Report Prepared by: Amanda Williams, Economic Development Associate
Title
SUBJECT: Adoption of a Resolution of Intention to Establish a Tourism Business Improvement District (TBID); Granting Preliminary Approval of the Proposed Management Plan; Scheduling a Public Meeting for November 4, 2024; and Scheduling a Public Hearing for December 2, 2024
REPORT IN BRIEF
Considers approving the Resolution of Intention which includes the proposed management plan and conducting both a public meeting as well as a public hearing regarding the installation of a Tourism Businesses Improvement District (TBID).
RECOMMENDATION:
City Council - Adopt a motion adopting Resolution 2024-92, a Resolution of Intention of the City Council of the City of Merced, California, Initiating Formation Proceedings for the Tourism Business Improvement District.
Body
ALTERNATIVES
1. Approve the Resolution, as recommend by Staff and the Steering Committee; or,
2. Refer to staff for reconsideration as requested by the City Council; or,
3. Defer action until a specific date; or,
4. Deny
AUTHORITY
Charter of the City of Merced, Section 200; Property and Business Improvement District Law of 1994; Sections 36600, et seq., to the California Streets and Highways Code.
CITY COUNCIL PRIORITIES
City Goals & Priorities FY 24-25, Economic Development 7-2; Continue coordinating efforts to create a Tourism Based Improvement District with key partners.
DISCUSSION
Staff and the steering committee are requesting the City Council consider approving the Resolution of Intention to Establish a Tourism Business Improvement District (TBID.) The Resolution sets forth public meeting and public hearing dates regarding establishing a TBID (Attachment 1.)
The first step in forming a TBID is for the lodging business within the proposed boundary of the district to petition the city to form a District. Upon the submission of the written petition signed by the business owners in the proposed District who will pay more than 50% of the assessment proposed to be levied, the City Council may initiate proceedings to form a District by adopting a Resolution of Intention. The Resolution of Intention declares the City’s intention to form a District and sets a time and place for a public meeting and hearing to receive testimony regarding the formation of the District.
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”) is being 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.
Petition to Form a TBID
In August 2024, petitions to form the TBID were sent out to the hoteliers within city limits, where 62.20% of the petitions were returned in support of establishing the district. (Attachment 3)
Authority to Form a TBID
The Merced Tourism Business Improvement District (TBID) is proposed for establishment pursuant to the state law; the “Property and Business Improvement District Law of 1994” and is a flexible financing tool for creating private-sector, self-governed management district. The proposed TBID will provide funding for security, marketing, sales, promotions, and management of the district once formed.
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 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. (Attachment 2)
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.
Initial TBID Budget: It is anticipated that the Merced TBID will generate $450,000 annually and the proposed first year annual budget is outlined below. (Attachment 3)
|
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% |
TBID Formation Process
The law requires several steps to be completed to establish a TBID. A public meeting is scheduled for November 4th, 2024, to hear testimonies regarding the establishment and levying of assessments. Council will then conduct a public hearing on December 2nd, 2024, to obtain public testimonies before adopting the resolution. If at the conclusion of the public hearing, there holds a record of written protests by the owners of the lodging businesses within the TBID that will pay more than fifty percent (50%) of the estimated total TBID assessment, no further proceedings to establish the TBID shall occur for a period of one (1) year. (Attachment 1)
IMPACT ON CITY RESOURCES
No impact on city resources.
ATTACHMENTS
1. TBID Resolution of Intention
2. TBID Management Plan
3. TBID Petitions