City Council
MEETING DATE: 3/22/2017
TITLE:
Title
Discussion of a Small Hotel Tourism Business Improvement District
End
FROM:
Charlie McClendon, City Manager
RECOMMENDATION:
Recommendation
This item is presented for information, discussion and direction only.
Body
BACKGROUND:
Palm Springs recently established a Tourism Business Improvement District (TBID) covering small hotels of fewer than 50 rooms. In addition a regional TBID exists across the region with an assessment to fund the Greater Palm Springs Convention and Visitors Bureau (CVB). Hotels with 50 rooms or more are part of that TBID. It appears that owners of small hotels in Cathedral City may be interested in establishing a Small Hotel TBID similar to what exists in Palm Springs.
DISCUSSION:
A TBID is a special benefit assessment district that the City Council can establish under state law to fund activities that promote tourism. The law allows for an assessment to be charged to business owners in the TBID. The assessment is paid to the City and the City must then use it for business promotion activities that benefit the assessed businesses. Cities with a TBID have often used a percentage of hotel revenue as the formula for imposing the assessment. In Palm Springs the Small Hotel TBIC assessment is 1%. A 1% assessment on the small hotels in Cathedral City would generate about $16,000 annually based on tax returns for the most recent fiscal period (FY15-16).
The formation of the district is accomplished by majority protest procedure. After notice, anyone subject to the proposed assessment may protest the establishment of the TBID. Protests are weighted by the amount of the assessment to be paid. The establishment of the TBID fails if a majority of the affected businesses, weighted by assessment amount, file a timely protest. Otherwise, the TBID may be established.
If the TBID is approved, the City Council would appoint an advisory committee, presumably made up of owners or managers of the small hotels, to report to the Council each year. The annual report should include a review of activities, proposed activities for the next year, an accounting of the fund and a recommended assessment for the following year. Subsequently, the Council would have to have to annually adopt of resolution of intent and hold a public hearing and then adopt the assessment for the year.
James Canfield, Executive Director of the Palm Springs Bureau of Tourism, the agency that manages the small hotel TBID in Palm Springs, will be present at the study session to provide information to the Council and answer questions.
If Council is interested in proceeding there is a prescribed process laid out in the law that must be followed to form the district and adopt the assessments. The entire process from start to finish will probably take about three to four months.
FISCAL IMPACT:
A small hotel TBID will have no effect on the general fund. All assessments will be paid by the hotels into a dedicated fund to be used to promote the assessed businesses. The City is allowed to recover administrative costs to manage the program.
ATTACHMENTS:
Parking and Business Improvement District Law of 1994