TO: ADAM PIRRIE, CITY MANAGER
FROM: JAMIE EARL, ASSISTANT CITY MANAGER
DATE: JANUARY 14, 2025
Reviewed by:
City Manager: AP
SUBJECT:
Title
RESOLUTION DECLARING RESULTS OF MAJORITY PROTEST PROCEEDINGS TO RENEW THE CLAREMONT TOURISM BUSINESS IMPROVEMENT DISTRICT (FUNDING SOURCE: GENERAL FUND)
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SUMMARY
The Claremont Tourism Business Improvement District (CTBID) is a benefit assessment district proposed to continue a revenue source to help fund marketing programs for CTBID lodging businesses. In November 2009, the Claremont City Council approved a Resolution of Formation, which confirmed the City Council’s intent to establish the CTBID and levy of assessments.
The City began collecting the CTBID assessment levy on January 1, 2010 for an initial five-year term (expiring December 31, 2014). In June 2014, the City Council approved a resolution renewing the CTBID for an additional ten-year term (January 1, 2015 to December 31, 2024).
The CTBID recently approached the City and expressed interest in extending for an additional ten-year term. On November 26, 2024, the City Council adopted a Resolution of Intention to renew the CTBID. As required by law, on December 10, 2024, the City Council allowed public testimony on the renewal of the CTBID and levy of assessments.
On January 14, 2025, the City Council will hold the final public hearing required before considering a formal Resolution of Formation (Attachment A). Holding the final hearing, declaring results of the majority protest proceedings, and adopting this Resolution will result in the renewal of the Claremont Tourism Business Improvement District and the levy of assessments on lodging businesses.
If approved, the renewed CTBID would have a ten (10) year term, beginning January 1, 2025, or as soon as possible thereafter, and ending on December 31, 2034.
RECOMMENDATION
Recommended Action
Staff recommends the City Council hold a final hearing and adopt a RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CLAREMONT, CALIFORNIA DECLARING RESULTS OF MAJORITY PROTEST PROCEEDINGS AND RENEWING THE CLAREMONT TOURISM BUSINESS IMPROVEMENT DISTRICT (CTBID), also referred to as the Resolution of Formation.
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ALTERNATIVES TO RECOMMENDATION
In addition to the recommendation, there are the following alternatives:
A. Request additional information.
B. Do not adopt the Resolution of Formation (Attachment A), in which case the CTBID would not be eligible for renewal.
FINANCIAL REVIEW
Renewing the CTBID has no immediate financial impact on the City. Because the CTBID programs are intended to increase visitation to the City, there may be an increase in transient occupancy tax and sales tax collections as a result of marketing efforts using CTBID funding.
The staff cost to review and prepare the material for this report is estimated at $1,100. The staff cost to administer this program annually is estimated at $2,200. These costs are included in the operating budgets of the Administrative and Financial Services Departments.
ANALYSIS
Background
Tourism Business Improvement Districts (TBIDs) utilize the efficiencies of private sector operation in the market-based promotion of tourism. These special assessment districts allow lodging business owners to organize their efforts to increase tourism. TBIDs have been used successfully in other destination areas throughout the state to improve tourism and drive additional room nights to assessed lodging businesses.
In November 2009, the Claremont City Council approved a Resolution of Formation, which confirmed the City Council’s intent to establish the Claremont Tourism Business Improvement District and levy of assessments. The CTBID is a benefit assessment district that provides a revenue source to help fund marketing programs for CTBID lodging businesses. The City began collecting the CTBID assessment levy on January 1, 2010 for an initial five-year term (expiring December 31, 2014). In June 2014, the City Council approved a resolution renewing the CTBID for an additional ten-year term (January 1, 2015 to December 31, 2024).
The CTBID recently approached the City and expressed interest in extending for an additional ten-year term. The renewed CTBID includes all lodging businesses, existing and in the future, available for public occupancy located within the boundaries of the City of Claremont. Lodging business owners decided to pursue renewal of the CTBID in order to continue a revenue source devoted to marketing Claremont as a tourist, meeting and event destination. If renewed, the CTBID would generate approximately $325,000 on an annual basis for promotion of travel and tourism specific to Claremont.
Lodging business owners within the CTBID fund the CTBID, and those funds are used to provide services that are desired by and benefit the lodging businesses within the CTBID.
