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HomeMy WebLinkAbout15 - PH-1 - Business Improvement Area (BIA) Reauthor - 6/7/2016CITY COUNCIL AGENDA REPORT MEETING DATE: June 7, 2016 ITEM NUMBER: PH -1 SUBJECT: BUSINESS IMPROVEMENT AREA (BIA) REAUTHORIZATION AND RESOLUTION TO LEVY ANNUAL ASSESSMENT DATE: MAY 13, 2016 FROM: OFFICE OF THE CEO PRESENTATION BY: DANIEL K. BAKER, ASSISTANT TO THE CEO FOR FURTHER INFORMATION CONTACT: DAN BAKER (714) 754-5156 RECOMMENDATION: It is recommended that the City Council: 1. Conduct a public hearing regarding the Business Improvement Area (BIA) reauthorization and approve Resolution No. 16-xx: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF COSTA MESA, CALIFORNIA, LEVYING AN ANNUAL ASSESSMENT FOR FISCAL YEAR 2016-2017 FOR A BUSINESS IMPROVEMENT AREA COVERING CERTAIN COSTA MESA HOTELS AND MOTELS. (Attachment 1) 2. Adopt the Fiscal Year 2016-2017 Community -Wide Marketing and Support Budget. (Attachment 2) BACKGROUND: The California Legislature adopted the Parking in Business Improvement Area Law of 1989 (Streets and Highways Code, §36500), which enables cities to impose an assessment fee on businesses within an area designated by the city. On July 5, 1995, the City Council adopted Ordinance No. 95-9 to establish a Business Improvement Area (BIA) for the purpose of assisting the hotel and motel industry in its promotion of tourism within the city. The BIA imposed a one percent (1%) assessment on the sale of hotel and motel overnight guest room stays. This money was to be used for the establishment and maintenance of a local tourism and promotion council. The Costa Mesa City Council authorized the city manager to enter into an agreement with the Costa Mesa Tourism and Promotion Council to develop and administer the BIA. In 2001, the Costa Mesa Conference & Visitor Bureau (CVB) became the administrator of the BIA. 1 In January 2000, the participating hotels voluntarily requested an increase in the assessment from one percent (1 %) to two percent (2%), which was approved. In October 2010, the participating hotels voluntarily requested an increase to the assessment from two percent (2%) to three percent (3%). The increase was approved by Council resolution and became effective on November 1, 2010. The BIA benefit zone encompasses all areas within the boundaries of Costa Mesa. At the May 3, 2016 meeting, the City Council approved a Resolution declaring the intention to levy an annual assessment for Fiscal Year 2016-2017, and set the public hearing for June 7, 2016 at 7 p.m. A copy of the resolution was mailed to every hotel and motel owner on file with the City, notifying them of the proposed assessment renewal and their opportunity to protest the annual assessment or other concerns regarding the BIA. This is a voluntary program for the property owners. ANALYSIS: Property owners will be provided an opportunity to protest the voluntary annual assessment or address any concerns regarding the BIA at the public hearing. The City Council will vote to adopt or deny the resolution levying an annual assessment for the upcoming fiscal year, and makes the ultimate decision as to the size of and the properties to be included in the BIA. Once the annual assessment is approved, the assessment is collected along with the city's Transient Occupancy Tax (TOT). The hotels and motels included in the BIA are required to itemize the BIA levy as a separate assessment. The CVB staff manages the day-to-day activities and provides all services to administer the BIA. Per the agreement between the City of Costa Mesa and the CVB and as required by Streets and Highways Code (§36533), the CVB provided an annual review at the May 3, 2016 Council meeting, describing the programs and activities implemented during the previous fiscal year as well as the status of the programs and activities implemented during the current fiscal year. Highlights of the 2015-2016 Fiscal Year The Costa Mesa Conference and Visitor Bureau (Bureau) is passionate about the City of the Arts TM. Driven to elevate