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File #: 2021-0109   
Type: Regular Calendar Item Status: Agenda Ready
File created: 2/1/2021 In control: Economic Development Board
On agenda: 6/8/2021 Final action:
Title: Annual Tourism BIA Assessment Report & Continuation of Tourism Assessment Without Change in Fiscal Year 2021-22
Department or Agency Name(s): Economic Development Board
Attachments: 1. Summary Report_06_08_2021_EDB_BIA_Hearing, 2. 2021-2022 SCTB-BIA 4th Amendment_ADA.pdf, 3. 2021-2022 SCTB TOT Agreement_ADA.pdf, 4. 06_08_2021_BIA_Resolution Continuing Without Change BIA Levy_ADA.pdf, 5. 2019-2020-SCT-Annual-Report ADA.pdf, 6. FY2021-2022 SCTB Annual Report and BudgetADA - F.pdf, 7. 06_08_2021_EDB_BIA Hearing.pres.pdf
Date Action ByActionResultAction DetailsMeeting DetailsVideo
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To: Board of Supervisors of Sonoma County

Department or Agency Name(s): Economic Development Board (EDB) and Auditor-Controller-Treasurer-Tax Collector (ACTTC)

Staff Name and Phone Number: Sheba Person-Whitley, EDB, 565-7170 and Brooke Koop, ACTTC, 565-1294

Vote Requirement: Majority

Supervisorial District(s): Countywide

 

Title:

Title

Annual Tourism BIA Assessment Report & Continuation of Tourism Assessment Without Change in Fiscal Year 2021-22

End

 

Recommended Action:

Recommended action

A)                     Conduct a public hearing to consider the Sonoma County Tourism Bureau's annual tourism assessment report to support the continuation of the tourism assessment in Fiscal Year 2021-22; and

B)                     Adopt a resolution confirming the Tourism Bureau’s Annual Report and continuing without change the levy of the tourism assessment for the Sonoma County Tourism Business Improvement Area for Fiscal Year 2021-22.

C)                     Approve the Board Chair to execute an amendment to provide services and programs promoting tourism in Sonoma County funded by assessments from within the Sonoma County Tourism Business Improvement Area until June 30, 2022. 

D)                     Authorize the Economic Development Executive Director, in coordination with the County Administrator and County Counsel, to execute an agreement with Sonoma County Tourism Bureau, Inc. to provide services and programs promoting tourism in Sonoma County for the period of July 1, 2021 to June 30, 2022.  Estimated funding provided through the agreement would be $1.64 million, based upon Sonoma County Tourism Bureau’s share of 1.25% of the first 9% of Transient Occupancy Tax Collected, and estimated collections of $11.8 million in fiscal year 2021-22.

end

 

Executive Summary:

Staff recommends the Board approve a resolution confirming the Annual Report prepared by the Sonoma County Tourism Bureau and continuing the program and assessments as levied without change for fiscal year 2021-22.  The request includes executing an amendment with the Sonoma County Tourism Bureau (SCTB), which includes expenditure policy restrictions to carry out the services, activities and programs promoting tourism funded by the assessments for the specific benefit of the lodging establishments within the Sonoma County Tourism Business Improvement Area. In addition, staff recommends FY 2021-22 funding agreement renewal awarding $1.64 million of the county’s unincorporated area Transient Occupancy Tax (TOT) to the SCTB to support tourism promotion activities.

 

Discussion:

 

Sonoma County Tourism Business Improvement Area Assessment Continuation

On November 2, 2004, the Sonoma County Board of Supervisors adopted the ordinance creating the Sonoma County Tourism Business Improvement Area (Business Improvement Area) in various cities and in the unincorporated areas of the county. Under the ordinance, lodging establishments generating annual room revenue of $350,000 or more must pay an assessment equal to 2% of such revenue. 

 

Pursuant to Streets and Highways Code section 36535(d), the levy of the assessment and program to promote tourism has continued without change in the Business Improvement Area since 2004 (BIA).

