title
RESOLUTIONS OF INTENTION RENEWING AND MODIFYING THE STOCKTON TOURISM BUSINESS IMPROVEMENT DISTRICT
recommended action
RECOMMENDATION
It is recommended that the City Council adopt Resolutions of Intention:
1. Renewing the Stockton Tourism Business Improvement District; and
2. Modifying the Stockton Tourism Business Improvement District Management District Plan;
It is also recommended that the City Council authorize the City Manager, or designee, to take necessary and appropriate actions to carry out the purpose and intent of the resolutions.
body
Summary
A Tourism Business Improvement District is a flexible financing tool for creating private-sector, self-governed management districts. The City established the Stockton Tourism Business Improvement District (STBID), in 2010 to support the marketing and attraction of hospitality and tourism business in the city limits of Stockton. The STBID was reestablished (renewed) in 2014 for a term of ten years through Resolution 2014-11-04-1601-01 (Attachment A).
The Stockton Convention and Visitors Bureau (Visit Stockton) is contracted to manage the STBID and deliver tourism marketing and attraction. 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. For the new District to be established effective January 1, 2025, the existing STBID Management District Plan must be modified to change its end date to December 31, 2024.
There are two resolutions recommended:
The first will result in a public meeting on November 12, 2024, and a public hearing on November 19, 2024, on the renewal of the Stockton Tourism Business Improvement District (STBID) and the levy of assessments on lodging businesses.
The second resolution will result in a public hearing on November 19, 2024, on the modification of the STBID Management District Plan to change the end the date of the STBID to December 31, 2024 from December 31, 2025; allowing the newly established STBID to take effect on January 1, 2025.
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 in the 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 B), and again in 2014 through Resolution 2014-11-04-1601-02 (Attachment C).
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, 2035, 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.
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.
TBID benefits:
• Funds cannot be diverted for other government programs;
• They are customized to fit the needs of each destination;
• They allow for a wide range of services; including destination marketing, tourism promotion, and sales lead generation;
• They are designed, created and governed by those who will pay the assessment; and
• They provide a stable funding source for tourism promotion.
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 D) 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 is 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.
STBID renewal & MODIFICATION PROCESS
October 1, 2024 - RESOLUTION OF INTENTION HEARING - RENEWAL
Upon the submission of a written petition, signed by the lodging business owners in the renewed district who will pay more than fifty percent (50%) of the assessments proposed to be levied, the City Council (Council) may initiate proceedings to renew the STBID by the adoption of a resolution expressing its intention to renew the STBID.
Petition Status: Petitions in favor of STBID renewal were submitted by eight (8) lodging businesses, which represent 52.21% of the total STBID assessment, as of 9/19/24. This majority petition allows the Council to initiate proceedings for STBID renewal at the October 1, 2024 meeting.
RESOLUTION OF INTENTION HEARING - MODIFICATION
Upon the written request by STBID Owners’ Association, the Council may adopt the Resolution of Intention which states the proposed modification to the STBID. The STBID provided a written request for the proposed modification to the Council dated August 13, 2024. (Attachment E)
Receipt of this written request allows the Council to initiate proceedings for STBID modification at the October 1, 2024 meeting.
Before October 4, 2024 - NOTICE - RENEWAL
The 94 Law requires the City to mail written notice to the owners of all businesses proposed to be assessed within the STBID. Mailing the notice begins a mandatory forty-five (45) day period in which owners of assessed lodging businesses may protest STBID renewal.
Before November 8, 2024 - NOTICE - MODIFICATION
The Property and Business Improvement District Law of 1994 requires the City to publish the Resolution of Intention in a newspaper of general circulation in the City at least seven (7) days before the public hearing and mail 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.
November 12, 2024 - PUBLIC MEETING - RENEWAL
Allow public testimony on the renewal of the STBID and levy of assessments. No Council action required.
November 19, 2024 - FINAL PUBLIC HEARING - RENEWAL
If written protests are received from the owners of lodging businesses in the renewed STBID which will pay fifty percent (50%) or more of the assessments proposed to be levied, and protests are not withdrawn so as to reduce the protests to less than fifty percent (50%), no further proceedings to levy the proposed assessment against such businesses shall be taken for a period of one (1) year from the date of the finding of a majority protest by the Council.
If the Council, following the public hearing, decides to establish the renewed STBID, the Council shall adopt a resolution of formation.
PUBLIC HEARING - MODIFICATION
The Council shall hold a public hearing on the proposed STBID MDP modifications. If the Council, following the public hearing, decides to modify the STBID, the Council shall adopt a resolution of modification.
NOTIFICATION
The City Clerk is directed in the Council Resolution (Section 12) to cause the notice of the Public Hearing to be mailed to all lodging business owners within the assessment district as shown in the Management District Plan. The notice shall include, but not be limited to, 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 shall also publish the Resolution of Intention in a newspaper of general circulation in the City at least seven (7) days before the public hearing and mail 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 revenue and collections.
Attachment A - Council Resolution 2014-11-04-1601-01
Attachment B - Council Resolution 10-0407
Attachment C - Council Resolution 2014-11-04-1601-02
Attachment D - Management District Plan
Attachment E - Request for Modification