the city as a premier Southern California destination, the Bureau focuses on creating awareness to attract overnight leisure travelers. California is welcoming more visitors than ever, 251.5 million -person trips in 2014. Over 204 million of these travelers were leisure guests and 16.5 million were international visitors. International traffic led growth in passenger loads at airports across the state, and travel spending is at an all-time high. Visitor spending was at $117.5 billion, an increase of 3.6 percent. Tourism -related jobs grew to over 1 million. The lodging industry in the United States experienced six consecutive years of increased occupancy, the longest period of increase since 1988. Occupancy in California reached 74.7 percent in 2015, up 2.8 percent from 2014, and revenue per available room (RevPAR) grew 10 percent. Orange County occupancy reached 78.7 percent, up 3 percent with RevPAR growing 9.4 percent. Partnering hotels within the Bureau saw an overall RevPAR increase of 5.1 percent in 2015. Tourism -related jobs in California grew 4.4 percent, emphasizing the importance of the industry as a significant job creator. Over 9 billion dollars in tax revenue at the state and local levels was generated. Our local restaurants, shopping centers, attractions and entertainment venues, as well as residents, benefit tremendously from every guest that visits our city. Tourism drives our economy and keeps California in business. As we have seen throughout the years, Costa Mesa hotel owners continue to invest in their products. Residence Inn by Marriott will complete their guest room renovation in late spring and Avenue of the Arts became a Tribute Portfolio Hotel after the completion of their chic, contemporary guest room renovation in April. The BLVD Hotel is completing their contemporary accommodations with a sleek transformation of their guest bathrooms and lobby surroundings. The Marriott recently completed renovation of their ballroom space with a welcoming, modern atmosphere for meetings, weddings and events. Food tourism is now considered the leading hook in travel. The City of the Arts TM is gaining an even greater reputation for the Art of Dining. Gogobot and the Orange County Register named Costa Mesa one of the 10 best mid-sized food cities in America. In fact, according to a critic's poll in the Orange County Register, 17 of the top 75 restaurants in Orange County are located in Costa Mesa. The diversity in culinary options is endless. Vaca, the newest Spanish restaurant owned by Top Chef contestant Amar Santana, opened in late December. Executive Chef Laurent Brazier opened Bistro Papillote inside The OC Mix, offering delicious quiches and crepes. The Halal Guys, famous in New York for their tasty gyro sandwiches and chicken and rice platters, opened their first Orange County location in Costa Mesa. Holsteins, at South Coast Plaza, crafts critically acclaimed hamburgers and milkshakes, and as rated by USA Today, is among the best in the United States. Taco Maria continues to receive accolades and was ranked number two on Pulitzer Prize-winning Jonathan Gold's 101 Best Restaurants list in November 2015. Exciting new partnerships took place last year. Anaheim Resort Transportation (ART) allows our guests to conveniently visit the Disneyland® Resort while enjoying the best shopping, dining and arts scene in Costa Mesa. This joint agreement enabled the Bureau to add a family customer segment to our core marketing efforts. Furthering our international efforts, new initiatives such as Ctrip (China's largest online travel agency) and a dedicated group sales effort focused on China will aid in growing awareness of our city as an attractive Southern California destination. ALTERNATIVES CONSIDERED: The Council may vote to reject the resolution, which will prevent the city from levying this voluntary annual assessment for the upcoming fiscal year. FISCAL REVIEW: The recently completed audit shows the CVB's cash equity as of June 30, 2015, to be $1,385,046. According to the 2015-2016 annual report, the CVB has a total of $1,752,769 in BIA actual revenues through February and is estimating to generate an additional $815,257 for the months of March, April, May and June for an estimated fiscal year total of $2.57 million. 