CITY OF PACIFICA
COUNCIL AGENDA SUMMARY REPORT
8/14/2023
1 SUBJECT:
Adoption of Ordinance to amend Pacifica Municipal Code section 3-17.03 to remove provision for allocation of funds within thirty days and replace the Pacifica Chamber of Commerce as the Managing Agency of the Pacifica Hotel Business Improvement District (BID) with the City of Pacifica
RECOMMENDED ACTION:
Waive the second reading and adopt by title only the Ordinance entitled, “An Ordinance of the City Council of the City of Pacifica Amending Section 3-17.03 (Administration) of Chapter 17 (Hotel Business Improvement District) Within Title 3 (Finance) of the Pacifica Municipal Code to Remove Provision for Allocation of Funds Within Thirty Days and to Replace the Pacifica Chamber of Commerce as the Managing Agency of the BID with the City of Pacifica”.
STAFF CONTACT:
Yulia Carter, Assistant City Manager
(650) 738-7402
[email protected]
BACKGROUND/DISCUSSION:
The attached Ordinance was introduced at a duly noticed public hearing held at the regular meeting of the City Council on July 10, 2023. The City Council conducted the public hearing for the BID amendment, as detailed further below, to determine if there was a majority of the BID members that oppose the amendment and to consider any oral and written protests pursuant to the requirements of Section 36524 of the Streets & Highways Code. There were no oral or written protests received, and the Ordinance to amend the BID was introduced as proposed.
The City Council also held a public meeting on June 12, 2023, to allow public testimony regarding the amendment. The City Council did not receive any public testimony or public comments at the meeting on June 12.
The proposed Ordinance is now in order for adoption.
Background:
Pacifica Hotel Business Improvement District
The Pacifica Hotel Business Improvement District (BID) was established in 2004 pursuant to California Streets and Highways Code sections 36500 et. seq., the City Council of the City of Pacifica adopted Ordinance No. 714-C.S creating the Pacifica Hotel Business Improvement District and levying an annual assessment of $1.00 per room per day of occupancy on the hotels within the City.
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The intent of creating the BID was to develop a mechanism of funding for the hotels in the City to self-fund activities that would promote occupancy through funds derived from the annual assessment of $1.00 per room per day of occupancy. Business Improvement Districts are selfbenefiting assessment districts where business owners voluntarily self-impose a fee to fund their daily business-related activities, advertising, or promotional opportunities. By California law, it is not a tax. Therefore, BIDs are most commonly encouraged and supported because they allow the business to self-fund and self-promote. Additionally, unlike Transient Occupancy Taxes (TOT), which go into the City's General Fund, the participating hotels allocate and control BID assessment funds.
The assessment from the funds levied by the businesses must be used "to promote lodging at the hotels within the district, administer marketing programs that increase overnight lodging, and to fund related activities, staffing, and administration for the district." (Pacifica Municipal Code § 3-17.02(b)). The revenue from the levy cannot be used to provide improvement or activities outside the district or for any purpose other than those specified in the resolution of intent.
The Pacifica BID was established under the authority of the Parking and Business Improvement Area Law of 1989, which does not require identifying a "managing agency." Therefore, many Bay Area Cities with BIDs established under the same law manage their BID operations internally (e.g., the City of South San Francisco and Brisbane). However, the Pacifica City Council previously appointed the Chamber of Commerce as the BID Managing Agency.
Currently, the Advisory Committee comprises one representative from each hotel, the managing director of the Pacifica Chamber of Commerce and Visitor Center, and one from the Chamber of Commerce Board of Directors.
The BID funds are solely managed by the Chamber of Commerce, which represents the interests of each BID member. The City collects the BID assessments with the Transient Occupancy Taxes and remits the BID funds to the Chamber monthly as a pass-through.
Therefore, the City has no control over the BID funds.
The assessment generated approximately $75,000 per year (pre-COVID), dropping as an average to a little under $50,000 over the last three years. This year's assessment is projected to return to the pre-COVID level.
Council Direction to Staff in 2022
During 2022, and as part of the broader Vision 2025 & Beyond Strategic Financial Sustainability project, the City presented to Council a two-year Marketing Plan to help improve the local economy and facilitate post-COVID recovery. Marketing efforts focused on programs such as Shop Pacifica and Workation. The Workation program is designed to improve hotel occupancy rates mid-week and off-season to ultimately benefit the hotels and the City, as higher occupancy rates would lead to higher TOT and Sales Tax revenues generated by Pacifica visitors. During the development and launch of these programs, City staff reached out to the Chamber of Commerce to communicate these programs to BID members and collaborate with the Chamber on implementation. However, after months of unsuccessful attempts at collaboration, the City had to proceed with the program launch without the Chamber's cooperation and only using Cityowned social media channels. In addition, the City had to create its own website landing pages for the Shop Pacifica and Workation marketing programs instead of using the Visit Pacifica platform administered by the Chamber, as was initially planned, due to the inability to reach support and cooperation from the Chamber for the use of the Visit Pacifica website.
