July 26, 2022
Agenda Item No. 11
TO:
HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM:
Tara Finnigan, Assistant City Manager - 949-644-3001, [email protected] PREPARED BY:
Melanie Franceschini, Management Analyst [email protected] PHONE:
949-644-3028
TITLE:
Tourism Business Improvement District (TBID) Annual Report and Fiscal Year 2022-23 Budget ABSTRACT:
Visit Newport Beach, Inc. (VNB), a business unit of Newport Beach & Company, serves as the administrator for the Newport Beach Tourism Business Improvement District (NB TBID). VNB has submitted the NB TBID’s FY 2022-23 Annual Report and Budget for the City Council’s review and approval.
RECOMMENDATION:
a) Determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; b) Authorize a waiver of the timeline provided in Section 3.5 of the Tourism Business Improvement District Management Agreement; c) Review and approve the Newport Beach Tourism Business Improvement District’s FY 2022-23 Annual Report; and d) Review and approve the Newport Beach Tourism Business Improvement District’s FY 2022-23 Budget.
DISCUSSION:
Newport Beach Tourism Business Improvement District (NB TBID) The NB TBID is a business improvement district formed pursuant to the Property and Business Improvement District Law of 1994, codified in Streets and Highway Code Section 36600 et seq., which helps fund marketing and sales promotion efforts for Newport Beach tourism businesses. It was established by Resolution No. 2009-21 on April 28, 2009, and is administered by VNB.
The Management District Plan for the renewed NB TBID (the document that details the district’s boundaries, funding and programs) was approved by the City Council on January 24, 2014, and was amended by the City Council on July 10, 2018. The NB TBID’s current, 10-year term will expire on January 31, 2024.
The NB TBID includes nine hotels/resorts, each consisting of 100 hotel rooms or more, located within Newport Beach:
Balboa Bay Resort
Fashion Island Hotel
Hyatt Regency John Wayne Airport Newport Beach
Hyatt Regency Newport Beach
Lido House Hotel
Newport Beach Marriott Bayview
Newport Beach Marriott Hotel & Spa
Newport Dunes Waterfront Resort & Marina
Renaissance Newport Beach Hotel
The Newport Beach Marriott Hotel & Spa is currently operating as VEA Newport Beach, A Marriott Resort & Spa. The Fashion Island Hotel is currently closed. The property will be renovated and reopened as the Pendry Newport Beach in 2023, under new ownership and management. At this time, it is projected that the hotel will not be operational for FY 2022-23.
VNB, on behalf of the NB TBID association, has prepared the NB TBID’S FY 2022-23 annual report and budget for the City Council’s review and approval (Attachments A and B). The annual report includes a summary of the NB TBID’s proposed activities for the year. The report does not contain recommendations to alter the BID boundaries or the method and basis for levying assessments for the following fiscal year. The NB TBID Board of Directors met on June 24, 2022 to review and approve the TBID’s FY 2022-23 annual report and budget.
This year’s report includes a brief discussion about the industry’s economic recovery from the COVID-19 pandemic and relays optimism as to surpassing 2019 numbers within the coming years.
The proposed FY 2022-23 revenue budget of $3,807,884 forecasts a 4% growth year over year. This projection accounts for continued industry recovery, as well as the new amenities offered by TBID member hotels. Expenditures for the FY 2022-23 are estimated at $4,526,445, which includes the hiring of an additional salesperson and sales coordinator. Despite bookings at 90% of pre-pandemic levels, the continued closure of the Fashion Island Hotel impacts the total revenue, requiring for the proposed FY 2022-23 budget to utilize $718,561 of FY 2021-22 carryover cash to supplement the shortfall.
The report also explains how the TBID’s FY 2022-23 marketing plan will concentrate on targeted messaging to luxury clients interested in bookings at higher tier hotels. VNB will employ strategies such as branding, messaging and planning integration, strengthening partnerships between VNB and meeting planners, and collecting further data intelligence to enhance sales, in order to meet the goal of booking 75,000 room nights.
Waiver Request
Staff is recommending a waiver of the timeline specified in Section 3.5 of the 2009 Tourism Business Improvement District Management Agreement between the City and Visit Newport Beach. The agreement set a May 31 due date for the NB TBID annual report; however, the NB TBID Board of Directors was not able to meet until June 24 to review and approve the annual report and budget.
FISCAL IMPACT:
Under the terms of the City-NB TBID agreement, the NB TBID assesses its member hotels 3% of gross short-term (less than 30-day stays) room rental revenue. The FY 2022-23 assessment revenue is projected to be approximately $3,807,884. The assessments levied for the NB TBID are applied toward the activities described in the NB TBID’S Management District Plan (approved by the City Council on January 28, 2014) and summarized in its annual report. The City collects the member assessments on behalf of the NB TBID and retains 0.25% of the total assessments collected in order to reimburse the City for collection and administrative costs associated with the NB TBID.
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly.
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item).
ATTACHMENTS:
Attachment A – NB TBID FY 2022-23 Annual Report
Attachment B – NB TBID FY 2022-23 Budget
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Tourism Business Improvement District (TBID) Annual Report and Fiscal Year 2022-23 Budget
July 26, 2022
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