02 (Attachment E).
Tourism Business Improvement Districts
Tourism Business Improvement Districts (TBIDs) utilize the efficiencies of private sector operation in the market-based promotion of tourism. These special assessment districts allow lodging business owners to organize their efforts to increase tourism. Lodging business owners within the TBID fund the TBID, and those funds are used to provide services that are desired by and benefit the lodging businesses within the TBID.
In California, TBIDs are primarily formed pursuant to the Property and Business Improvement District Law of 1994 (94 Law). This law allows for the creation of special benefit assessment districts to raise funds within a specific geographic area. The key difference between TBIDs and other special benefit assessment districts is that funds raised are returned to the private non-profit corporation governing the TBID.
MANAGEMENT DISTRICT PLAN
The Management District Plan (Attachment F) includes the proposed boundary of the STBID, a service plan and budget, and a proposed means of governance. The STBID will include all lodging businesses, existing and in the future, available for public occupancy within the boundaries of the City of Stockton.
The annual assessment rate will increase from four (4%) to five percent (5%) of gross short-term (stays less than 31 days) sleeping room rental revenue. In year six (6) of the STBID’s term, the assessment rate shall automatically increase by one-half -of-one percent (0.5%), to a total assessment rate of five and one-half-of-one percent (5.5%). Based on the benefit received, assessments will not be collected on stays of more than thirty (30) consecutive days.
The renewed STBID will have a ten (10) year term, beginning January 1, 2025, and ending ten (10) years from its start date. The assessment will be implemented beginning January 1, 2025. Once per year, beginning on the anniversary of STBID renewal there is a thirty (30) day period in which business owners paying fifty percent (50%) or more of the assessment may protest and begin proceedings to terminate the STBID.
The City will be responsible for collecting the assessment on a quarterly basis from each lodging business located in the STBID boundaries. The City shall forward the assessments to Visit Stockton (VS), which will have the responsibility of managing STBID programs as provided in the Management District Plan.
The basic steps to renew the STBID are:
July - Sept 2024 Solicit hoteliers to sign a petition to renew the STBID
October 1, 2024 Council adopted a Resolution of Intention (Resolution 2024-10-01-1208-01, Attachment G) to renew the STBID and preliminarily approve the Management District Plan
October 4, 2024 Notices to renew the STBID were mailed to lodging businesses
November 12, 2024 Hold a public meeting to provide interested parties an opportunity to provide testimony supporting/opposing the assessment
November 19, 2024 Hold a public hearing where Council takes action (approves) the renewal of the STBID
November 19, 2024 Council approves the contract between the City and Visit Stockton for management services or the STBID
January 1, 2025 If all the above steps are completed/supported then the STBID will be renewed for a ten year period - January 1, 2025 through December 31, 2034
Present Situation
Hoteliers, through signed petitions and communications from the Board, have requested that the City of Stockton consider reestablishing the Stockton Tourism Business Improvement District for a term of ten (10) years beginning January 1, 2025, through December 31, 2034, as provided for under the law. Reestablishment of the STBID will continue a revenue source devoted to marketing Stockton as a tourist, meeting, sporting, and event destination. If renewed, the STBID would generate approximately $2,000,000 on an annual basis for promotion of travel and tourism specific to Stockton. The Board expressed the desire for the renewed STBID term to commence before the current STBID’s term expiration date of December 31, 2025. Therefore, it is requested that Council modify the current STBID term to expire early on December 31, 2024 to accommodate the renewed STBID’s start date of January 1, 2025. (Attachment H)
NOTIFICATION
The City Clerk certified that the notice of the Public Hearing was mailed to all lodging business owners within the assessment district, as shown in the Management District Plan, on or before November 4, 2024. The notice included the total amount of the assessment proposed to be levied in the Management District Plan, the assessment rate proposed, the reason for the assessment, the duration of the assessment, and the basis upon which the amount of the assessment was calculated.
The City Clerk also published the Resolution of Intention in a newspaper of general circulation in the City at least seven (7) days before the public hearing and mailed a complete copy of the Resolution of Intention to each business owner affected by the proposed modification at least ten (10) days before the public hearing.
FINANCIAL SUMMARY
The STBID will generate approximately $2,000,000 annually to promote, market, and attract tourism and sporting events to the City of Stockton. The City will retain 3% (approximately $60,000) of the total assessments collected to offset the ongoing costs of processing and collection of the district assessment. Additionally, because the STBID programs are intended to increase visitation to the City, there may be an increase in transient occupancy tax and sales tax collections. STBID activities are budgeted in TBID fund 6000-416-630006-270-052-00-60-000-000, with administration in 6000-416-670002-270-052-00-60-000-000.
Attachment A - Contract 2014-11-04-1601-01 NP
Attachment B - Council Resolution 10-0406
Attachment C - Council Resolution 2014-11-04-1601-01
Attachment D - Council Resolution 10-0407
Attachment E - Council Resolution 2014-11-04-1601-02
Attachment F - Management District Plan
Attachment G - Council Resolution 2024-10-01-1208-01
Attachment H - Request for Modification