3 The city receives one percent (1%) of the BIA revenue/assessment as partial reimbursement for its collection and administrative costs. The one percent (1%) allocated to the city for reimbursement is estimated at $25,700 for the 2016-2017 Fiscal Year. This fee will sufficiently cover the costs incurred by the City of Costa Mesa in assisting the CVB. Examples of CVB expenditures include an advertising campaign, media relations, brochures/promotional items, video production, administration, special promotions, and hotel niche marketing. Lastly, the City utilizes CVB funding for community -wide marketing and support. The Fiscal Year 2016-2017 proposed budget totaling $164,000 is outlined in attachment 2. Staff is seeking final council input regarding the allocation amounts prior to the FY 2016- 2017 fiscal budget adoption at the June 21,2016, City Council meeting. LEGAL REVIEW: Legal counsel has prepared the resolution of intention and reviewed the documents and approved as to form. CONCLUSION: State law mandates a specific procedure to be followed in the establishment of a BIA area and the levying of a voluntary annual assessment. Adoption of the attached resolution is the final step in the reauthorization of the BIA assessment, and the City Council must approve the proposed resolution before an annual assessment can be levied for the 2016-2017 fiscal year. DANIEL K. BAKER Assistant to the CEO THOMAS R. HATCH City CEO THOMAS DUARTE STEVE DUNIVENT City Attorney Interim Finance Director Attachments: 1. Proposed Resolution 2. Proposed Fiscal Year 2016-17 Marketing Budget 4 Attachment 1 RESOLUTION NO. 16- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF COSTA MESA, CALIFORNIA, LEVYING AN ANNUAL ASSESSMENT FOR FISCAL YEAR 2016-2017 FOR A BUSINESS IMPROVEMENT AREA COVERING CERTAIN COSTA MESA HOTELS AND MOTELS THE CITY COUNCIL OF THE CITY OF COSTA MESA DOES HEREBY RESOLVE AS FOLLOWS: WHEREAS, in adopting the Parking and Business Improvement Area Law of 1989 (Streets & Highways Code § 36500 et seq.), the California Legislature authorized cities to levy assessments on businesses in order to promote economic revitalization and tourism, to create jobs, attract new businesses, and prevent erosion of business districts; and WHEREAS, on July 5, 1995, by Ordinance No. 95-9, the City Council adopted a business improvement area, commonly known as the Costa Mesa Tourism & Promotion Business Improvement Area ("BIA"), the purpose of which is to promote tourism to the City and to fund programs and activities that benefit the hotel and motel businesses within the City of Costa Mesa; and WHEREAS, the City Council appointed the general managers of the 11 hotels subject to the assessment area to serve as the advisory board as required by California Streets and Highways Code Section 36530; and WHEREAS, said advisory board is known as the Costa Mesa Conference and Visitor Bureau (the "CMCVB"); and WHEREAS, the City Council has voted to continue the special assessment for the BIA each year since its inception, and it has been levied upon the 11 hotel and motel businesses listed in Exhibit A, attached hereto and incorporated by this reference; and WHEREAS, in January 2000, the City Council approved an increase in the assessment, raising the assessment from one percent (1 %) to two percent (2%) based on the sale of overnight room stays; and WHEREAS, in November 2010, the City Council approved an increase in the assessment, raising the assessment from two percent (2%) to three percent (3%) based on the sale of overnight room stays; and WHEREAS, the City desires to levy and collect a three percent (3%) assessment within the BIA for Fiscal Year 2016-2017; and WHEREAS, a Resolution of Intention was adopted by the City Council pursuant to Streets & Highways Code § 36534 at a meeting on May 