 

The Sonoma County Tourism Bureau (Tourism Bureau) is a private, non-profit organization dedicated to increasing overnight stays in Sonoma County. In June 2005, the Sonoma County Board of Supervisors executed an agreement with the Tourism Bureau to carry out services, activities, and programs promoting tourism to Sonoma County, funded by assessments from within the Business Improvement Area.

 

As it has done every year since 2004, the Tourism Bureau has submitted its Annual Report, which contains information on the activities and corresponding expenditures to carry out in Fiscal Year 2021-22 (attached). The Report also contains a budget showing projected revenue from assessments and all other sources sufficient to carry out the services, programs, and activities set forth in the plan.

 

Collection of Tourism Assessment and Award of Transient Occupancy Tax

The Sonoma County Treasurer-Tax Collector collects the BIA assessment from all qualifying entities in the unincorporated areas of the County and also remittances from member cities, which include the Cities of Santa Rosa, Rohnert Park, Petaluma, Cloverdale, Cotati, and Sebastopol, and the Town of Windsor. The City of Sonoma and the City of Healdsburg have not approved consent resolutions to join the BIA.


County staff are meeting with Sonoma County Tourism and other stakeholders to review opportunities to coordinate efforts to expand enforcement and collection efforts of the business improvement assessment.  In the meantime, County staff recommend proceeding with the annual process to continue the levy of the business improvement assessment without changing the ordinance.   We are requesting that the Board accept the Sonoma County Tourism’s annual tourism assessment report to support the continuation of the tourism assessment in fiscal year 2021-22 and continue without change the BIA assessment.

 

In addition to BIA funds, the Sonoma County Tourism Bureau receives funding from the County of Sonoma’s Transient Occupancy Tax (TOT). TOT is authorized under State Revenue and Taxation Code Section 7280, as an additional source of non-property tax revenue to local government. The TOT tax levied in Sonoma County is at a rate of 12% for accommodations at lodging and camping facilities in the unincorporated areas of the County. TOT funds are discretionary, in that the Board of Supervisors may direct use of these funds for any legitimate county expense and may grant funds that benefit the community in accordance with Government Code section 26227. The TOT contract with the County of Sonoma and Sonoma County Tourism is forthcoming, pending the completion of the audits.

 

Findings and Recommendations

Staff and the Tourism Bureau, in its capacity as the Advisory Board, recommends that the Board accept and confirm this Annual Report and continue the assessments as levied without change for the Business Improvement Area in Fiscal Year 2021-2022 pursuant to the Parking and Business Improvement Area Law of 1989 (California Streets and Highways Code section 36535(d) et seq.), subject to the following findings and recommendations:

 

1.                     That the boundaries of the Business Improvement Area should remain the same, with the recognition that the cities of Santa Rosa, Petaluma, Rohnert Park, Sebastopol, Cloverdale and Cotati, and the Town of Windsor, have not withdrawn their consent to be included within the boundaries of the Business Improvement Area.

2.                     That Tourism Bureau continue to serve as the Advisory Board for the Business Improvement Area.

3.                     That the method and basis of levying the assessment remain unchanged and continue in Fiscal Year 2021-22.

4.                     That the revenues generated by the assessment be used in accordance with the requirements of Sonoma County Code section 33-4 to conduct marketing activities including funding of programs, services, and activities outside of the County designed to increase the number of overnight visits to the County.

5.                     The Tourism Bureau will provide an annual audit of travel and meal expenses per their most recent updated travel and meal reimbursement policy.

 

Written and Oral Protests

In advance of this public hearing, written protests may be submitted to the Economic Development Board Director, County of Sonoma, 575 Administrative Drive, Room 100A, Santa Rosa, CA 95403 by 5:00 p.m. on June 7, 2021. At the public hearing, the Board will consider all protests, both written and oral, presented to the Board prior to the close of the hearing. Staff has published notice in the newspaper as directed by the Board and as required by Streets and Highways Code section 36535(d).  

Staff recommends the Board accept the Annual Assessment Report for Fiscal Year 2021-22, and adopt the resolution supporting the continuation of the tourism assessment without change.

