Cotati City Council
Agenda Staff Report
Item type: PRESENTATIONS
To: City Council
Subject: Presentation on Proposed Changes to the Sonoma County Tourism Business Improvement Assessment
Date: August 09, 2022
Written by: Damien O'Bid, City Manager
Recommendation
It is recommended that the City Council receive a presentation from Sonoma County Tourism on the proposed changes to the existing Business Improvement Assessment (BIA). No action will be taken.
Background
A Resolution of Consent is required by the participating BIA cities for the change in the County of Sonoma Ordinance 5255 to be considered by the Board of Supervisors. Established on November 2, 2004, with resolutions of consent from the Cities of Santa Rosa, Rohnert Park, Petaluma, Cloverdale, Cotati, and Sebastopol, and the Town of Windsor, the Sonoma County Tourism Business Improvement Area was formed.
The BIA was adopted pursuant to the “Parking and Business Improvement Area Law of 1989,” Sections 36500 et seq. of the California Streets and Highways Code, and Resolution Nos. 04- 0850 and 04-0984, adopted by the Board of Supervisors on September 14, 2004, and October 12, 2004.
The purpose of forming the Area as a business improvement area under the Law is to provide revenue to defray the costs of services, activities, and programs that promote and encourage tourism within the Area, which will benefit the Operators of Lodging establishments paying Assessments in the Area through the promotion of the scenic, recreational, cultural, and other attractions in the Area. Revenues from Assessments shall be used to conduct Marketing Activities designed to increase overnight visits to the Area.
Sonoma County Tourism is requesting an update to its existing BIA to raise collection from 2% to 3% and to remove the existing revenue threshold of $350,000 annually for participating in collection of the BIA.
Analysis/Discussion
Sonoma County Tourism (SCT) exists to drive overnight visitation into Sonoma County lodging properties and drive revenue into the county through tourism activities. Through a strategic approach and highly efficient sales and marketing programs and campaigns, SCT is able to reach potential visitors in key consumer target audiences and within specified travel professional groups.
In recent years, SCT has shown that its programming provides a significant return-on- investment, generating $14 in local taxes for every $1 invested in tourism marketing. Every additional dollar spent in marketing will benefit the overall brand awareness of the county and drive business into the doors of customer-facing businesses.
At present, SCT is working within the framework outlined in its current funding structure, that being receiving 1.25% of the first 9% of Transient Occupancy Tax (TOT) collected in unincorporated Sonoma County and 2% of county-wide overnight lodging revenue for properties with an excess of $350,000 per year in revenue, save the towns of Sonoma and Healdsburg as assessed through the Business Improvement Area (BIA).
Seeking ways to help ensure the organization has a sustainable funding model, SCT is seeking to revise the structure of the BIA program. Under the mantel of the Responsible Tourism Assessment, SCT proposes an overlay BIA (to the current structure) that would bring an estimated additional $4 - $5 million into the organization.
These funds would allow SCT the ability to laser focus on responsible travelers and as an addition to SCT’s current sales and marketing programs. While the responsible travel message is always a part of the messaging, these funds will allow for additional messaging and campaign components aimed directly as responsible travelers.
Throughout the year, SCT operates its consumer campaigns during the time periods that drive business. SCT is mandated to drive business November through April. It’s during this time period that the majority of the paid advertising has and will occur. These funds will help augment the campaigns run during that time with a travel responsibly message. During the remainder of the year, May – October, the chief messaging will be around responsible travel.
The need to drive business is not as acute during this “high season” time, but the need to tout responsible and sustainable travel takes the forefront. These funds will help ensure each campaign time frame is as effective as possible.
Sonoma County’s agricultural community has long had a commitment to sustainability, but finding and inviting like-minded travelers on the consumer side is a recent undertaking.
Attracting new visitors is always a more costly proposition than inviting travelers from core markets (San Francisco Bay to Sacramento) who are very familiar with the destination and its marketing messages. Also, as the cost of purchasing media time continues to rise, the key consumer markets for Sonoma County are San Francisco, Los Angeles, San Diego, Dallas, Phoenix, Portland and Seattle – represent some of the most expensive markets in the country.
Additional funds will help SCT be more effective in connecting with the responsible traveler target audiences within these coveted traveler markets.
Financial Considerations
The City of Cotati does not currently have overnight lodging, and therefore does not currently collect BIA funds, even though Cotati is a participating BIA city. Should a lodging property be established, there is staff time to collect funds and remit them to the County. An administrative fee may be collected to offset that cost.
Environmental Issues
This is a presentation only, so the California Environmental Quality Act (CEQA) does not apply.
Attachments:
Sonoma County Tourism BIA Presentation (PDF)