These multiple issues related to the BID program management by the Chamber prompted City Council discussions in May-June 2022 about how to proceed. During the City Council public hearing on June 27, 2022, City Council adopted a resolution continuing to levy the assessment Pacifica City Council 3
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for FY 2022-23. However, City Council also directed staff to hold quarterly meetings with the BID members, Chamber representatives, and Council liaisons to try to build collaboration between the City and the BID, ensure compliance with the BID regulations, review performance measures and BID budget, unify marketing efforts and report back to Council at mid-year with recommendations.
On September 30, 2022, the City held the Q1 meeting, where the City Manager and Council liaisons communicated the Council's direction for quarterly BID meetings to the BID members.
In addition, city staff presented the Workation campaign, a City-sponsored marketing program directly benefitting hotels. The Chamber of Commerce also reported on marketing programs and the use of BID funds to date. The meeting revealed that the BID members were unaware of the City's marketing programs and were generally confused about the purpose and benefit of the BID.
In January 2023, two BID members expressed concerns over the effectiveness and value of the BID. In response, City staff placed the BID governance structure item for discussion at the Q2 BID meeting that was held on February 3, 2023, with BID representatives from Fairfield Inn & Suites; Inn at Rockaway; Lighthouse Hotel; Anchor Inn; Sea Breeze Motel; and the Chamber of Commerce present at the meeting. The Council liaisons, Sue Beckmeyer and Mary Bier, and staff also attended the meeting. Representatives from America's Best Value Inn and Pacifica Beach Hotel were absent.
During the meeting, City staff presented the Workation program details and the marketing materials in preparation for the program launch the following week. The majority of the meeting discussion was spent on the BID Governance structure and whether the BID program and assessment should continue. After the open discussion, the majority of the BID hotel representatives voted for option two and expressed their desire to: 1) continue the assessment at the current rate, 2) for the City of Pacifica to assume the role of the Managing Agency for the BID moving forward, and 3) for the City to safeguard the assessed funds until the BID decides how it would like to proceed.
Council Direction to Staff on May 8, 2023
At the Council meeting on May 8, 2023, the Council considered various options relating to the BID including dissolving the BID, continuing the assessment but changing the BID governance structure, and continuing with the current assessment and governance structure. Based on the recommendation of the majority of BID members and staff’s recommendations, the Council adopted a resolution of intent (Resolution No. 45-2023) to amend the City's Municipal Code to remove provision for allocation of funds within thirty days and transition the Managing Agency role of the BID to the City of Pacifica.
Amending the BID
In order to amend the BID, the City must amend the Pacifica Municipal Code in the same way that the Ordinance establishing the BID was originally adopted by the City Council (i.e., resolution of intent, notice, public hearing) as identified in Streets and Highways Code section 36500 et. seq. This requires amending Section 3-17.03 (Administration) of Chapter 17 (hotel business improvement district) within Title 3 (Finance) of the Pacifica Municipal Code to remove provision for allocation of funds within thirty days and to replace the Pacifica Chamber of Commerce as the Managing Agency of the BID with the City of Pacifica.
The chart below provides more detail on the process and timeline that the City has followed to amend the BID governance structure set forth in section 3-17.03 of the Pacifica Municipal Code:
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1. The City Council adopted a resolution of intention setting forth the details of the BID - May 8, 2023 program, a date and time for a public hearing. (S&H 36522)
2. Within seven days of adopting the resolution of intention, a complete copy of the May 15, 2023 Resolution of Intention was mailed to each business owner in the territory of the proposed BID. (S&H 36523(b))
3. The City mailed to each business a joint notice of public meeting and public hearing. (S&H 36523.5 and Gov. Code 54954.6(a)(2),54954.6(c))
by May 26, 2023
The Joint Notice was mailed along with a copy of the Resolution of Intention.