3, 2016; and WHEREAS, the City Council has conducted a public hearing pursuant to Streets and Highways Code § 36535; and WHEREAS, the City Council now desires to confirm the annual report filed by the CMCVB and adopt this Resolution to levy the assessment for the 2016-2017 fiscal year. Attachment 1 NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Costa Mesa as follows: Section 1. Assessment. An annual assessment for the BIA shall be levied pursuant to Streets & Highways Code § 36500 et seq. The boundaries of the territory are the 11 motels and hotels listed in Exhibit A. The amount of the annual assessment is three percent (3%) based on the sale of overnight room stays. New hotel and motel businesses commenced after the effective date of the resolution levying the assessment will be exempt from the levy of assessment, pursuant to Streets & Highways Code § 36531. Section 2. Annual Report. An annual report on the Business Improvement Area has been prepared. Said report is on file in the City Clerk's Office. Section 3. Types of Activities to Be Funded. The type or types of activities to be funded by and through the annual levy of assessments on businesses within the Costa Mesa Tourism & Promotion Council Business Improvement Area are specified in the referenced annual report and Exhibit B, attached hereto and incorporated by this reference. Section 4. Reporting and Remitting to the City of Costa Mesa Finance Department. Each hotel/motel owner shall separate the Business Improvement Assessment from the Transient Occupancy Tax on guest billing statements. The specific term "Business Improvement Assessment" shall be included on the billing to identify the assessment amount. The hotel/motel owner shall collect and subsequently remit the assessment to the City Finance Department at the same time and manner as the Transient Occupancy Tax. A ten percent (10%) penalty and half percent (0.5%) interest will be assessed on late remittances. Section 5. Method and Basis of Levy. To allow each business owner to estimate the amount of the assessment to be levied against his or her business, the method and basis of levying the assessment are set forth in the annual report relative to the Business Improvement Area, Ordinance 95-9, and Exhibit B. BE IT FURTHER RESOLVED THAT the City Council of the City of Costa Mesa, California, does hereby adopt the annual report on the business improvement area (referenced report on file in the City Clerk's Office), and this Resolution as set forth herein, including all exhibits. PASSED, APPROVED AND ADOPTED this 7th day of June, 2016. Stephen M. Mensinger, Mayor ATTEST: APPROVED AS TO FORM: Brenda Green, City Clerk Thomas P. Duarte, City Attorney 2 Attachment 1 STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss CITY OF COSTA MESA ) I, BRENDA GREEN, City Clerk of the City of Costa Mesa, DO HEREBY CERTIFY that the above and foregoing is the original of Resolution No. 16-_ and was duly passed and adopted by the City Council of the City of Costa Mesa at a regular meeting held on the day of 2016, by the following roll call vote, to wit: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: IN WITNESS WHEREOF, I have hereby set my hand and affixed the seal of the City of Costa Mesa this day of 2016. BRENDA GREEN, CITY CLERK 3 Attachment 1 EXHIBIT A The Business Improvement Area ("BIA") benefit zone encompasses the entire City of Costa Mesa boundaries. It is anticipated that the entire City, including businesses and residents, will benefit from increased revenues generated by the activities financed by the BIA assessment. The following businesses will be included in the BIA that is established pursuant to Streets & Highways Code § 36500 et seq., the businesses commonly known as: Ayres Country Inn & Suites Property Address: 325 and 345 Bristol Street, Costa Mesa Business Owner: Newport Country Inn & Suites, Inc. 355 Bristol Street, Suite A Costa Mesa, CA 92626 Property Owner: Newport Country Inn & Suites, Inc. 355 Bristol Street, Suite A Costa Mesa, CA 92626 Best Western