Cotati City Council
Agenda Staff Report
Item type: REGULAR AGENDA (ACTION)
To: City Council
Subject: Proposed Changes to the Sonoma County Tourism Business Improvement Assessment
Date: September 27, 2022 Written
by: Damien O'Bid, City Manager
Recommendation
It is recommended that the City Council adopt a resolution of consent to removing the minimum revenue threshold for tourism assessment in the existing Business Improvement Assessment (BIA).
Background
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 (BIA) was formed to promote tourism in Sonoma County.
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 BIA 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 County, which will benefit the Operators of Lodging establishments paying Assessments in the BIA through the promotion of the scenic, recreational, cultural, and other attractions in the County. Revenues from Assessments are used to conduct Marketing Activities designed to increase overnight visits to the County.
Sonoma County Tourism provided a presentation to the City Council on August 9, 2022. At that meeting, the City Council requested information on Sonoma County Tourism’s budget, how they market to ensure equity, and return on investment. A summary letter from Sonoma County Tourism with links to more information is attached to this staff report. The City also reached out to the developer for the Cotati Hotel on several occasions to inquire about the BIA changes, but has not received any feedback.
Sonoma County Tourism originally requested 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. Following the initial presentation to the City Council, Sonoma County Tourism amend the request to simply remove the $350,000 threshold and not proceed at this time with an increase in the assessment rate.
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 or ultimately take effect in the city. As of September 22, 2022, the cities of Petaluma, Sebastopol, Rohnert Park, Windsor and Cloverdale have adopted the Resolution of Consent. The only remaining city, Santa Rosa, is scheduled to hear this on October 11.
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. 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 customerfacing 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). Sonoma and Healdsburg have their own local tourism BIA.
SCT is seeking to remove the $350,000 threshold for the BIA program, which will level the playing field for hotels and vacation rentals by making them both subject to the same assessments. Currently, many vacation rentals are not subject to the assessment. Both vacation rentals and hotels benefit equally from tourism marketing, which brings new guests for both to Sonoma County. The estimated $2 - 2.5 million in additional funds each year would also allow SCT the ability to increase targeted marketing to 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 or allow vacation rentals.
Therefore, the City does not currently collect BIA funds. Should a lodging property be established, there will be staff time to collect funds and remit them to the County. An administrative fee may be collected to offset that cost.
Environmental Issues
The action of adopting a Resolution of Consent does not constitute a project as defined by California Environmental Quality Act Guidelines Section 15378; therefore, no further environmental review is required.
Attachments:
Sonoma County Tourism Overview Letter (PDF)