CITY OF PACIFICA
COUNCIL AGENDA SUMMARY REPORT
3/24/2025
1 SUBJECT:
Public Meeting to Receive Testimony Regarding Establishment of the '94 Business Improvement District (BID), the Pacifica Tourism Marketing District (PTMD) RECOMMENDED ACTION:
Receive public testimony regarding the proposed establishment of the ’94 Business Improvement District (BID), the Pacifica Tourism Management District (PTMD).
STAFF CONTACT:
Yulia Carter, Assistant City Manager
(650) 738-7402
[email protected]
BACKGROUND/DISCUSSION:
Pacifica Hotel Business Improvement District
In 2004, the Pacifica Hotel Business Improvement District (PHBID) was formed pursuant to the Parking and Business Improvement Area Law of 1989 (‘89 Law). The City Council of the City of Pacifica adopted Ordinance No. 714-C.S creating the PHBID and levying an annual assessment of $1.00 per room per day of occupancy on the hotels within the City.
The City of Pacifica and Pacifica lodging businesses now seek to modernize the PHBID by forming a new Pacifica Tourism Marketing District (PTMD) pursuant to the Property and Business Improvement District Law of 1994, Streets and Highways Code section 36600 et seq. (‘94 Law) and allowing the PHBID formed under the ‘89 Law to expire at the end of it’s current 1-year term on June 30, 2025, by not undergoing the annual renewal process at City Council.
The intent of creating the PHBID 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. BIDs are self-benefiting 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 selffund 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.
In early 2024, the process to form the ’94 District and developed a Management District Plan (MDP) was initiated based on feedback from the PHBID Advisory Board (Board). At that time, the Board had decided on a 1% assessment rate for the new ’94 District.
Pacifica City Council 2
March 24, 2025
In April 2024, petitions to form the ’94 District were distributed to all hotels owners (which also make up the PHBID Board) with the proposed 1% assessment rate. Six signed petitions were received out of a total of eight eligible PHBID members to reach the necessary majority to move forward with forming the new district.
Although the required legal threshold had been met, the City Council elected to not move forward with the formation of the ’94 district at that time. On April 22, 2024, City Council adopted a Resolution of Intention to Continue the ‘89 PHBID.
On June 24, 2024, City Council conducted a Public Hearing and adopted a Resolution Confirming the Annual Report from the PHBID and Assessing the Levy for the Fiscal Year 2024- 25 at the same rates as in the Fiscal Year 2023-24, which was $1 per room per night.
With the ’89 PHBID approaching the end of its current term, staff brought the continuation of the ’94 district formation as an agenda item at the January PHBID Board (Board) meeting. At the meeting, the Board expressed concerns about the financial burden of the 1% assessment rate on their guests. While the Board agreed to continue with the ’94 district formation, they proposed to modify the 1% assessment rate that they approved previously.
Since the circulation of the petitions, the Board has indicated a preference to maintain the current rate of $1 per room, per day of occupancy rather than 1% of gross short-term sleeping room rental revenue. Since this substantial change from the previously approved Board direction on the assessment was raised during the meeting, staff did not have the financial analysis for this newly proposed option at that time. The Board moved forward and voted for $1 per room per day of occupancy assessment. Following that meeting, staff conducted a financial analysis comparing the impact of $1 assessment versus various percentage-based assessments, revealing that adjusting a percentage assessment might be more beneficial to the BID Board than a $1-based assessment. This analysis was presented to the Council at the last meeting, when the resolution of intent to form the new district was also adopted.
At the conclusion of the ’94 PTMD formation process, the City Council may adopt, revise, change, reduce, or modify the proposed assessment pursuant to Streets and Highways Code section 36624. Proposed assessments may only be revised by reducing any or all of them.
Council Direction to Staff on March 10, 2025
At the City Council meeting on March 10, 2025, Council adopted the Resolution of Intention and recommended that Staff coordinate an in-person meeting with the BID Board members to share the new financial analysis and discuss the assessments and the formation of the ’94 District before the Council holds the public hearing on the formation of the new district on April 28, 2025.
Staff has scheduled the BID board meeting for March 21, 2025, and will report back to the Council accordingly.
94 PTMD FORMATION PROCESS
March 10, 2025 - RESOLUTION OF INTENTION (COMPLETED)
Upon the submission of a written petition, signed by the business owners in the proposed district who will pay more than fifty percent (50%) of the assessments proposed to be levied, the City Council (Council) may initiate proceedings to establish a district by the adoption of a resolution expressing its intention to establish a district.
Petition Status: Petitions in favor of PTMD formation were submitted by 6 lodging businesses, Pacifica City Council 3
March 24, 2025
which represent 50.10% of the total PTMD assessment, not counting a single business proposed to pay more than 40 percent (40%),pursuant to California Streets and Highways Code section 36621(a). This majority petition allows the Council to initiate proceedings for PTMD formation at the March 10, 2025 meeting.
No later than
March 14, 2025 - MAILING OF PUBLIC NOTICE (COMPLETED)
The ‘94 Law requires the City to mail written notice to the owners of all businesses proposed to be within the PTMD. Mailing the notice begins a mandatory forty-five (45) day period in which owners may protest PTMD formation.
March 24, 2025 - PUBLIC MEETING
Allow public testimony on the formation of the PTMD and levy of assessments. No Council action required.
April 28, 2025 - FINAL PUBLIC HEARING
If written protests are received from the owners of businesses in the proposed PTMD which will pay fifty percent (50%) or more of the assessments proposed to be levied and protests are not withdrawn so as to reduce the protests to less than fifty percent (50%), no further proceedings to levy the proposed assessment against such businesses shall be taken for a period of one (1) year from the date of the finding of a majority protest by the Council.
At the conclusion of the public hearing to establish the district, the City Council may adopt, revise, change, reduce, or modify the proposed assessment or the type or types of improvements, maintenance, and activities to be funded with the revenues from the assessments pursuant to Streets and Highways Code section 36624. Proposed assessments may only be revised by reducing any or all of them.
The adoption of the Resolution of Formation shall establish the PTMD and levy of the assessment in each of the fiscal years referred to in the Plan. If the ’94 PTMD is approved after the foregoing process, the City will need to amend Chapter 17, “Hotel Business Improvement District” within Chapter 17, Title 3 of the Pacifica Municipal Code.
ALTERNATIVE ACTION:
The City Council may elect not to proceed with the establishment of the PTMD formation under the 1994 District Law.
RELATION TO CITY COUNCIL GOALS AND WORK PLAN:
"Fiscal Sustainability" includes investing in economic development to increase revenues, funding a reserve/emergency fund, and being well-prepared for grant opportunities.
FISCAL IMPACT:
No significant fiscal impact is associated with this action. The City currently collects no fee for administering the BID.
ORIGINATED BY:
City Manager's Office
Pacifica City Council 4
March 24, 2025
ATTACHMENT LIST: