Report Prepared by: Amanda Williams, Economic Development Associate
Title
SUBJECT: Approval of an Agreement Between the City of Merced and the Merced Business Tourism Improvement District to Administer the Assessment Tax and Authorizing the City Manager to Execute the Agreement
REPORT IN BRIEF
Considers approving the agreement between the City of Merced and the Merced Tourism Business Improvement District (TBID) to administer the Assessment Tax and authorizing the City Manager to execute the agreement.
RECOMMENDATION
City Council - Adopt a motion:
A. Approving the agreement between the City of Merced and the Merced Tourism Business Improvement District to administer the Assessment Tax; and,
B. Authorizing the City Manager to execute the agreement.
Body
ALTERNATIVES
1. Approve, as recommended by staff; or,
2. Approve, subject to conditions other than as recommended by staff; or,
3. Continue to a future meeting; or
3. Deny
AUTHORITY
Property and Business Improvement District Law of 1994 (Streets and Highways Code Section 36600, et seq.)
City Council Resolution No. 2024-92.
DISCUSSION
What is a TBID:
A TBID is a mechanism for funding tourism and destination activities designed to increase revenues for the assessed businesses.
The City of Merced Tourism Business Improvement District (“TBID”) was developed by interested lodging businesses in efforts of vitalizing the hospitality industry, increasing overnight stays, and promoting these properties as destinations for tourism, events, and commerce. Merced is often referred to as “The Gateway to Yosemite”, and the local lodging industry would like to increase its prominence and capture the tourists that not only come to visit Yosemite, but also the growing regional agricultural industry, festivals, events, and UC Merced programs. Through the TBID, both day visitors and overnight visitors contribute to Merced’s vitality through purchases at activity providers, restaurants, and retailers.
TBID Formation
The formation process included petitions from the local hoteliers, a resolution to establish, and a public comment and hearing period. The TBID was officially formed on December 2nd, 2024, through approved Resolution 2024-92.
Summary Management District Plan
Pursuant to the Property and Business Improvement District Law of 1994 (California Streets and Highways Code § 36600 et seq.) (the “Law”), the TBID is proposed to be formed for an initial 5-year term. The TBID Management District Plan (Attachment 1) describes how funding tourism marketing, sales, promotion, and security will improve and convey special benefits to assessed lodging businesses located in the City of Merced. Each of the services is designed to meet the goals of the district; to improve occupancy and room night sales.
Location: The TBID will include all transient occupancy lodging businesses within the city limits of Merced. In total these properties represent approximately 1,200 rooms. As new properties come online, they too will be included in the TBID. It is not the intent of the TBID to include short-term vacation rentals.
Method of Financing: The TBID budget will be funded by collecting 2% of each assessed lodging properties’ gross short-term room rental revenue.
Collection: The City of Merced will be responsible for collecting the assessment on a quarterly basis (including any delinquencies, penalties, and interest) from each lodging business located within the TBID boundary. The TBID will pay the City of Merced $500 quarterly to collect the TBID assessments.
TBID Budget: The Management Plan anticipated that the Merced TBID could generate up to $450,000 annually to be used as outlined below.
|
Expenditures |
Amount |
% of Budget |
|
Marketing/Sales/ Promotion |
$315,000 |
70.0% |
|
Security |
$60,000 |
13.3% |
|
Management/Operations |
$75,000 |
16.7% |
|
Total Expenditures |
$450,000 |
100.00% |
Fiscal Year 2025-26 adopted budget estimates $430,000 in TBID revenue. This amount was based off the trend and estimate of Transient Occupancy Tax.
Service Agreement:
This agreement (Attachment 2) was prepared by staff and approved by the TBID board with no changes. Through this agreement, City desires, and Corporation agrees to have the Corporation provide the activities and improvements listed on the terms and conditions set forth in this Agreement. Said activities and expectations were first established through the approved Management Plan (Attachment 1). It is requested that the City Council authorize the City Manager to execute the agreement between the City of Merced and the Merced Tourism Improvement District to administer the Assessment Tax.
IMPACT ON CITY RESOURCES
No impact on city resources. Estimated revenue and expense budget for TBID was included as part of the FY 25-26 adopted budget in new Fund 4951-Tourism Based Improvement District.
ATTACHMENTS
1. Management Plan
2. Proposed TBID Agreement