4. No earlier than ten days after mailing the joint notice, the City Council held at least June 12, 2023 one public meeting at which the City Council allowed public testimony regarding the proposed amendment. (Gov. Code 54954.6(a)(1), 54954.6(c)(1))
5. No earlier than forty-five days after mailing the joint notice, and no earlier than seven days after the public meeting, the City Council will hold a public hearing. (Gov't Code 54954.6(a)(2), 54954.6(c)(1))
July 10, 2023
6. At the public hearing, the City Council must consider oral and written protests. If written July 10, 2023 protests meeting the requirements of Section 36524 of the Streets & Highways Code are received (and not withdrawn) from the owners of businesses in the proposed area which will pay 50 percent or more of the assessments proposed to be levied, then proceedings must be abandoned for no less than one year (S&H 36525(a))
7. If a 50%/+ protest is not received, the City Council may adopt an ordinance amending the BID. (S&H 36527)
July 10, 2023
(introduction of the
Ordinance) August
14, 2023 (adoption
of the Ordinance)
The City mailed the Resolution of Intention (Resolution No. 45-2023) to all BID members on May 12, 2023. The City mailed the Joint Notice to all BID members on May 24, 2023.
The City Council also held a public meeting on June 12, 2023 to allow public testimony regarding the amendment and held a public hearing to introduce the proposed Ordinance on July 10, 2023.
Proposed Ordinance
The proposed Ordinance would amend Pacifica Municipal Code Section 3-17.03 to remove provision for allocation of funds within thirty days and replace the Pacifica Chamber of Commerce as the Managing Agency of the BID with the City of Pacifica. If adopted at this meeting, the City will implement the amendments 30 days after the adoption of the ordinance or by September 13, 2023.
CEQA:
Adoption of the proposed Ordinance is not subject to review under the California Environmental Quality Act (CEQA) pursuant to Public Resources Code Section 21000, et seq. and the CEQA Guidelines (14 Cal. Code Regs. §§ 15000 et. seq.), including without limitation, Public Resources Code section 21065 and California Code of Regulations 15378 as this is not a “project” that may cause a direct, or reasonably foreseeable indirect, physical change in the environment.
ALTERNATIVE ACTION:
The City Council may elect not to proceed with amending the BID governance structure.
RELATION TO CITY COUNCIL GOALS AND WORK PLAN:
"Enhance Organizational and Fiscal Stability" includes investing in economic development Pacifica City Council 5
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to increase revenues, funding a reserve/emergency funds, and being well-prepared for grant opportunities.
FISCAL IMPACT:
No significant fiscal impact is associated with this action, except for savings related to eliminating the administrative cost of processing BID pass-through payments. The City currently collects no fee for administering the BID.
ORIGINATED BY:
City Manager's Office
ATTACHMENT LIST:
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ORDINANCE NO. (ID # 5416)
ORDINANCE NO. ______
A ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PACIFICA AMENDING SECTION 3-17.03 (ADMINISTRATION) OF CHAPTER 17 (HOTEL BUSINESS IMPROVEMENT DISTRICT) WITHIN TITLE 3 (FINANCE) OF THE PACIFICA MUNICIPAL CODE TO REMOVE
PROVISION FOR ALLOCATION OF FUNDS WITHIN THIRTY DAYS AND TO REPLACE THE
PACIFICA CHAMBER OF COMMERCE AS THE MANAGING AGENCY OF THE BID WITH
THE CITY OF PACIFICA
WHEREAS, pursuant to California Streets and Highways Code sections 36500 et. seq., the City Council of the City of Pacifica adopted Ordinance No. 714-C.S. in 2004, creating the Pacifica Hotel Business Improvement District and levying an annual assessment of $1.00 per room per day of occupancy on the hotels in the City; and WHEREAS, the Pacifica Hotel Business Improvement District ("BID") has been operating and levying an annual assessment of $1.00 per room per day of occupancy on the hotels in the City continuously since 2004; and
WHEREAS, Ordinance No. 714-C.S. is codified in Pacifica Municipal Code (“PMC”) Chapter 17, “Hotel Business Improvement District” within Title 3, “Finance”; and WHEREAS, at a meeting of the BID on February 3, 2023 a majority of the BID hotel representatives voted for option two and expressed their desire to: 1) continue the assessment at the current rate, 2) for the City of Pacifica to assume the role of the Managing Agency for the BID moving forward, and 3) for the City to safeguard the assessed funds until the BID decides how it would like to proceed; and WHEREAS, at a City Council meeting on May 8, 2023, the Council considered various options relating to the BID including dissolving the BID, continuing the assessment but changing the BID governance structure, and continuing with the current assessment and governance structure; and
