REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Fred A. Wilson, City Manager
PREPARED BY: Kellee Fritzal, Deputy Director of Economic Development
Subject:
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Adopt Resolution No. 2018-79 declaring the City Council’s intention to modify the Huntington Beach Tourism Business Improvement District (HBTBID); conduct a Public Meeting and setting a Public Hearing date of January 21, 2019
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Statement of Issue:
On October 15, 2018, the City Council adopted the Resolution of Intention to renew the Huntington Beach Tourism Business Improvement District (HBTBID). Government Code section 54954.6 requires that a public meeting be held, to provide members of the public an opportunity to comment on the renewed. Conducting this public meeting satisfies the statutory required step in the HBTBID, the Public Hearing is scheduled for December 17. The City Council is working with Visit Huntington Beach (VHB) regarding modifications to the current HBTBID. The modifications would increase the assessment from 3% to 4%, as approved by assessed lodging businesses, and the early termination of the Grant Agreement.
Adoption of this Resolution will result in a public hearing on January 21, 2019, for the early termination of the current Huntington Beach Tourism Business Improvement District.
Financial Impact:
There is no fiscal impact with this Resolution or the public meeting.
Recommended Action:
recommendation
A) Adopt Resolution No. 2018-79, “A Resolution of the City Council of the City of Huntington Beach Declaring Its Intention To Modify the Management District Plan of the Huntington Beach Tourism Business Improvement District;” and,
B) Open the public meeting to allow members of the public to provide comments on the renewed HBTBID.
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Alternative Action(s):
Do not adopt the Resolution and direct staff as necessary.
Analysis:
In California, Tourism Business Districts (TBID) are primarily formed pursuant to the Property and Business Improvement District Law of 1994. This law allows for the creation of a special benefit assessment district 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. The HBTBID funds the marketing and sales promotion efforts for Huntington Beach’s overall destination brand awareness including Huntington Beach 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 early-renewed HBTBID includes all lodging businesses located within the boundaries of the City of Huntington Beach.
The City of Huntington Beach created the HBTBID on September 15, 2014, by resolution for a five year (5) term which ends on September 30, 2019. The VHB is proposing to renew the HBTBID in order to continue a revenue source devoted to marketing Huntington Beach as a leisure, meetings and events destination. The proposal is to increase the current 3% assessment to a 4% assessment.
In addition to the HBTBID, the City and VHB entered into a separate agreement in which 1% of the 10% of the City’s Transient Occupancy Tax rate is retained by VHB for public relations services. The Agreement will expire on September 30, 2021. Visit Huntington Beach is proposing to terminate the Agreement as part of the renewal of the HBTBID. This action would result in the City retaining the 1% (approximately $1 million), which would be additional revenue to the General Fund.
The HBTBID has requested the City Council to modify the current Management District Plan of the current District to shorten the term from five (5) years to four (4) years and three (3) months, with a modified ending date of January 31, 2019. This modification will allow the renewed district to maintain an equivalent level of funding and begin collecting the new assessment rate on February 1, 2019.
MANAGEMENT DISTRICT PLAN
The Management District Plan (Attachment 1) includes the current boundary of the District, a service plan and budget and a current means of governance. The District includes lodging businesses in Huntington Beach, as shown on the map in Section IV of the Management District Plan. The current District has a five (5) year life. The assessment was implemented beginning October 1, 2014, through September 30, 2019. The Management District Plan (Attachment 1) has been modified so that the District expires January 31, 2019.
HBTBID renewal PROCESS
To commence the renewal process, the City must receive a written petition, signed by the business owners in the renewed district who will pay more than fifty percent (50%) of the assessments proposed to be levied. If the Resolution is approved, the City is required to mail written notice to the owners of all businesses proposed to be within the HBTBID. Mailing the notice begins a mandatory forty-five (45) day period in which owners may protest HBTBID renewal. The City Council is required to hold a Public Meeting to allow public testimony on the renewal of the HBTBID and levy of assessments. No Council action required.
On December 17, 2018, a Public Hearing will be conducted by the City Council. If written protests are received from the owners of businesses in the renewed HBTBID which will pay more than fifty percent (50%) 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.
At the conclusion of the public hearing to renew the HBTBID, the Council may adopt, revise, change, reduce or modify the proposed assessment or the type or types of improvements and activities to be funded with the revenues from the assessments. Proposed assessments may only be revised by reducing any or all of them. If the Council, following the public hearing, decides to establish the renewed HBTBID, the Council shall adopt a resolution of formation.
On January 21, 2019, the City Council will be asked to modify the current HBTBID’s management district plan to change the term to end on January 31, 2019, and to terminate the Grant Agreement for TOT and enter into a new Memorandum of Understanding.
Environmental Status:
Not applicable.
Strategic Plan Goal:
Strengthen economic and financial sustainability
Attachment(s):
1. Huntington Beach Tourism Business Improvement District Management District Plan
2. Resolution No. 2018-79, “A Resolution of the City Council of the City of Huntington Beach Declaring its Intention to Modify the Management District Plan of the Huntington Beach Tourism Business Improvement District”
3. Letter Requesting the Early Termination of Existing HBTBID
4. Resolution No. 2018-59 “A Resolution of the City Council of the City of Huntington Beach declaring its intention to renew the Huntington Beach Tourism Business Improvement District (HBTBID) and fixing the time and place of a public meeting and a public hearing thereon and giving notice thereof”