REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Travis Hopkins, City Manager
VIA: Jennifer Villasenor, Director of Community Development
PREPARED BY: Christopher Kennedy, Economic Development Project Manager
Subject:
title
Approval of Huntington Beach Tourism Business Improvement District (HBTBID) Annual Report for Fiscal Year (FY) 2025-26
body
Statement of Issue:
The Huntington Beach Tourism Business Improvement District (HBTBID) was created by the City Council in 2014 under the California Property and Business Improvement District Law of 1994.
The district provides a reliable funding source to market Huntington Beach as a visitor and conference destination. It is funded by a special assessment paid by hotels and short-term rentals on overnight stays of less than 30 days. The purpose of the district is to attract more overnight visitors, which:
* Increases spending at local restaurants, shops, and attractions.
* Grows the City's tax revenues, including the Transient Occupancy Tax (TOT).
* Supports local businesses and jobs.
The district is managed by Visit Huntington Beach (VHB), the City's official destination marketing organization and a nonprofit 501(c)(6).
State law requires VHB to prepare and submit an Annual Report to the City Council for approval every year. This report describes the programs, improvements, and budget for the upcoming year. Approval by the City Council ensures legal compliance and allows these efforts to continue.
Financial Impact:
There is no direct financial impact to the City associated with the recommended action.
Recommended Action:
recommendation
Approve the HBTBID Annual Report for Fiscal Year 2025-26.
end
Alternative Action(s):
Do not approve the report and provide direction to staff.
Analysis:
Huntington Beach TBID Overview
The HBTBID is a special business district that funds improvements and services to strengthen Huntington Beach's visitor economy. Funds are used exclusively to promote overnight stays through marketing, public relations, and event programming.
The district currently includes:
* 21 hotels and motels, and
* 203 short-term rentals (STRs) across the City, including Sunset Beach.
Guests staying fewer than 30 days pay a 6% assessment on gross room revenue, in addition to the City's 10% Transient Occupancy Tax (TOT). This assessment rate and methodology are set forth in the HBTBID Management District Plan (MDP), which was updated and approved by the City Council in June 2024.
The 2024 updates to the MDP also:
* Increased the assessment rate from 4% to 6%.
* Directed 10% of assessments to a dedicated Tourism Enhancement Program (TEP) to fund visitor-serving projects.
The current HBTBID authorization runs through June 30, 2028.
Annual Report Summary
No changes to the HBTBID boundaries are proposed for FY 2025-26.
VHB continues to strengthen Huntington Beach's competitiveness as a visitor destination through digital marketing, group sales, and media engagement.
Tourism Enhancement Program (TEP) projects funded include wayfinding signage, accessibility upgrades, seasonal beach restrooms, the Ambassador Program, event infrastructure, and planning for the International Surfing Museum.
In FY 2025-26, VHB will expand international outreach (with new representation in the UK and Ireland), increase partnerships supporting events and training, enhance accessibility and storytelling in collaboration with the City, and strengthen internal efficiency and research.
Budget Summary
VHB bases its revenue projections for FY 2025-26 on factors such as group meeting bookings, weather conditions, hotel partner forecasts, and increased demand for short-term rentals.
Assessment revenue is projected at $10,354,873, approximately 4% lower than the previous year's estimate. This reflects a more conservative approach based on recent performance and broader industry trends. With an additional $153,500 in other revenues (retail, ticket sales, digital advertising, and investment income) and $800,058 in rollover funds from the prior year, the total projected income is $11,308,431.
Planned expenses total $11,629,855, with the majority allocated to core TBID assessment programs.
INCOME
FY 25/26
Estimated TBID Assessments
$10,354,873
Retail, Ticket Sales, Digital Advertising, Investment Income
$153,500
Estimated Carryover from Prior Year
$800,058
Total Income
$11,308,431
EXPENSES
TBID Assessment Expenses
Sales and Marketing
$7,765,342
Tourism Enhancement Programs (TEP)
$1,531,958
Administration
$2,178,608
Contingency/Reserve
$25,000
City Collection Costs
$98,047
Subtotal - TBID Funded Expenses
$11,598,955
Non-TBID Fund Expenses (Advocacy, Board/Staff Events)
$30,900
TOTAL EXPENSES
$11,629,855
The FY 2025-26 budget reflects a planned deficit of $321,424, which will be covered by reserves. VHB's history of underspending has generated rollover funds and a strong reserve balance, ensuring long-term financial security. This approach sustains robust promotion of Huntington Beach while maintaining flexibility to adapt to changing market conditions.
Breakdown of TBID-Funded Programs
Percentages reflect the allocation of anticipated TBID revenue, while actual dollar amounts also include rollover, reserve, and other income. Allocations follow Council-approved MDP categories, with additional funds directed to Sales & Marketing per VHB Board guidance.
* Sales and Marketing (69%) - $7,765,342 - Advertising, public relations, sales, events, digital and influencer campaigns, and international promotion (UK/Ireland representation through agency partner JNS Next). Supported by website updates, familiarization tours, and research.
* Tourism Enhancement Programs (10%) - $1,531,958 - Visitor-serving projects such as new and replacement gateway signs, Pier signage design, pedestrian lighting between Pacific City and Downtown, seasonal restrooms with accessibility upgrades, enhanced bike valet branding, continued support for the Downtown Ambassador Program, the International Surfing Museum, high-speed Wi-Fi evaluation, Main Street seat wall modifications, and Pier history markers.
* Administration (20%) - $2,178,608 - IT, facilities, and security upgrades, as well as planning for a refreshed strategic plan and leadership transition.
* Contingency/Reserve (minimal) - $25,000 - A small allocation, since VHB has already achieved its $1.5 million reserve target, ensuring long-term financial stability.
* City Collection Costs (1%) - $98,047 - Covers the City's administrative costs for collecting assessments.
The FY 2025-26 budget was approved by VHB's Board of Directors on June 25, 2025, and reviewed by the City's Economic Development Committee on August 13, 2025.
Approval of the Annual Report by the City Council will:
* Fulfill state law requirements.
* Allow VHB to continue implementing tourism strategies that generate overnight stays, increase local spending, and support local businesses.
* Strengthen Huntington Beach's position as a premier visitor destination.
Environmental Status:
Pursuant to CEQA Guidelines Section 15378(b)(4), government fiscal activities that do not result in a physical change in the environment and do not commit the lead agency to any specific project, do not constitute a project. Therefore, these activities are exempt in accordance with CEQA Guidelines Section 15060(c)(3).
Strategic Plan Goal:
Goal 1 - Economic Development, Strategy A - Develop an updated economic development strategy to ensure business retention, local investments and job growth.
For details on the City of Huntington Beach Strategic Plan, visit:
https://www.huntingtonbeachca.gov/departments/city_manager/strategic_plan.php
Attachment(s):
1. Visit Huntington Beach FY 2025-26 Annual Report
2. PowerPoint Presentation