CITY COUNCIL STAFF REPORT
March 19, 2024 {{section.number}}c
APPROVAL OF THE FISCAL YEAR 2024 (FY 2024) ANNUAL REPORT/MANAGEMENT PLAN FROM THE CORONADO TOURISM IMPROVEMENT DISTRICT (CTID) ADVISORY BOARD;
ADOPTION OF A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CORONADO,
CALIFORNIA, DECLARING ITS INTENT TO CONTINUE TO LEVY TWO ONE-HALF PERCENT (0.5%) ASSESSMENTS ON FOUR HOTEL BUSINESSES WITHIN CTID I AND CTID II DURING FISCAL YEAR 2024-25 (FY 2024-25); AND SETTING A PUBLIC HEARING FOR APRIL 16, 2024
RECOMMENDATION:
Approve the FY 2024 Annual Report and Management Plan of the CTID Advisory Board; adopt “A Resolution of the City Council of the City of Coronado, California, Declaring Its Intention to Continue to Levy Assessments during FY 2024-25 on Certain Hotel Businesses within Coronado Tourism Improvement District I and Coronado Tourism Improvement District II;” and set a public hearing date of Tuesday, April 16, 2024, for consideration of the levy of the continued assessment.
BACKGROUND:
On June 15, 2010, the City Council adopted Ordinance No. 2013 establishing the first Coronado Tourism Improvement District (CTID I). CTID I was formed under the Parking and Business Improvement Area Law of 1989 and incorporated into the City's Municipal Code under Chapter 16.14. On June 16, 2015, the City Council adopted Ordinance No. 2050 amending Municipal Code Chapter 16.14 to establish the second Coronado Tourism Improvement District (CTID II).
In 2018, CTID began operating as Discover Coronado. Tourism Improvement Districts are a variation of a Business Improvement Districts (BIDs), whose formation and function are authorized in California’s Street and Highways Code. The working assumption behind BIDs is businesses know best how to market, promote, and benefit their business. With all BIDs, a local agency uses its authorized powers to collect an assessment on selected businesses, and then the selected businesses use the assessments according to a work plan approved by the legislative body for the benefit of the assesses. Funds cannot be used for any purpose other than the benefit of the assesses, or the program is considered a tax. The formation of the first CTID in 2010 was in reaction to the downturn in Coronado’s tax revenues after the Great Recession of 2008.
Pursuant to Coronado Municipal Code Section 16.14.080 and Sections 36530 and 36533 of the 1989 Law, the CTID Advisory Board must submit an Annual Report and Management Plan outlining the board's efforts over the current year and the proposed activities for use of the assessment funds for each CTID in the upcoming fiscal year. Section 36534 of the 1989 Law further requires that, after approval of the Annual Report and Management Plan, the City Council shall consider adopting a resolution of intent to reauthorize both CTID I and II to continue to levy the current annual assessment and authorize the programs proposed for the next fiscal year. If the resolution of intent is adopted, a time and place for a public hearing shall be called. The public hearing shall be held no less than ten (10) days after the Resolution of Intent is adopted. The purpose of the public hearing shall be to receive any written or oral protests from the assessed hotel properties against the reauthorization of either or both CTID I and II and/or the one-half percent (0.5%) assessment for each CTID.
Discover Coronado is a self-sufficient organization. It does not receive funding from the City of Coronado, federal, state or industry sources. Instead, it is funded by an assessment paid by overnight guests to member hotels.
Notice of the public hearing will be published and letters noting the renewal and protest hearing date, along with the resolution of intent, will be sent to all assessed parties (in this case, the four major hotels) within seven (7) days of the adoption of the Resolution of Intent.
ANALYSIS:
On February 8, 2024, the Discover Coronado Board met and approved the attached Annual Report and Management Plan. The Annual Report and Management Plan summarizes the activities and accomplishments for the current year and goals for the upcoming year. Despite challenges such as ongoing recovery from the COVID-19 pandemic, soaring inflation rates, water quality concerns, unprecedented weather, and ongoing hotel renovations, Discover Coronado continues to lead the travel and hotel sector and serve as a reliable recovery mechanism.
Coronado’s resorts experienced robust recovery in 2022, and 2023 marked steady ongoing growth. In 2023, groups spent $117.5 million in direct visitor spending, generating a total economic impact of $170.3 million in the City of Coronado. This total economic impact sustained 989 jobs and generated $8.4 million in local tax revenues in 2023.
Member hotels sold 419,500 room nights in 2023, of which 171,800 were from the group travel segment. The projected transient occupancy tax revenue for FY 2023 is expected to decrease
6.3% to $18.5 million due to planned renovations at some of the hotel properties.
Discover Coronado continues to engage in several marketing and sales initiatives that promote Coronado as a premier destination and bring luxury meetings to its resorts. Due to these efforts, Coronado was recognized as the 34th Top Meeting Destination in America in 2023, according to Cvent.
Along with their destination marketing efforts, Discover Coronado actively supports various local community projects. Last year, Discover Coronado began sponsoring various community events, including becoming the title sponsor of the Art and Wine Festival. Other community projects include cosponsoring the Coronado holiday tree lighting, funding the Orange Avenue Banner Program, providing the wrap for the Free Summer Shuttle buses, and new this year, implementing a sustainability plan that promotes sustainable initiatives to visitors.
A full list of FY 2023-24 achievements are outlined within the attached Discover Coronado Annual Report. Entering FY 2024-25, Discover Coronado has outlined eight goals and considerations:
1. Improve awareness of destination.
2. Engage travel trade professionals.
3. Sustainability; water quality initiatives.
4. Sponsorship of community events.
5. Advocate for organization and industry.
6. Improve hotel employee retention/recruitment.
7. Explore efforts that lengthen stays.
8. Evaluate beautification efforts.
As the hospitality and hotel industries gradually stabilize post-pandemic, leisure demand is steadily reverting to pre-pandemic patterns. This means consumers are exhibiting a sustained interest in travel, that is more intentional than reactionary. Consequently, Discover Coronado has committed to collaborating with travel professionals who can promote Coronado to their clientele, while encouraging guests to immerse themselves in the local culture by attending events and patronizing local businesses.
As San Diego’s resort landscape evolves, the Advisory Board has expressed interest in developing programs that retain hotel employees in Coronado, particularly during periods of renovation. Additionally, the Board will continue to discuss programs that enhance the arrival experience for visiting groups and guests.
FISCAL IMPACT:
The City receives $5,000 from both CTID I and CTID II to cover the cost of an annual financial review, accounting costs, and other in-kind services. The CTID Board adopted the Annual Report on February 8, 2024. The report projects FY 2024 assessments will generate $950,000 in revenues for CTID I and the same amount for CTID II for a total of $1.9 million.
ALTERNATIVE:
1) Make modifications to the Annual Report and Management Plan and approve it, as modified; and/or 2) Not approve the Annual Report and Management Plan or exclude either CTID I or CTID II from the Resolution of Intent and direct staff to bring back a Resolution of Intention to disestablish one or both Districts.
CALIFORNIA ENVIRONMENTAL QUALITY ACT:
Not Applicable.
PUBLIC NOTICE:
No notice required.
ATTACHMENTS:
1. Resolution No. 2024-13
2. Discover Coronado Annual Report
Submitted By: City Manager's Office / Kelli Maples