WHEREAS, based on the recommendation of the majority of BID members and staff’s recommendations, the Council adopted a Resolution of Intention (Resolution No. 45- 2023) to amend the City's Municipal Code to remove provision for allocation of funds within thirty days and transition the Managing Agency role of the BID to the City of Pacifica; and WHEREAS, pursuant to Streets and Highways Code section 36523(b) the City Clerk mailed each business owner in the territory of the BID a complete copy of the Resolution of Intention on May 15, 2023, within seven days of adopting the Resolution of Intention; and WHEREAS, the City Clerk mailed to each business in the BID a joint notice of the public meeting and public hearing along with a copy of the Resolution of Intention in accordance with Streets and Highways Code section 36523.5 and Government Code sections 54954.6(a)(2) and 54954.6(c) by May 26, 2023; and WHEREAS, no earlier than ten days after the mailing of the joint notice, the City Council held one public meeting on June 12, 2023 at which the City Council allowed public Pacifica City Council 7
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testimony regarding the proposed amendment in accordance with Government Code sections 54954.6(a)(1) and 54954.6(c)(1); and
WHEREAS, no earlier than forty-five days after mailing the joint notice, and no earlier than seven days after the public meeting, the City Council held a public hearing on July 10, 2023 in accordance with Government Code sections 54954.6(a)(2), 54954.6(c)(1)); and
WHEREAS, the City Council conducted a duly noticed public hearing pursuant to the Resolution of Intention and Streets and Highways Code section 36500 et seq., on July 10, 2023 at 7:00 p.m., or as soon thereafter as practicable, at City Council Chambers at 2212 Beach Boulevard, Pacifica California and heard and considered all oral and written protests and considered all correspondence, staff reports and other materials presented; and
WHEREAS, at the conclusion of the public hearing, the Clerk did note for the record that written protests meeting the requirements of Section 36524 of the Streets & Highways Code from the owners of businesses in the BID did not total more than fifty percent (50%).
NOW, THEREFORE, the City Council of the City of Pacifica does ordain as follows:
Section 1. Recitals. The City Council of the City of Pacifica does hereby find that the above referenced recitals are true and correct and material to the adoption of this Ordinance.
Section 2. Amendment. Section 3-17.03 (Administration) of Chapter 17 (Hotel Business Improvement District) within Title 3 (Finance) of the Pacifica Municipal Code is hereby amended by repealing and replacing Section 3-17.03, in its entirety to read as follows:
“Sec. 3-17.03. Administration.
(a) The funds will be collected by the City of Pacifica on the same schedule as, but independently from, the collection of transient occupancy taxes. Funds shall be allocated from the City to the district annually.
(b) The cost to establish the district shall be paid by the Pacifica Chamber of Commerce and will be reimbursed by funds from the district. (c) The Pacifica City Council is designated as the managing agency for district related activities and Pacifica City staff shall provide staffing and administration for the managing agency.
(d) The Pacifica City Council appoints an Advisory Committee consisting of, but not limited to, one representative from each of the hotels, the managing director of the Pacifica Chamber of Commerce and Visitor Center, and one representative from the Chamber of Commerce Board of Directors.”
Section 3. Compliance with CEQA. The City Council hereby finds that the action to adopt this Ordinance is not subject to review under the California Environmental Quality Act (CEQA) pursuant to Public Resources Code Section 21000, et seq. and the CEQA Guidelines (14 Cal. Code Regs. §§ 15000 et. seq.), including without limitation, Public Resources Code section 21065 and California Code of Regulations 15378 as this is not a “project” that may cause a direct, or reasonably foreseeable indirect, physical change in the environment.
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Section 4. Severability. If any section, subsection, sentence, clause or phrase of this Ordinance is for any reason held to be invalid, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it should have adopted the Ordinance and each section, subsection, sentence, clause or phrase thereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared unconstitutional.
Section 5. Publication. The City Clerk is hereby ordered and directed to certify the passage of this Ordinance by the City Council of the City of Pacifica, California, and cause the same to be published in accordance with State law.
Section 6. Effective Date. This Ordinance shall be in full force and effective thirty (30) days after its adoption and shall be published and posted as required by law.
PASSED AND ADOPTED this ______ day of ___________________, 2023, by the following vote:
AYES, Councilmembers:
NOES, Councilmembers:
ABSENT, Councilmembers:
ABSTAIN, Councilmembers:
_________________________________
Tygarjas Twyrls Bigstyck, Mayor
ATTEST: APPROVED AS TO FORM:
______________________________ _________________________________ Sarah Coffey, City Clerk Michelle Kenyon, City Attorney Pacifica City Council 9
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* * * * *
(ID # 5416) at 8/14/2023 5:45 PM City Council Regular Meeting