Plus Newport Mesa Inn Property Address: 2642 Newport Boulevard, Costa Mesa Business Owner: James Hsuen & Shang -Pu Lee 2642 Newport Boulevard Costa Mesa, CA 92627 Property Owner: James Hsuen & Shang -Pu Lee 2642 Newport Boulevard Costa Mesa, CA 92627 BLVD Hotel Property Address: 2430 Newport Blvd., Costa Mesa, CA 92627 Business Owner: Shayamal Patel 2450 Newport Blvd Costa Mesa, CA 92627 Property Owner: Shayamal Patel 2450 Newport Blvd Costa Mesa, CA 92627 Hilton Costa Mesa Property Address: 3050 Bristol Street, Costa Mesa Attachment 1 Business Owner: Ashford TRS CM LLC 14185 Dallas Parkway, Suite 1100 Dallas, TX 75254 Property Owner: Remington Lodging & Hospitality LP 14185 Dallas Parkway, Suite 1100 Dallas, TX 75254 Crowne Plaza Property Address: 3131 Bristol Street, Costa Mesa Business Owner: Brighton Management 1901 Main Street, Suite 150 Irvine, CA 92614 Property Owner: 3131 Bristol Property UC, LLC 2711 Centerville Road, Suite 400 Wilmington, DE 19808 Holiday Inn Express Hotel & Suites Property Address: 2070 Newport Boulevard, Costa Mesa Business Owner: Narendra B. Patel 2070 Newport Boulevard Costa Mesa, CA 92667 Property Owner: Narendra B. Patel 2070 Newport Boulevard Costa Mesa, CA 92667 Costa Mesa Marriott Property Address: 500 Anton Boulevard, Costa Mesa Business Owner: Marriott International 10400 Fernwood Road Bethesda, MD 20817 Property Owner: Host Hotels & Resorts 6903 Rockledge Drive, Suite 1500 Bethesda, MD 20817 Ramada Inn & Suites Costa Mesa Property Address: 1680 Superior Avenue, Costa Mesa Business Owner: B.D. Inns Inc./Ramada Ltd. 1680 Superior Avenue Costa Mesa, CA 92627 Attachment 1 Property Owner: B.D. Inns Inc./Ramada Ltd. 1680 Superior Avenue Costa Mesa, CA 92627 Residence Inn by Marriott Property Address: 881 Baker Street, Costa Mesa Business Owner: Marriott International 10400 Fernwood Road Bethesda, MD 20817 Property Owner: ING Clarion Partners 2650 Cedar Springs Road, Suite 850 Dallas, TX 75201-1491 The Westin South Coast Plaza Property Address: 686 Anton Boulevard, Costa Mesa Business Owner: Host Hotels & Resorts 6903 Rockledge Drive Suite 1500 Bethesda, JD 20817 Property Owner: CJ Segerstrom & Sons c/o South Coast Plaza 686 Anton Boulevard Costa Mesa, CA 92626 Avenue of the Arts Wyndham Hotel Property Address: 3350 Avenue of the Arts, Costa Mesa Business Owner: Rosanna Inc. 3350 Avenue of the Arts Costa Mesa, CA 92627 Property Owner: Rosanna Inc. 3350 Avenue of the Arts Costa Mesa, CA 92627 Attachment 1 EXHIBIT B The BIA assessment will be used to fund the Costa Mesa Conference & Visitor Bureau (CMCVB). The CMCVB will fund activities to promote tourism in Costa Mesa and will sponsor related tourist events that benefit the hotel and motel businesses within the City. The specific improvements and activities to be funded by this assessment are outlined in the CMCVB's 2016-2017 Annual Report. Revenue A three percent (3%) levy will be assessed against each of the 11 hotels listed in Exhibit A, based on the net revenue from the sale of overnight room stays. Business owners shall pay the assessment to the Costa Mesa City Finance Department on a monthly basis. A penalty and interest shall be assessed on late payments. Note: New hotel and motel businesses within the BIA commenced after the effective date of this resolution will be exempt from the levy of assessment. Attachment 2 2016-17 Community -Wide Marketing and Support Budget The events and programs below support the goals of bringing tourism to the community and increasing room night stays at local hotels: Anaheim Resort Transportation Shuttle Bus $ 25,000 City of the Arts Master Plan for Public Art $ 35,000 Community Sponsored Sister -City Program $ 20,000 Summer Concerts in the Park Support $ 10,000 Costa Mesa Community Run Support $ 10,000 Snoopy House Holiday Event $ 20,000 International Conference of Shopping Center Booth - Marketing and Branding to Potential New Businesses $ 10,000 Mayor's Celebration Sponsorship $ 10,000 Community Promotional Materials - Giveaways, Apparel, Maps, etc. $ 24,000 Total $ 164,000