 

Agreement for Services to Promote Tourism from 7/1/2021 to 6/30/2022

Business Improvement Districts are important to California’s economy and provide a number of tourism-related services to California’s tourism industry, including marketing of assessed businesses, tourism promotion, and special events to attract tourists. Sonoma County Code section 33-4 requires that revenues from Business Improvement Area assessments must be used to conduct marketing activities designed to increase overnight visits to the area. The term “area” is defined as the territory within the boundaries of the Business Improvement Area, and the term “marketing activities” is defined as activities designed to market the area as a tourist destination, including the expenditure of funds to place advertising in any media, conduct public relations campaigns, perform marketing research, promote conventions and trade shows, and foster improved contacts within the travel industry, for the purpose of promoting tourism within the area. Revenues from assessments may be used for programs, services, and activities outside the area, if such programs, services, and activities are designed to promote and encourage overnight visits to the area. Revenues from assessments may also be used to pay the ongoing reasonable administrative costs associated with the marketing activities.

The focus on increasing overnight visits to the area constitutes a specific benefit to the lodging establishments that pay the assessments. The fact that others may receive incidental benefits from the expenditure of assessments, such as restaurants serving more patrons, does not change the characterization of assessments as a specific benefit to lodging establishments because no additional cost is imposed on the lodging establishments to provide those incidental benefits.

 

The type of activities intended to be funded by the Tourism Bureau’s Business Improvement Area assessment and Transient Occupancy Tax revenues include:

(1) advertising; (2) marketing materials and distribution; (3) tradeshows and sales missions; (4) sales and marketing promotions; (5) destination development; (6) research and development; (7) public relations; (8) sales and marketing tools; (9) labor; and (10) administrative expenses.

 

Staff recommends contracting with SCTB to provide tourism promotion activities financed with BIA annual assessment and supplemented with a portion of the county’s unincorporated tax collection, which is consistent with Board policy <https://sonomacounty.ca.gov/CAO/Services/Community-Investment-Program/Community-Investment-Program-Policy/> and it equates to 1.25% of the first 9% TOT recommended budget revenue included in the County’s FY 2021-22 budget. The new term of contracted services ends on 6/30/2022 and an estimated $3.97 million Business Improvement Area assessment plus $3.6 million of the county’s TOT.

 

Prior Board Actions:

3/23/2021 - The Board accepted the Sonoma County Tourism Bureau’s annual tourism assessment report and adopted a resolution to hold a public hearing on June 8, 2021 to consider the report and continue the BIA assessment without change. 

 

Fiscal Summary

 Expenditures

FY 20-21 Adopted

FY21-22 Projected

FY 22-23 Projected

Budgeted Expenses

 

 

 

Additional Appropriation Requested

 

$5,575,920

 

Total Expenditures

 

$5,575,920

 

Funding Sources

 

 

 

General Fund/WA GF

 

 

 

State/Federal

 

 

 

Fees/Other: Business Improvement Area Assessment and TOT award

 

$5,575,920

 

Use of Fund Balance

 

 

 

Contingencies

 

 

 

Total Sources

 

$5,575,920

 

 

Narrative Explanation of Fiscal Impacts:

Business Assessment continuation is estimated to generate $3,963,694 in revenues, which is supplemented with $1,612,226 of the county’s TOT per existing Board policy https://sonomacounty.ca.gov/CAO/Services/Community-Investment-Program/Community-Investment-Program-Policy/

 

Staffing Impacts:

 

 

 

Position Title (Payroll Classification)

Monthly Salary Range (A-I Step)

Additions (Number)

Deletions (Number)

 

 

 

 

 

Narrative Explanation of Staffing Impacts (If Required):

N/A

 

Attachments:

2021-22 BIA Contract Amendment

2021-22 TOT Services Agreement

Resolution to Continue BIA Assessment without Change for Fiscal Year 2021-22

2021-22 Sonoma County Tourism Bureau Annual Report and Budget

2019-20 Sonoma County Tourism Annual Report

 

Related Items “On File” with the Clerk of the Board:

None