CTBID benefits include:
• Funds cannot be diverted for other government programs;
• They are customized to fit the needs of each destination;
• They allow for a wide range of services; including: destination marketing, tourism promotion, and sales lead generation;
• They are designed, created and governed by those who will pay the assessment; and
• They provide a stable funding source for tourism promotion.
In California, TBIDs are primarily formed pursuant to the Property and Business Improvement District Law of 1994 (94 Law). This law allows for the creation of special benefit assessment districts 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.
Management District Plan
The Management District Plan (Attachment B) includes the proposed boundary of the TBID, a service plan, budget, and a proposed means of governance. The TBID will include all lodging businesses, existing and in the future, available for public occupancy within the boundaries of the City of Claremont.
The annual assessment rate is two percent (2%) of gross short-term sleeping room rental revenue. Based on the benefit received, assessments will not be collected on stays of more than thirty (30) consecutive days, stays by any person as to whom it is beyond the power of the City to impose the assessment, stays by any federal or state employee when on official business, or stays of any officer or employee of a foreign government who is exempt by reason of express provision of federal law or international treaty.
The renewed CTBID would have a ten (10) year term, beginning January 1, 2025, or as soon as possible thereafter, and end on December 31, 2034. The assessment will be implemented beginning January 1, 2025. Once per year, beginning on the anniversary of CTBID renewal, there is a thirty (30) day period in which business owners paying fifty percent (50%) or more of the assessment may protest and begin proceedings to terminate the CTBID.
The City of Claremont (City) will be responsible for collecting the assessment on a monthly basis from each lodging business located in the CTBID boundaries. The City shall forward the assessments to the Claremont Chamber, which will have the responsibility of managing CTBID programs as provided in the Management District Plan.
CTBID Renewal Process
November 26, 2024: RESOLUTION OF INTENTION (COMPLETED)
Upon the submission of 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, the City Council may initiate proceedings to renew a district by the adoption of a resolution expressing its intention to renew a district. Petitions in favor of CTBID renewal (“Renewal Petitions”) were submitted which represent over 50% of the total CTBID assessment. Renewal Petitions can be found in Attachment C. This majority petition allowed the City Council to initiate proceedings for CTBID renewal at its November 26, 2024 meeting. The “Resolution of Intention” that was adopted by the City Council can be found in Attachment D.
November 29, 2024: NOTICE (COMPLETED)
The 94 Law requires that written notices be mailed to the owners of all businesses proposed to be within the CTBID. The City provided the CTBID’s consultant, Civitas Advisors, with this information prior to the November 26 Council meeting so that they could fulfill this requirement on the CTBID’s behalf, which they did on November 29. Mailing the notice begins a mandatory forty-five (45) day period in which owners may protest CTBID renewal.
December 10, 2024: PUBLIC MEETING (COMPLETED)
Allow public testimony on the renewal of the CTBID and levy of assessments. No City Council action is required.
January 14, 2025: FINAL PUBLIC HEARING AND RESOLUTION OF FORMATION
If written protests are received from the owners of businesses in the renewed CTBID which will pay fifty percent (50%) or more 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 City Council.
Holding the final hearing, declaring results of the majority protest proceedings, and adopting the Resolution of Formation (Attachment A) will result in the renewal of the CTBID and the levy of assessments on lodging businesses.
LEGAL REVIEW
The Resolution of Formation (Attachment A), Management District Plan (Attachment B) and the Resolution of Intention that was previously adopted by City Council (Attachment D) have been reviewed and approved as to form by the City Attorney.
RELATIONSHIP TO CITY PLANNING DOCUMENTS
Staff has evaluated the agenda item in relationship to the City’s strategic and visioning documents and finds that it applies to the following City Planning Documents: Council Priorities, Economic Sustainability Plan, and the 2024-26 Budget.
CEQA REVIEW
This item is not subject to environmental review under the California Environmental Quality Act (CEQA).
PUBLIC NOTICE PROCESS
The agenda and staff report for this item have been posted on the City website and distributed to interested parties. If you desire a copy, please contact the City Clerk’s Office.
Submitted by: Prepared by:
Jamie Earl Katie Wand
Assistant City Manager Deputy City Manager
Attachments:
A - Resolution of Formation
B - Management District Plan
C - Renewal Petitions
D - Resolution of Intention